Power Integrations, Inc. v. Fairchild Semiconductor

United States Court of Appeals
for the Federal Circuit
______________________
POWER INTEGRATIONS, INC.,
Plaintiff-Appellee
v.
FAIRCHILD SEMICONDUCTOR INTERNATIONAL,
INC., FAIRCHILD SEMICONDUCTOR
CORPORATION, FAIRCHILD (TAIWAN)
CORPORATION,
Defendants-Appellants
______________________
2016-2691, 2017-1875
______________________
Appeals from the United States District Court for the
Northern District of California in No. 3:09-cv-05235-
MMC, Judge Maxine M. Chesney.
______________________
OPINION ISSUED: July 3, 2018
OPINION MODIFIED: September 20, 2018 *
______________________
FRANK SCHERKENBACH, Fish & Richardson, PC,
Boston, MA, argued for plaintiff-appellee. Also represent-
ed by CRAIG E. COUNTRYMAN, JOHN WINSTON
* This opinion has been modified and reissued fol-
lowing a petition for rehearing filed by Appellee.
2 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
THORNBURGH, San Diego, CA; MICHAEL R. HEADLEY,
HOWARD G. POLLACK, Redwood City, CA.
KATHLEEN M. SULLIVAN, Quinn Emanuel Urquhart &
Sullivan, LLP, New York, NY, argued for defendants-
appellants. Also represented by KEVIN ALEXANDER SMITH,
San Francisco, CA; BLAIR MARTIN JACOBS, STEPHEN
BLAKE KINNAIRD, CHRISTINA ANN ONDRICK, PATRICK
STAFFORD, Paul Hastings LLP, Washington, DC.
______________________
Before DYK, CLEVENGER, and CHEN, Circuit Judges.
DYK, Circuit Judge.
Power Integrations, Inc. owns U.S. Patent Nos.
6,212,079 (“the ’079 patent”) and 6,538,908 (“the ’908
patent”). Power Integrations sued Fairchild Semiconduc-
tor Corporation and Fairchild (Taiwan) Corporation
(collectively “Fairchild”) for infringement. A jury found
Fairchild literally infringed claims 31, 34, 38, and 42 of
the ’079 patent and infringed claims 26 and 27 of the ’908
patent under the doctrine of equivalents. In a second trial,
a jury awarded damages of roughly $140 million, finding
that the entire market value rule applied in calculating
damages for infringement of the ’079 patent. The district
court denied Fairchild’s motions for judgment as a matter
of law. Fairchild appeals.
We affirm the district court’s judgments of infringe-
ment. We conclude that the entire market value rule
cannot be used here to calculate damages. We vacate the
damages award and remand for further proceedings.
BACKGROUND
I
Power Integrations and Fairchild are both manufac-
turers of power supply controller chips. Power supply
controller chips are integrated circuits used in power
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 3
supplies, such as chargers for electronic devices. These
power supplies transform alternating current (“AC”)
electricity, which comes from an AC outlet, into direct
current (“DC”) electricity, which is needed to power cell
phones, laptops, and other electronic devices.
After AC electricity has been converted to DC electric-
ity, a switching regulator directs the transistor in the
circuit when to turn on and off in order to provide the
desired amount of power to the electronic device. The
electronic device is referred to as the “DC output” because
it receives the DC current. The transistor turns on and off
at defined intervals. For example, if there is a need for
power at the DC output, the switching regulator will
direct the transistor to stay “on” for a longer period of
time so more power will flow to the DC output.
The controversy here involves the ’079 and ’908 pa-
tents owned by Power Integrations. The asserted claims
of the ’079 patent cover switching regulators. Prior-art
switching regulators were inefficient during periods when
the DC output required little power. During these low
power periods, prior-art switching regulators would skip
on/off cycles to decrease the DC power provided; the
power remained off during the skipped cycle. However,
skipping cycles created loud noise and delivered power in
an intermittent fashion. The ’079 patent addressed this
problem by reducing the frequency of on/off cycles rather
than by skipping cycles altogether. The frequency of on/off
cycles is determined by feedback signals. Thus, the
switching frequency varies based on the feedback signal.
However, for a certain range of feedback signals, the
frequency of the on/off cycles does not change. Each of the
asserted claims requires a “fixed switching frequency for a
first range of feedback signals.”
The ’908 patent covers a “power supply controller,”
which is an integrated circuit that can perform a variety
of power-regulation functions. ’908 pat., col. 1, ll. 32–33,
4 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
52–60. Each of the asserted claims requires a power
supply controller comprising “a multi-function circuit
coupled to receive a signal at a multi-function terminal for
adjusting a current limit of a power switch.” Id., col. 25, l.
63–col. 26, l. 14. The current limit is a value of current
that can be used by the circuit to turn off the power
switch when the amount of current passing through the
power switch reaches the threshold value.
