Opticurrent, LLC v. Power Integrations, Inc. et al

Filing 338

PUBLIC/REDACTED ORDER Re Post-Trial Motions 292 295 296 298 303 309 313 . Signed by Judge Edward M. Chen on 6/5/2019. (emcsec, COURT STAFF) (Filed on 6/5/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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OPTICURRENT, LLC,

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Plaintiff,

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v.

PUBLIC/REDACTED VERSION
ORDER RE POST-TRIAL MOTIONS

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POWER INTEGRATIONS, INC., et al.,

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United States District Court
Northern District of California

Case No. 17-cv-03597-EMC

Defendants.

Docket No. 292, 295, 296, 298, 303, 309,
313

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Plaintiff Opticurrent, LLC (“Opticurrent”) brought this suit against Defendant Power

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Integrations, Inc. (“PI”), alleging infringement of U.S. Patent No. 6,958,623 (the “’623 patent”).

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The ’623 patent, which was issued to inventor James Congdon in 2005, claims “[a] noninverting

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transistor switch having only three terminals” which “limits the current leakage between the third

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terminal and the second terminal.” Docket No. 1-1. On February 25, 2019, after a four-day trial,

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the jury delivered a verdict finding that: (1) PI literally infringed claim 1 of the ’623 patent; (2) PI

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infringed claim 1 of the ’623 Patent under the doctrine of equivalents; (3) PI did not induce

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infringement of the ’623 patent; and (4) Opticurrent is entitled to damages in the amount of

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$6,666,484.77 (i.e., 3% of PI’s sales, through March 31, 2018, of $222,216,159). Docket No. 285.

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The parties have filed a number of post-trial motions. For the reasons discussed below, the

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Court rules as follows:
(1) PI’s motion for judgment as a matter of law is

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a. DENIED as to literal infringement;

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b. DENIED as to infringement under the doctrine of equivalents;

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c. GRANTED as to the royalty base used to calculate damages;

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d. DENIED as to the royalty rate used to calculate damages;

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e. DENIED as to damages;
(2) Opticurrent’s motion for judgment as a matter of law on induced infringement is

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DENIED;

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(3) Opticurrent’s motion for supplemental judgment on accused products excluded from

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the trial is DENIED;

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(4) Opticurrent’s motion for ongoing royalty is GRANTED;

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(5) Opticurrent’s motion for prejudgment and postjudgment interest is GRANTED;

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(6) Opticurrent’s motion for attorneys’ fees is DENIED;
(7) PI’s motion to stay execution of judgment pending appeal is DENIED.

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I.

United States District Court
Northern District of California

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A.

LEGAL STANDARDS

Judgment as a Matter of Law
A party may make a motion under Federal Rule of Civil Procedure 50(a) for judgment as a

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matter of law before a case is submitted to the jury. If the court denies or defers ruling on the

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motion, and the jury then returns a verdict against the moving party, the party may renew its

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motion under Rule 50(b). E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir.

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2009). A court “review[s] a jury’s verdict for substantial evidence in ruling on a properly made

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motion under Rule 50(b).” Id. “The test applied is whether the evidence permits only one

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reasonable conclusion, and that conclusion is contrary to the jury’s verdict.” Barnard v. Theobald,

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721 F.3d 1069, 1075 (9th Cir. 2013) (quoting Josephs v. Pac. Bell, 443 F.3d 1050, 1062 (9th Cir.

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2005)). Thus, judgment as a matter of law should be granted only where “there is no legally

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sufficient basis for a reasonable jury to find for that party on that issue.” Krechman v. Cnty. of

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Riverside, 723 F.3d 1104, 1109–10 (9th Cir. 2013) (quoting Jorgensen v. Cassiday, 320 F.3d 906,

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917 (9th Cir. 2003)). “[I]n entertaining a motion for judgment as a matter of law, the court . . .

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may not make credibility determinations or weigh the evidence,” and “may not substitute its view

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of the evidence for that of the jury.” Id. at 1110 (citations and internal quotation marks omitted).

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B.

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New Trial
A court may grant a new trial under Rule 59 “if ‘the verdict is contrary to the clear weight
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of the evidence, or is based upon evidence which is false, or to prevent, in the sound discretion of

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the trial court, a miscarriage of justice.’” United States v. 4.0 Acres of Land, 175 F.3d 1133, 1139

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(9th Cir. 1999) (quoting Oltz v. Saint Peter’s Community Hosp., 861 F.2d 1440, 1452 (9th Cir.

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1988)). Unlike on a motion for a judgment as a matter of law, when considering a motion for a

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new trial, the Court “can weigh the evidence and assess the credibility of witnesses, and need not

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view the evidence from the perspective most favorable to the prevailing party.” Landes Constr.

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Co. v. Royal Bank of Canada, 833 F.2d 1365, 1371 (9th Cir. 1987). However, a motion for new

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trial should not be granted “simply because the court would have arrived at a different verdict.”

