General Publications December 21, 2012

Federal Circuit Patent Case Summaries for the Week Ending December 21, 2012

Alston & Bird LLP's weekly Federal Circuit Patent Case Summaries are published by Wolters Kluwer Law & Business as part of its Aspen Publishers product line. The following is a summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit for the week ending on the date below.

Patent Case Summaries for the Week Ending December 21, 2012 
Chris McArdle and Ross Barton prepared the summaries in this issue.

Case Summaries

Patent Office Procedures: Reissue: Generally
Intel Corp. v. Negotiated Data Solutions, Inc., et al., No. 11-1448 (Fed. Cir. (E.D. Tex.) Dec. 17, 2012). Opinion by Linn, joined by Prost and Wallach.

In affirming the grant of summary judgment of noninfringement of a reissue patent due to a license agreement, the Federal Circuit concluded that even though the license agreement did not explicitly discuss reissue patents, the agreement evinced the parties’ intent that the license should extend to any patents that were reissued from licensed patents.

U.S. Patent Nos. 5,361,261; 5,533,018; and 5,594,7334 (collectively the “Original Patents”) were originally owned by National Semiconductor Corp. (“National”), and were subject to a 1976 license agreement between National and Intel Corp. (“Intel”). In 1998, National assigned the Original Patents to Vertical Networks, Inc., who filed broadening reissue applications for the Original Patents prior to assigning the Original Patents and the reissue applications to Negotiated Data Solutions, Inc. (“N-Data”). In 2006, N-Data sued Dell, Inc. (“Dell”) in the U.S. District Court for the Eastern District of Texas, alleging infringement of several patents including U.S. Reissue Patents RE38,820; RE39,216; and RE39,395 (collectively the “Reissue Patents”), which corresponded to the Original Patents. Intel intervened in N-Data’s suit against Dell and filed a complaint in 2008, seeking a declaratory judgment that under the 1976 license agreement Intel and its customers had a license to practice the Reissue Patents and other patents covered by the agreement. N-Data counterclaimed, asserting infringement by Intel and its customers. The parties cross-moved for summary judgment on the issue of whether the license agreement extends to the Reissue Patents, which had issued after the license agreement expired. The district court agreed with Intel and found that the license agreement extended to the Reissue Patents

On appeal, Intel argued that under 35 U.S.C. § 252, a reissue patent replaces an original patent nunc pro tunc; thus, the Reissue Patents replaced the Original Patents for all practical purposes and were licensed. The Federal Circuit rejected Intel’s argument, noting that § 252’s provision for intervening rights makes clear that a reissue patent does not replace the original patent nunc pro tunc. Next, the Federal Circuit considered whether the 1976 license agreement covered the Reissue Patents. N-Data argued that because the Reissue Patents issued directly to N-Data after the 1976 license agreement had expired, the Reissue Patents are not covered by the license agreement. The Federal Circuit noted, however, that under the applicable California law a contract must be interpreted to give effect to the parties’ mutual intent at the time of contracting. As a result, the Federal Circuit looked to the reissue statute in place at the time of the 1976 license agreement, and concluded that because 35 U.S.C. § 251 prohibited the addition of new matter in a reissue patent, the mutual intent of the agreement was that the invention of the Original Patents would be subject to the 1976 license agreement, as would the Reissue Patents. The Federal Circuit thus affirmed the district court’s grant of summary judgment.  

Remedies: Injunctions: Permanent Injunction
Remedies: Damages: Lost Profits
Remedies: Damages: Patent Marking/Notice of Infringement
Infringement: Generally
Presidio Components, Inc. v. American Technical Ceramics Corp., Nos. 10-1355, 11-1089 (Fed. Cir. (S.D. Cal.) Dec. 19, 2012). Opinion by Rader, joined by Plager and Wallach.

In vacating the denial of a permanent injunction, the Federal Circuit held that the U.S. District Court for the Southern District of California’s finding of no competition for the purpose of irreparable harm conflicted with its finding of competition for the purpose of awarding damages. The Federal Circuit also determined that substantial evidence supported the jury’s determinations of infringement and entitlement to lost profit damages. Finally, the Federal Circuit vacated the district court’s judgment as a matter of law (“JMOL”) of false marking and held that because of the retroactive applicability of the America Invents Act (“AIA”), the false marking counterclaim was moot.

Presidio Components, Inc. (“Presidio”) sued American Technical Ceramics Corp. (“ATC”) in the U.S. District Court for the Southern District of California, alleging infringement of U.S. Patent No. 6,816,356 (“the ’356 patent”) which relates to integrated broadband ceramic capacitor arrays. ATC manufactures 545L capacitors, a variety of monolithic broadband capacitors that compete with Presidio’s Buried Broadband capacitors (“BB capacitors”). At trial, Presidio asserted that ATC’s 545L capacitors infringe the ’356 patent. After a jury found that the asserted claims of the ’356 patent were not invalid and were willfully infringed by ATC, the jury awarded Presidio $1,048,677 in lost profits. The district court then denied Presidio’s motions for a permanent injunction, enhanced damages, and attorneys’ fees, but granted Presidio $235,172.68 in supplemental damages. The district court also vacated the jury’s willfulness verdict and set an ongoing royalty rate of 12% of the 545L capacitor’s wholesale price. At the same time, the trial court denied ATC’s numerous motions for JMOL or a new trial. The district court did, however, fine Presidio $228,086.25 for false marking. ATC appealed twelve issues, and Presidio appealed five.

The Federal Circuit first affirmed the district court’s finding that substantial evidence supports the jury’s verdict that ATC’s 545L capacitors infringe the asserted claims of the ’356 patent. In particular, the Federal Circuit reviewed the testimony of the experts and concluded that there was sufficient record evidence supporting the conclusion that the accused 545L capacitors were “substantially monolithic.” Next, the Federal Circuit concluded that substantial evidence supported the jury’s lost profits verdict, explaining that Presidio satisfied the first Panduit factor for lost profit damages because not only did demand exist for Presidio’s BB capacitors, but also the BB capacitors directly competed with ATC’s infringing 545L capacitors. The Federal Circuit then rejected ATC’s arguments that there were acceptable noninfringing substitutes for the BB capacitors during the relevant time period, noting that the proposed noninfringing substitutes were not adequate substitutes in the same market.

The Federal Circuit vacated the district court’s denial of a permanent injunction and related royalty determination, explaining that the district court’s finding of no competition for the purpose of irreparable harm conflicted with the finding of competition for the purpose of awarding damages. Further, in finding support for a determination of irreparable harm, the Federal Circuit noted that Presidio showed that it was unwilling to license the ’356 patent, that the BB capacitor was one of Presidio’s main products, that ATC was aware of the ’356 patent during the development of its 545L capacitor, and that ATC’s 545L sales necessarily caused Presidio to lose BB capacitor sales.

Finally, the Federal Circuit determined that the false marking provisions of the AIA apply retroactively to cases pending before the appellate courts. As a result, the Federal Circuit concluded that ATC did not have a claim under 35 U.S.C. § 292(a) because this provision of the statute allows only the United States to bring a false marking claim.  


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