II
Power Integrations filed suit against Fairchild, alleg-
ing infringement of various claims of the ’079 patent and
the ’908 patent. 1 In February and March 2014, the district
court held a sixteen-day jury trial. The jury found
Fairchild literally infringed claims 31, 34, 38, and 42 of
the ’079 patent and infringed claims 26 and 27 of the ’908
patent under the doctrine of equivalents. 2 The jury
awarded Power Integrations $105 million in reasonable
royalty damages. Fairchild sought judgment as a matter
of law that it did not infringe claims of the ’079 or ’908
patents, or in the alternative a new trial, which the
district court denied.
1 Fairchild counterclaimed for infringement of U.S.
Patent No. 5,747,977. The jury found that Power Integra-
tions did not infringe this patent, and the district court
entered judgment consistent with the jury verdict. This
aspect of the judgment has not been appealed.
2 All of the asserted claims in this proceeding have
been found unpatentable in two IPR proceedings. Those
proceedings are currently pending on appeal to this court.
See Semiconductor Components Indus., LLC v. Power
Integrations, Inc., IPR No. 2016-00809 (P.T.A.B. Dec. 22,
2017), appeal filed No. 18-1607 (Fed. Cir. Feb. 26, 2018);
Semiconductor Components Indus., LLC v. Power Integra-
tions, Inc., IPR No. 2016-00995 (P.T.A.B. Dec. 21, 2017),
appeal filed No. 18-1602 (Fed. Cir. Feb. 23, 2018).
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 5
Six months after the jury verdict, and while the case
was still pending in the district court, our court decided
VirnetX, Inc. v. Cisco Systems, Inc., 767 F.3d 1308, 1329
(Fed. Cir. 2014), which concerned the general rule that a
patentee seeking damages based on an infringing product
with both patented and unpatented features must “appor-
tion damages only to the patented features.” VirnetX
explained that simply identifying the smallest salable
unit is not necessarily sufficient to satisfy a patentee’s
obligation to apportion for multi-component products with
significant unpatented features. Id. Because Power Inte-
grations’ royalty calculation in the first trial did not
apportion beyond the “smallest salable unit” and Power
Integrations had disclaimed reliance on the entire market
value rule, the district court granted a new trial on the
issue of damages in light of VirnetX.
The district court held a second damages trial in De-
cember 2015. The district court granted a Daubert motion
to exclude Power Integrations’ expert testimony based on
apportionment, but allowed its expert to present testimo-
ny based on the entire market value rule. The jury
awarded $139.8 million in damages, based on damages
testimony that relied solely on the entire market value
rule. Fairchild then moved for judgment as a matter of
law, or in the alternative a new trial, arguing that the
damages award was not supported by substantial evi-
dence and that the use of the entire market value rule
was improper. The district court denied this motion.
Fairchild now appeals the determination of literal in-
fringement of the ’079 patent, the determination of in-
fringement under doctrine of equivalents of the ’908
patent, and the damages award. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(1).
6 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
DISCUSSION
I
We first address infringement of the ’079 patent. The
key issue here is whether the accused products have a
“fixed switching frequency for a first range of feedback
signal values.” 3 On appeal, Fairchild does not dispute that
3 Claim 31, which is representative, reads in full:
31. A switching regulator, comprising: a power
switch coupled between first and second termi-
nals, the first terminal to be coupled to an energy
transfer element of a power supply and the second
terminal to be coupled to a supply rail of the pow-
er supply, and
a control circuit coupled to a third terminal and
the power Switch, the third terminal to be coupled
to an output of the power supply, the control cir-
cuit coupled to generate a feedback signal respon-
sive to the output of the power supply, the control
circuit coupled to switch the power switch in re-
sponse to the feedback signal, the control circuit
coupled to switch the power switch at a fixed
switching frequency for a first range of feedback
signal values, the control circuit coupled to vary a
switching frequency of the power switch without
skipping cycles in response to the feedback signal
for a second range of feedback signal values,
wherein the control circuit comprises:
a feedback signal circuit coupled to the third ter-
minal, the feedback signal circuit coupled to gen-
erate the feedback signal; and
a pulse width modulator circuit coupled to switch
the power switch in response to the feedback sig-
nal,
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 7
the other claim limitations were satisfied. The jury found
that all accused products infringed the asserted claims,
and the district court denied judgment as a matter of law
of no infringement. We review the denial of a motion for
judgment as a matter of law de novo. We review a jury
determination of infringement for substantial evidence.
In a Markman order, the district court construed
“fixed switching frequency” to mean “[a] non-varying
number of switching cycles per second.” J.A. 2142. On
appeal, Fairchild disputes: (1) whether all accused prod-
ucts include a “fixed” switching frequency because the
frequency varies due to operating conditions, and
(2) whether a particular subset of accused products,
known as “frequency-hopping” products, has a “fixed”
frequency. This second issue turns primarily on claim
construction—whether the district court properly con-
strued “fixed frequency” to include a per second limita-
tion. But Fairchild contends that even if the claim
construction were correct, there was not substantial
evidence to support the jury verdict.