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Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002).
II.

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United States District Court
Northern District of California

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A.

DISCUSSION

PI’s Post-Trial Motions
PI moves for judgment as a matter of law or, in the alternative, for a new trial, on several

issues. Docket No. 309 (“PI Mot.”) at 1.

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1.

Literal Infringement

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PI argues that Opticurrent failed to prove that PI literally infringed the ’623 patent. PI

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Mot. at 5–6. In so arguing, PI fixates upon the preamble to claim 1 of the ’623 patent, which

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describes the claimed invention as “[a] noninverting transistor switch having only three

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terminals.” Docket No. 1-1. PI insists that its accused products do not literally infringe because

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they are switches with four terminals, not three. PI Mot. at. 5. However, Judge Gilstrap already

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declined to adopt this simplistic reading of the claim language during claim construction when he

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ruled that the phrase “a noninverting transistor switch having only three terminals” means “a

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noninverting transistor switch with three terminals that does not have a fourth terminal connected

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to a power supply.” Docket No. 58 at 13 (emphasis added). Judge Gilstrap explicitly rejected PI’s

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contention that the preamble language limits the ’623 patent to switches with “no more than three”

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terminals, noting that the patent specification “states that a three terminal noninverting transistor

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switch may have a fourth terminal/pin and still be considered a three terminal switch.” Id. at 12–

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13. PI’s argument that its accused products do not infringe because they contain more than three

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terminals is not availing; it ignores the claim construction ruling herein.
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The more salient question is whether the fourth terminal in the accused products is

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“connected to a power supply.” Id. at 13. If it is, then the accused products would not infringe

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under the Court’s claim construction. PI claims it “introduced unrebutted evidence” at trial that

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“its accused products cannot be used unless the fourth pin is attached to an external capacitor that

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is necessary to supply power to the chip.” PI Mot. at 5–6. However, Opticurrent’s expert testified

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that the external capacitor is not a “power supply” because the capacitor itself receives its power

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from an external power source, and serves as a filter for the external power source rather than an

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independent source of power. See Tr. at 345:22–346:9, 347:11–351:13, 621:2–622:23. In the face

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of this evidence, PI’s characterization of its products is not the “only one” permitted by the
evidence, Barnard, 721 F.3d at 1075; nor is the jury’s verdict of infringement “contrary to the

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United States District Court
Northern District of California

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clear weight of the evidence,” 4.0 Acres of Land, 175 F.3d at 1139. The jury could reasonably

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have credited Opticurrent’s explanation that the capacitor in PI’s accused products is not a “power

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supply.”

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Accordingly, PI’s motion is DENIED with respect to literal infringement.

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2.

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PI also contends that Opticurrent failed to prove infringement under the doctrine of

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equivalents. PI Mot. at 6–8. As with its literal infringement arguments, however, PI’s position on

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this point is fundamentally a disagreement with the Court’s claim construction and the jury’s

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weighing of the evidence and is therefore unpersuasive.

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Infringement under the Doctrine of Equivalents

PI’s primary argument is that Opticurrent was “required to show . . . the presence of a

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‘noninverting transistor switch having only three terminals’” because the “all elements rule”

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requires that all claim elements must be established under the doctrine of equivalents. PI Mot. at

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6. As explained above, Judge Gilstrap construed “having only three terminals” to mean “not

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hav[ing] a fourth terminal connected to a power supply.’” Docket No. 58 at 13. And Opticurrent

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presented evidence to the jury to counter PI’s characterization of its accused products containing a

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fourth terminal connected to a power supply. The jury weighed the competing evidence and

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concluded that the fourth terminal in PI’s products is not connected to a power supply, and

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therefore that all elements of claim 1 of the ’623 patent are present in the accused products. This
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conclusion was not unreasonable in light of the evidence at trial.
Citing the proposition that “the concept of equivalency cannot embrace a structure that is

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specifically excluded from the scope of the claims,” Dolly, Inc. v. Spalding & Evenflo Companies,

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Inc., 16 F.3d 394, 400 (Fed. Cir. 1994), PI claims that its four-terminal switches are specifically

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excluded by the ’623 patent’s “only three terminals” language, PI Mot. at 7. Again, the ’623

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patent, as construed by Judge Gilstrap, does exclude switches that contain a fourth terminal

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connected to a power supply. But the jury determined, on the basis of the evidence proffered at

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trial, that the accused products do not contain a fourth terminal connected to a power supply. PI’s

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accused products thus are not “specifically excluded” from the claims as construed herein.

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PI’s third argument is that Opticurrent’s equivalence theory relied on “comparing the

United States District Court
Northern District of California

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internal capacitor in [the inventor] Mr. Congdon’s breadboard (and associated drawing) with the

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external capacitor used by the accused products.” PI Mot. at 7. According to PI, this contravened

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the Court’s instruction to the jury that “in deciding the issue of infringement you may not compare

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PI’s accused products to Mr. Congdon’s breadboard product or the accompanying drawing.

