{"id":2093,"date":"2018-07-03T12:18:33","date_gmt":"2018-07-03T16:18:33","guid":{"rendered":"https:\/\/patents.harnessip.com\/?p=2093"},"modified":"2018-07-04T00:28:39","modified_gmt":"2018-07-04T04:28:39","slug":"third-times-the-charm-federal-circuit-remands-for-third-damages-trial-because-patent-owner-did-not-prove-use-of-entire-market-value-was-appropriate","status":"publish","type":"post","link":"https:\/\/patents.harnessip.com\/?p=2093","title":{"rendered":"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"},"content":{"rendered":"

In Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.<\/a>, [2016-2691, 2017-1875] (July 3, 2018), the Federal Circuit\u00a0affirm the district court\u2019s judgments of infringement of U.S. Patent Nos.\u00a06,212,079 and 6,538,908, but concluded that\u00a0the entire market value rule\u00a0cannot be used here to calculate damages and vacated the
\ndamages award and remanded for further proceedings.<\/p>\n

The patents in suit related to\u00a0power supply controller chips used in power
\nsupplies, such as chargers for electronic devices.\u00a0 While the case was pending in the district court, the Federal Circuit\u00a0in VirnetX, Inc. v. Cisco Systems, Inc.,explained that simply identifying the smallest salable\u00a0unit is not necessarily sufficient to satisfy a patentee\u2019s\u00a0obligation to apportion for multi-component products with\u00a0significant unpatented features.\u00a0 Because Power Integrations\u2019\u00a0royalty calculation in the first trial did not\u00a0apportion beyond the \u201csmallest salable unit\u201d and Power\u00a0Integrations had disclaimed reliance on the entire market\u00a0value rule, the district court granted a new trial on the
\nissue of damages.\u00a0\u00a0The district court excluded Power Integrations\u2019 expert testimony based on\u00a0apportionment, but allowed its expert to present testimony\u00a0based on the entire market value rule. The jury\u00a0awarded $139.8 million in damages, based on damages
\ntestimony that relied solely on the entire market value\u00a0rule\u00a0 The district court denied\u00a0Fairchild’s motion for judgment as a matter of\u00a0law, or in the alternative for a new trial.<\/p>\n

The Federal Circuit affirmed infringement of U.S. Patent No.\u00a06,212,079 finding the verdict supported by substantial evidence, noting that the\u00a0jury could have properly concluded that the claim terms \u201cfixed frequency\u201d and \u201cnon-varying\u201d left open the
\npossibility for minor frequency variations due to operating\u00a0conditions.<\/p>\n

The Federal Circuit also affirmed infringement of U.S. Patent No. 6,538,908 under the doctrine of equivalents, agreeing that\u00a0adjusting a voltage<\/em><\/strong>\u00a0limit of a power switch was an infringing equivalent of\u00a0adjusting a current<\/strong><\/em>\u00a0limit of a power switch.\u00a0 \u00a0The Federal noted that Circuit\u00a0Power Integrations\u2019 expert testified that a\u00a0value of voltage qualifies as a \u201cvalue of current\u201d because\u00a0under Ohm\u2019s Law, current is equal to voltage divided by
\nresistance.\u00a0 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.\u00a0 The Federal Circuit said that\u00a0the claim language on its face is different than\u00a0the language of the claims to which the prosecution\u00a0argument was directed, and concluded that\u00a0Fairchild failed to establish that the prosecution\u00a0history is sufficiently clear as to create an estoppel.<\/p>\n

On the issue of damages, the Federal Circuit\u00a0agreed with Fairchild that the district court should\u00a0have granted the new trial motion.\u00a0 The Federal Circuit said that a \u00a0patentee is only entitled to a reasonable royalty attributable\u00a0to the infringing features, and must
\nin every case give evidence tending to separate or apportion\u00a0the defendant\u2019s profits and the patentee\u2019s damages\u00a0between the patented feature and the unpatented features.\u00a0 In the context of a utility patent, it\u00a0is only the patented technology that is taken from the\u00a0owner, so the value to be determined is only the value\u00a0that the infringing features contribute to the value of an\u00a0accused product.<\/p>\n

Where multicomponent\u00a0products are accused of infringement, the\u00a0royalty base should not be larger than the smallest salable\u00a0unit embodying the patented invention.\u00a0 Use of the entire market\u00a0value of a multi-component product that includes a patented
\ncomponent cannot help but skew the\u00a0damages horizon for the jury, regardless of the contribution\u00a0of the patented component to this revenue. The Federal Circuit said that\u00a0Admission of evidence of the entire\u00a0market value only serves to make a patentee\u2019s proffered\u00a0damages amount appear modest by comparison, and to\u00a0artificially inflate the jury\u2019s damages calculation beyond\u00a0that which is adequate to compensate for the infringement.<\/p>\n

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\u00a0several features, when the feature patented\u00a0constitutes the basis for consumer demand.\u00a0 However if the product has other valuable features that also\u00a0contribute to driving consumer demand\u2014patented or\u00a0unpatented\u2014then the damages for patent infringement\u00a0must be apportioned to reflect only the value of the patented\u00a0feature.<\/p>\n

In the present case, both parties agreed that the\u00a0accused products contained other valuable features as\u00a0well, yet Power Integrations presented no evidence about the
\neffect of those features on consumer demand or the extent\u00a0to which those features were responsible for the products\u2019\u00a0value.<\/p>\n

The Federal Circuit said that the entire\u00a0market value rule is appropriate only when the
\npatented feature is the sole driver of customer demand or\u00a0substantially creates the value of the component parts.\u00a0 It is not\u00a0enough to merely show that the patented feature is\u00a0viewed as essential, that a product would not be commercially viable without the patented feature, or that consumers\u00a0would not purchase the product without the
\npatented feature. The Federal Circuit said that when the product contains
\nother valuable features, the patentee must prove that\u00a0those other features did not influence purchasing decisions.<\/p>\n

Because the evidence presented by Power Integrations\u00a0was insufficient as a matter of law to invoke the\u00a0entire market value rule, the Federal Circuit vacated the award of damages\u00a0and remand for a new trial.<\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

In Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., [2016-2691, 2017-1875] (July 3, 2018), the Federal Circuit\u00a0affirm the district court\u2019s judgments of infringement of U.S. Patent Nos.\u00a06,212,079 and 6,538,908, but concluded that\u00a0the entire market value rule\u00a0cannot be used here to … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2093","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=\/wp\/v2\/posts\/2093","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2093"}],"version-history":[{"count":2,"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=\/wp\/v2\/posts\/2093\/revisions"}],"predecessor-version":[{"id":2095,"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=\/wp\/v2\/posts\/2093\/revisions\/2095"}],"wp:attachment":[{"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patents.harnessip.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}