Claim terms are given their ordinary and customary
meaning, which is the meaning the term would have to a
person of ordinary skill in the art at the time of the inven-
tion. Phillips v. AWH Corp., 415 F.3d 1303, 1312–13 (Fed.
Cir. 2005) (en banc). We review claim construction de
novo, except for subsidiary facts based on extrinsic evi-
wherein the first and second ranges of the feed-
back signal correspond to first and second ranges
of on-time values of a drive signal generated by
the pulse width modulator circuit to switch the
power switch.
’079 patent, Ex Parte Reexamination Certificate, col. 2,
ll. 4–32.
8 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
dence, which we review for clear error. Teva Pharms.
USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841 (2015).
A
Fairchild argues that the jury verdict is not supported
by substantial evidence because none of the Fairchild
products has a “fixed switching frequency” according to
the language of the claims or a “non-varying frequency”
under the district court’s claim construction, because even
during “fixed” frequency mode, the products operate with
5% to 15% variance in frequency. This variance is due to
operating conditions, such as temperature and input
voltage. The question is whether this variability renders
the products non-infringing.
Fairchild argues that the term “fixed” under the dis-
trict court’s construction of “non-varying number of
switching cycles per second” requires an absolutely fixed
frequency with no variance, even due to operating condi-
tions. The district court, Fairchild asserts, rejected a
construction of “fixed” frequency that permits natural
variation when it rejected Power Integration’s proposed
construction of “fixed switching frequency” as “the target
switching frequency is intended to be substantially fixed.”
J.A. 2125. Rather, the court adopted “fixed” as meaning
“non-varying.” J.A. 2142. 4
4 Fairchild also argues that the term “fixed” cannot
include any variations due to operating conditions based
on statements made by Power Integrations during the
reexamination about a particular prior art reference, the
Zhou reference. However, this argument is waived be-
cause Fairchild did not raise the prosecution history
concerning the Zhou prior art as a claim construction
argument before the district court. Moreover, the Zhou
reference did not disclose holding frequency constant over
a range of feedback signals but instead varied frequency
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 9
Fairchild’s argument is unpersuasive. The district
court’s construction of “fixed switching frequency” as
“non-varying” does not exclude the possibility of natural
variation because doing so would impermissibly render
the claims inoperable. See Ecolabs, Inc. v. FMC Corp., 569
F.3d 1335, 1345 (Fed. Cir. 2009) (finding that where claim
language permits an operable construction, the inoperable
construction is wrong). 5 Here, the parties offered expert
testimony to address the knowledge of persons of ordinary
skill in the art. The expert testimony demonstrated that
no real-world power supply controllers could operate with
an absolutely fixed, or non-varying, frequency. Indeed,
Fairchild seems to concede that there is always some
variation in frequency due to operating conditions. More-
over, technical marketing documents from products sold
by Fairchild, Power Integrations, and third parties label
these controllers as “fixed frequency” products despite the
undisputed, minor variations in frequency. Since the term
“fixed” is not unambiguously defined in the claims, the
fact that power supply controllers cannot operate without
any variation supports that the plain and ordinary mean-
ing of “fixed” encompasses minor environmental varia-
tions.
Thus, the jury could have properly concluded that the
terms “fixed frequency” and “non-varying” left open the
over the entire range of operation. Therefore, the prosecu-
tion history statement describing Zhou as not containing
a “fixed” frequency was not directed to determining
whether the switching frequency has been fixed when
environmental variations occur while holding a fixed
frequency over a certain range of signals.
5 This case is unlike that in Chef America, Inc. v.
Lamb-Weston, Inc., where the claims were unambiguously
written in a manner that rendered them inoperable. 359
F.3d 1371, 1374 (Fed. Cir. 2004).
10 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
possibility for minor frequency variations due to operating
conditions. A reasonable jury could have found that the
accused products have a “fixed” or “non-varying” frequen-
cy despite slight variance due to operating conditions.
B
Fairchild alternatively argues that there was no basis
for finding that the “fixed” frequency limitation was
satisfied for a subset of the accused products because the
Fairchild “frequency-hopping” products intentionally vary
frequency in order to reduce electromagnetic interference.
The intentional varying of frequency is referred to as
“jittering.” For example, one Fairchild frequency-hopping
product jittered its switching frequency from 62 kilohertz
to 68 kilohertz, around a center frequency of 65 kilohertz.
Even though the frequency varies in any given microsec-
ond interval, the average number of cycles per second is
65,000.
On appeal, Fairchild argues that the district court
erred in construing “fixed switching frequency” as a “non-
varying number of switching cycles per second” rather
than looking to overall variation.