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Rather, you must compare PI’s accused products to claim 1 of the ’623 patent when making your

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decision regarding infringement.” Jury Instruction No. 29. In particular, PI highlights the

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following exchange from the direct examination of Dr. Regan Zane, Opticurrent’s expert witness:

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Q: Now, looking back at the patent, Exhibit 4, in the language we
were talking about, Dr. Zane, is the use of the capacitor with the
voltage stabilizer, like we just described in Exhibit 32, is that an
alternative type of conventional voltage stabilizer which is well
known in the art?
A: It could be considered so, yes. Although in this case in the
diagram that was shown previously, the voltage stabilizer really is
still the transistor I identified as a voltage stabilizer. The capacitor is
simply helping that voltage stabilizer be more reliable, more robust,
because it helps filter that node.

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Tr. 325:2–12. PI claims that here, Dr. Zane was “expressly using” Trial Exhibit 32—Mr.

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Congdon’s drawing—“to argue equivalents.” PI Mot. at 7.

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PI did not object to this portion of testimony during trial. In any event, the context

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indicates Dr. Zane was merely illustrating a term from the ’623 patent itself. The ’623 patent

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includes circuit diagrams showing a transistor labeled “MOSFET 123.” Docket No. 1-1 at Fig. 5.
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The patent explains that “MOSFET 123 functions as a voltage stabilizer,” and “could be replaced

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by alternative types of conventional voltage stabilizers which are well known in the art without

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departing from the spirit of the present invention.” Id. at col. 6:37–46. Opticurrent, through Dr.

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Zane’s testimony, referenced this language to demonstrate that a capacitor such as the one in PI’s

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accused products is an example of a “conventional voltage stabilizer which is well known in the

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art,” and therefore that the accused products’ use of a capacitor connected to the fourth terminal

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was contemplated by the ’623 patent. See Tr. at 321:1–20. In other words, Opticurrent did not

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compare the accused products to Congdon’s drawing but to the ’623 patent, to which the drawing

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gave meaning. Opticurrent’s line of questioning was not improper.

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Finally, PI argues that Opticurrent’s equivalence presentation ran afoul of the principle that

United States District Court
Northern District of California

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“equivalent infringement is not available for structures which were known to the patent applicant

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at the time of his application but were not disclosed in the patent.” PI Mot. at 8 (quoting Sipex

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Corp. v. Maxim Integrated Prod., Inc., No. CIV.A. 99-10096-RWZ, 2002 WL 1046699, at *1 (D.

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Mass. May 24, 2002)); see Chiuminatta Concrete Concepts, Inc. v. Cardinal Indus., Inc., 145 F.3d

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1303, 1311 (Fed. Cir. 1998) (holding that equivalence cannot be found where “given the prior

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knowledge of the technology asserted to be equivalent, it could readily have been disclosed in the

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patent”). PI asserts that Mr. Congdon did not disclose that his claimed invention could incorporate

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a capacitor in the ’623 patent. To the contrary, Mr. Congdon did exactly that in the patent when

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he made clear that the MOSFET 123 “could be replaced by alternative types of conventional

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voltage stabilizers which are well known in the art without departing from the spirit of the present

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invention.” Docket No. 1-1 at col. 6:37–46. As Dr. Zane explained at trial, a capacitor is an

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example of a conventional voltage stabilizer well known in the art. See Tr. at 321:1–20.

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Accordingly, PI’s motion is DENIED with respect to infringement under the doctrine of
equivalents.

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3.

Royalty Base

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The jury awarded Opticurrent damages in the amount of $6,666,484.77, calculated using a

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royalty rate of 3% and a royalty base of $222,216,159. See Docket No. 285 at 2. The royalty base

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was derived from PI’s sales revenue from April 2010 through March 2018. Tr. at 763:1–767:22.
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During that period, the worldwide sales of PI’s accused products totaled $666,648,477, of which

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an estimated one-third—$222,216,159—eventually entered the United States. Id. PI asserts that

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the royalty base used by the jury lacks an evidentiary basis because “Opticurrent’s argument that

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one-third of PI’s products entered the United States was based on an inducement theory.” PI Mot.

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at 4 (emphasis in original). Since the jury has found that there was no induced infringement, PI

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reasons, the one-third figure cannot be sustained as a basis for damages. Id. PI accordingly asks

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the Court to reduce the royalty base to 6% of PI’s sales. Id. at 3–4.

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a.

Background Principles

PI’s argument implicates two established principles of patent law. The first is that “[t]he
royalty base for reasonable royalty damages cannot include activities that do not constitute patent

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United States District Court
Northern District of California

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infringement, as patent damages are limited to those ‘adequate to compensate for the

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infringement.’” Enplas Display Device Corp. v. Seoul Semiconductor Co., Ltd., 909 F.3d 398,

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411–12 (Fed. Cir. 2018) (quoting AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1343 (Fed. Cir.

