Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.

United States Court of Appeals
for the Federal Circuit
__________________________
POWER INTEGRATIONS, INC.,
Plaintiff-Cross Appellant,
v.
FAIRCHILD SEMICONDUCTOR INTERNATIONAL,
INC. AND FAIRCHILD SEMICONDUCTOR
CORPORATION,
Defendants-Appellants.
__________________________
2011-1218, -1238
__________________________
Appeals from the United States District Court for the
District of Delaware in case No. 04-CV-1371, Judge
Leonard P. Stark.
__________________________
Decided: March 26, 2013
__________________________
FRANK E. SCHERKENBACH, Fish & Richardson P.C., of
Boston, Massachusetts, argued for plaintiff-cross appel-
lant. With him on the brief were CRAIG E. COUNTRYMAN,
of San Diego, California, and HOWARD G. POLLACK and
MICHAEL R. HEADLEY, of Redwood City, California.
BLAIR M. JACOBS, McDermott Will & Emery LLP, of
Washington, DC, argued for defendants-appellants. With
POWER INTEGRATIONS v. FAIRCHILD SEMI 2
him on the brief were NATALIA V. BLINKOVA and DAVID M.
DESROSIER; LEIGH J. MARTINSON, of Boston, Massachu-
setts. Of counsel was CHRISTINA A. ONDRICK, of Washing-
ton, DC.
__________________________
Before LOURIE, O’MALLEY, and REYNA, Circuit Judges.
REYNA, Circuit Judge.
This is an appeal from a final judgment of the United
States District Court for the District of Delaware finding
that Fairchild Semiconductor International, Inc. and
Fairchild Semiconductor Corporation (collectively,
“Fairchild”) willfully infringed several valid patents
belonging to Power Integrations, Inc. (“Power Integra-
tions”). After two jury trials, a bench trial, and post-trial
proceedings including a motion for remittitur, the district
court entered final judgment in favor of Power Integra-
tions and awarded compensatory and enhanced damages
in the amount of $12,866,647.16. Fairchild on appeal
asserts that the district court erred in its claim construc-
tion, in denying Fairchild’s motion for judgment as a
matter of law that one of Power Integrations’ claimed
inventions would have been obvious, in formulating its
remitted damages award, and in finding Fairchild’s
infringement willful. On cross-appeal, Power Integra-
tions argues that it was error for the district court to
grant Fairchild’s motion for remittitur, thereby reducing
the jury’s original damages award by eighty-two percent.
Power Integrations asserts further error in the district
court’s exclusion of evidence related to price erosion prior
to the date Fairchild was notified of its infringement, and
in the district court’s denial of Power Integrations’ motion
for a post-verdict accounting.
3 POWER INTEGRATIONS v. FAIRCHILD SEMI
For the reasons set out below, we affirm the district
court’s finding of non-obviousness; we affirm-in-part and
reverse-in-part on claim construction; we vacate the
district court’s order of remittitur and its attendant
damages award; we find error in the district court’s
exclusion of evidence related to pre-notice price erosion
and in its refusal to grant Power Integrations a post-
verdict accounting; we vacate the district court’s finding
of willful infringement; and we remand to the district
court for further proceedings consistent with this opinion.
I. PROCEDURAL POSTURE
In 2004, Power Integrations sued Fairchild for in-
fringement of four U.S. patents related to power supplies
for electronic devices: U.S. Patent Nos. 6,249,876 (filed
Nov. 16, 1998) (the ’876 Patent); 6,107,851 (filed Aug. 20,
2000) (the ’851 Patent); 6,229,366 (filed May 8, 2001) (the
’366 Patent); and 4,811,075 (filed Apr. 24, 1987) (the ’075
Patent). The patented technology is used in electric
chargers for mobile phones.
In 2006, following its claim construction order, the
district court bifurcated infringement and damages issues
from those relating to validity of the asserted patents.
The parties tried the issues before separate juries, and
both juries rendered verdicts in favor of Power Integra-
tions.
In the trial on infringement and damages, a first jury
found that Fairchild had willfully infringed claim 1 of the
’876 Patent, claims 1 and 4 of the ’851 Patent, claims 9
and 14 of the ’366 Patent, and claims 1 and 5 of the ’075
Patent. The jury awarded Power Integrations lost profits
due to lost sales ($14,981,828), lost profits due to price
erosion ($1,952,893), future lost profits due to price ero-
POWER INTEGRATIONS v. FAIRCHILD SEMI 4
sion ($13,018,379), and a lump sum reasonable royalty
($4,028,681), for a total damages award of $33,981,781.
In the trial on validity, a second jury found all assert-
ed claims valid. After the validity trial, the district court
denied Fairchild’s motion for judgment as a matter of law
(“JMOL”) that the invention of Power Integrations’ ’876
Patent would have been obvious to one of ordinary skill in
the art.
Fairchild subsequently moved for remittitur, JMOL,
or in the alternative, a new trial on damages. Expressing
concern over the testimony of Power Integrations’ damag-
es expert, the district court granted Fairchild’s motion for
remittitur and reduced the jury’s combined damages
award by 82%, resulting in a total award of $6,116,720.58.
On the same day, the district court issued a permanent
injunction covering all claims of the asserted patents.
The court also granted Fairchild’s motion for a new trial
on willfulness in view of our decision in In re Seagate
Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).
Fairchild filed an emergency request to stay the in-
junction pending appeal. In support of its request,
Fairchild cited favorable actions taken by the U.S. Patent
and Trademark Office (“Patent Office”) in the reexamina-
tions of three Power Integrations patents.1 The district
court denied the stay request, Fairchild appealed to this
court, and we dismissed for lack of jurisdiction. Power
Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
345 F. App’x 563 (Fed. Cir. 2009).
1 We note that Fairchild filed the requests for reex-
amination with the Patent Office after conclusion of the
first jury trial but before conclusion of the second.
5 POWER INTEGRATIONS v. FAIRCHILD SEMI
In June 2009, following a bench retrial of the issue of
willfulness, the district court concluded in view of Seagate
that Fairchild’s infringement was willful. The district
judge who had been presiding over the case retired, and a
new judge assumed the bench. In January 2011, the
district court reaffirmed its willfulness finding, and
pursuant to its authority under 35 U.S.C. § 284, the court
granted Power Integrations’ motion for enhanced damag-
es. The court awarded Power Integrations enhanced
damages for willful infringement by doubling its remitted
damages award of $6,116,720.58, for a total award of
$12,233,441.16, not including interest.
These appeals followed. We have jurisdiction under
35 U.S.C. § 1295(a)(1).
II. STANDARDS OF REVIEW
We review issues of claim construction without defer-
ence. See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448,
1456 (Fed. Cir. 1998) (en banc). Whether a claim limita-
tion invokes means-plus-function claiming under 35
U.S.C § 112, ¶ 6 (now 35 U.S.C. § 112(f)), is an exercise in
claim construction which we review without deference.
Inventio AG v. ThyssenKrupp Elevator Ams. Corp., 649
F.3d 1350, 1356 (Fed. Cir. 2011).
We review a district court’s denial of a JMOL motion
under the law of the regional circuit, in this case the
Third Circuit. See Therasense, Inc. v. Becton, Dickinson &
Co., 593 F.3d 1325, 1330 (Fed. Cir. 2010) (en banc). The
Third Circuit reviews a district court’s denial of a JMOL
motion without deference. Rinehimer v. Cemcolift, Inc.,
292 F.3d 375, 383 (3d Cir. 2002).
Obviousness is a question of law based on underlying
factual findings. KSR Int'l Co. v. Teleflex Inc., 550 U.S.
POWER INTEGRATIONS v. FAIRCHILD SEMI 6
398, 427 (2007); In re Cyclobenzaprine Hydrochloride
Extended-Release Capsule Patent Litig., 676 F.3d 1063,
1068 (Fed. Cir. 2012). We review a jury’s ultimate conclu-
sions on obviousness without deference, but review the
jury’s findings of fact for substantial evidence. LNP Eng’g
Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347,
1353 (Fed. Cir. 2001). Objective evidence of secondary
considerations of patentability are fact determinations
which we review for substantial evidence. Para-Ordnance
Mfg., Inc. v. SGS Importers Int’l, Inc., 73 F.3d 1085, 1088
(Fed. Cir. 1995).
We review admissibility of evidence under the law of
the regional circuit. Ethicon, Inc. v. U.S. Surgical Corp.,
135 F.3d 1456, 1465 (Fed. Cir. 1998). The Third Circuit
reviews a district court’s ruling on admissibility of expert
testimony for abuse of discretion. In re Paoli R.R. Yard
PCB Litig., 35 F.3d 717, 749 (3d Cir. 1994). To the extent
the district court's ruling turns on an interpretation of a
Federal Rule of Evidence, our review is plenary. DeLuca
v. Merrell Dow Pharm., 911 F.2d 941, 944 (3d Cir. 1990).
We review a district court’s decision to set aside a ju-
ry’s damages award by applying the standard of review
applicable in the regional circuit. Siemens Med. Solutions
USA, Inc. v. Saint-Gobain Ceramics & Plastics, Inc., 637
F.3d 1269, 1289 (Fed. Cir. 2011). The Third Circuit will
not disturb a jury’s damages award unless unsupported
by substantial evidence, Thabault v. Chait, 541 F.3d 512,
532 (3d Cir. 2008), or contrary to the limits established by
law, Scott v. Baltimore & O. R. Co., 151 F.2d 61, 65 (3d
Cir. 1945). We consider issues regarding what types of
damages are legally compensable in an action for patent
infringement under the law of our own circuit, without
deference to the trial court. See Rite-Hite Corp. v. Kelley
Co., Inc., 56 F.3d 1538, 1544 (Fed. Cir. 1995) (en banc).
7 POWER INTEGRATIONS v. FAIRCHILD SEMI
We review a district court’s decision to grant or with-
hold a remittitur under the law of the regional circuit.
The Third Circuit has held that “[a] remittitur is in order
when a trial judge concludes that a jury verdict is ‘clearly
unsupported’ by the evidence and exceeds the amount
needed to make the plaintiff whole.” Starceski v. West-
inghouse Elec. Corp., 54 F.3d 1089, 1100 (3d Cir. 1995).
The Third Circuit has emphasized that it is not the func-
tion of the appellate court to assess what would constitute
fair recompense for the injuries sustained by the plaintiff,
but rather to ascertain whether the trial judge, weighing
all the evidence on damages, “has exercised his considered
judgment as to a rational verdict in a judicial manner.”
Russell v. Monogahela Ry. Co., 262 F.2d 349, 352 (3d Cir.
1958). Thus, “[t]he trial judge’s decision to grant or
withhold a remittitur cannot be disturbed absent a mani-
fest abuse of discretion.” Starceski, 54 F.3d at 1100;
accord 2660 Woodley Rd. Joint Venture v. ITT Sheraton
Corp., 369 F.3d 732, 745 (3d Cir. 2004) (“We review a
grant of remittitur for abuse of discretion.”).
While we review for abuse of discretion the district
court’s decision to order a remittitur, Starceski, 54 F.3d at
1100, we review the amount of the court’s remittitur on
the basis of whether it exceeds the maximum award
supported by the evidence, see Garrett v. Faust, 183 F.2d
625, 629 (3d Cir. 1950); see also 11 Charles Alan Wright,
Arthur R. Miller and Mary Kay Kane, Federal Practice
and Procedure § 2815, at 159 (2d ed.1995). We thus
consider whether the amount of the district court’s remit-
titur order is supported by substantial evidence.