The district court construed claim terms in a series of
Markman orders in 2011 and 2012—two years before
trial. Power Integrations proposed that “fixed switching
frequency” be construed to mean “the target switching
frequency is intended to be substantially fixed; but does
not preclude the presence of a frequency jittering circuit.”
J.A. 2125. Fairchild proposed that: “the switching fre-
quency does not vary.” Id. The district court then con-
strued the term to mean a “non-varying number of
switching cycles per second,” even though neither party
requested the “per second” limitation. J.A. 2142.
Although Fairchild later proposed further construc-
tion for other claim terms, Fairchild never objected to the
“per second” construction and did not seek rehearing or
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 11
supplemental construction. At trial, Fairchild did not
object to the district court’s instructing the jury using the
“per second” language. Even in its post-trial motion,
Fairchild did not argue that the court’s construction was
incorrect. The claim construction issue is argued for the
first time on appeal.
Power Integrations argues that because Fairchild did
not seek additional claim construction at the district court
and chose to litigate this issue as a factual dispute about
infringement, Fairchild has waived its “per second” claim
construction argument. Fairchild responds that it did not
waive its claim construction argument because the claim
construction it proposes now is the same as the claim
construction it proposed during the Markman hearing,
which did not contain the “per second” limitation.
We have held that a party does not waive a claim con-
struction argument by failing to object during trial when
the construction proposed on appeal is the same as the
construction proposed in a Markman hearing. O2 Micro
Int’l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351,
1359 (Fed. Cir. 2008); see also D’Agostino v. Mastercard
Int’l Inc., 844 F.3d 945, 950 (Fed. Cir. 2016); In re Pabst
Licensing Dig. Camera Patent Litig., 778 F.3d 1255, 1266
(Fed. Cir. 2015). “When the claim construction is resolved
pre-trial, and the patentee presented the same position in
the Markman proceeding as is now pressed, a further
objection to the district court’s pre-trial ruling may indeed
have been not only futile, but unnecessary.” Cardiac
Pacemakers, Inc. v. St. Jude Med., Inc., 381 F.3d 1371,
1381 (Fed. Cir. 2004). However, this rule only applies
when “issues were fully litigated and decided at the
Markman stage of the litigation.” O2 Micro, 521 F.3d at
1359.
The problem for Fairchild is that the issue of the ap-
propriate time interval over which to measure frequency
was not fully litigated—or even raised as an issue in
12 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
dispute—at the Markman stage of this proceeding. Dur-
ing the Markman proceedings, there was no dispute about
the time interval. Neither Fairchild nor Power Integra-
tions proposed a construction with the “per second” limi-
tation. The district court added this limitation to the
construction on its own without providing a clear explana-
tion. Because the district court had not specifically ad-
dressed this issue in its claim construction order, in order
to preserve an objection to the district court’s claim con-
struction, Fairchild was required to raise the issue before
submission to the jury. Yet even when this dispute arose
at trial, Fairchild did not ask the district court to modify
or clarify its claim construction with regard to “per sec-
ond,” nor did it object to the jury instructions. Instead,
Fairchild waited until this appeal to argue that the dis-
trict court’s claim construction was erroneous.
It is well-settled that a party cannot reserve a new
claim-construction argument for the post-trial motion
stage of litigation. Lazare Kaplan Int’l, Inc. v. Photoscribe
Techs., Inc., 628 F.3d 1359, 1376 (Fed. Cir. 2010);
Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 694
(Fed. Cir. 2008); Hewlett-Packard Co. v. Mustek Sys., Inc.,
340 F.3d 1314, 1320 (Fed. Cir. 2003).
The present situation is similar to Solvay S.A. v. Hon-
eywell International, Inc., 742 F.3d 998 (Fed. Cir. 2014).
In that case, the district court construed a claim term
“isolating” to require removing two chemicals, HFC-245fa
and HCl, from a chemical reaction. Id. at 1003. During
claim construction, the parties did not raise and the
district court did not address the issue of whether the two
chemicals could return to the reactor after initially being
removed. Id. at 1003–04. However, during the trial, a
disagreement arose between the parties as to whether the
chemicals had to be permanently removed. The parties
argued the issue at trial, and the district court allowed
jury instructions that did not necessarily require perma-
nent removal. Id. at 1004. When the patentee argued on
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 13
appeal that the proper claim construction required the
chemicals to be permanently removed, we held that
“[b]ecause [the patentee] failed to object to the court’s
construction or jury instruction with respect to the term
‘isolating,’ it waived the issue and cannot now raise novel
arguments to redefine the scope of [the] claim.” Id. In
particular, we noted that the patentee “did not ask the
district court to modify the claim construction or accom-
panying jury instruction.” Id. By failing either to request
that the district court modify or clarify its claim construc-
tion earlier in the litigation proceedings or to object to the
jury instructions, Fairchild has waived this new claim-
construction argument.