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2015)). The second is that “patent laws, like other laws, are to be understood against a

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background presumption against extraterritorial reach.” Carnegie Mellon Univ. v. Marvell Tech.

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Grp., Ltd., 807 F.3d 1283, 1306 (Fed. Cir. 2015) (citing Microsoft Corp. v. AT & T Corp., 550

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U.S. 437, 454 (2007)). The patent laws provide “a clear definition of what conduct Congress

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intended to reach—making or using or selling in the United States or importing into the United

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States” any patented invention without authority. Id. (citing 25 U.S.C. § 271(a)) (emphases in

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original). Accordingly, “[w]here a physical product is being employed to measure damages for

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the infringing use of patented methods, . . . territoriality is satisfied when and only when any one

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of those domestic actions for that unit (e.g., sale) is proved to be present.” Id.

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b.

Evidence

The uncontroverted evidence at trial showed that PI makes, uses, and sells the vast

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majority of its accused chips abroad. Although the accused products are designed in California,

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they are manufactured in Asia. Tr. at 778:14–22. Most of the products are sold in China. Id. at

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779:2–3. PI only sells “approximately 5 or 6 percent” of its products in the United States. Id. at

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779:4–9. For the products sold abroad, no part of PI’s sales process takes place in the United
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States. Id. at 779:10–14. The buyers of those products incorporate PI’s chips into power supply

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products and then sell them to end-users. Id. at 779:15–24. PI estimates that approximately one-

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third of its accused chips “eventually make their way into the United States” through these power

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supply products manufactured by third parties. Id. at 780:4–8. This estimate is based on “a

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general rule of thumb that roughly for the global volumes of electronic products made . . . roughly

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30 percent is consumed in the U.S.” Id. at 766:9–14. Ben Sutherland, PI’s vice president of

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worldwide sales, made clear that it was PI’s customers, not PI itself, that imported the accused

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products into the United States:

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United States District Court
Northern District of California

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Q: And who is it that is importing that third into the United States?
A: That’s a good question. We’re kind of disconnected from that
part of the process because we’re not involved in it. But I could
imagine it’s companies like Dell or Samsung themselves would
move their goods around the world and bring them into the U.S.

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Id. at 780:9–15 (emphasis added). Opticurrent introduced no evidence controverting Mr.

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Sutherland’s testimony that only 5 or 6 percent of PI’s revenue is domestic. Id. at 782:22–783:1.

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c.

Analysis

Courts “afford substantial deference to a jury’s finding of the appropriate amount of

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damages,” and must uphold the jury’s award “[u]nless the amount is grossly excessive or

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monstrous, clearly not supported by the evidence, or based only on speculation or guesswork.”

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Harper v. City of Los Angeles, 533 F.3d 1010, 1028 (9th Cir. 2008) (internal quotation marks

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omitted). On the above evidence, the jury could reasonably conclude that the proper royalty base

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from which to calculate damages for PI’s direct infringement is 6% of PI’s worldwide sales,

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because that is the portion of revenue derived from accused chips that PI itself “makes, uses, offers

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to sell, or sells . . . within the United States or imports into the United States.” 35 U.S.C. § 271(a).

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But there was no evidentiary basis for the jury to determine that the remainder of PI’s accused

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products that eventually find their way into the United States could be included in the royalty base

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for direct infringement, because Mr. Sutherland’s undisputed testimony established that those

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products were imported by PI’s customers, not by PI.1 Thus, PI could only be liable for damages

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arising from the sales of those products if the jury found that PI induced its customers to infringe.

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The jury found no inducement. Accordingly, the jury’s use of the royalty base of one-third of PI’s

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worldwide sales to assess damages for direct infringement is “clearly not supported by the

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evidence.” Harper, 533 F.3d at 1028. See France Telecom S.A. v. Marvell Semiconductor Inc.,

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39 F. Supp. 3d 1080, 1103 (N.D. Cal. 2014) (precluding damages based on defendant’s sale of

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accused semiconductor chips because “there is no genuine issue of material fact that all sales of

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the accused chips happened abroad,” notwithstanding that “the chips may ultimately end up and be

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used in the United States”).
Opticurrent nevertheless insists, relying on Carnegie Mellon Univ. v. Marvell Tech. Grp.,

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United States District Court
Northern District of California

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Ltd., 807 F.3d 1283 (Fed. Cir. 2015), that the jury used the correct royalty base. Docket No. 321

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at 3–4. In Carnegie Mellon, the defendant Marvell, a California-based company, was alleged to

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have infringed two patents relating to semiconductor chips. Carnegie Mellon Univ. v. Marvell

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Tech. Grp., Ltd., 986 F. Supp. 2d 574, 582 (W.D. Pa. 2013). Marvell manufactured the infringing