The issue of willful infringement has two components,
each with a different standard of review. First, the “pa-
tentee must show by clear and convincing evidence that
the infringer acted despite an objectively high likelihood
that its actions constituted infringement of a valid pa-
POWER INTEGRATIONS v. FAIRCHILD SEMI 8
tent.” In re Seagate Tech., LLC, 497 F.3d 1360, 1371
(Fed. Cir. 2007). This first inquiry is a question of law
that we review without deference. Bard Peripheral
Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003,
1006–07 (Fed. Cir. 2012). Second, “the patentee must . . .
demonstrate that this objectively-defined risk . . . was
either known or so obvious that it should have been
known to the accused infringer.” Seagate, 497 F.3d at
1371. This second inquiry is a question of fact which we
review for substantial evidence. Bard, 682 F.3d at 1006.
III. THE PATENTED TECHNOLOGY
Power Integrations’ patented technology is used in
power supplies for electronic devices. The ’851, ’366, and
’876 Patents describe techniques for alleviating electro-
magnetic interference and current flow problems associ-
ated with prior art power supplies. The ’075 Patent
describes a type of transistor useful in high voltage power
circuits. Although the patented technologies are applica-
ble generally in the field of electronics, the present case
focuses on their use in chargers for mobile phones.
Electrical outlets throughout much of the world, in-
cluding standard wall outlets in the United States, pro-
vide electrical energy by way of an alternating current
(AC). The electric current provided by such power outlets
is called “alternating” because the direction of current
flow reverses periodically. In operation, current flows
first from the wall outlet through a power cable, toward
the powered device. Flow then reverses, and electric
current flows back from the powered device through the
power cable, toward the wall outlet. These current flow
reversals occur many times per second. An AC power
source such as a standard wall outlet accomplishes these
current flow reversals by providing a voltage, sometimes
called a “power signal,” which changes cyclically over time
9 POWER INTEGRATIONS v. FAIRCHILD SEMI
from positive to negative. When the power signal voltage
is positive, current tends to flow in one direction; when
the power signal voltage is negative, current tends to flow
in the opposite direction. As a result of these rapid
changes in voltage and current flow, AC power signals
continually fluctuate.
Some devices can utilize an AC power signal directly,
but most electronic devices must convert the rapidly
fluctuating AC power signal to a more stable “direct
current” (DC) power signal. A DC power signal does not
change over time; rather, it provides a steady, constant
voltage, and current tends to flow in only one direction.
Electronic devices that require DC rather than AC power
often utilize external adapters to convert the AC power
from standard wall outlets into suitable DC power. This
process of converting AC to DC is known as “rectification.”
Popular examples of rectifying power supplies are wall-
chargers for laptops and mobile phones.
After rectification, most power supplies must adjust
the voltage of the rectified DC power signal. This adjust-
ment brings the voltage of the DC power signal within an
appropriate operating range for the powered electronic
device. Many modern power supplies carry out this
voltage adjustment by using semiconductor switches,
called transistors, to switch the rectified DC power signal
rapidly on and off. This is similar to operating a light
switch, which can be turned quickly on and off to simulate
medium light (not fully lit, but not completely dark). By
using this rapid on-and-off switching technique, a switch-
ing power supply can produce an output power signal that
can be used as if it were a steady DC voltage. To fine-
tune the voltage of this output DC power signal, the
power supply can adjust its “pulse-width,” which
measures the time the power supply spends in the “on”
switching stage relative to the “off” stage. More switching
POWER INTEGRATIONS v. FAIRCHILD SEMI 10
time spent in the “on” stage transfers more voltage to the
output DC power signal. This voltage-adjustment tech-
nique is called pulse-width modulation (PWM), and it is
the technology implicated in this appeal.
A. THE ’851 AND ’366 PATENTS
There are two notable problems with pulse-width
modulated (PWM) power converters: electromagnetic
interference (EMI) and inrush current. EMI results when
the rapid switching in a PWM power supply generates a
high frequency signal that interferes with other electronic
devices. The power supply can radiate this high frequen-
cy signal, thereby affecting nearby devices; it can also
inject the high frequency signal back into the power grid,
thereby affecting other devices on the grid.
PWM power supplies are also susceptible to large in-
rush currents. When a PWM power supply first turns on,
current rushes in and charges the internal capacitors.
This initial inrush current is much higher than the cur-
rent utilized during normal, steady-state operation.
Inrush current stresses the components of the power
supply and decreases its useful life. Substituting compo-
nents capable of handling a large inrush current can add
significantly to the power supply’s cost.
To address EMI and inrush current, the ’851 Patent
and its divisional, the ’366 Patent, disclose improved
integrated circuitry for PWM power supplies. The im-
proved circuitry provides “frequency-jittering” functionali-
ty for reducing EMI, and “soft-start” functionality for
reducing inrush current.
“Frequency-jittering” is a technique that varies the
frequency of the on-off switching in a PWM power supply.
This frequency variation disperses generated EMI by
11 POWER INTEGRATIONS v. FAIRCHILD SEMI
spreading it out over a range of frequencies. In a PWM
power supply, a periodically repeating signal known as an
oscillating drive signal drives the power supply’s rapid on-
off switching. The ’851 Patent discloses a technique for
varying the frequency of a PWM power supply’s oscillat-
ing drive signal by using an independent “frequency
variation signal.” By changing the frequency variation
signal, the PWM power supply can vary the frequency of
its oscillating drive signal. This frequency variation in
the oscillating drive signal spreads generated EMI over a
spectrum of frequencies, thereby reducing interference
with other devices.
“Soft-start” circuitry attempts to reduce inrush cur-
rent that stresses internal components of a PWM power
supply. The ’851 Patent describes an improvement over
prior art soft-start circuits, which in some cases suffer
from brief initial periods of large current flow. To allevi-
ate this problem, the ’851 Patent discloses a PWM power
supply with soft-start circuitry driven by the same inde-
pendent frequency variation signal used for frequency-
jittering. Tying soft-start circuitry to the independent
frequency variation signal allows soft-start functionality
to operate independently of the electrical characteristics
of a powered device. It also eliminates the brief initial
inrush current suffered by prior art soft-start circuits.
B. THE ’876 PATENT
The ’876 Patent discloses a “frequency-jittering” cir-
cuit that provides frequency-jittering functionality in a
manner distinct from the ’851 and ’366 Patents. Unlike
the ’851 and ’366 Patents, the circuit of the ’876 Patent
does not provide “soft-start” functionality. Representative
Figure 1 of the ’876 Patent is shown below:
POWER INTEGRATIONS v. FAIRCHILD SEMI 12
’876 Patent fig.1 (labels “A” and “B” added). The circuit of
the ’876 Patent uses an analog “control signal” (designat-
ed in Fig. 1 by “A”) to control the frequency of the power
supply’s oscillating drive signal (“B”). This analog “con-
trol signal” is similar to the frequency variation signal of
the ’851 and ’366 Patents, which also controls oscillating
drive signal frequency. In the circuit depicted in Fig. 1,
the analog “control signal” (“A”) periodically changes, thus
changing the frequency of the oscillating drive signal
(“B”). These periodic changes in the drive signal’s fre-
quency help dissipate generated EMI by spreading it over
a range of frequencies.
At the heart of the ’876 Patent is the process by which
the analog “control signal” changes, thus varying the
frequency of the oscillating drive signal. Generally, this
process works as follows: A digital counter (box 140)
monitors the power supply’s oscillating drive signal (“B”),
which repeats periodically. As the oscillating drive signal
13 POWER INTEGRATIONS v. FAIRCHILD SEMI
repeats, the digital counter counts the drive signal’s
repetitions. After the count reaches a maximum value,
the digital counter resets to zero. Essentially, the digital
counter keeps a tally of how many times the oscillating
drive signal repeats. A digital-to-analog converter (dotted
area 150) reads the outputs of the digital counter (signal
lines 155, 157, 163, and 167). Based on the counter’s
outputs, the digital-to-analog converter generates an
analog signal proportional to the counter’s tally. This
analog signal is the analog “control signal” (“A”) that
controls the frequency of the oscillating drive signal. An
oscillator (dotted area 110) generates the oscillating drive
signal (“B”) based on the analog control signal (“A”).
As the digital counter counts the cycles of the power
supply’s oscillating drive signal, the outputs of the digital
counter change, thereby changing the analog control
signal. The analog control signal, in turn, changes the
frequency of the oscillating drive signal. Each time the
digital counter increments, the frequency of the oscillat-
ing drive signal changes with it. The end result is that
the frequency of the power supply’s oscillating drive
signal—and thus the frequency of its generated EMI—
steps through an ordered set of frequencies. This fre-
quency stepping repeats when the counter resets to zero.
Because the frequency of the power supply’s generated
EMI is continually changing, EMI is spread out over a
wide range of frequencies and interference with other
devices is reduced.
C. THE ’075 PATENT
The ’075 Patent, now expired, discloses a type of met-
al-oxide semiconductor field-effect transistor (MOSFET)
for use in high voltage electronic devices such as power
supplies. The disclosed transistor provides improved
ability to incorporate high and low voltage circuitry on a
POWER INTEGRATIONS v. FAIRCHILD SEMI 14
single chip. Power Integrations notes that the technology
of the ’075 Patent served as the cornerstone for the com-
pany’s founding. Fairchild does not raise any claim
construction or validity issues with regard to the ’075
Patent. We therefore do not describe the technology in
depth.
IV. CLAIM CONSTRUCTION
The district court conducted a Markman hearing and
construed various terms of the claims in the asserted
patents. On appeal, Fairchild argues that the district
court erred in its construction of two terms in particular:
“frequency variation signal” and “soft start circuit,” both
of which appear in the claims of the ’851 and ’366 Patents.
Claim construction begins with the language of the
claim. See Phillips v. AWH Corp., 415 F.3d 1303, 1312
(Fed. Cir. 2005) (en banc) (“[T]he claims are of primary
importance, in the effort to ascertain precisely what it is
that is patented.”). We presume that the terms in the
claim mean what they say. Tate Access Floors, Inc. v.
Interface Architectural Res., Inc., 279 F.3d 1357, 1370
(Fed. Cir. 2002). We interpret the claim’s words “in light
of the intrinsic evidence of record, including the written
description, the drawings, and the prosecution history.”
Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1324
(Fed. Cir. 2002). Where the intrinsic record is ambiguous,
and when necessary, we have authorized district courts to
rely on extrinsic evidence, which “consists of all evidence
external to the patent and prosecution history, including
expert and inventor testimony, dictionaries, and learned
treatises.” Phillips, 415 F.3d at 1317 (quoting Markman
v. Westview Instruments, Inc., 52 F.3d 967, 980 (Fed. Cir.
1995), aff’d, 517 U.S. 370 (1996)).
15 POWER INTEGRATIONS v. FAIRCHILD SEMI
A. FREQUENCY VARIATION SIGNAL
The district court construed the term “frequency vari-
ation signal” in the ’851 and ’366 Patents as “an internal
signal that cyclically varies in magnitude during a fixed
period of time and is used to modulate the frequency of
the oscillation signal within a predetermined frequency
range.”
On appeal, Fairchild argues that the district court
erred by improperly reading features of the preferred
embodiments into the claims. Specifically, Fairchild
argues that the claimed “frequency variation signal” is not
limited to an internal signal (the “internal signal” limita-
tion) and that “frequency variation signal” is not limited
to a signal that varies cyclically in magnitude during a
fixed period of time (the “cyclically varies” limitation).
These limitations, Fairchild insists, appear in the patents’
preferred embodiments and not in the claims, and be-
cause the district court’s construction incorporates both
limitations, that construction is incorrect as a matter of
law. Fairchild argues that we should not look to the
patent specification to define the disputed term “frequen-
cy variation signal” because the term has a plain and
ordinary meaning. Fairchild would have us construe
“frequency variation signal” more broadly as “a signal
that is used to vary the frequency of the oscillation sig-
nal.”