Because Fairchild has waived its “per second” claim-
construction objection, we only review whether substan-
tial evidence supported the jury verdict under the court’s
construction. See Lazare, 628 F.3d at 1376; Hewlett-
Packard, 340 F.3d at 1320. Power Integrations’ expert,
Dr. Kelley, testified that the accused products operate
with a non-varying number of cycles per second for a
range of operation. Dr. Kelley testified that the frequency-
hopping products meet the limitation of a “non-varying
number of switching cycles per second” because even
though the frequency varies over microsecond intervals,
the aggregate number of pulses would not vary over each
one-second interval. Based on this testimony, a reasona-
ble jury could have concluded that the accused products
operate with a “fixed switching frequency” for a certain
range of feedback signals under the district court’s con-
struction. Thus, substantial evidence supports the jury’s
verdict of infringement of the ’079 patent for all of the
accused products.
II
Next, we address infringement of the ’908 patent un-
der the doctrine of equivalents. The ’908 patent is directed
towards a power supply controller, where an integrated
14 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
circuit can perform multiple functions within a single
terminal. Claim 26 requires:
26. A power supply controller circuit, comprising:
a multi-function circuit coupled to receive a signal
at a multi-function terminal for adjusting a cur-
rent limit of a power switch, the multi-function
circuit to generate a current limit adjustment sig-
nal in response to the signal; and
a control circuit coupled to receive the current lim-
it adjustment signal, the control circuit coupled to
adjust the current limit of a current through the
power switch in response to the current limit ad-
justment signal.
’908 patent, col. 25 l. 63–col. 26, l. 7 (emphasis added).
Claim 27, the only other asserted claim, depends from
claim 26.
The dispute focuses on the “current limit” term. There
is no dispute about claim construction. The district court
construed “current limit” as “a value of current that can
be used by the control circuit to turn off the power switch
when the amount of current passing through the power
switch reaches the threshold.” J.A. 2155.
The accused products use a value of voltage, rather
than a value of current, as the signal to implement the
current limit, so there could not be literal infringement of
this limitation. Fairchild moved in limine to preclude
Power Integrations from arguing infringement under the
doctrine of equivalents based on prosecution-history
estoppel. Fairchild argued that prosecution-history estop-
pel existed because during prosecution of a related patent,
Power Integrations explicitly distinguished voltage from
current and therefore could not now assert voltage as an
equivalent. The district court denied the motion in limine
because the prosecution history was for a different term
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 15
in a different patent, allowing Power Integrations to
argue voltage as an equivalent for monitoring current.
At trial, Power Integrations’ expert testified that a
value of voltage qualifies as a “value of current” because
under Ohm’s Law, current is equal to voltage divided by
resistance. J.A. 572–73, 901. The jury then found in-
fringement under the doctrine of equivalents, and the
district court denied judgment as a matter of law. On
appeal, Fairchild argues that Power Integrations’ equiva-
lents theory is barred by prosecution-history estoppel.
Prosecution-history estoppel limits the application of
the doctrine of equivalents. If a patentee surrenders
certain subject matter during prosecution, the patentee is
then barred from using the doctrine of equivalents to
recover for infringement based on that same subject
matter. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki
Co., 535 U.S. 722, 733–34 (2002). Prosecution-history
estoppel can occur either when the patentee makes a
narrowing amendment to the claim or surrenders claim
scope through argument to the patent examiner. Conoco,
Inc. v. Energy & Envtl. Int’l, L.C., 460 F.3d 1349, 1363
(Fed. Cir. 2006). Here there was no claim amendment, so
Fairchild relies on argument-based estoppel. To invoke
argument-based estoppel, the prosecution history must
evince a “clear and unmistakable surrender of the subject
matter.” Id. at 1364. The application of prosecution-
history estoppel is a question of law that we review de
novo. Intendis GMBH v. Glenmark Pharm. Inc., USA, 822
F.3d 1355, 1365 (Fed. Cir. 2016).
Fairchild argues for argument-based estoppel based
on a statement that Power Integrations made during
prosecution of U.S. Patent No. 6,462,971 (“the ’971 pa-
tent”), which is the parent to the ’908 patent and shares a
specification. The relevant claim of the ’971 patent is
directed to:
16 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
[a] power supply controller circuit, comprising a
current input circuit coupled to receive a current
representative of an input voltage, the current in-
put circuit to generate an enable/disable signal
when the current crosses a threshold having a
hysteresis of greater than or equal to zero, the
power supply controller to activate and deactivate
the power supply in response to the enable/disable
signal.
’971 pat., col. 23, ll. 30–36 (emphasis added).
