Opinion Issued: July 3, 2018
Appeals from the United States District Court for the
Northern District of California in No. 3:09-cv-05235-MMC,
Judge Maxine M. Chesney.
Scherkenbach, Fish & Richardson, PC, Boston, MA, argued
for plaintiff-appellee. Also represented by Craig E.
Countryman, John Winston Thornburgh, San Diego, CA; Michael
R. Headley, Howard G. Pollack, Redwood City, CA.
Kathleen M. Sullivan, Quinn Emanuel Urquhart & Sullivan,
LLP, New York, NY, argued for defendants-appellants. Also
represented by Kevin Alexander Smith, San Francisco, CA;
Blair Martin Jacobs, Stephen Blake Kinnaird, Christina Ann
Ondrick, Patrick Stafford, Paul Hastings LLP, Washington, DC.
Dyk, Clevenger, and Chen, Circuit Judges.
Integrations, Inc. owns U.S. Patent Nos. 6, 212, 079
("the '079 patent") and 6, 538, 908 ("the
'908 patent"). Power Integrations sued Fairchild
Semiconductor Corporation and Fairchild (Taiwan) Corporation
(collectively "Fairchild") for infringement. A jury
found Fairchild literally infringed claims 31, 34, 38, and 42
of the '079 patent and infringed claims 26 and 27 of the
'908 patent under the doctrine of equivalents. In a
second trial, a jury awarded damages of roughly $140 million,
finding that the entire market value rule applied in
calculating damages for infringement of the '079 patent.
The district court denied Fairchild's motions for
judgment as a matter of law. Fairchild appeals.
affirm the district court's judgments of infringement. We
conclude that the entire market value rule cannot be used
here to calculate damages. We vacate the damages award and
remand for further proceedings.
Integrations and Fairchild are both manufacturers of power
supply controller chips. Power supply controller chips are
integrated circuits used in power supplies, such as chargers
for electronic devices. These power supplies transform
alternating current ("AC") electricity, which comes
from an AC outlet, into direct current ("DC")
electricity, which is needed to power cell phones, laptops,
and other electronic devices.
AC electricity has been converted to DC electricity, a
switching regulator directs the transistor in the circuit
when to turn on and off in order to provide the desired
amount of power to the electronic device. The electronic
device is referred to as the "DC output" because it
receives the DC current. The transistor turns on and off at
defined intervals. For example, if there is a need for power
at the DC output, the switching regulator will direct the
transistor to stay "on" for a longer period of time
so more power will flow to the DC output.
controversy here involves the '079 and '908 patents
owned by Power Integrations. The asserted claims of the
'079 patent cover switching regulators. Prior-art
switching regulators were inefficient during periods when the
DC output required little power. During these low power
periods, prior-art switching regulators would skip on/off
cycles to decrease the DC power provided; the power remained
off during the skipped cycle. However, skipping cycles
created loud noise and delivered power in an intermittent
fashion. The '079 patent addressed this problem by
reducing the frequency of on/off cycles rather than by
skipping cycles altogether. The frequency of on/off cycles is
determined by feedback signals. Thus, the switching frequency
varies based on the feedback signal. However, for a certain
range of feedback signals, the frequency of the on/off cycles
does not change. Each of the asserted claims requires a
"fixed switching frequency for a first range of feedback
'908 patent covers a "power supply controller,"
which is an integrated circuit that can perform a variety of
power-regulation functions. '908 pat., col. 1, ll. 32-33,
52-60. Each of the asserted claims requires a power supply
controller comprising "a multi-function circuit coupled
to receive a signal at a multi-function terminal for
adjusting a current limit of a power switch."
Id., col. 25, l. 63-col. 26, l. 14. The current
limit is a value of current that can be used by the circuit
to turn off the power switch when the amount of current
passing through the power switch reaches the threshold value.
Integrations filed suit against Fairchild, alleging
infringement of various claims of the '079 patent and the
'908 patent. In February and March 2014, the district
court held a sixteen-day jury trial. The jury found Fairchild
literally infringed claims 31, 34, 38, and 42 of the '079
patent and infringed claims 26 and 27 of the '908 patent
under the doctrine of equivalents. The jury awarded Power
Integrations $105 million in reasonable royalty damages.
Fairchild sought judgment as a matter of law that it did not
infringe claims of the '079 or '908 patents, or in
the alternative a new trial, which the district court denied.
months after the jury verdict, and while the case was still
pending in the district court, our court decided VirnetX,
Inc. v. Cisco Systems, Inc., 767 F.3d 1308, 1329 (Fed.
Cir. 2014), which concerned the general rule that a patentee
seeking damages based on an infringing product with both
patented and unpatented features must "apportion damages
only to the patented features." VirnetX
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. Id. 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 in light of VirnetX.
district court held a second damages trial in December 2015.
The district court granted a Daubert motion to
exclude 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. Fairchild then
moved for judgment as a matter of law, or in the alternative
a new trial, arguing that the damages award was not supported
by substantial evidence and that the use of the entire market
value rule was improper. The district court denied this
now appeals the determination of literal infringement of the
'079 patent, the determination of infringement under
doctrine of equivalents of the '908 patent, and the
damages award. We have jurisdiction pursuant to 28 U.S.C.
first address infringement of the '079 patent. The key
issue here is whether the accused products have a "fixed
switching frequency for a first range of feedback signal
values." On appeal, Fairchild does not dispute that
the other claim limitations were satisfied. The jury found
that all accused products infringed the asserted claims, and
the district court denied judgment as a matter of law of no
infringement. We review the denial of a motion for judgment
as a matter of law de novo. We review a jury determination of
infringement for substantial evidence.
Markman order, the district court construed
"fixed switching frequency" to mean "[a]
non-varying number of switching cycles per second." J.A.
2142. On appeal, Fairchild disputes: (1) whether all accused
products include a "fixed" switching frequency
because the frequency varies due to operating conditions, and
(2) whether a particular subset of accused products, known as
"frequency-hopping" products, has a
"fixed" frequency. This second issue turns
primarily on claim construction-whether the district court
properly construed "fixed frequency" to include a
per second limitation. But Fairchild contends that even if
the claim construction were correct, there was not
substantial evidence to support the jury verdict.
terms are given their ordinary and customary meaning, which
is the meaning the term would have to a person of ordinary
skill in the art at the time of the invention. Phillips
v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005)
(en banc). We review claim construction de novo, except for
subsidiary facts based on extrinsic evidence, which we review
for clear error. Teva Pharms. USA, Inc. v. Sandoz,
Inc., 135 S.Ct. 831, 841 (2015).
argues that the jury verdict is not supported by substantial
evidence because none of the Fairchild products has a
"fixed switching frequency" according to the
language of the claims or a "non-varying frequency"
under the district court's claim construction, because
even during "fixed" frequency mode, the products
operate with 5% to 15% variance in frequency. This variance
is due to operating conditions, such as temperature and input
voltage. The question is whether this variability renders the
argues that the term "fixed" under the district
court's construction of "non-varying number of
switching cycles per second" requires an absolutely
fixed frequency with no variance, even due to operating
conditions. The district court, Fairchild asserts, rejected a
construction of "fixed" frequency that permits
natural variation when it rejected Power Integration's
proposed construction of "fixed switching
frequency" as "the target switching frequency is
intended to be substantially fixed." J.A. ...