Power Integrations argues that the district court cor-
rectly construed “frequency variation signal.” Power
Integrations argues that “frequency variation signal” does
not have a plain and ordinary meaning. Because we must
consider claim terms in light of the entire patent, Power
Integrations insists that we must look to the specification
to define “frequency variation signal.” Power Integrations
argues that, although the claims do not explicitly recite
POWER INTEGRATIONS v. FAIRCHILD SEMI 16
the “internal signal” and “cyclically varies” limitations,
these limitations are necessary and inherent components
of the term “frequency variation signal.” Power Integra-
tions further argues that failing to include the “internal
signal” limitation would cause the claims to read on the
prior art, and would likewise ignore a fundamental aspect
of the invention’s improvement.
With respect to the “cyclically varies” limitation, Pow-
er Integrations maintains that all examples and descrip-
tions in the patents limit the “frequency variation signal”
to a “signal that cyclically varies in magnitude during a
fixed period of time.” Without this limitation, Power
Integrations argues, the invention would experience the
same problem with “unpredictably, externally influenced
variations the patent set out to solve.” Power Integra-
tions urges that the district court correctly construed the
claims to uphold their validity, as required by our prece-
dent.
In construing a claim term, we look to the words of
the claim itself. Vitronics Corp. v. Conceptronic, Inc., 90
F.3d 1576, 1582 (Fed. Cir. 1996). If the claim term has a
plain and ordinary meaning, our inquiry ends. Id. If,
however, the claim term does not have an ordinary mean-
ing, and its meaning is not clear from a plain reading of
the claim, “we turn to the remaining intrinsic evidence,
including the written description, to aid in our construc-
tion of that term.” Telemac Cellular Corp. v. Topp Tele-
com, Inc., 247 F.3d 1316, 1326 (Fed. Cir. 2001). As we
have said, “the specification is always highly relevant to
the claim construction analysis. Usually, it is dispositive;
it is the single best guide to the meaning of a disputed
term.” Vitronics, 90 F.3d at 1582. The construction that
stays true to the claim language and most naturally
aligns with the patent’s description of the invention will
be, in the end, the correct construction. Renishaw PLC v.
17 POWER INTEGRATIONS v. FAIRCHILD SEMI
Marposs Societa’ per Azioni, 158 F.3d 1243, 1250 (Fed.
Cir. 1998).
With these principles in mind, we turn to the claims
of the ’851 and ’366 Patents. Claim 1 of the ’851 Patent
recites both
a frequency variation circuit that provides a fre-
quency variation signal
and
an oscillator that provides an oscillation signal
having a frequency range, said frequency of said
oscillation signal varying within said frequency
range according to said frequency variation signal.
’851 Patent col. 12 ll. 22–27 (emphases added). Similarly,
claim 14 of the ’366 Patent includes
a frequency variation circuit that provides a fre-
quency variation signal and wherein said maxi-
mum time period varies according to a magnitude
of said frequency variation signal.
’366 Patent col. 14 ll. 14–17 (emphases added). Claims 1
and 14 do not further define “frequency variation signal.”
Although Fairchild argues that “frequency variation
signal” has a plain and ordinary meaning, an expert for
Power Integrations, Mr. Blauschild, testified that “[t]he
term ‘frequency variation signal,’ recited in the ’851
Patent, is not a term of art.” “Nor would this term have
had,” Mr. Blauschild continued, “a plain and ordinary
meaning to one of skill in the art at the time of the inven-
tion.” J.A. 359. Turning to the specification, Mr.
Blauschild opined that “the specification of the ’851
POWER INTEGRATIONS v. FAIRCHILD SEMI 18
Patent clearly defines such a signal as an internal signal
that cyclically varies in magnitude during a fixed period
of time.” Id. Fairchild offers no evidence to contradict the
testimony of Mr. Blauschild other than its own assertion
that “frequency variation signal” has a plain and ordinary
meaning.
We are not persuaded that the claims inform a plain
and ordinary meaning of the term “frequency variation
signal,” nor do we agree with Fairchild that we need only
a dictionary to discern the meaning of “frequency varia-
tion signal.” Unless the inventor intended a term to cover
more than the ordinary and customary meaning revealed
by the context of the intrinsic record, it is improper to read
the term to encompass a broader definition simply be-
cause it may be found in a dictionary, treatise, or other
extrinsic source. Nystrom v. TREX Co., Inc., 424 F.3d
1136, 1145 (Fed. Cir. 2005). In any event, our inquiry
here starts with the intrinsic record, including the specifi-
cation, and not with a dictionary definition of the disputed
term. Phillips, 415 F.3d at 1321 (“The problem is that if
the district court starts with the broad dictionary defini-
tion in every case and fails to fully appreciate how the
specification implicitly limits that definition, the error
will systematically cause the construction of the claim to
be unduly expansive.”).
Here, the specification of the ’851 Patent describes the
frequency variation signal:
Although the presently preferred frequency varia-
tion signal 400 is a triangular waveform, alter-
nate frequency variation signals such as ramp
signals, counter output signals or other signals
that vary in magnitude during a fixed period of
time may be utilized as the frequency variation
signal.
19 POWER INTEGRATIONS v. FAIRCHILD SEMI
’851 Patent col. 6 ll. 34–38 (emphases added). The patent
thus contemplates frequency variation signals other than
the preferred embodiment’s triangular waveform. The
specification describes these alternatives as “other signals
that vary in magnitude during a fixed period of time.” Id.
col. 6 ll. 36–37. Specifically limiting the expansive term
“other signals” to “signals that vary in magnitude during
a fixed period of time” suggests that the patentee contem-
plated only frequency variation signals having a periodic
waveform. The intrinsic record thus clearly indicates the
patentee’s precise conception and formulation, which here
must control our construction. See Renishaw, 158 F.3d at
1250 (“Ultimately, the interpretation to be given a term
can only be determined and confirmed with a full under-
standing of what the inventors actually invented and
intended to envelop with the claim.”).
We also note that the specification, in describing the
frequency variation signal, lists several specific examples
followed by the general phrase “or other signals . . . .”
When a general phrase follows a list of specific items, this
can be a good indication that the general phrase refers to
additional items of the same kind. Here, the specification
lists a preferred “triangular waveform” along with two
alternatives, “ramp signals” and “counter output signals.”
All of these signals have periodic waveforms. ’851 Patent
col. 6 ll. 35–36. Thus, in context, the general phrase
“other signals” suggests other periodic signals. This
implicit limitation is confirmed by the words that follow:
“other signals that vary in magnitude during a fixed
period of time.” Id. col. 6 ll. 36–37 (emphasis added). We
thus agree with the district court that the proper con-
struction of “frequency variation signal” includes the
“cyclically varies” limitation.
With regard to the “internal signal” limitation, the
specification indicates that the term “frequency variation
POWER INTEGRATIONS v. FAIRCHILD SEMI 20
signal” refers to an internal signal. In two separate
places, the specification provides,
That is, the switching frequency of the pulse
width modulated switch 262 varies according to
an internal frequency variation signal. This has
an advantage over the frequency jitter operation
of [the prior art circuit of] FIG. 1 in that the fre-
quency range of the presently preferred pulse
width modulated switch 262 is known and fixed,
and is not subject to the line voltage or load mag-
nitude variations.
’851 Patent col. 6 ll. 12–18, col. 11 ll. 44–49 (emphases
added). This description confirms that the patentee
contemplated a fixed-range, periodic frequency variation
signal, and it further indicates that the internal character
of the frequency variation signal is essential to the inven-
tion. It is the internal character of the signal that makes
the frequency-jittering functionality “not subject to the
line voltage or load magnitude variations.” Id. col. 6 ll.
17–18, col. 11 ll. 48–49. As the specification reflects, the
patentee did not employ the term “frequency variation
signal” to refer to external signals, nor did the patentee
consider external frequency variation signals as part of
the invention. In fact, the patentee sought to alleviate
problems with the prior art’s external frequency variation
techniques.
For these reasons, the district court properly limited
the claimed “frequency variation signal” to an internal,
periodic signal. We thus conclude that the district court
correctly construed “frequency variation signal” as “an
internal signal that cyclically varies in magnitude during
a fixed period of time and is used to modulate the fre-
quency of the oscillation signal within a predetermined
frequency range.”
21 POWER INTEGRATIONS v. FAIRCHILD SEMI
B. SOFT START CIRCUIT
The district court construed the term “soft start cir-
cuit” in the ’851 and ’366 Patents as means-plus-function
limitations under paragraph 6 of 35 U.S.C. § 112 (now 35
U.S.C. § 112(f)). In the district court’s view, an ordinarily
skilled artisan would not “know the precise structures for
a soft start circuit, because the function of a soft start
circuit can be achieved in a variety of ways making it
unclear what the specific structures are for performing
the recited functions.” Power Integrations, Inc. v.
Fairchild Semiconductor Int’l, Inc., 422 F. Supp. 2d 446,
459 (D. Del. 2006). Thus, the district court concluded that
“the term ‘soft start circuit’ should be construed in ac-
cordance with Section 112, ¶ 6” and limited to the struc-
ture described in the specification and its equivalents. Id.
at 460.
On appeal, Fairchild argues that the district court in-
correctly construed the “soft start circuit” limitations in
the ’851 and ’366 Patents as means-plus-function limita-
tions. Fairchild contends that these limitations do not
include the word “means,” which creates a strong pre-
sumption that mean-plus-function claiming does not
apply. Rather, Fairchild argues, the claims disclose
sufficient structure to remove the “soft start circuit”
limitations from the reach of means-plus-function claim-
ing.
Power Integrations seeks an affirmance of the district
court’s construction. Power Integrations argues that the
term “soft start circuit,” does not suggest sufficiently
definite structure to the skilled artisan. Power Integra-
tions would have us affirm the district court’s construc-
tion and limit the term “soft start circuit” to the
structures described in the specifications of the ’851 and
’366 Patents.
POWER INTEGRATIONS v. FAIRCHILD SEMI 22
Means-plus-function limitations permit a patentee to
claim an element of her invention in terms of the ele-
ment’s function, without in the claim itself reciting corre-
sponding structure:
An element in a claim for a combination may be
expressed as a means or step for performing a
specified function without the recital of structure,
material, or acts in support thereof, and such
claim shall be construed to cover the correspond-
ing structure, material, or acts described in the
specification and equivalents thereof.
35 U.S.C. § 112, ¶ 6.2 If a claim term does not use the
word “means,” we presume that means-plus-function
claiming does not apply. See CCS Fitness, Inc. v. Bruns-
wick Corp., 288 F.3d 1359, 1369 (Fed. Cir. 2002). If,
however, the claim term recites a function without recit-
ing sufficient structure for performing that function, the
presumption falls and means-plus-function claiming
applies. See, e.g., Watts v. XL Sys., Inc., 232 F.3d 877, 880
(Fed. Cir. 2000). We assess whether a claim limitation
recites sufficient structure to avoid means-plus-function
claiming from the vantage point of an ordinarily skilled
artisan. See Inventio, 649 F.3d at 1357; Apex Inc. v.
Raritan Computer, Inc., 325 F.3d 1364, 1372 (Fed. Cir.
2003). To this end, “considering intrinsic and extrinsic
evidence is usually helpful [in determining whether] a
claim limitation is so devoid of structure that the drafter
2 In 2011, Congress reformatted the paragraphs of §
112 as subsections. Leahy-Smith America Invents Act
(“AIA”), Pub. L. No. 112-29, 125 Stat. 284 (2011). Section
112, ¶ 6, is now codified as § 112(f). To maintain con-
sistency with the district court’s opinion, we refer to §
112, ¶ 6.
23 POWER INTEGRATIONS v. FAIRCHILD SEMI
constructively engaged in means-plus-function claiming.”
Inventio, 649 F.3d at 1357. With respect to intrinsic
evidence, a patent’s specification may inform the skilled
artisan’s understanding of the structure required by a
claim limitation.
We have previously held on several occasions that the
term “circuit” connotes structure. See MIT v. Abacus
Software, 462 F.3d 1344, 1355 (Fed. Cir. 2006)
(“[D]ictionary definitions establish that the term ‘circuit-
ry,’ by itself, connotes structure.”); see also Linear Tech.