The examiner rejected the claims based on the
Agiman reference. In an effort to overcome the rejection,
Power Integrations argued that “Agiman’s circuit moni-
tors voltage rather than current.” J.A. 2283 (emphasis in
original). Power Integrations then urged that “Agiman
fails to disclose . . . a current input circuit coupled to
receive a current representative of an input voltage, the
current input circuit to generate an enable/disable signal
when the current crosses a threshold.” Id. (emphases in
original). Fairchild argues that this distinction also ap-
plies to the “current limit” term of the ’908 patent.
To determine whether prosecution-history estoppel
applies, “the relevant inquiry is whether a competitor
would reasonably believe that the applicant surrendered
the relevant subject matter.” Conoco, 460 F.3d at 1364(quoting Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448,
1457 (Fed. Cir. 1998), abrogated on other grounds by Teva
Pharms. USA, Inc. v. Sandoz, Inc., 789 F.3d 1335 (Fed.
Cir. 2015). When considering the prosecution history of a
parent application to construe claim terms, we consider
differences in the language and context of different
claims. See Abtox, Inc. v. Exitron Corp., 122 F.3d 1019,
1027 (Fed. Cir. 1997) (“[S]tatements in the parent appli-
cation must be confined to their proper context and
properly acknowledge the distinctions between . . . [the]
claims.”).
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 17
Here, the claim language on its face is different than
the language of the claims to which the prosecution
argument was directed. Claim 26 of the ’908 patent covers
“a multi-function circuit coupled to receive a signal at a
multi-function terminal for adjusting a current limit of a
power switch, the multi-function circuit to generate a
current limit adjustment signal in response to the signal.”
’908 pat., col. 25 l. 63–col. 26, l. 7 (emphasis added). The
current limit in the ’908 patent is externally adjustable
and helps prevent a power switch from overloading due to
excessive current flow. The ’971 patent, on the other
hand, claims a “current input circuit coupled to receive a
current representative of an input voltage, the current
input circuit to generate an enable/disable signal when
the current crosses a threshold.” ’971 pat., col. 23, ll. 30–
33 (emphasis added). The functions performed in the two
patents are related but different. The ’908 patent claims
receiving a signal to adjust the current limit, which in
turn determines when to turn the power supply on and
off. The ’971 patent claims receiving a signal that directly
turns the power supply on and off. Importantly, the claim
in the ’971 patent specifically distinguishes voltage from
current, claiming “a current representative of an input
voltage.” The ’908 claim, in contrast, does not distinguish
between current and voltage within the claim. It merely
describes a “signal” to adjust the current limit.
On appeal, Fairchild provides only a cursory argu-
ment of why the statement in the ’971 patent prosecution
history should apply the embodiments claimed in the ’908
patent. Fairchild failed to establish that the prosecution
history is sufficiently clear as to create an estoppel. We
conclude that the district court correctly determined that
prosecution-history estoppel does not apply, and affirm
the finding of infringement as to the asserted claims of
the ’908 patent.
18 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
III
Lastly, we address damages. The jury awarded Power
Integrations $139.8 million in the form of a reasonable
royalty. The jury’s reasonable royalty covered the three
types of losses Power Integrations’ damages expert Dr.
Putnam testified the parties would anticipate during a
hypothetical negotiation: lost sales, reduction in price due
to competition, and lost licensing fees. The district court
denied Fairchild’s motion for judgment as a matter of law
or in the alternative a new trial with respect to damages.
We agree with Fairchild that the district court should
have granted the new trial motion.
A patentee is only entitled to a reasonable royalty at-
tributable to the infringing features. The patentee “must
in every case give evidence tending to separate or appor-
tion the defendant’s profits and the patentee’s damages
between the patented feature and the unpatented fea-
tures.” Garretson v. Clark, 111 U.S. 120, 121 (1884). In
accordance with Garretson, we have required that royal-
ties be apportioned between the infringing and non-
infringing features of the product. Ericsson, Inc. v. D-Link
Sys., Inc., 773 F.3d 1201, 1226–27 (Fed. Cir. 2014); Vir-
netX, 767 F.3d at 1326; Uniloc USA, Inc. v. Microsoft
Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011); Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336–37
(Fed. Cir. 2009). “As a substantive matter, it is the ‘value
of what was taken’ that measures a ‘reasonable royalty’
under 35 U.S.C. § 284.” Ericsson, 773 F.3d at 1226 (quot-
ing Dowagiac Mfg. v. Minn. Moline Plow Co., 235 U.S.
