Mentor Graphics Corporation v. Eve-USA, Inc. et al. (Synopsys)

Docket Nos. 2015-1470, -1554, -1556

On Petition for Rehearing En Banc
September 1, 2017

Brief summary: Petitions for panel rehearing and rehearing en banc of the March 16, 2017 FC panel decision affirming the damages award and the grant of SJ under assignor estoppel denied.

Summary: The petitions for panel rehearing and rehearing en banc of the March 16, 2017 FC panel decision affirming the damages award (“Mentor satisfied all of the Panduit factors with regard to the sales to Intel for which the jury awarded lost profits”) and the grant of SJ barring Synopsys for challenging US 6,240,376 (see also Feb. 10, 2016 FC panel opinion affirming FWD in IPR2012-00042 in which ‘376 claims 5, 8 and 9 were found invalid for anticipation, not addressed here) under assignor estoppel were denied. In their concurring opinion, Judges Stoll, Newman, Moore, O’Malley, Reyna and Wallach wrote that they “have consistently held that where an infringing product is a multi-component product with patented and unpatented components, apportionment is required” (VirnetX, FC 2014; Commonwealth Sci., FC 2015; Garretson, US 1884). This concurrence explained that “Garretson, however, also holds that damages for patent infringement may be based on the value of the entire product if the patentee can show that ‘the entire value of the whole machine…is properly and legally attributed to the patented feature’” (“[i]f it can be shown that the patented feature drives the demand for an entire multi-component product, a patentee may be awarded damages as a percentage of revenues or profits attributable to the entire product”, citing Laser Dynamics, Inc. v. Quanta Comput., Inc. (FC 2012) (the “entire market value” rule (Lucent, FC 2009))). In the panel opinion to which this order is directed, an “undisputed fact finding established that Mentor proved that the patented features were what imbued the combined features that made up the emulator with marketable value” and, therefore, “further apportionment” was “unnecessary.” Criticizing Judges Dyk and Hughes’s dissent, the concurrence notes that “the panel made clear that apportionment is typically necessary in both reasonable royalty and lost profits analysis” but that the decision is “not read…to apply to all lost profits analyses.” That dissent argued that “the panel opinion simply does not apportion-even though it purportedly recognized apportionment’s importance.” It also argued that “the Supreme Court’s patent cases make quite clear that more than but-for causation is required for apportionment” and “claimed damages must be apportioned between patented and unpatented features” (“even if ‘but-for’ a patented feature the item would not have been purchased, it could be equally true that but for an unpatented feature (or a feature covered by another patent) the item would not have been purchased”; the Panduit factors “makes no such apportionment”). Judges Moore and Chen also concurred in the denial, addressing Synopsys’s arugment that assignor estoppel, which bars a patent’s assignor from later challenging the validity of the patent, should be abolished. This concurrence explained that this argument “is foreclosed by Westinghouse” (US 1924; see also Gottfried, US 1881) as the assignor “may make an implicit representation that what he sold has value” (Diamond Sci., FC 1988), and not supported by logic of the Supreme Court’s elimination of licensee estoppel in Lear (US 1969; Diamond (“Unlike the licensee, who, without Lear might be forced to continue to pay for a potentially invalid patent, the assignor…has already been fully paid for the patent rights.”)

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