Monthly Archives: July 2018

Hiring Away Employees May Look Bad, But Plaintiff Still Must Show Missappropriation

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In Raytheon Company v. Indigo Systems Corporation, [2016-1945, 2016-2050] (July 12, 2018), the Federal Circuit affirmed the judgment of no liability for misappropriation of trade secrets, and the denial of attorneys fees.

At issue on appeal was  whether the jury’s verdict that Indigo did not misappropriate Raytheon’s Trade Secrets was supported by substantial evidence; whether the district court abused its discretion in denying Raytheon’s motion for a new trial; and whether the district court abused its discretion in denying Indigo’s motion for attorney fees.

The Federal Circuit found evidence at trial showed that Indigo employees independently developed Indigo’s technology without using Raytheon’s, and further that Indigo’s technology was “significantly different” from Ratheon’s. The Federal Circuit found that the jury reasonably found that Indigo did not misappropriate trade secrets, and the district court did not err in denying Raytheon’s motion for judgment as a matter of law regarding this claim.

As to Raytheon’s motion for a new trial, the Federal Circuit said that Raytheon’s failure to establish its entitlement to judgment as a matter of law on the trade secret  mis- appropriation issue also means it has failed to establish its entitlement to a new trial. Thus, the district court did not abuse its discretion in denying Raytheon’s alternative
motion for a new trial.

As to Indigo’s challenge to the district court’s denial of attorneys’ fees, the Federal Circuit noted that an award of attorney’s fees to the prevailing party is mandatory when the statutory requirements under the TTLA are met.  While Indigo argued that Raytheon’s dropping of its claim under Texas law made it the prevailing party, the Federal Circuit held that it had to establish: (1) it actually prevailed on the merits of a TTLA claim; (2) Raytheon dismissed the TTLA claim with prejudice; or (3) Raytheon
dismissed the TTLA claim without prejudice to avoid an adverse ruling on the merits.  , and that . Texas courts have noted that such an award may be based on a
court decision on the merits for either party.  The Federal Circuit held that none of these applied.  The Federal Circuit noted that dismissing the TTLA claim without prejudice in favor of the CUTSA in this context appears to represent a preference by Raytheon to pursue its trade secret misappropriation claims under one state’s laws over another’s. The Federal Circuit agreed with the district court that it is far from clear that Raytheon’s focus on California law over Texas law was taken “to avoid an unfavorable ruling on the merits.”

 

Lack of Written Opinion Leaves Infringer Exposed in the Crosswalk

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In Polara Engineering Inc. v. Campbell Company, [2017-1974, 2017-2033] (July 10, 2018), the Federal Circuit affirmed in part, vacated in part, and remanded the district court’s determination that claims 1-4 of U.S. Patent No. 7,145,476 on accessible pedestrian signal systems were valid and willfully infringed, and awarding enhanced damages.

Cambell argued on appeal that the claims were invalid of prior public uses and over the prior art.  Regarding the public uses, the Federal Circuit noted that an inventor who seeks to perfect his discovery may conduct extensive testing without losing his right to obtain a patent for his invention—even if such testing occurs in the public eye.  A use may be experimental if its purpose is to test claimed features of the invention or to determine whether an invention will work for its intended purpose.  The Federal Circuit found that that substantial evidence supported the jury’s finding of experimental use that negates application of the public use bar, noting that testing to perfect features inherent to the claimed invention, such as durability qualifies as experimental, and that in any event the testing did relate to claimed features.  While there was evidence that the testing involved commercial features, rather than claimed features, the Federal Circuit could not say that the jury’s finding of experimental use lacked substantial evidentiary support.

Regarding invalidity over the prior art, the Federal Circuit agreed that Campbell was estopped from arguing that the district court erred in its claim construction instruction
because the court adopted Campbell’s proposed construction of “digital data signals.”  The Federal Circuit found substantial evidence for the jury’s implied fact finding.