641, 648 (1915)). And in the context of a utility patent, it
is only the patented technology that is taken from the
owner, so the value to be determined is only the value
that the infringing features contribute to the value of an
accused product. Id.Undertaking an apportionment analysis where rea-
sonable royalties are sought generally requires a deter-
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 19
mination of the royalty base to which the royalty rate will
be applied. We have articulated that, where multi-
component products are accused of infringement, the
royalty base should not be larger than the smallest sala-
ble unit embodying the patented invention. We have
cautioned against reliance on use of the entire market
value of a multi-component product that includes a pa-
tented component because it “cannot help but skew the
damages horizon for the jury, regardless of the contribu-
tion of the patented component to this revenue.” Uniloc,
632 F.3d at 1320. “Where small elements of multi-
component products are accused of infringement, calculat-
ing a royalty on the entire product carries a considerable
risk that the patentee will be improperly compensated for
non-infringing components of that product.” LaserDynam-
ics, 694 F.3d at 67. Admission of evidence of the entire
market value “only serve[s] to make a patentee’s proffered
damages amount appear modest by comparison, and to
artificially inflate the jury’s damages calculation beyond
that which is ‘adequate to compensate for the infringe-
ment.’” Id. at 68 (quoting 35 U.S.C. § 284). Even when a
damages theory relies on the smallest salable unit as the
basis for calculating the royalty, the patentee must esti-
mate what portion of that smallest salable unit is at-
tributable to the patented technology when the smallest
salable unit itself contains several non-infringing fea-
tures. VirnetX, 767 F.3d at 1327.
The damages verdict here rests on Power Integra-
tions’ reliance on a demanding alternative to our general
rule of apportionment, the entire market value rule. Id.
“The entire market value rule allows for the recovery of
damages based on the value of an entire apparatus con-
taining several features, when the feature patented
constitutes the basis for consumer demand.” Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed.
Cir. 2009); see also Rite-Hite Corp. v. Kelley Co., 36 F.3d
1538, 1549 (Fed. Cir. 1995) (en banc). As we have ex-
20 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
plained, “[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.”
VirnetX, 767 F.3d at 1329. “[S]trict requirements limiting
the entire market value exception ensure that a reasona-
ble royalty ‘does not overreach and encompass compo-
nents not covered by the patent.’” Id. at 1326 (quoting
LaserDynamics, 694 F.3d at 70).
If the product has other valuable features that also
contribute to driving consumer demand—patented or
unpatented—then the damages for patent infringement
must be apportioned to reflect only the value of the pa-
tented feature. This is so whenever the claimed feature
does not define the entirety of the commercial product. In
some circumstances, for example, where the other fea-
tures are simply generic and/or conventional and hence of
little distinguishing character, such as the color of a
particular product, it may be appropriate to use the entire
value of the product because the patented feature ac-
counts for almost all of the value of the product as a
whole. See AstraZeneca AB v. Apotex Corp., 782 F.3d
1324, 1338–40 (Fed. Cir. 2015).
Power Integrations’ royalty rate is premised on the
’079 patent’s frequency reduction feature as driving
consumer demand for Fairchild’s controller chips. To
support this contention, Power Integrations provided
evidence that the ’079 patented frequency reduction
feature was essential to many customers, as it allowed the
products to meet the federal government’s Energy Star
program. In addition, Power Integrations provided evi-
dence that some customers asked for the ’079 feature,
that products with the ’079 feature outsold other prod-
ucts, and that technical marketing materials promoted
the ’079 feature. Both parties, however, agreed that the
accused products contained other valuable features as
well. Power Integrations presented no evidence about the
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 21
effect of those features on consumer demand or the extent
to which those features were responsible for the products’
value. Power Integrations did not seek a separate jury
determination as to damages for infringement of the
asserted claims of the ’908 patent, and it is clear that the
jury calculated damages only for the ’079 patent.
In its JMOL motion, Fairchild argued that the evi-
dence presented by Power Integrations was insufficient as
a matter of law to invoke the entire market value rule,
pointing to our decision in LaserDynamics. The district
court noted that three prior cases relied on evidence that
“LaserDynamics . . . arguably would find inadequate to
support EMVR,” and that the evidence presented by
Power Integrations was comparable to the evidence in the
prior cases. J.A. 26; see Bose Corp. v. JBL, Inc., 274 F.3d
1354, 1361 (Fed. Cir. 2001); Tec Air, Inc. v. Denso Mfg.
Mich. Inc., 192 F.3d 1353, 1362 (Fed. Cir. 1999); Fonar
Corp. v. Gen. Elec. Co., 107 F.3d 1543, 1552–53 (Fed. Cir.
1997).
Despite the district court’s suggestion to the contrary,
there is no conflict between LaserDynamics and these
earlier cases, and subsequent cases have relied on La-
serDynamics. See VirnetX, 767 F.3d at 1326–27; Com-
monwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc.,
809 F.3d 1295, 1301–02 (Fed. Cir. 2015); Versata Soft-
ware, Inc. v. SAP Am., Inc., 717 F.3d 1255, 1268 (Fed. Cir.
2013). LaserDynamics discussed how a patentee can
prove that a patented feature forms the basis for consum-
er demand in the context of multi-component products.