Corp. v. Impala Linear Corp., 379 F.3d 1311, 1320–21
(Fed. Cir. 2004) (holding that the term circuit is not a
means-plus-function limitation when the patent provides
“a recitation of the respective circuit’s operation in suffi-
cient detail to suggest structure to persons of ordinary
skill in the art”); Apex, 325 F.3d at 1373 (“[T]he term
‘circuit’ with an appropriate identifier such as ‘interface,’
‘programming’ and ‘logic,’ certainly identifies some struc-
tural meaning to one of ordinary skill in the art.”). In
Abacus, we said,
The claim language here too does not merely de-
scribe a circuit; it adds further structure by de-
scribing the operation of the circuit. The circuit’s
input is “appearance signals” produced by the
scanner; its objective is to “interactively intro-
duce[e] [sic] aesthetically desired alterations into
said appearance signals”; and its output is “modi-
fied appearance signals.” This description of the
operation of the circuit is sufficient to avoid 112 ¶
6.
462 F.3d at 1356 (citation omitted).
Abacus establishes that in determining whether the
word “circuit” invokes means-plus-function claiming, the
POWER INTEGRATIONS v. FAIRCHILD SEMI 24
pivotal issue is “whether the [circuit limitation] as proper-
ly construed recites sufficiently definite structure.” Per-
sonalized Media Commc’ns., LLC v. Int’l Trade Comm’n,
161 F.3d 696, 704 (Fed. Cir. 1998) (emphasis added). A
description of the circuit’s operation may provide suffi-
ciently definite structure, Abacus, 462 F.3d at 1356, as
can certain “adjectival qualifications,” Apex, 325 F.3d at
1374 (“interface circuit”). Nevertheless, not just any
adjectival qualification or functional language will suffice.
See Abacus, 462 F.3d at 1362–63 (Michel, C.J., dissent-
ing). The proper inquiry is whether the claim limitation
itself, when read in light of the specification, connotes to
the ordinarily skilled artisan sufficiently definite struc-
ture for performing the identified functions. Apex, 325
F.3d at 1373.
1. CLAIM 4 OF THE ’851 PATENT
Turning to the claims at issue, claim 4 of the ’851 Pa-
tent recites a “soft start circuit” that performs a function:
a soft start circuit that provides a signal instruct-
ing said drive circuit to discontinue said drive sig-
nal when said magnitude of said oscillation signal
is greater than a magnitude of said frequency var-
iation signal.
’851 Patent col. 12 ll. 46–49 (emphasis added). Although
the claim includes a functional description of the “soft
start circuit,” the claim does not include the word
“means.” Further, the claimed “soft start circuit” per-
forms a straightforward function when a simple test is
met: it “provides a signal” that cuts off the drive signal
“when said magnitude of said oscillation signal is greater
than a magnitude of said frequency variation signal.”
This test is nothing more than a comparison of the magni-
tudes of two signals. The end result is simple: if the
25 POWER INTEGRATIONS v. FAIRCHILD SEMI
comparison is met, an “off” signal is provided. The word
“circuit” in combination with such a clear and unambigu-
ous description of the circuit’s operation weighs heavily in
favor finding sufficient structure to avoid means-plus-
function claiming.
The district court expressed concern that an ordinari-
ly skilled artisan would not “know the precise structures
for a soft start circuit, because the function of a soft start
circuit can be achieved in a variety of ways.” Power
Integrations, 422 F. Supp. 2d at 459. Yet, we require only
that the claim term be used in common parlance or by
ordinarily skilled artisans to designate sufficiently defi-
nite structure, “even if the term covers a broad class of
structures.” Lighting World, 382 F.3d at 1359–60. Here,
as the district court pointed out, a variety of structures
can be used to provide the claimed function. Neverthe-
less, viewed in the context of the claimed invention, the
function recited is sufficiently clear, and definitely de-
scribed, to suggest to the ordinarily skilled artisan a
defined class of structures. As in Abacus, we have an
input to the circuit (the oscillation and frequency varia-
tion signals), a straightforward function (comparing of the
magnitudes of these signals), and an output (the signal
provided to the drive circuit based on the comparison).
This is sufficient structure in the context of the claimed
invention to avoid the ambit of means-plus-function
claiming.
The “soft start circuit” limitation of claim 4 of the ’851
Patent, therefore, recites sufficient structure to avoid
means-plus-function claiming. The district court erred in
construing this term as a means-plus-function limitation
under § 112, ¶ 6.
POWER INTEGRATIONS v. FAIRCHILD SEMI 26
2. CLAIMS 9 AND 14 OF THE ’366 PATENT
We turn next to claims 9 and 14 of the ’366 Patent.
Claim 9 also includes a “soft start circuit”:
a soft start circuit that provides a signal instruct-
ing said drive circuit to disable said drive signal
during at least a portion of said maximum time
period.
’366 Patent col. 13 ll. 33–35 (emphasis added). Claim 14
depends from claim 9 and is therefore subject to the same
limitation. This “soft start circuit” in the ’366 patent, like
the soft start circuit in claim 4 of the ’851 Patent, provides
a signal that cuts off the drive signal. The claim further
informs us that the soft start circuit provides the cutoff
signal “during at least a portion of said maximum time
period.”
While we agree that this functional description is less
illuminating than that recited in claim 4 of the ’851
patent, we find that it suggests sufficient structure to an
ordinarily skilled artisan. Power Integrations conceded
that a skilled artisan would understand the claim limita-
tion as referring to “various soft start circuit structures
[which] accomplish the functions recited in the patent
claims . . . .” J.A. 358. As such, an ordinarily skilled
artisan reading the claim limitation in the context of the
claimed invention, and in light of the specification, would
understand that the limitation connotes “sufficiently
definite structure for performing the identified functions.”
Apex, 325 F.3d at 1373.
Having concluded our review of claim construction, we
reverse the district court’s construction of the “soft start
circuit” limitations in claim 4 of the ’851 Patent and in
claims 9 and 14 of the ’366 patent. On remand, the dis-
27 POWER INTEGRATIONS v. FAIRCHILD SEMI
trict court shall construe those claims according to our
instructions and assess what effects, if any, the new
constructions have on the validity of those claims and on
Fairchild’s infringement thereof. If the court determines
that its constructions raise new, material issues of validi-
ty or infringement, the court shall determine whether to
order a new trial. The court shall determine whether any
such new, material issues are “distinct and separable”
such that a new trial limited to those issues would not
unduly prejudice either party. Cf. Gasoline Prods. Co. v.
Champlin Ref. Co., 283 U.S. 494, 500 (1931). If, in its
discretion, the district court finds that any such new,
material issues may be tried separately without prejudice,
the court may limit any new trial accordingly. The court
should consider the effects of any amendments made in
reexamination.
V. OBVIOUSNESS
At trial, Fairchild argued that claim 1 of the ’876 Pa-
tent would have been obvious in view of the prior art,
which included U.S. Patent No. 4,638,417 (filed Jan. 20,
1987) (“Martin”). The jury returned a verdict of nonobvi-
ousness, and the district court denied Fairchild’s motion
for judgment as a matter of law (JMOL). Fairchild ap-
peals the district court’s denial of its JMOL motion, and
asserts that claim 1 of the ’876 Patent would have been
obvious in view of Martin.
The parties agree that the salient difference between
Martin and the ’876 Patent is Martin’s inclusion of an
EPROM memory. Fairchild contends, however, that
Martin’s EPROM memory is not related to frequency-
jittering and is only necessary to mask the signature of
the power supply. Fairchild thus argues that removing
the EPROM would have been obvious if signature mask-
ing was not required. Because frequency-jittering is
POWER INTEGRATIONS v. FAIRCHILD SEMI 28
desirable independent of signature masking, Fairchild
argues that the invention of the ’876 Patent would have
been obvious in view of Martin.
Power Integrations counters that nothing in the prior
art suggests that Martin’s EPROM “could or should be
removed.” Appellee’s Br. 65. Power Integrations directs
our attention to the many prior art references considered
by Fairchild’s expert, who by his own admission failed to
uncover a single reference lacking Martin’s EPROM
memory. Power Integrations also cites evidence of sec-
ondary considerations of non-obviousness. The evidence
of secondary considerations, Power Integrations argues, is
sufficient to uphold the jury’s verdict that the ’876 Patent
would not have been obvious.
Martin teaches “spread spectrum techniques” that op-
erate in a manner similar to the “frequency-jittering”
functionality of Power Integrations’ ‘876 Patent. Martin’s
spread spectrum techniques, like the frequency-jittering
of the ’876 Patent, reduce generated EMI by spreading it
over a range of frequencies. Martin discloses
[a] power density spectrum controller circuit
which incorporates a programming element in
conjunction with a voltage controlled oscillator
and which uses spread spectrum techniques to
provide a relatively clean output signal having lit-
tle or no ripple, little or no noise and little or no
signature while having a minimum output filter-
ing requirement.
Martin, at [57] (abstract). Martin’s sole figure shows the
general layout of the disclosed power circuit:
29 POWER INTEGRATIONS v. FAIRCHILD SEMI
A voltage controlled oscillator (VCO) (13) produces an
oscillating signal which drives a pulse width modulator
(PWM) (14). The VCO also feeds the oscillating drive
signal back to a counter (10), which counts at a rate
dependent on the oscillating drive signal’s frequency. The
output of the counter is connected to a memory device,
EPROM (11), which stores a pseudo-random code in
digital form. The counter output causes the EPROM to
“selectively step[] . . . through its addressing routine in
order to select the contents of a particular address.”
Martin col. 2 ll. 30–32. The digital output of the EPROM
serves as input to a digital-to-analog converter (D/A) (12),
which converts the digital output to an analog signal.
This analog signal, in turn, controls the frequency of the
oscillating drive signal produced by the VCO. The result
is that the frequency of Martin’s oscillating drive signal
steps through a pseudo-random set of discrete frequency
values, spreading out the power circuit’s generated EMI
and limiting its observable signature.3 Martin refers to
3 Limiting a power supply’s signature—a unique
signal pattern that “identifies [the power supply] much in
the nature of a fingerprint”—is desirable in high-security
applications. Martin col. 1 ll. 24–27. Without signature
masking, a “signature signal can be used to identify a
particular source . . . by means of appropriate spectrum
analyzing.” Id. col. 1 ll. 29–36.
POWER INTEGRATIONS v. FAIRCHILD SEMI 30
this as “spread spectrum” technology.
Martin’s “spread spectrum” technology operates in es-
sentially the same manner as the frequency-jittering in
the ’876 Patent, with the exception that the ’876 Patent
does not use an EPROM memory. Martin, on the other
hand, always includes an EPROM memory between the
counter and digital-to-analog converter (D/A). Martin
does not teach removing the EPROM memory as in the
’876 Patent, nor does Martin suggest that it would be
feasible to do so. Martin’s sole figure indicates that the
EPROM is just as integral as the circuit’s other compo-
nents. Nevertheless, on its face, Martin suggests to the
ordinarily skilled artisan that the purpose of the EPROM
is to mask the power circuit’s signature, not to reduce
EMI through frequency-jittering.
