PATENT CASE OF THE WEEK

Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., Appeal Nos. 2016-2691, 2017-1875 (Fed. Cir. Sept. 20, 2018)

In a reissued, slightly altered version of a July 3, 2018 decision, the Court showed the continued difficulties in applying the entire market value rule (“EMVR”), which determines the extent to which a patentee can seek damages based on the defendants’ products as sold to market, rather than damages based on specific components. 

In the July 3, 2018 decision, a panel of the Federal Circuit vacated a jury’s damages award which had relied on the EMVR. Defendants had presented evidence that the accused products contained other valuable features besides the patented feature, and therefore argued that damages should not be based on the entire product as sold to market, but should instead be based on specific components. The Court in its July 3 opinion held that plaintiff/appellee Power Integrations was required to present evidence that the products’ other features were not relevant to consumer choice. Because Power Integrations had not done so, the Court found its evidence insufficient as a matter of law to invoke the entire market value rule (“EMVR”), and the damages award was vacated. Our write-up of the July 3 opinion can be found here.

Following a petition for rehearing en banc by Power Integrations, the panel this week issued a modified version of its July 3, 2018 opinion.  

In its petition for rehearing, Power Integrations argued that “requir[ing] the patentee to prove a negative”—that “those other features did not influence purchasing decisions”—was an impossible hurdle for a patentee to overcome, as “it is inevitable that there will be other valuable features that influence at least some purchasing decisions.”  Instead, Power Integrations argued that the patentee’s burden is only to establish that the patented feature creates the basis for consumer demand, citing other panel decisions that had upheld application of the EMVR upon a finding that substantial evidence supported that determination.

In response, Defendants argued that those decisions “simply did not address whether any unaccused feature substantially contributed to consumer demand,” and that the panel in this case properly applied the standard that for the EMVR to apply, the patented feature alone must drive consumer demand.  Defendants also argued that the facts of this case made it a poor vehicle to re-examine the EMVR, for example, because Power Integrations had sought infringement damages attributable to the “other features” in parallel litigation, and had presented evidence only as to consumer motivation to purchase its own products, and not the accused products.

Power Integrations’ petition for rehearing was first referred to the panel, which denied it, but issued a modified version of its earlier opinion.  In the modified opinion, references to the requirement that the patentee present evidence that the other features “are not relevant to consumer choice” and “did not influence purchasing decisions” were revised to require only that the patentee present evidence that the other features “do not cause consumers to purchase the product.”  These revisions leave intact the burden-shifting framework articulated in the July 3 opinion, but lower the bar the patentee must overcome, in accordance with precedent generally holding that sales of the products must ultimately be attributable solely to the patented feature.

The Court also added “the color of a particular product” as an illustrative example to a paragraph describing certain circumstances “where the other features are simply generic and/or conventional and hence of little distinguishing character,” such that the EMVR could properly apply.

In a simultaneous en banc Order, the Court at large also denied the petition for rehearing, and indicated that the Court would issue its mandate on October 29, 2018.

Opinion can be found here.

ALSO THIS WEEK 

E.I. Dupont de Nemours & Co. v. Synvina C.V., Appeal No. 2017-1977 (Fed. Cir. Sept. 17, 2018)

In an appeal from a PTAB decision finding claims of a patent not invalid as obvious, the Federal Circuit reversed.  The claims related to the production of a specific chemical called FDCA.  The prior art disclosed means of manufacture of FDCA based on different temperature and pressure ranges that overlapped the claimed temperature and pressure ranges.  The PTAB had found that the petitioner failed to meet its burden of persuasion to show that the claims were obvious over the prior art ranges.  On appeal, the Court first addressed whether DuPont had standing for the appeal, notwithstanding that it had not been accused of infringement, and held that it did.  The Federal Circuit then reversed the PTAB’s analysis and applied a burden shifting framework to cases involving overlapping ranges, following the framework it laid out in In re Peterson, 315 F.3d 1325 (Fed. Cir. 2003).  The Court held that temperature and pressure were “result-effective variables” under the framework developed from In re Antonie, 559 F.2d 618 (CCPA 1977).  Upon reanalyzing the facts, the Court held the claims to be invalid.

Opinion can be found here.