Docket No. 2016-2607, -2650
DYK, MOORE, TARANTO
November 21, 2017
Brief summary: DC conclusion of no indefiniteness, that “ATC was entitled to the defense of absolute intervening rights”, and denial of enhanced damages affirmed. Award of lost profits and permanent injunction remanded.
Summary: ATC appealed DC determination that the claims of Presidio’s reexamined US 6,816,356 C2 directed to multilayer electrical capacitors are not indefinite and its award of lost profits and grant of a permanent injunction (which the FC previously temporarily stayed until March 17, 2017 for ATC’s customers that had already purchased infringing product). Presidio appealed DC conclusion that ATC has intervening rights and denial of its request for enhanced damages despite a jury finding of willful infringement. The disputed limitation with respect to indefiniteness is “a conductive second contact…sufficiently close to a first contact in an edge to edge relationship in such proximity as to form a first fringe-effect capacitance with a first contact that is capable of being determined by measurement in terms of a standard unit.” The FC panel explained that under the “reasonable certainty” Nautilus (US 2014) standard, “a claim is not indefinite if a person of skill in the art would know how to utilize a standard measurement…to make the necessary measurement” (Ethicon, FC 2015 (no industry standard but “the disclosure was sufficient”); Teva, FC 2015 and Dow, FC 2015 (“there were competing existing technologies that reached different results, and the patent failed to describe which…to use”); Interval Licensing, FC 2014 (the claims cannot “rely on the ‘unpredictable vagaries of any one person’s opinion”). Here, the FC panel affirmed the DC’s conclusion of no indefiniteness, finding that the “the general approach” (to the “the insertion loss testing method”) “was sufficiently well established in the art and referenced in the patent to render the claims not indefinite.”
“Intervening rights” refers to the rule that “[a]n owner of a patent that survives reexamination is not entitled to infringement damages for the time period between the date of issuance of the original claims and the date of issuance of the reexamined claims if the original and amended claims are not ‘substantially identical’” (35 U.S.C. §§ 252, 307(b); R+L Carriers, FC 2015; Bloom Eng’g, FC 1997). Here, the DC found the scope of the claims “substantially changed” following reexamination “and, therefore, ATC was entitled to the defense of absolute intervening rights.” The FC panel explained that only the question of “whether there is any product or process that would infringe the original claim, but not the amended claim” (R+L) “based on our normal claim construction analysis” (Phillips, FC 2005) is important, not “why an amended claim was narrowed” (R+L). Here, and based in part on an earlier decision (collateral estoppel), the FC panel determined that before reexamination, “theoretical calculations [were] sufficient” but not under the amended claims. Thus, the DC’s decision was correct.
“To recover lost profits, the patentee bears the burden of proof to show a ‘reasonable probability that, ‘but for’ infringement, it would have made the sales that were made by the infringer” (Crystal Semi., FC 2001) using the four factor “Panduit” test (Versata, FC 2013). Lost profits may be recovered “even if [the patentee’s] product does not practice the claimed invention, where the product directly competes with the infringing device” (Presidio, FC 2012). ATC argued the DC erroneously determined Presidio “satisfied the second prong of Panduit analysis-the absence of an acceptable, non-infringing alternative” (which may be either “not acceptable to potential customers or…not available at the time” (Grain-Processing, FC 1999)). The FC panel found the DC’s analysis flawed since “[t]he correct inquiry…is whether a non-infringing alternative would be acceptable compared to the patent owner’s product, not…the infringing product.” The DC compared ATC’s allegedly infringing capacitor (the 550) to one of ATC’s non-infringing capacitors (the 560L), instead of to Presidio’s product (the BB capacitor). As such, the FC panel reversed the DC’s denial of ATC’s request for JMOL and set aside the lost profits award and ordered “a new trial…to determine the reasonable royalty award.”
On the DC’s denial of enhanced damages for willfulness, the FC panel explained that “enhanced damages do not necessarily flow from a willfulness finding” and is determined at the DC’s discretion after “consider[ing] the overall circumstances of the case…to determine whether it is egregious” (WBIP (FC 2016) citing Halo (US 2016) (Read factor analysis is not required)). Here, the FC panel found the DC “appropriately analyzed ATC’s culpability only during the period” following reexamination and did not abuse its discretion.
Based on the evidence presented, the permanent injunction was vacated but the FC panel did “not decide whether this should be the end of the matter” as the DC’s grant of PI was based on its reversed lost profits award and it “has discretion to determine whether other evidence could support a finding of irreparable injury” (eBay, US 2006; Apple, FC 2012 (“patentee must show…absent an injunction…irreparable harm” and “sufficiently strong nexus”); Douglas Dynamics, FC 2013). The FC panel also noted that this PI “may have created the hypothetical market necessary to determine whether consumers would purchase Presidio’s BB capacitor in the absence of ATC’s 550 series capacitors” or whether they “may have turned to non-infringing alternatives…such as the 560L”.