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chips in Taiwan and sold them to makers of hard-disk drives, who incorporated the chips into the

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drives. Id. at 592–93. The hard-disk drives were then incorporated into laptops, and some of

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those laptops were eventually imported back to the United States. Id. at 594. The jury found that

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Marvell had infringed both patents, and awarded the plaintiff, CMU, a royalty based on Marvell’s

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worldwide sales. Carnegie Mellon, 807 F.3d at 1291–92. On appeal, Marvell challenged the

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royalty base used by the jury. The Federal Circuit held that the chips that Marvell manufactured

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and sold abroad but were ultimately imported into the United States were properly included in the

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royalty base. Id. at 1305.
Opticurrent reads Carnegie Mellon’s analysis as controlling the outcome in this case

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because one-third of the accused chips that PI manufactured and sold abroad were ultimately

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Opticurrent argues that “the QBar license constitutes . . . evidence permitting the jury to find
that, in a hypothetical negotiation, Mr. Congdon and Defendant would have agreed to royalty base
used by the jury,” because “the QBar license was for ‘worldwide’ rights.” Docket No. 321 at 5.
However, the QBar license was introduced as a reference point for the jury to determine a royalty
rate for the ’623 patent, not a royalty base.
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imported into the United States. But there is a crucial distinction between the two cases. Unlike

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here, in Carnegie Mellon, the “jury found that Marvell both directly and indirectly infringed the

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two (method) claims at issue by developing, testing, and selling to its customers.” Id. at 1294

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(emphasis added). Indeed, the district court emphasized that “CMU’s liability theories against

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Marvell are critical to understanding the jury’s damages award” because “CMU argued that that

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Marvell directly infringed the CMU Patents . . . as well as indirectly infringed by inducing and

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contributing to the infringement by its customers in the United States.” Carnegie Mellon, 986 F.

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Supp. 2d at 634–35. The finding of inducement allowed the jury to impose liability on Marvell for

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chips that were imported to the United States by Marvell’s customers.
Opticurrent attempts to explain that distinction away by pointing out that “the Federal

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United States District Court
Northern District of California

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Circuit expressly analyzed whether Marvell’s importation activities triggered damages under

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Section 271(a),” which supposedly addresses “direct infringement,” not induced infringement.

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Docket No. 321 at 4 n.1. Opticurrent misreads Carnegie Mellon. Any finding of induced

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infringement necessarily hinges on the applicability of § 271(a) because “[i]nducement liability

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requires a showing of direct infringement by a third party.” Semiconductor Energy Lab. Co. v.

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Chi Mei Optoelectronics Corp., 531 F. Supp. 2d 1084, 1112 (N.D. Cal. 2007) (citing Moleculon

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Research Corp. v. CBS, Inc., 872 F.2d 407, 410 (Fed. Cir. 1989)). The Carnegie Mellon court’s

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assessment of damages against Marvell for inducement was thus predicated on the determination

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that Marvell’s customers violated § 271(a). Carnegie Mellon does not stand for the proposition

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that a finding of direct infringement alone subjects the infringer to damages for every subsequent

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sale, use, or importation by its customers, even if the infringer had no knowledge of or did not

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foresee its customers’ activities. Such a notion defies common sense, as it would render moot

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inducement as a distinct basis for liability where accused products eventually and indirectly find

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their way into the United States. Indeed, at the hearing, Opticurrent’s counsel acknowledged that

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his interpretation of Carnegie Mellon would allow a patentee to recover damages for induced

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infringement even after a jury verdict of no inducement. Liability would obtain no matter how

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remote, unintended, or unforeseeable the ultimate importation of the product incorporating the

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accused product. A footnote in Opticurrent’s motion seeking judgment as a matter of law on
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inducement similarly exposes the illogicality of Opticurrent’s position: “This relief sought in this

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Motion would be a moot point if the Court upholds the royalty base found by the jury to which

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Power Integrations now objects.” Docket No. 317 at 1 n.1.

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Given that PI did not induce infringement, there is no evidentiary basis to support a

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royalty base of $222,216,159. Instead, the trial evidence can only support a royal base of 6% of

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PI’s worldwide sales.

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d.

Waiver/Estoppel

Opticurrent contends that PI is barred from challenging the royalty base for two reasons.

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First, Opticurrent asserts that PI waived its challenge by failing to object to the one-third royalty

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base before and during trial. Not so. Before trial, PI expressly preserved its “challenge [to] the

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United States District Court
Northern District of California

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royalty base . . . through fact witnesses, cross-examination, and attorney argument.” Docket No.

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184 at 4 (PI’s opposition to Opticurrent’s motions in limine). PI then raised such a challenge at

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trial by eliciting Mr. Sutherland’s testimony that only 6% of PI’s revenue derive from its own

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domestic sales. Moreover, PI filed a Rule 50(a) motion in which it specifically argued that

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“[m]ost of Opticurrent’s claimed damages are based on alleged inducement, not alleged direct

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infringement” and therefore that “at least 94% of PI’s pre-suit sales . . . must be excluded from

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damages.” Docket No. 281 at 2. Accordingly, PI did not waive its challenge to the royalty base.