On the issued of enhanced damages, the Federal Circuit noted that enhanced damages are designed as a “punitive” or “vindictive” sanction for egregious
infringement behavior, and found that substantial evidence supports
the jury’s finding of willful infringement.  The Federal Circuit said that the jury reasonably could have found that Campbell intentionally copied the ’476 patent despite a significant known risk that its two-wire AAPS would infringe the ’476 patent, having been advised by counsel that there were “areas of potential conflict.”  While Campbell argued that it relied upon competent opinion of counsel,  the Federal Circuit said that Campbell “has not pointed to any documentary or third-party evidence showing it received an opinion of counsel,” and the jury was entitled not to credit the testimony that there was such an opinion.  While Campbell’s challenge that the jury instruction did not specify the time period during which Campbell’s conduct was willful may have had merit, Campbell waived this challenge by agreeing to a simple yes or no instructions.

Finally, on the amount of enhanced damages (the district court used a multiplier 2 1/2), the Federal Circuit said that the district court awarded almost the maximum amount
of enhanced damages, but did not adequately explain its basis for doing so, and failed to even mention Campbell’s public use defense, which presented a close question in
this case.  The Federal Circuit found that the district court may have erred in its consideration of Campbell’s public use defense, and vacated the award of enhanced damages and remanded.

Federal Circuit Makes Minor Correction to May 1 Opinion in Texas Advanced Optoelectronic Solutions

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In Texas Advanced Optoelectronic Solutions, Inc. v. Renesas Electronics America, Inc., [2016-2121, 2016-2208, 2016-2235] (July 9, 2018), the Federal Circuit, after a petition for rehearing, reissued its opinion affirming liability for trade secret misappropriation and patent infringement, but vacating the monetary awards, and remanding for further proceedings.  The reissued opinion only differs from the early opinion in the fifth paragraph of Section III.A.

A Chicken in Every Pot, A Patent in Every Portfolio

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So July 6 is National Fried Chicken Day.  Who decides such things?  Apparently no one, or perhaps more accurately anyone.  However, the people of National Day Calendar are happy to endorse your declaration and put it on their calendar, if you need outside validation.

Assuming the bona fides of National Fried Chicken Day, a patent lawyer’s mind turns to Colonel Harland Sanders, who obtained two patents on his methods and apparatus for preparing fried chicken: U.S. Patent No. 3,1 56,177 on Food Preheating, Cooking and Warming Device:

 and U.S. Patent No. 3245800 on Process of Producing Fried Chicken Under Pressure:

 

These are not just the patents of the day, but the patents of National Fried Chicken Day.

 

Have a Happy and Safe Fourth of July

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Patented technology can improve the most mundane aspects of life and on July 4 we recognize some patents that inject an element of patriotism into our daily routine.  U.S. Patent No. D478,404 protects an American Patriotic Candy Cane:

U.S. Patent No. 7192168 protects a lighting display:

U.S. Patent No. D513768 protects Patriotic Themed Duct Tape:

U.S. Patent No. 8160936 protects a Patriotic American Shopping Network:

Finally, U.S. Patent No. D572517 protects a Patriotic Air Conditioner Cover:

Have a happy and safe Fourth of July!

Third Time’s The Charm: Federal Circuit Remands for Third Damages Trial Because Patent Owner Did Not Prove Use of Entire Market Value was Appropriate

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In Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., [2016-2691, 2017-1875] (July 3, 2018), the Federal Circuit affirm the district court’s judgments of infringement of U.S. Patent Nos. 6,212,079 and 6,538,908, but concluded that the entire market value rule cannot be used here to calculate damages and vacated the
damages award and remanded for further proceedings.

The patents in suit related to power supply controller chips used in power
supplies, such as chargers for electronic devices.  While the case was pending in the district court, the Federal Circuit in VirnetX, Inc. v. Cisco Systems, Inc.,explained that simply identifying the smallest salable unit is not necessarily sufficient to satisfy a patentee’s obligation to apportion for multi-component products with significant unpatented features.  Because Power Integrations’ royalty calculation in the first trial did not apportion beyond the “smallest salable unit” and Power Integrations had disclaimed reliance on the entire market value rule, the district court granted a new trial on the
issue of damages.  The district court excluded Power Integrations’ expert testimony based on apportionment, but allowed its expert to present testimony based on the entire market value rule. The jury awarded $139.8 million in damages, based on damages
testimony that relied solely on the entire market value rule  The district court denied Fairchild’s motion for judgment as a matter of law, or in the alternative for a new trial.

