Halo Electronics, Inc. v. Pulse Electronics, Inc. et al.


Docket Nos. 2013-1462, -1656

LOURIE, O’MALLEY, HUGHES
October 22, 2014

Brief Summary: No direct infringement by disputed products were ordered, manufactured, shipped, delivered and paid for abroad despite pricing and contracting negotiations in the US. Direct infringement by sales of products outside US that were ultimately imported into the US affirmed.

Summary: Halo appealed DC decisions granting SJ that Pulse did not sell or offer to sell the accused products within the US and thus did not directly infringe the asserted patents and that infringement by the sale of other accused products was not willful (“Pulse ‘reasonably relied on at least its obviousness defense’” which was not “objectively baseless”). Pulse cross-appealed DC constructions of the the claim term “electronic surface mount package” and “contour element” (not addressed) and the jury findings that sales in the US infringed and the asserted claims were not invalid for obviousness. The products and patents relate to “electronic surface mount package[s] for mounting on a printed circuit board in an electronic device”. The FC opinion explains that section 271(a) relates to offers for sale or sales “within the United States” (“patent infringement occurs where the sales are made” and not “where legal title passe[d]”, North Amer. Phillips, FC 1994) and “the ordinary meaning of a sale includes the concept of a transfer of title or property” (NTP, FC 2005). While Pulse and its customer (Cisco) had a “general business agreement”, the disputed products were ordered, manufactured, shipped, delivered and paid for abroad (“pricing and contracting negotiations are insufficient to constitute a sale within the United States”). The DC finding on this point was therefore affirmed. Regarding the alleged offer for sale, the opinion explains that negotiations occurred in the US but all the contemplated sales were outside the US and under Transocean (FC 2010) this is not direct infringement. The DC decision on this point was therefore also affirmed. The FC panel also agreed with the DC that Pulse did not willfully infringe the asserted claims because it had its engineer review the Halo patents upon receipt of a letter from Halo regarding the same and concluded those patents would be invalid for obviousness. And reliance on the engineer’s opinion was found not to be objectively baseless. Thus, the objective prong (“objectively high likelihood that its actions constituted infringement) of the two-prong (second prong: “risk known or so obvious that it should have been known”) willfulness analysis was not met (In re Seagate, FC 2007; Spine Solutions, FC 2010 (no willfullness where infringer raised substantial question regarding obviousness)). The DC decision of no willfulness was therefore affirmed. Infringement of Halo’s patents by delivery of products (including those that were delivered outside the US but ultimately were imported into the US) in the US was affirmed. While the FC panel explained “[i]t is true that the record indisputably shows that almost all the limitations of the asserted claims were known elements of electronic packages that existed in the prior art”, Pulse did not file a motion under Fed. R. Civ. P. 50(a) before the obviousness issue went to the jury and thereby waived its right to challenge. Thus, the judgement that the claims were not invalid for obviousness was affirmed. In their concurring opinion, Judges O’Malley and Hughes wrote that “it is time for the full court to reevaluate our standard for the imposition of enhanced damages”.

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