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Second, Opticurrent urges the Court to apply the doctrine of judicial estoppel against PI for

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a position PI took in Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., No.

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04-cv-1371-LPS (D. Del. filed Oct. 20, 2004). Docket No. 321 at 6–8. In that case, as the

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prevailing plaintiff in a patent infringement action, PI argued that it was entitled to damages from

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Fairchild for lost profits worldwide due to infringement in the United States. Id., Exh. 7 at 1. PI

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cited the Supreme Court’s recent decision in WesternGeco LLC v. ION Geophysical Corp., 138 S.

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Ct. 2129 (2018) as support for its position that “foreseeable foreign losses are properly included in

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U.S. patent damages.” Docket No. 321, Exh. 7 at 2. That position, according to Opticurrent,

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contradicts PI’s position in this case that it is not liable for foreign damages absent a finding of

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inducement, so PI should be judicially estopped from asserting it here.

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Judicial estoppel “generally prevents a party from prevailing in one phase of a case on an
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argument and then relying on a contradictory argument to prevail in another phase.” New

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Hampshire v. Maine, 532 U.S. 742, 749 (2001) (citation omitted). For the doctrine to apply, “a

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party’s later position must be clearly inconsistent with its earlier position.” Id. at 750–51. There

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is no clear inconsistency here. In Fairchild, PI’s assertion that it is entitled to recover for foreign

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losses relied on evidence in the record that the defendant “manufactured infringing chips in the

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United States” and “offered infringing products to [customers] with the involvement of its U.S.

7

sales force, causing PI to drastically reduce its prices.” Docket No. 321, Exh. 7 at 2. That is,

8

domestic infringement caused the foreign losses. In contrast, there is no evidence in this case that

9

PI manufactured or sold accused chips within the United States. The only type of domestic
infringement Opticurrent has established on PI’s part is a small percentage of sales within the

11
United States District Court
Northern District of California

10

United States. Opticurrent has presented no evidence that those sales caused it to suffer foreign

12

losses. PI’s position in Fairchild is not inconsistent with its position here. Judicial estoppel does

13

not apply.

14

Therefore, PI’s motion for judgment as a matter of law is GRANTED as to the royalty

15

base. The royalty base is adjusted to 6% of PI’s worldwide sales, i.e., $39,998,908.62. Multiplied

16

by the royalty rate of 3%, this produces a damages figure of $1,199,967.26.

17

4.

Royalty Rate

18

PI next asks the Court to reduce the 3% royalty rate awarded by the jury to 2%. PI Mot. at

19

4–5. The QBar license, which Opticurrent presented to the jury as a reference point for

20

determining the royalty rate, set a 3% rate for an exclusive license, but specified that “[i]n the

21

event the license granted hereunder is converted into a non-exclusive license . . . the percentage

22

royalty on Net Sales shall be reduced to two percent.” Trial Exhibit 2. PI argues that “Opticurrent

23

failed to introduce any evidence that the license resulting from the hypothetical negotiation in this

24

case would be exclusive,” and therefore that the 2% rate is appropriate. PI Mot. at 5.

25

Opticurrent does not dispute that, as a starting point, a royalty rate of 2% may have been

26

appropriate based on the non-exclusive rate in the QBar license. See Docket No. 321 at 11.

27

However, Opticurrent asserts that it is a “fair inference” that the jury decided to award a 3% rate in

28

light of the evidence Opticurrent adduced that the ’623 patent significantly improves on the ’323
12

1

patent that was the subject of the QBar license. Id. For instance, Mr. Congdon explained that the

2

’323 patent produced a “leakage current” that led to “standby energy waste,” such that a product

3

containing the patented switch would “burn power all the time that it’s plugged in” to a power

4

outlet. Tr. at 493:20–494:3. The ’623 patent improved on the ’323 patent by “stop[ping] that

5

energy waste.” Id. at 494:3–7. Dr. Zane confirmed that the ’323 patent had the “drawback” of

6

“leak[ing] current from . . . high voltage, and opined that the ’623 patent represented an

7

improvement on the ’323 patent because “a modification applied in the ’623 [patent] . . . allows it

8

to avoid the problem . . . [of] having that leakage path through the device.” Tr. at 296:8–297:4,

9

298:22–299:12. David Kung, PI’s director of design engineering, provided additional context for
understanding the value of the improvements in the ’623 patent when he explained that energy

11
United States District Court
Northern District of California

10

efficiency is “actually the main advantage” of the design of PI’s accused chips (which the jury

12

ultimately decided infringed the ’623 patent). Tr. at 633:16–634:11. He informed the jury that

13

“people . . . want high efficiency, they pay a lot of extra money to get high efficiency,” and in fact