There we explained that “[i]t is not enough to merely
show that the [patented feature] is viewed as valuable,
important, or even essential to the use of the [infringing
product].” LaserDynamics, 694 F.3d at 68. Moreover,
“proof that consumers . . . choose the [infringing product]
having the [patented] functionality says nothing as to
whether the presence of that functionality is what moti-
vates customers to buy [an infringing product] in the first
22 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
place.” Id. None of the earlier cases that the district court
cited discussed other valuable features that made the
application of the entire market value rule inappropriate.
See Bose, 274 F.3d at 1361; Tec Air, 192 F.3d at 1362;
Fonar, 107 F.3d at 1552–53. These cases merely consid-
ered whether a patented feature formed the basis for
consumer demand and do not conflict with the legal test
articulated in LaserDynamics, which is binding.
As LaserDynamics, Versata, and VirnetX held, the en-
tire market value rule is appropriate only when the
patented feature is the sole driver of customer demand or
substantially creates the value of the component parts.
LaserDynamics, 694 F.3d at 67; Versata, 717 F.3d at
1268; VirnetX, 767 F.3d at 1326. The burden of proof in
this respect is on the patent holder. LaserDynamics, 694
F.3d at 67. The question is whether the accused product,
compared to other products in the same field, has features
that would cause consumers to purchase the products
beyond the patented feature, i.e., valuable features.
Where the accused infringer presents evidence that its
accused product has other valuable features beyond the
patented feature, the patent holder must establish that
these features do not cause consumers to purchase the
product. A patentee may do this by showing that the
patented feature “alone motivates customers to purchase
[the infringing product]” in the first place. See id. at 69.
But when the product contains multiple valuable fea-
tures, it is not enough to merely show that the patented
feature is viewed as essential, that a product would not be
commercially viable without the patented feature, or that
consumers would not purchase the product without the
patented feature. Id. at 68. When the product contains
other valuable features, the patentee must prove that
those other features do not cause consumers to purchase
the product.
Here, the power supply controllers had other valuable
features, such as jittering. The district court noted that
POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR 23
“there is evidence in the record that other features are
important and are highlighted by the respective parties”
and that “there is no question that . . . there are other
valuable features.” 6 J.A. 1764. In fact, Power Integrations
sought infringement damages from Fairchild on the
jittering feature in these same products in a separate
lawsuit based on different patents, and we affirmed the
judgment of infringement. See Power Integrations, Inc. v.
Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315 (Fed.
Cir. 2016). Moreover, many of Fairchild’s technical mar-
keting documents specifically mention the jittering fea-
ture and other features in addition to the ’079 patented
feature. There is no proof that these features, including
jittering, did not affect consumer demand. Without such
proof, Power Integrations did not meet its burden to show
that the patented feature was the sole driver of consumer
demand, i.e., that it alone motivated consumers to buy the
accused products. 7
6 Moreover, in an order denying a permanent in-
junction, the district court noted that the circuits “contain
numerous features aside from the patented features.” J.A.
2293.
7 Power Integrations provided testimony that the
patented feature drove demand for the purchase of some
products. This evidence almost entirely concerned Power
Integrations’ own products, TOPSwitch-Fx and
TOPSwitch-Gx, not Fairchild’s. Power Integrations con-
tends that the only difference between the older
TOPSwitch-Fx and the newer TOPSwitch-Gx controller
chips is the frequency reduction feature covered by the
’079 patent, and that the frequency reduction feature was
the reason why its customers would buy the Gx product
over the Fx product. We, however, explained in La-
serDynamics that such a comparator, without more, is not
enough to prove that the frequency reduction feature
24 POWER INTEGRATIONS, INC. v. FAIRCHILD SEMICONDUCTOR
Because the evidence presented by Power Integra-
tions was insufficient as a matter of law to invoke the
entire market value rule, we vacate the award of damages
and remand for a new trial. In light of this disposition, we
need not address Fairchild’s other arguments about the
sufficiency of the reasonable-royalty evidence.
CONCLUSION
We affirm the judgment of infringement of the assert-
ed claims of the ’079 and the ’908 patents. We vacate the
damages award and remand for further proceedings
consistent with this opinion.
AFFIRMED-IN-PART, VACATED-IN-PART,
REMANDED
COSTS
Costs to neither party.
alone drives consumer demand for power supply control-
ler chips. 694 F.3d at 68 (“Put another way, if given a
choice between two otherwise equivalent laptop comput-
ers, only one of which practices optical disc discrimina-
tion, proof that consumers would choose the laptop
computer having the disc discrimination functionality
says nothing as to whether the presence of that function-
ality is what motivates consumers to buy a laptop com-
puter in the first place. It is this latter and higher degree
of proof that must exist to support an entire market value
rule theory.”). Moreover, this evidence does not address
the other valuable features in Fairchild’s products.