Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. et al.
Decided: July 3, 2018
Power Integrations sued Fairchild for allegedly infringing US patents 6,212,079 and 6,538,908, which disclose specific types of switching voltage regulators. One key issue at trial regarding the ‘079 patent was whether the accused Fairchild voltage regulators had a “fixed switching frequency”—which the District Court construed to mean “[a] non-varying number of switching cycles per second.”
Fairchild argued that some of its products’ switching frequencies were not “fixed” because over normal voltage and temperature ranges, the frequencies at which they switch can vary by as much as 15%. The jury disagreed, finding that two Fairchild products literally infringed the ‘079 patent, and that another Fairchild product infringed the ‘908 patent under the doctrine of equivalents.
As for damages, Power Integrations argued that the infringing features drove the entire market demand for Fairchild's accused voltage regulators because they allowed these products to comply with the US Government’s Energy Star requirements. Fairchild countered that the actual value of the patented technology was small because its products have dozens of other (nonpatented) features that were important to its customers. The jury sided with Power Integrations, finding that the rarely used “entire market value rule” applied and awarding damages of nearly $140 million.
Fairchild made several arguments on appeal. First, it renewed its argument that one type of accused voltage regulator did not operate at a “fixed switching frequency” because the actual frequency at which they switch can vary based on environmental conditions. In rejecting this argument, the Federal Circuit cited expert testimony in the case explaining that no real-world switching voltage regulators could operate with an absolutely fixed, or non-varying, frequency; because of this, an ordinary artisan would understand that the plain and ordinary meaning of “fixed frequency” encompasses the minor environmental variations that exist in all switching regulators.
Fairchild also argued that the trial court wrongly construed the ‘079 patent’s "fixed frequency" to mean “[a] non-varying number of switching cycles per second.” Under this construction, Fairchild's "frequency hopping" products (with switching rates that rapidly alternate between 68 kHz and 62 kHz) fall within the scope of the claims, because—even though their switching frequency rapidly changes between those two values—the total number of switching cycles per second is always “fixed” at 65,000. The Federal Circuit ruled that Fairchild had waived this argument because it did not object to the District Court’s claim construction before or during the trial.
The panel also rejected Fairchild's assertion that argument-based prosecution history estoppel prevented application of the doctrine of equivalents to the ‘908 patent’s claims, because the alleged argument-based waiver—which took place during prosecution of a related Power Integrations patent application—did not constitute a "clear and unmistakable surrender of subject matter" as required by Federal Circuit precedent.
Turning finally to the issue of whether the entire market value rule properly applies in this case, the panel explained that under Federal Circuit precedent, “[t]he law requires patentees to apportion the royalty down to a reasonable estimate of the value of its claimed technology” unless it can “establish that its patented technology drove demand for the entire product.” Again, the Power Integrations had argued below that the claimed features were the only drivers for the infringing products’ demand because they allowed the products to be Energy Star compliant. But because the plaintiff presented no evidence about how the accused products’ other features influenced demand (or were responsible for the products’ value), Power Integrations did not meet the high burden required by the entire market value rule, and the case was remanded to determine damages under the proper apportionment standard.
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