14

“in the field in real-world power supplies,” the “whole world is asking for [energy efficiency] right

15

now.” Id. The testimony of Mr. Congdon, Dr. Zane, and Mr. Kung are substantial evidence of the

16

value of the ’623 patent that support the jury’s decision to award a higher royalty rate for that

17

patent than what was set forth in the QBar license.2 See Whitserve, LLC v. Computer Packages,

18

Inc., 694 F.3d 10, 26 (Fed. Cir. 2012) (jury awards are reviewed under the substantial evidence

19

standard).
PI counters that Opticurrent cannot use the 2% non-exclusive rate in the QBar license as

20
21

the baseline onto which to add the value of the improvements in the ’623 patent. Docket No. 323

22

at 5–6. PI submits that using a 2% baseline would attribute value to the ’323 patent, which

23
24
25
26
27
28

2

The jury was instructed that it may consider the Georgia-Pacific factors in determining a
reasonable royalty rate. See Jury Instruction No. 36. Several of those factors bear directly on the
issue of discerning the value attributable to an improvement in a patent. For example, factor nine
refers to “[t]he utility and advantages of the patented property over the old modes or devices,” and
factor thirteen refers to “[t]he portion of the realizable profits that should be credited to the
invention as distinguished from non-patented elements.” Id.; see AstraZeneca, 782 F.3d at 1338
(noting that “the standard Georgia-Pacific reasonable royalty analysis takes account of the
importance of the inventive contribution in determining the royalty rate that would have emerged
from the hypothetical negotiation”).
13

1

Opticurrent has not asserted against PI, and which had expired by the start of the damages period

2

in this case. Docket No. 323 at 5–6. Instead, PI argues that Opticurrent must isolate the value of

3

the improvement in the ’623 patent (i.e., the incremental value of the ’632 patent over the ’323

4

patent) and use only that value to calculate the royalty rate. Id.

5

PI is correct that in general, “the patent owner must apportion or separate the damages

6

between the patented improvement and the conventional components of the multicomponent

7

product” to “ensure[] that [the patent owner] is compensated for the patented improvement . . .

8

rather than the entire [product].” Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prod. Grp.,

9

LLC, 879 F.3d 1332, 1348 (Fed. Cir. 2018) (citations omitted); see also Ericsson, Inc. v. D-Link
Sys., Inc., 773 F.3d 1201, 1233 (Fed. Cir. 2014) (“[T]he patent holder should only be compensated

11
United States District Court
Northern District of California

10

for the approximate incremental benefit derived from his invention.”) (citing Garretson v. Clark,

12

111 U.S. 120, 121 (1884)). However, in reviewing the jury award, the Court must bear in mind

13

that “[t]he determination of a damage award is not an exact science,” Del Mar Avionics, Inc. v.

14

Quinton Instrument Co., 836 F.2d 1320, 1327 (Fed. Cir. 1987), and when “the amount of the

15

damages cannot be ascertained with precision, any doubts regarding the amount must be resolved

16

against the infringer,” Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056, 1065 (Fed. Cir. 1983).

17

Here, even assuming that no part of the royalty rate can be based on the technology taught by the

18

’323 patent, the evidence presented at trial about the importance of the energy efficiency

19

advantages of the ’623 patent and the significant improvement of the ’623 patent over the ’323

20

patent was sufficient to support a jury awarding a 3% rate for the value of the improvement alone.

21

Accordingly, PI’s motion is DENIED with respect to the royalty rate.

22

5.

23

PI next asks the Court to enter judgment as a matter of law that Opticurrent failed to prove

Damages

24

damages at trial, in several ways.

25

a.

26

Apportionment and Entire Market Value Rule

First, PI protests that Opticurrent did not apportion damages between the infringing aspects

27

of PI’s products that are attributable to the value of the ’623 patent and the noninfringing aspects

28

covered by the expired ’323 patent. PI Mot. at 11. Apportionment is the well-established
14

1

principle that “where multi-component products are involved,” the “damages awarded for patent

2

infringement must reflect the value attributable to the infringing features of the product, and no

3

more.” Commonwealth Sci. & Indus. Research Organisation v. Cisco Sys., Inc., 809 F.3d 1295,

4

1301 (Fed. Cir. 2015) (citations and internal quotation marks omitted). Apportionment requires

5

that a damages theory “must separate the value of the allegedly infringing features from the value

6

of all other features.” Id. (quoting VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1329 (Fed. Cir.

7

2014)). At the most basic level, PI is correct that Opticurrent’s damages theory had to isolate the

8

value of the ’623 patent’s improvement on the ’323 patent, instead of conflating the worth of the

9

two, at least as to the period after the ’323 patent expired.