The Federal Circuit affirmed infringement of U.S. Patent No. 6,212,079 finding the verdict supported by substantial evidence, noting that the jury could have properly concluded that the claim terms “fixed frequency” and “non-varying” left open the
possibility for minor frequency variations due to operating conditions.

The Federal Circuit also affirmed infringement of U.S. Patent No. 6,538,908 under the doctrine of equivalents, agreeing that adjusting a voltage limit of a power switch was an infringing equivalent of adjusting a current limit of a power switch.   The Federal noted that Circuit Power Integrations’ expert testified that a value of voltage qualifies as a “value of current” because under Ohm’s Law, current is equal to voltage divided by
resistance.  The Federal Circuit also affirmed that equivalence was not precluded by prosecution history, and in particular to arguments distinguishing current and voltage in another application sharing the same specification.  The Federal Circuit said that the claim language on its face is different than the language of the claims to which the prosecution argument was directed, and concluded that Fairchild failed to establish that the prosecution history is sufficiently clear as to create an estoppel.

On the issue of damages, the Federal Circuit agreed with Fairchild that the district court should have granted the new trial motion.  The Federal Circuit said that a  patentee is only entitled to a reasonable royalty attributable to the infringing features, and must
in every case give evidence tending to separate or apportion the defendant’s profits and the patentee’s damages between the patented feature and the unpatented features.  In the context of a utility patent, it is only the patented technology that is taken from the owner, so the value to be determined is only the value that the infringing features contribute to the value of an accused product.

Where multicomponent products are accused of infringement, the royalty base should not be larger than the smallest salable unit embodying the patented invention.  Use of the entire market value of a multi-component product that includes a patented
component cannot help but skew the damages horizon for the jury, regardless of the contribution of the patented component to this revenue. The Federal Circuit said that Admission of evidence of the entire market value only serves to make a patentee’s proffered damages amount appear modest by comparison, and to artificially inflate the jury’s damages calculation beyond that which is adequate to compensate for the infringement.

The Federal Circuit noted that the entire market value rule allows for the recovery of damages based on the value of an entire apparatus containing several features, when the feature patented constitutes the basis for consumer demand.  However if the product has other valuable features that also contribute to driving consumer demand—patented or unpatented—then the damages for patent infringement must be apportioned to reflect only the value of the patented feature.

In the present case, both parties agreed that the accused products contained other valuable features as well, yet Power Integrations presented no evidence about the
effect of those features on consumer demand or the extent to which those features were responsible for the products’ value.

The Federal Circuit said that the entire market value rule is appropriate only when the
patented feature is the sole driver of customer demand or substantially creates the value of the component parts.  It is not enough to merely show that the patented feature is viewed as essential, that a product would not be commercially viable without the patented feature, or that consumers would not purchase the product without the
patented feature. The Federal Circuit said that when the product contains
other valuable features, the patentee must prove that those other features did not influence purchasing decisions.

Because the evidence presented by Power Integrations was insufficient as a matter of law to invoke the entire market value rule, the Federal Circuit vacated the award of damages and remand for a new trial.

 

 

Adidas and Nike Race Back to PTAB to Address Non-Instituted Grounds

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In Adidas AG v. Nike, Inc., [2018-1180, 2018-1181] (July 2, 2018), the Federal Circuit granted Adidas’ motion to remand the appeal back to the PTAB to consider the non-instituted grounds in Adidas’ Petitions for inter partes review against Nike’s U.S. Patent Nos. 7,814,598 and  8,266,749.

The PTAB’s final written decision found that Nike’s patent were not unpatentable on the instituted grounds, but did not reach a second, non-instituted grounds.  After the Supreme Court’s decision in SAS, Adidas promptly moved to remand for the Board to consider the non-instituted ground.  The Federal Circuit agreed, as it had in several other cases, that remand was appropriate without first deciding the appeal of the claims and grounds already before it.