Martin’s “spread spectrum” functionality arises from
periodically changing the frequency of the oscillating
drive signal. The cycles of the oscillating drive signal
increment a counter, and changes to the counter’s value
cause changes in the frequency of the oscillating drive
signal. This is the same principle disclosed in Power
Integrations’ ’876 Patent. Although Martin teaches,
without exception, an EPROM memory between the
counter and D/A, the ordinarily skilled artisan would
understand that the EPROM is necessary only for signa-
ture masking. Essentially, Martin’s EPROM converts
ordinary frequency-jittering, as in the ’876 Patent, to
“masked” frequency-jittering. We thus agree with
Fairchild that an ordinarily skilled artisan would have
understood that Martin’s EPROM was used for signature
masking and not for frequency-jittering.4
4 Listing Martin as an anticipatory prior art refer-
ence, the Patent Office’s Board of Patent Appeals and
31 POWER INTEGRATIONS v. FAIRCHILD SEMI
Our inquiry does not end here, however, and we next
turn to objective considerations, which we sometimes
refer to as “secondary considerations,” as essential com-
ponents of our obviousness analysis. In re Cycloben-
zaprine, 676 F.3d at 1076–79. Objective evidence of
nonobviousness can include copying, long felt but un-
solved need, failure of others, commercial success, unex-
pected results created by the claimed invention,
unexpected properties of the claimed invention, licenses
showing industry respect for the invention, and skepti-
cism of skilled artisans before the invention. In re
Rouffet, 149 F.3d 1350, 1355 (Fed. Cir. 1998) (collecting
cases). These objective considerations can protect against
the prejudice of hindsight bias, which often overlooks that
“[t]he genius of invention is often a combination of known
elements which in hindsight seems preordained.” McGin-
ley v. Franklin Sports, Inc., 262 F.3d 1339, 1351 (Fed. Cir.
2001).
The record here is replete with testimony and other
evidence demonstrating that Power Integrations’ patent-
ed technology was far less obvious than Martin on its face
suggests. Power Integrations offered testimony that
Martin’s EPROM adds expense and imposes design
constraints, a good indication that removing the EPROM
provided otherwise unexpected benefits. Another witness
testified that, because of its components, Martin’s circuit
cannot be integrated on a single chip. Dr. Horowitz,
Fairchild’s obviousness expert, testified that he found
approximately “fifty pieces of prior art,” which he “filtered
down to seven.” When asked at trial whether “each and
Interferences affirmed the examiner’s final rejection of
claim 1 of the ’876 Patent in ex parte reexamination. Ex
parte Power Integrations, Inc., No. 2010-011021, Reexam-
ination No. 90/008,326 (B.P.A.I. 22 Dec. 2010).
POWER INTEGRATIONS v. FAIRCHILD SEMI 32
every one of those [seven] references . . . included
[EP]ROMs,” Dr. Horowitz responded, “Of course.” More
than 11 years passed between Martin’s 1987 issuance and
Power Integrations’ filing of the ’876 Patent in 1998. Yet
no one during those 11 years tapped Martin’s EPROM as
a candidate for removal. One expert, who previously
worked for Philips Electronics, testified that no one in the
industry, including Philips, was able to come up with the
patented invention.
Power Integrations also provided evidence of commer-
cial success of the ’876 Patent. Various witnesses testi-
fied to the overwhelming success of the patented products,
and they uniformly attributed this success to the patented
features. Power Integrations touted the patented fea-
tures in its advertising and marketing materials, as did
Fairchild. One of Fairchild’s data sheets, for example,
exclaims in bold, “Low EMI through Frequency modula-
tion!”. A Fairchild engineer testified that Fairchild added
“frequency scaling” functionality because it was “more
effective” to reduce EMI and “because it was required by
the customers.” Power Integrations has received a num-
ber of awards for its innovations. It characterizes its
invention as collapsing customers’ demands “into a sexy
power supply, something small.”
Significantly, Fairchild competed with Power Integra-
tions by reverse engineering and copying of Power Inte-
grations’ products. One Fairchild engineer testified to
“looking at the circuit” of the ’876 Patent while developing
the accused products. He testified that Fairchild obtained
Power Integrations’ products and datasheets for “bench-
marking,” which he said is “the same” as reverse engi-
neering. Internal documents indicate that Fairchild kept
track of at least some of its efforts to reverse engineer
Power Integrations’ products. The record indicates that
Fairchild fostered a corporate culture of copying, which
33 POWER INTEGRATIONS v. FAIRCHILD SEMI
was not limited to the ’876 Patent.
Considering Martin in light of the evidence in the rec-
ord, the jury in the validity trial returned a general
verdict that claim 1 of the ’876 Patent would not have
been obvious. Although the ultimate conclusion of obvi-
ousness is an issue of law, we must “presume that the
jury resolved the underlying factual disputes in favor of
the verdict winner and leave those presumed findings
undisturbed if they are supported by substantial evi-
dence.” Starceski v. Westinghouse Elec. Corp., 54 F.3d
1089, 1100 (3d Cir. 1995). Objective evidence of second-
ary considerations is a factual dispute underlying obvi-
ousness. Para-Ordnance, 73 F.3d at 1088. We are thus
bound to assume that the jury resolved the evidence of
secondary considerations in favor of Power Integrations.
Having reviewed the record, we find substantial evi-
dence of objective considerations of non-obviousness to
support the jury’s conclusion that claim 1 of Power Inte-
grations’ ’876 Patent would not have been obvious to the
ordinarily skilled artisan. Consequently, the district
court was correct to deny Fairchild’s motion for judgment
as a matter of law.
VI. DAMAGES
The district court bifurcated Power Integrations’ in-
fringement suit into two jury trials: the first addressing
issues of infringement and damages, including willful-
ness, and the second addressing validity of Power Inte-
grations’ patents. Before the trial on infringement and
damages, the parties agreed to a stipulation that
Fairchild made or sold within the United States, or im-
ported into the United States, a number of accused devic-
es having a total value of $765,724. At trial, counsel for
Power Integrations read this stipulation into evidence
POWER INTEGRATIONS v. FAIRCHILD SEMI 34
prior to testimony of Power Integrations’ damages expert.
Ultimately, the jury found that Fairchild had willfully
infringed all asserted patents and awarded past lost
profits due to lost sales ($14,981,828) and price erosion
($1,952,893), future lost profits due to price erosion
($13,018,379), and a lump sum reasonable royalty
($4,028,681), for a total damages award of $33,981,781.
In the trial on validity, the jury found all asserted claims
valid.
After the trial on infringement and damages,
Fairchild moved for remittitur, JMOL, or in the alterna-
tive, a new trial on damages. In its motion, Fairchild
contended that the jury’s damages award was contrary to
law and unsupported by evidence. Specifically, Fairchild
asserted that the jury’s award was based on worldwide
sales and therefore improperly rooted in Fairchild’s
extraterritorial use of the patented inventions.
The district court agreed with Fairchild and ruled
that the total amount of the jury’s damages award was
contrary to law. The court nevertheless found that,
because the jury heard evidence involving third-party
sales in the United States, a portion of the award was
supportable and appropriate under a theory of infringe-
ment by inducement. The court noted that Power Inte-
grations had presented an inducement theory at trial, and
pointed to evidence of Fairchild’s intent to cause in-
fringement in the United States. Based on this theory of
inducement, the district court granted Fairchild’s motion
for remittitur and reduced the jury’s damages award by
82%. The remaining 18%, the court said, represented
U.S. sales for which Fairchild was liable by way of in-
ducement. The court thus remitted the jury’s original $33
million award by 82% resulting in a total award to Power
Integrations of $6,116,720.58.
35 POWER INTEGRATIONS v. FAIRCHILD SEMI
Concurrent with its order of remittitur, the district
court issued a permanent injunction covering all asserted
patent claims, and granted Fairchild’s motion for a new
trial on willfulness given this court’s then-recent decision
in Seagate, 497 F.3d 1360. Following a bench retrial of
the willfulness issue held during June 2009, the district
court found that Fairchild’s infringement was willful in
view of Seagate. In January 2011, the district court
awarded Power Integrations enhanced damages for
willful infringement by doubling the remitted damages
award of $6,116,720.58, for a total award of
$12,233,441.16, not including interest.
In reaching its determination of damages, the district
court made two threshold decisions. First, the district
court found that the jury’s total damages award of over 33
million dollars was contrary to law. Second, the district
court granted Fairchild’s motion for remittitur and re-
duced the worldwide damages award by 82% based on a
theory of induced infringement.
A. JURY AWARD
On cross-appeal, Power Integrations asserts error in
the district court’s determination that the jury’s original
damages award was contrary to law. Accordingly, Power
Integrations asks us to reinstate the jury’s original award
as supported by both law and evidence.
In response, Fairchild makes two separate argu-
ments. First, Fairchild argues that the district court
correctly determined that the jury’s damages award was
based on worldwide sales and thus contrary to law.
Second, Fairchild argues that in formulating its award
the jury relied on inadmissible expert testimony.
POWER INTEGRATIONS v. FAIRCHILD SEMI 36
We first consider whether the jury’s original award
has a valid basis in law.
1. WORLDWIDE SALES
Power Integrations argues that the jury’s original
award of worldwide damages was legally appropriate.
Specifically, Power Integrations argues that it was fore-
seeable that Fairchild’s infringement in the United States
would cause Power Integrations to lose sales in foreign
markets. Thus, Power Integrations argues, the law
supports an award of damages for the lost foreign sales
which Power Integrations would have made but for
Fairchild’s domestic infringement.
As legal authority for its position, Power Integrations
recites established law that once a patentee demonstrates
an underlying act of domestic infringement, the patentee
is entitled to receive full compensation for “any damages”
suffered as a result of the infringement.5 Gen. Motors
Corp. v. Devex Corp., 461 U.S. 648, 654–55 (1983).
5 Our patent damages statute mandates, “[u]pon
finding for the claimant the court shall award the claim-
ant damages adequate to compensate for the infringement,
but in no event less than a reasonable royalty.” 35 U.S.C.
§ 284 (emphasis added). “Congress sought [by the stat-
ute] to ensure that the patent owner would in fact receive
full compensation for ‘any damages’ he suffered as a
result of the infringement.” Gen. Motors Corp, 461 U.S.
at 654–55. Thus, “when a wrong has been done, and the
law gives a remedy, . . . [t]he injured party is to be placed,
as near as may be, in the situation he would have occu-
pied if the wrong had not been committed.” Albemarle
Paper Co. v. Moody, 422 U.S. 405, 418–19 (1975) (quoting
Wicker v. Hoppock, 73 U.S. (6 Wall.) 94, 99 (1867)).
37 POWER INTEGRATIONS v. FAIRCHILD SEMI
According to Power Integrations, this principle of “full
compensation” has no inherent, per se geographical
limits. Power Integrations cites this court’s decision in
Rite-Hite, where we explained that “[i]f a particular injury
was or should have been reasonably foreseeable by an
infringing competitor in the relevant market, broadly
defined, that injury is generally compensable absent a
persuasive reason to the contrary,” 56 F.3d at 1546, and
urges us here to incorporate Fairchild’s foreign sales as
part of “the relevant market.”
Power Integrations’ argument that the broad princi-
ples of “full compensation,” extend to cover Fairchild’s
worldwide sales is not persuasive. It is axiomatic that
U.S. patent law does not operate extraterritorially to
prohibit infringement abroad. Deepsouth Packing Co. v.
Laitram Corp., 406 U.S. 518, 531 (1972), superseded by
statute, Patent Law Amendments Acts of 1984, Pub. L.
No. 98-622, 98 Stat. 3383 (codified at 35 U.S.C. § 271(f)),
as recognized in Microsoft Corp. v. AT&T Corp., 550 U.S.
437 (2007); see also Brown v. Duchesne, 60 U.S. (19 How.)
183, 195 (1856) (“Our patent system makes no claim to
extraterritorial effect; these acts of Congress do not, and
were not intended to, operate beyond the limits of the
United States . . . .” (internal quotation marks omitted)).
Even indirect infringement, which can encompass conduct
occurring elsewhere, see Merial Ltd. v. Cipla Ltd., 681
F.3d 1283, 1302–03 (Fed. Cir. 2012), requires underlying
direct infringement in the United States, Deepsouth, 406
U.S. at 531. Our patent laws allow specifically “damages
adequate to compensate for the infringement.” 35 U.S.C. §
284 (emphasis added). They do not thereby provide
compensation for a defendant’s foreign exploitation of a
patented invention, which is not infringement at all.
Brown, 60 U.S. at 195 (“And the use of it outside of the
jurisdiction of the United States is not an infringement of
POWER INTEGRATIONS v. FAIRCHILD SEMI 38
his rights, and he has no claim to any compensation for
the profit or advantage the party may derive from it.”).
