Docket No. 2017-1448
PROST, WALLACH, STOLL
January 29, 2018
Brief summary: DC grant of PI based on its finding that Infineon’s termination of an agreement was ineffective and order requiring Infineon to comply with the agreement affirmed, but vacated and remanded as to two sentences thereof.
Summary: Infineon appealed DC grant of preliminary injunction (PI) based on its finding that Infineon’s termination of an agreement was ineffective and ordering Infineon to comply with the agreement. As part of a 2010 sale of MACOM’s (formerly Nitronix) patents to Infineon (formerly Int. Rectifier Corp. (IC)), the parties entered into a separate license agreement (Agreement) licensing the patents back to Nitronex [MACON] in “a ‘Field of Use’ characterized by GaN-on-silicon (“GaN-on-Si’) technology” (shared with Infineon). In 2016, Infineon notified MACOM it believed MACOM had “breached the Agreement by making and selling products using GaN-on-silicon carbide (GaN-on-SiC) technology, which is distinct from GaN-on-Si technology and outside the Agreement”. MACOM responded that any such “sales were minimal and that any breach had been cured”, but Infineon terminated the agreement. MACOM then sued on various contract claims and for a DJ of non-infringement, which the DC granted (“[Infineon’s] purported termination of that agreement…shall have no effect.”) The FC panel explained that it applies regional circuit law during review of DC PI decisions (here, the Ninth Circuit) and therefore reviewed the decision for an abuse of discretion (erroneous legal standard or clearly erroneous findings of fact; requester must show “it is ‘likely to succeed on the merits’” and “suffer irreparable harm”, and that the “balance of equities tips in [its] favor” and “an injunction is in the public interest”). Infineon argued MACOM’s Wrongful Terminationa claim is not likely to succeed because MACOM use “breached the Agreement’s implied convenant of good faith and fair dealing”, but the FC panel agreed with the DC that the grant provision of the Agreement only “conveys a patent license to MACOM, which is ‘in essence nothing more than a promise by the licensor not to sue the licensee” (Spindelfabrik, FC 1987) and “suggests no additional promise by (or obligation of) MACOM not to exceed the Field of Use on which we may “hinge an implied duty’” (Berger, C.D. Cal. 2007 (“implied covenant will not apply where no express term exists on which to hinge an implied duty”)). The FC panel explained that it was not “suggest[ing] MACOM is free to operate outside the Field of Use” since “Infineon’s ownership of the Licensed Patents gives a right to exclude” (35 USC § 154(a)(a); Prism Techs., FC 2017), but noted that it “need not decide those issues today”. Infineon argued the DC’s finding of irreparable harm was erroneous “because there was no ‘causal nexus’ between the Agreement’s termination and Infineon’s (presumably lawful) marketing” (Apple, FC 2015; Apple, FC 2013). But the FC panel found the DC “did not rely only on Infineon’s marketing in finding irreparable harm” but also concluded “MACOM would ‘suffer harm merely by virtue of [its] customers’ perception that [it] no longer hold[s] an exclusive…license…even if [Infineon] is not practicing a patent withint [MACOM’s] exclusive use”, and agreed with the DC’s decision. Infineon also argued the content of the PI was improper and the FC panel agreed regarding part of it as not compliant with Rule 65(d) (e.g., PI “must ‘state the reasons why it issued,’ ‘state its terms specifically,’ and ‘describe in reasonable detail…the act or acts restrained or required’”). The FC panel therefore affirmed the decision but vacated and remanded it as to two sentences of the PI.