Power Integrations’ “foreseeability” theory of world-
wide damages sets the presumption against extraterrito-
riality in interesting juxtaposition with the principle of
full compensation. Nevertheless, Power Integrations’
argument is not novel, and in the end, it is not persuasive.
Regardless of how the argument is framed under the facts
of this case, the underlying question here remains wheth-
er Power Integrations is entitled to compensatory damag-
es for injury caused by infringing activity that occurred
outside the territory of the United States. The answer is
no.
Power Integrations is incorrect that, having estab-
lished one or more acts of direct infringement in the
United States, it may recover damages for Fairchild’s
worldwide sales of the patented invention because those
foreign sales were the direct, foreseeable result of
Fairchild’s domestic infringement. Power Integrations
has not cited any case law that supports an award of
damages for sales consummated in foreign markets,
regardless of any connection to infringing activity in the
United States. To the contrary, the entirely extraterrito-
rial production, use, or sale of an invention patented in
the United States is an independent, intervening act that,
under almost all circumstances, cuts off the chain of
causation initiated by an act of domestic infringement.
Cf. Morrison v. Nat’l Australia Bank Ltd., 130 S. Ct. 2869,
2884 (2010) (“But the presumption against extraterritori-
al application would be a craven watchdog indeed if it
retreated to its kennel whenever some domestic activity is
involved in the case.”).
The district court determined that the jury had “clear-
ly adopted the measure of damages posed by Power
39 POWER INTEGRATIONS v. FAIRCHILD SEMI
Integrations expert, Dr. Troxel” in reaching the combined
damages award of over $33 million. In view of this de-
termination, the district court correctly concluded that
there was “no legal basis that supports the jury award in
the amount of $33 million” because Dr. Troxel’s estimate
of $30 million in damages was not “rooted in Fairchild’s
activity in the United States.” Indeed, Dr. Troxel testified
on cross-examination that he did not quantify an amount
of damages based on any offer for sale by Fairchild in the
United States. We find neither compelling facts nor a
reasonable justification for finding that Power Integra-
tions is entitled to “full compensation” in the form of
damages based on loss of sales in foreign markets which it
claims were a foreseeable result of infringing conduct in
the United States. See F. Hoffmann-La Roche Ltd. v.
Empagran S.A., 542 U.S. 155, 166 (2004) (finding it
unreasonable to apply the law at issue to conduct that is
significantly foreign, “insofar as that conduct causes
independent foreign harm and that foreign harm alone
gives rise to the plaintiff's claim”).
We thus reject Power Integrations’ argument that
there exists a legal basis sufficient to uphold the jury’s
original damages award, which was based on worldwide
sales and hold that the district court correctly decided
that the jury’s original damages award was contrary to
law.
2. EXPERT TESTIMONY ON DAMAGES
Fairchild additionally challenges the evidentiary basis
of the jury’s award, which was based on a damages esti-
mate provided at trial by Power Integrations’ damages
expert Dr. Troxel. Dr. Troxel formulated his estimate
based on a document describing worldwide shipments of
mobile phones during the third quarters of 2004 and
2005. Although the document relates generally to world-
POWER INTEGRATIONS v. FAIRCHILD SEMI 40
wide sales of mobile phones from all vendors, it contains
more detailed information for some vendors, including
Samsung. Specifically, Dr. Troxel relied on a table in the
document that indicates that during the third quarter of
2005, Samsung shipped 26.8 million phones worldwide,
up from 22.7 million phones during the third quarter in
2004. Dr. Troxel used the worldwide sales data for Sam-
sung’s mobile phones to estimate sales of the accused
power circuits, which Samsung incorporated into its
mobile phone chargers.
On appeal, Fairchild argues that Dr. Troxel’s testimo-
ny was speculative and his data inadmissible. In
Fairchild’s view, Dr. Troxel’s methodology suffered from
layered assumptions and unwarranted speculation.
Fairchild insists that Dr. Troxel made two speculative
leaps in his analysis: First, he assumed that each Sam-
sung mobile phone included a charger. Second, he as-
sumed that each of these chargers incorporated an
infringing power circuit. Fairchild further argues that
the document on which Dr. Troxel relied for Samsung’s
sales data was an unauthenticated hearsay “press re-
lease” retrieved from the Internet. In sum, Fairchild
argues that Dr. Troxel’s testimony, in view of his method-
ology and data sources, was uniquely unreliable and
legally inadmissible.
Power Integrations responds that Dr. Troxel’s meth-
odology was reasonable and his data source reliable.
According to Power Integrations, Dr. Troxel’s methodolo-
gy did not require any more speculation than is usually
permitted in calculating compensatory damages. Power
Integrations further argues that because the document on
which Dr. Troxel relied in his expert analysis would be
reasonably relied upon by experts in his field, the docu-
ment need not be independently admissible.
41 POWER INTEGRATIONS v. FAIRCHILD SEMI
In determining damages, a jury may rely on expert
testimony. 35 U.S.C. § 284. District courts, as gatekeep-
ers, must nevertheless ensure that all expert testimony is
rooted in firm scientific or technical ground. Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589–90 (1993);
Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 148
(1999). To that end, the Federal Rules of Evidence re-
quire that an expert’s testimony be the product of reliable
principles and methods applied to sufficient facts or data.
Fed. R. Evid. 702(b),(c). The trial judge must ensure that
the expert has “reliably applied the principles and meth-
ods to the facts of the case.” Id. at 702(d). Data relied on
by the expert “need not be admissible for the opinion to be
admitted” if experts in the field would reasonably rely on
such data. Fed. R. Evid. 703. The trial judge must have
considerable leeway in deciding how to determine wheth-
er the expert’s testimony is sufficiently reliable. Kumho
Tire, 526 U.S. at 152.
Here, Dr. Troxel’s damages testimony was unreliable
in several respects. Initially, the source of the documents
on which Dr. Troxel relied for his estimate of Samsung’s
worldwide sales is unclear. When asked whether the
provider of the documents “found [them] off the internet,”
Dr. Troxel responded, “I can only assume so.” Power
Integrations’ only response to the questionable source of
Dr. Troxel’s sales documents is that Dr. Troxel “was a
qualified expert, and he found the [documents] and other
materials he considered, while researching the case.” We
disagree with Power Integrations that the source and
reliability of data relied upon by an expert is otherwise
immaterial. Our rules of evidence require that an ex-
pert’s testimony be “the product of reliable principles and
methods” applied to “sufficient facts or data.” Fed. R.
Evid. 702(b),(c). Thus, while an expert’s data need not be
admissible, the data cannot be derived from a manifestly
unreliable source. See Montgomery County v. Microvote
POWER INTEGRATIONS v. FAIRCHILD SEMI 42
Corp., 320 F.3d 440, 448 (3d Cir. 2003) (finding expert’s
data source unreliable where “some of the things that
were shown to [the expert] he didn't seem to know where
they were from or what the source of them were”); cf.
Emigh v. Consol. Rail Corp., 710 F. Supp. 608, 612 (W.D.
Pa. 1989) (“[W]hen the underlying source is so unreliable
as to render it more prejudicial than probative, . . . Rule
703 cannot be used as a backdoor to get the evidence
before the jury.”).
While Dr. Troxel’s data source was unreliable, so was
his methodology. Here, Dr. Troxel made two speculative
leaps. First, the document on which Dr. Troxel relied for
his worldwide damages estimate indicated worldwide
shipments of Samsung’s mobile phones. As Dr. Troxel
testified, however, the infringing power circuits were
found in mobile phone chargers, not in mobile phones.
Dr. Troxel’s sales document does not mention chargers or
otherwise indicate sales of chargers. His analysis as-
sumed that each of Samsung’s phones shipped with a
charger. While Power Integrations is quick to point out
that Dr. Troxel’s assumption was not unreasonable, the
document relied upon by Dr. Troxel does not specify the
nature of the shipments, nor does it provide any reliable
link which might indicate that the shipped phones includ-
ed chargers. Without more, we cannot safely assume that
all of these shipments must have included a charger.
Dr. Troxel’s second speculative step was when he as-
sumed from his document not only that each of Samsung’s
shipments included a charger, but that each of these
chargers incorporated an infringing power circuit. Dr.
Troxel’s sales document lists no model numbers or other
indicia from which he could reasonably infer that
chargers assumed to be included incorporated Fairchild’s
infringing power circuits. Power Integrations’ Vice Presi-
dent of Worldwide Sales testified at trial that several
43 POWER INTEGRATIONS v. FAIRCHILD SEMI
other companies sold competing power circuits to Sam-
sung. Further, Power Integrations retained more than
50% of Samsung’s business. Thus, the data indicate that
at least some of Samsung’s chargers could have incorpo-
rated the competing power circuits or Power Integrations’
own circuits, which do not infringe. Dr. Troxel had no
way to distinguish between infringing and noninfringing
chargers, and his assumption that all chargers incorpo-
rated an infringing power circuit was speculation.
In the end, we are left with an expert opinion derived
from unreliable data and built on speculation. Without
more, Dr. Troxel’s testimony and data regarding world-
wide shipments of Samsung’s mobile phones are too far
removed from the facts of this case, which involves
Fairchild’s infringing power circuits. Dr. Troxel’s layered
assumptions lack the hallmarks of genuinely useful
expert testimony. Kumho Tire, 526 U.S. at 156. Such
unreliable testimony frustrates a primary goal of expert
testimony in any case, which is meant to place experience
from professional specialization at the jury’s disposal, not
muddle the jury’s fact-finding with unreliability and
speculation.
For these reasons, we find that the district court
abused its discretion in admitting Dr. Troxel’s testimony,
which was both unreliable and based on insufficient data.
In view of our other holdings in this case, we do not find
that the district court’s decision to admit Dr. Troxel’s
testimony warrants a new trial.
B. REMITTITUR
Upon rejecting the jury’s original damages award, the
district court considered “the alternatives presented at
trial,” and accepted Power Integrations’ argument that
18% of the infringing devices sold worldwide are eventual-
POWER INTEGRATIONS v. FAIRCHILD SEMI 44
ly imported into the United States by unnamed third
parties. Although in such cases the unnamed third
parties—not Fairchild—would directly infringe the pa-
tents, the court found that the jury had grounds to find
Fairchild liable under a theory of infringement by in-
ducement. As evidence of Fairchild’s intent to induce
infringement, the district court cited Power Integrations’
evidence that Fairchild had indemnified its largest off-
shore customers for potential infringement in the United
States, including Fairchild’s “joint defense agreement
with Samsung and one of [Samsung’s] largest cell phone
charger subcontractors, Dongyang.”
Based on its review, the district court determined that
sufficient evidence existed to support a portion of the
jury’s award “to the extent it was based on inducement of
infringement.” Power Integrations, Inc. v. Fairchild
Semiconductor Int'l, Inc., 589 F. Supp. 2d 505, 512 (D.
Del. 2008). The court based its determination on testimo-
ny from Power Integrations’ expert that 18% of Sam-
sung’s worldwide sales were eventually imported into the
United States. “[T]his figure,” the court said, “necessarily
means that 82% are not imported into the United States.”
Id. Accordingly, the court “reduce[d] the jury’s damages
award by 82%, representing that portion of the infringing
products not imported into the United States.” Id.The 18% domestic sales figure which the district court
adopted is based in the testimony of Dr. Troxel, Power
Intergrations’ expert. To support his testimony that 18%
of Samsung’s mobile phones sold worldwide are imported
into the United States, Dr. Troxel relied on a combination
of two documents: The first document, which we discuss
above in relation to the jury’s award, indicates worldwide
shipments of Samsung mobile phones for the third quar-
ters of 2004 and 2005. The second document indicates
total sales of Samsung mobile phones in the United States
45 POWER INTEGRATIONS v. FAIRCHILD SEMI
during the third quarter of 2005. Like the first document,
the data in the second document relate only to mobile
phones, and not to chargers or power circuits. Combining
the data in these two documents, Dr. Troxel calculated
the percentage of Samsung’s worldwide sales during the
third quarter of 2005 that represented mobile phones
eventually sold in the United States.
On appeal, Fairchild argues that the district court
improperly relied on Dr. Troxel’s estimates in formulating
its remitted damages award. Specifically, Fairchild
argues that Dr. Troxel’s testimony regarding domestic
infringing sales was speculative, based on hearsay inter-
net articles, and ultimately inadmissible. Thus, Fairchild
argues that Dr. Troxel’s testimony regarding third-party
domestic sales was not sufficient to sustain the district
court’s remitted damages award. Fairchild further argues
that the evidence does not support an award of damages
for infringement by inducement, which requires both
specific intent and underlying direct infringement. Ac-
cordingly, while Fairchild agrees with the district court
that the original jury award was contrary to law and
unsupported by the evidence, Fairchild argues that the
district court’s remitted damages award was similarly
improper.
The district court’s decision to base its remittitur on
the 18% figure provided by Dr. Troxel gives credence to
the saying that a tainted data base produces flawed
results. Setting aside whether the decision to grant
remittitur was correct, the evidence on the record does not
support the district court’s decision to base its remitted
damages award on a percentage of Samsung’s worldwide
sales of mobile phones.
First, the district court erred when it relied on Sam-
sung’s worldwide sales of mobile phones as evidence, in
POWER INTEGRATIONS v. FAIRCHILD SEMI 46
value or quantity, of sales of Fairchild’s infringing compo-
nents. As we hold above with respect to the testimony of
Dr. Troxel, such reliance is impermissibly speculative.
The subject data include no indicators that could appro-
priately be used to identify infringing sales. Thus, the
evidence demonstrates no direct connection between
Samsung’s worldwide sales of mobile phones and sales of
Fairchild’s infringing power circuits. See Chiuminatta
Concrete Concepts, Inc. v. Cardinal Indus., Inc., 1 F. App’x
879, 883–84 (Fed. Cir. 2001) (“[I]n cases in which there is
a question whether every sale leads to an instance of
direct infringement, a patentee must . . . establish the
connection between sales and direct infringement.”).
Second, the district court erred when it accepted Dr.
Troxel’s assumption that 18% of Samsung’s worldwide
sales, in value or quantity, were infringing sales made in
the United States. Dr. Troxel based his assumption on a
combination of his first document indicating worldwide
sales of Samsung’s mobile phones, and his second docu-
ment indicating sales of the same in the United States.
Arguably, Dr. Troxel’s data indicate that during the
relevant period 18% of Samsung’s worldwide sales of
mobile phones were sales in the United States. Neverthe-
less, the data do not support Dr. Troxel’s assumption that
the 18% of Samsung’s mobile phones sold in the United
States included chargers incorporating Fairchild’s infring-
ing circuits. In fact, evidence was presented that Sam-
sung sold chargers that did not incorporate Fairchild’s
infringing circuits. As a result, Dr. Troxel’s assumption
that all purported U.S. sales included infringing circuits
amounts to pure speculation. Although direct evidence of
infringement is not required, we consistently require that
the record demonstrate something more than speculation
that infringing activity has occurred. See E-Pass Techs.,
Inc. v. 3Com Corp., 473 F.3d 1213, 1222 (Fed. Cir. 2007)
47 POWER INTEGRATIONS v. FAIRCHILD SEMI
(“[I]t requires too speculative a leap to conclude that any
customer actually performed the claimed method.”).
In sum, Dr. Troxel did not present evidence linking
Samsung’s mobile phone sales data to Fairchild’s infring-
ing power circuits, other than to say that Fairchild sold
its infringing components to Samsung. There is no evi-
dence that the imports of Samsung products included
chargers, nor is there evidence that any included chargers
incorporated Fairchild’s infringing circuits. Accordingly,
the amount of the district court’s remittitur is not sup-
ported by substantial evidence, and we hold that the
district court erred in relying on Dr. Troxel’s inherently
speculative 18% figure.
For the reasons above, we find that Power Integra-
tions adduced insufficient evidence of induced infringe-
ment to sustain the district court’s award of damages
under that theory. Because there was no basis upon
which a reasonable jury could find Fairchild liable for
induced infringement, we vacate the district court’s
damages award.
C. DIRECT INFRINGEMENT
Before the trial on infringement and damages, the
parties agreed to a stipulation that Fairchild made or sold
within the United States, or imported into the United
States, accused devices having a total value of $765,724.6
6 While the parties on appeal do not dispute that
$765,724 is the correct value of the accused products
included in their stipulation, we note an ambiguity in the
record: The stipulation to which the parties have directed
us, and which was read into evidence at trial, specifies
that between February 2004 and October 2005 Fairchild
POWER INTEGRATIONS v. FAIRCHILD SEMI 48
The parties’ stipulation relates to Fairchild’s own manu-
facture, sale, or importation, which on a finding of in-
fringement would amount to stipulated direct
infringement. Fairchild noted the stipulation before the
district court in its motion for remittitur, JMOL, or a new
trial on damages, and again notes the stipulation in its
brief on appeal. At trial, counsel for Power Integrations
read the parties’ stipulation into evidence prior to testi-
mony of Power Integrations’ damages expert Dr. Troxel.
Power Integrations ultimately argued at trial that
Fairchild was liable for infringing activity beyond the
scope of the stipulation, based on comingled theories of
direct and induced infringement.
The jury returned a general verdict awarding Power
Integrations a total of $33,981,781 in damages. The jury’s
total award was divided into individual awards for past
lost profits due to lost sales ($14,981,828), past and future
lost profits due to price erosion ($1,952,893 and
$13,018,379), and a lump sum reasonable royalty
($4,028,681). Although the district court instructed the
jury on both direct and indirect infringement, the verdict
form did not specify whether the jury’s award was based
on a finding of direct infringement, infringement by
inducement, or both. In its order of remittitur, however,
the district court made clear that its remitted award,
representing 18% of the jury’s original damages award,
was based on Power Integrations’ theory of induced
infringement.
manufactured, using a particular process, 2.73 million
units of a particular accused device at a fabrication facili-
ty in Portland, Maine for a total revenue to Fairchild of
$547,724. On remand, the district court should review
and evaluate this discrepancy.
49 POWER INTEGRATIONS v. FAIRCHILD SEMI
As we have already concluded, the record contains in-
sufficient evidence to support Fairchild’s liability for
induced infringement. The record, however, does reflect
evidence that would support a finding of Fairchild’s
liability for direct infringement. Fairchild stipulated that
it made or sold within the United States, or imported into
the United States, accused devices worth $765,724. This
stipulation to Fairchild’s domestic activity was read into
evidence and considered by the jury in the infringement
trial. Following the jury’s infringement verdict,
Fairchild’s stipulation became essentially a stipulation to
direct infringement. Thus, the record supports a finding
of Fairchild’s liability for direct infringement, at least
with respect to the products included in the stipulation.
Where, as here, the jury returns a general verdict, we
must “presume[] the existence of fact findings implied
from the jury's having reached that verdict.” Starceski v.
Westinghouse Elec. Corp., 54 F.3d 1089, 1100 (3d Cir.
1995) (quoting R.R. Dynamics, Inc. v. A. Stucki Co., 727
F.2d 1506, 1516 (Fed. Cir. 1984)). Infringement and
damages are findings of fact, and we review a jury’s
findings on both issues for substantial evidence. Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1309–10
(Fed. Cir. 2009). Here, we must presume that the jury’s
original $33 million award was based on a finding of
direct infringement, and we must honor’s the jury’s
determination of damages to the extent supported by
substantial evidence. See U.S. Const. amend. VII;
Starceski, 54 F.3d at 1100.
Based on the foregoing, we affirm the jury’s implicit
finding that Fairchild is liable to Power Integrations for
direct infringement. See Starceski, 54 F.3d at 1100. We
find the issue of damages from Fairchild’s direct in-
fringement “so distinct and separable from the others that
a trial of it alone may be had without injustice.” See
POWER INTEGRATIONS v. FAIRCHILD SEMI 50
Gasoline Prods., 283 U.S. at 500. On remand, therefore,
the district court shall hold a new trial to determine the
proper amount of damages for Fairchild’s direct infringe-
ment that is supported by substantial evidence in the
existing record. We anticipate that Fairchild’s liability for
direct infringement will be commensurate in scope with
the accused domestic activity to which Fairchild stipulat-
ed. Nevertheless, the parties on appeal have not briefed
this issue, and we acknowledge that the district court is
most fit to make this determination in the first instance.
D. PRICE EROSION
Before the trial on infringement and damages,
Fairchild moved the district court for partial summary
judgment on the issue of pre-suit damages. In its motion,
Fairchild asserted that Power Integrations had failed to
mark its patented products in accordance with 35 U.S.C. §
287, the patent marking statute. Therefore, Fairchild
argued, the marking statute precluded Power Integra-
tions from relying on any “economic or market data prior
to the date” Fairchild was notified of its infringement.7
The district court granted Fairchild’s motion for par-
tial summary judgment. The court specifically “grant[ed]
7 We refer to the date Power Integrations first noti-
fied Fairchild of its alleged infringement as “the date of
notice” or “the notice date.” Here, the district court
determined and the parties do not dispute that the notice
date is October 20, 2004, the date on which Power Inte-
grations first filed suit against Fairchild. See 35 U.S.C. §
287(a) (“Filing of an action for infringement shall consti-
tute such notice.”); see also U.S. Philips Corp. v. Iwasaki
Elec. Co. Ltd., 505 F.3d 1371, 1374 (Fed. Cir. 2007).
51 POWER INTEGRATIONS v. FAIRCHILD SEMI
Fairchild’s request that all actual damages calculations be
based on conditions occurring on or after the October 20,
2004 notice date.” Power Integrations, Inc. v. Fairchild
Semiconductor Int’l, Inc., No. 04-CV-1371, ECF No. 265
(D. Del. Jun. 2, 2006). By its ruling, the court prohibited
Power Integrations from introducing evidence that
Fairchild’s pre-notice infringing sales had depressed the
market price of the patented products, thus reducing
Power Integrations’ profits on sales after the notice date.
Power Integrations cross-appeals the district court’s
decision to exclude evidence of pre-notice price erosion for
the purpose of calculating damages from Fairchild’s post-
notice infringement. Power Integrations urges that, while
the marking statute precludes recovery of damages for
infringement before the notice date, the statute does not
require courts to ignore pre-notice price erosion when
calculating damages for post-notice infringement. Thus,
Power Integrations argues the district court erred in
excluding evidence of pre-notice market data for use in
calculating damages for Fairchild’s infringement that
occurred after the notice date. According to Power Inte-
grations, the court should have admitted evidence regard-
ing price changes from the start of Fairchild’s infringing
activity for use in determining compensation for
Fairchild’s post-notice infringements. Power Integrations
suggests that, when assessing compensable price erosion
for post-notice infringements, we must assess market
conditions at the time Fairchild’s infringing products first
entered the market.
Lost revenue caused by a reduction in the market
price of a patented good due to infringement is a legiti-
mate element of compensatory damages. Indeed, an
“infringer’s activities do more than divert sales to the
infringer. They also depress the price [of the patented
product]. Competition drives price toward marginal cost.”
POWER INTEGRATIONS v. FAIRCHILD SEMI 52
In re Mahurkar Double Lumen Hemodialysis Catheter
Patent Litig., 831 F. Supp. 1354, 1384 (N.D. Ill. 1993),
aff’d., 71 F.3d 1573 (Fed. Cir. 1995). Because the patent-
ee is entitled to what she would have made “had the
Infringer not infringed,” Aro, 377 U.S. at 507, damages for
infringement may account for both lost sales and reduc-
tion of prices due to infringing competition, see Yale Lock
Mfg. Co. v. Sargent, 117 U.S. 536, 551 (1886) (“Reduction
of prices, and consequent loss of profits, enforced by
infringing competition, is a proper ground for awarding
damages.”). We thus recognize the economic principle of
“price erosion” in calculating compensatory damages for
patent infringement. See Crystal Semiconductor Corp. v.
TriTech Microelectronics Int’l, Inc., 246 F.3d 1336, 1357
(Fed. Cir. 2001).
The patent marking statute limits recoverable dam-
ages where a patentee fails to mark her patented prod-
ucts. 35 U.S.C. § 287; see also Wine Ry. Appliance Co. v.
Enter. Ry. Equip. Co., 297 U.S. 387, 397 (1936) (“All these
acts reveal the purpose to require that marks be put on
patented articles for the information of the public.”).
Where a patentee does not appropriately mark her prod-
ucts, she may not recover damages for infringement
occurring before notice to the infringer.8
8 The marking statute provides, with respect to
damages,
In the event of failure so to mark, no damages
shall be recovered by the patentee in any action
for infringement, except on proof that the infring-
er was notified of the infringement and continued
to infringe thereafter, in which event damages
may be recovered only for infringement occurring
after such notice.
53 POWER INTEGRATIONS v. FAIRCHILD SEMI
The marking statute provides a temporal limitation
on damages for infringement. It does not define—nor
does it redefine—acts of infringement. That task is left to
35 U.S.C. § 271(a), which provides that “whoever without
authority makes, uses, offers to sell, or sells any patented
invention . . . infringes the patent.” 35 U.S.C. § 271(a).
While the marking statute limits recovery of damages for
infringement occurring before the “infringer was notified
of the infringement,” the statute refers to the pre-notice
infringing activity as “infringement.” 35 U.S.C. § 287(a)
(emphasis added). Indeed, pre-notice infringement is still
infringement. What differs is that a patentee may not
recover damages for such pre-notice infringement.
In Wang, we were faced with a similar situation.
There, the patentee’s failure to mark its patented prod-
ucts precluded recovery of damages for infringement prior
to notice. There were, however, post-notice infringing
sales for which damages were legally recoverable, and the
district court endeavored to determine a reasonable
royalty rate for these post-notice sales. The district court
determined that the date of a hypothetical royalty negoti-
ation should be the date of notice rather than “the earlier
date, the date on which the patents issued and infringe-
ment of the invention technically began, but for which
plaintiffs are barred by 35 U.S.C. § 287 from seeking
damages.” We reversed on appeal because “the court
confused limitation on damages due to lack of notice with
determination of the time when damages first began to
accrue, and it is the latter which is controlling in a hypo-
thetical royalty determination.” Wang Labs., Inc. v.
Toshiba Corp., 993 F.2d 858, 870 (Fed. Cir. 1993).
We thus acknowledged in Wang that while the mark-
35 U.S.C. § 287(a) (emphasis added).
POWER INTEGRATIONS v. FAIRCHILD SEMI 54
ing statute precludes recovery of damages for pre-notice
infringement, we must assess damages for post-notice
infringement relative to market conditions at the point in
time when infringement began.9 Even the infringer’s pre-
notice infringing activity is part of her whole infringe-
ment, and it is the whole of her infringement which we
must consider in calculating damages for legally compen-
sable post-notice infringement. To the extent an infring-
er’s pre-notice infringement erodes the market price of a
patented product, that price erosion is relevant in deter-
mining for each post-notice act of infringement what the
patentee would have made but for the infringement. See
Aro, 377 U.S. at 507 (asking what the patentee would
have made “had the [i]nfringer not infringed” (emphasis
added)); Amstar Corp. v. Envirotech Corp., 823 F.2d 1538,
1543 (Fed. Cir. 1987) (“In a market with only two viable
competitors, one may infer that the patentee would have
made the infringer’s sales or charged higher prices but for
the infringing competition.”). Accordingly, we hold that a
price erosion analysis relating to damages arising from
post-notice infringement must measure price changes
against infringement-free market conditions, and thus the
proper starting point of such a price erosion analysis is
the date of first infringement.
The district court’s decision to exclude Power Integra-
tions’ evidence of pre-notice price erosion was incorrect as
9 Indeed, the marking statute’s temporal limitation
on damages does not legitimize pre-notice infringement.
That infringing activity, quite definitely, remains an
intrusion on the patentee’s exclusive right. Rather, the
marking statute operates precisely to preclude recovery of
each quantum of damage—that is, each lost sale or rea-
sonable royalty payment—that arises from an act of pre-
notice infringement.
55 POWER INTEGRATIONS v. FAIRCHILD SEMI
a matter of law. We thus reverse the district court’s grant
of partial summary judgment for Fairchild. In the new
trial on damages for direct infringement, the district court
shall admit Power Integrations’ evidence of pre-notice
price erosion that is relevant in calculating damages for
Fairchild’s post-notice direct infringement.
E. ACCOUNTING
Following both jury trials, Power Integrations moved
the district court for an accounting of Fairchild’s post-
verdict infringing sales. The district court denied the
motion due to Power Integrations’ failure to request an
accounting either in its amended complaint or in the
parties’ joint pretrial order. The district court acknowl-
edged some ambiguity as to whether Fairchild had agreed
to an accounting earlier in litigation; nevertheless, the
court found that Power Integrations had not “preserved
its rights to an accounting by expressly requesting one in
either its Amended Complaint or the Final Pretrial Or-
der.” Power Integrations, Inc. v. Fairchild Semiconductor
Int'l, Inc., No. 04-CV-1371, 2008 WL 5263899, at *1 (D.
Del. Dec. 12, 2008).
Power Integrations cross-appeals the district court’s
denial of its post-trial motion for an accounting. Power
Integrations contends that our decision in Finjan, Inc. v.
Secure Computing Corp., 626 F.3d 1197, 1213 (Fed. Cir.
2010), requires an accounting of post-verdict damages.
In Fairchild’s view, Finjan does not control here. Un-
like in Finjan, Fairchild argues, the timing of Power
Integrations’ motion for a post-verdict accounting is
extremely prejudicial. Fairchild insists that Power Inte-
grations’ request for an accounting is a veiled attempt to
remedy its deficient damages case. Fairchild urges us not
to give Power Integrations a “second bite at the apple.”
POWER INTEGRATIONS v. FAIRCHILD SEMI 56
Despite Fairchild’s objection, our decision in Finjan is
on point. There, Finjan challenged the district court’s
decision to deny Finjan an accounting for post-judgment
damages. Id. at 1212. The defendants argued that Finjan
had waived its right to an accounting because Finjan’s
complaint sought only “such damages as it shall prove at
trial.” Id. at 1213. We found that “nothing in this state-
ment forfeited the right to prove damages for sales that
occurred after trial,” and accordingly, we rejected the
defendant’s waiver argument. Id. We noted that Finjan’s
complaint additionally sought “[s]uch further and other
relief as the Court and/or jury may deem proper and just,”
and we found no prejudice from the timing of Finjan’s
motion. Id. “Therefore,” we held, “the district court
should have awarded compensation for any infringement
prior to the injunction.” Id.Power Integrations is correct that it was entitled to an
accounting for Fairchild’s post-verdict infringement.10 We
10 See Finjan, 626 F.3d at 1212–13; see also 35 U.S.C
§ 284 (2012) (“When damages are not found by a jury, the
court shall assess them.”) (emphasis added); Ecolab, Inc.
v. FMC Corp., 569 F.3d 1335, 1353, amended on reh’g in
part, 366 F. App'x 154 (Fed. Cir. 2009) (“To the extent
that an accounting is so required—e.g. to calculate and
award damages for post-verdict sales—the district court
should order an accounting on remand.”); Fresenius USA,
Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1303 (Fed. Cir.
2009) (“A damages award for pre-verdict sales of the
infringing product does not fully compensate the patentee
because it fails to account for post-verdict sales of repair
parts.”); Carborundum Co. v. Molten Metal Equip. Inno-
vations, Inc., 72 F.3d 872, 882 (Fed. Cir. 1995) (explaining
that patentee is “not fully compensated” if “damages
award did not include future lost sales.”); accord Edwards
57 POWER INTEGRATIONS v. FAIRCHILD SEMI
see nothing in the record to suggest that Power Integra-
tions waived its right to a post-verdict accounting. In its
complaint, Power Integrations requested, among other
things, “money damages sustained as a result of defend-
ants’ infringement.” This statement contains no temporal
limit on the damages requested. Power Integrations’
complaint further requested “such other and further relief
as this Court finds just and proper.” As in Finjan, this
open-ended request confirms that Power Integrations
intended no waiver of any appropriate remedy. In any
event, Power Integrations’ purported waiver was unclear
enough that the district court found it “ambiguous”
whether Fairchild had actually agreed at some point to an
accounting. Based on the foregoing, we cannot see how
Power Integrations waived its right to an accounting.
We reverse the district court’s denial of Power Inte-
grations’ motion for an accounting. We are nevertheless
sympathetic to Fairchild’s insistence that a reversal on
Lifesciences AG v. CoreValve, Inc., No. 08-91-GMS, 2011
WL 446203, at *16 (D. Del. Feb. 7, 2011), aff’d in part,
remanded in part, 699 F.3d 1305 (Fed. Cir. 2012) (“The
court will grant . . . an accounting of the number of [in-
fringing] devices made, used, sold . . . through the date of
the order accompanying this memorandum.”); TruePosi-
tion Inc. v. Andrew Corp., No. Civ. 05-747-SLR, 2009 WL
1651042, at*1 n.2 (D. Del. June 10, 2009), aff’d, 389 F.
App’x 1000 (Fed. Cir. 2010) (“The court permitted addi-
tional discovery . . . to complete a post-trial accounting of
damages.”); Becton Dickinson & Co. v. Tyco Healthcare
Grp. LP, No. 02-1694 GMS, 2008 WL 4745882, at *5 (D.
Del. Oct. 29, 2008) (“BD’s request for a post-verdict ac-
counting of damages and interest that BD has incurred
from the sale of [the infringing devices] . . . since October
7, 2007, is GRANTED.”).
POWER INTEGRATIONS v. FAIRCHILD SEMI 58
this issue should not give Power Integrations “a second
bite at the apple.” Accordingly, the district court on
remand shall limit the scope of its accounting to those
post-verdict infringing sales, if any, which are substan-
tially related to the direct infringement by Fairchild
which the district court finds supported by the existing
record. See Fed. R. Civ. P. 59 (“The court may, on motion,
grant a new trial on all or some of the issues . . . .”); cf.
Gasoline Prods., 283 U.S. at 500 (explaining that partial
new trial is permissible if “issue to be retried is so distinct
and separable from the others that a trial of it alone may
be had without injustice”). At this point, Power Integra-
tions has had a full and fair opportunity to develop the
record, and its right to a post-verdict accounting is not an
unlimited after-hours hunting license.
VII. CONCLUSION
In accordance with the foregoing, we affirm the dis-
trict court’s ruling on obviousness. We reverse the dis-
trict court’s construction of the “soft start circuit”
limitations in claim 4 of the ’851 Patent and in claims 9
and 14 of the ’366 Patent. We remand for the district
court to construe those claims and determine what effects,
if any, the new constructions have on the validity of those
patents and on Fairchild’s infringement thereof. We
vacate the district court’s award of damages based on
infringement by inducement, and we remand for a new
trial on damages resulting from Fairchild’s direct in-
fringement. We order an accounting limited to post-
verdict infringing sales related to Fairchild’s direct in-
fringement. Finally, we vacate the district court’s finding
of willful infringement, and we remand with instructions
to reassess willfulness in view of our other holdings in
this case.
59 POWER INTEGRATIONS v. FAIRCHILD SEMI
AFFIRMED-IN-PART, REVERSED-IN-PART,
VACATED-IN-PART, AND REMANDED
COSTS
Each party shall bear its own costs.