10

However, the Federal Circuit “recognizes that, under this apportionment principle, there

United States District Court
Northern District of California

11

may be more than one reliable method for estimating a reasonable royalty.” Id. (citation and

12

internal quotation marks omitted). In this case, Opticurrent opted to invoke one such method of

13

apportionment. That method “values the asserted patent based on comparable licenses”—here, the

14

QBar license. Id. at 1303. To properly apportion under a comparable-license theory of damages,

15

a plaintiff must show that the license is in fact comparable by “account[ing] for differences in the

16

technologies and economic circumstances of the contracting parties.” Finjan, Inc. v. Secure

17

Computing Corp., 626 F.3d 1197, 1211 (Fed. Cir. 2010). PI’s apportionment arguments thus are

18

properly directed to whether Opticurrent sufficiently established comparability between the QBar

19

license for the ’323 patent and the license that would have resulted from a hypothetical negotiation

20

for the ’623 patent. That question is addressed in the next section.

21

PI also makes the related argument that Opticurrent improperly relied on the entire market

22

value of the accused products by seeking damages as “a percentage of PI’s entire revenue or entire

23

average selling price.” PI Mot. at 11–12. “The entire market value rule is a narrow exception to

24

th[e] general rule” requiring apportionment. LaserDynamics, Inc. v. Quanta Computer, Inc., 694

25

F.3d 51, 67 (Fed. Cir. 2012). Under the entire market value rule, “[i]f it can be shown that the

26

patented feature drives the demand for an entire multi-component product, a patentee may be

27

awarded damages as a percentage of revenues or profits attributable to the entire product.” Id.

28

(citation omitted). According to PI, Opticurrent invoked the entire market value rule because its
15

1
2

damages theory used PI’s entire revenue as a royalty base.
This reasoning is at odds with the Federal Circuit’s teaching in Commonwealth that the
entire market value rule is not implicated where apportionment is already built into the royalty rate

4

in a comparable license. In Commonwealth, the parties engaged in unsuccessful negotiations over

5

a license for the patent that eventually became the subject of the lawsuit. 809 F.3d at 1302–03.

6

The district court calculated damages using a royalty rate based on a per-unit royalty proposed

7

during the negotiations. See id. at 1300, 1303. On appeal, the Federal Circuit rejected the

8

defendant’s contention that the district court erred in “not beginning its damages analysis with . . .

9

the smallest salable patent-practicing unit” of the defendant’s product. Id. at 1301. The court

10

explained that, “[b]ecause the parties’ discussions centered on a license rate for the [patent-in-

11
United States District Court
Northern District of California

3

suit], this starting point for the district court’s analysis already built in apportionment,” such that

12

“the parties negotiated over the value of the asserted patent, and no more.” Id. at 1303 (emphasis

13

added) (citation and internal quotation marks omitted). Commonwealth concluded that “otherwise

14

comparable licenses are not inadmissible solely because they express the royalty rate as a

15

percentage of total revenues, rather than in terms of the smallest salable unit.” Id. (citing Ericsson,

16

773 F.3d at 1228); see also Bio-Rad Labs., Inc. v. 10X Genomics, Inc., No. CV 15-152-RGA,

17

2018 WL 4691047, at *7 (D. Del. Sept. 28, 2018) (finding “no problem with using comparable

18

licenses to establish a reasonable royalty rate, without performing a separate apportionment

19

analysis, where there is a logical basis for doing so”).

20

Here, Opticurrent’s damages theory does not improperly invoke the entire market value

21

rule merely because it references a percentage of PI’s total revenues. The Court explained as

22

much at the final pretrial conference:

23
24
25
26
27
28

MR. THORNBURGH: So what we’re asking for, to be very precise,
is we’re asking for the Court to exclude evidence of PI’s total
accused revenue because they have not laid the foundation that the
Federal Circuit requires. They can’t invoke the entire market value
rule because they don’t even claim that this feature is the basis of
demand. They have failed to –
THE COURT: Well, I’m not sure that they’re really seeking the
entire market theory. I mean, to the extent that -- if they’re basing it
on a comparable license and putting aside factual questions whether
there’s enough comparability here, you can sort of make a
16

1
2
3
4
5
6

reasonable case, normally, if something is a comparable license, as
the Commonwealth-Cisco case kind of points out, it sort of
incorporates an allocation as between patentability or patented and
non-patented elements.
So if the patented device is only a small part of whatever the unit is,
that’s – that’s going to be reflected in the fact that, instead of 70
percent or 50 percent or 25 percent royalty, it’s a 2 percent or 1
percent. So, I mean, it’s -- I don’t necessarily see that they are
seeking the entire market value if they’re trying to use the QBar
license, which was, what, 2 to 3 percent.

7

Docket No. 250 at 48:23–49:20. That is, the royalty rate in the QBar license could be used so long

8

as Opticurrent met its burden of “account[ing] for differences in the technologies and economic

9

circumstances of the contracting parties,” including the value of the invention relative to the value

10

United States District Court
Northern District of California

11
12

of the whole product. Finjan, 626 F.3d at 1211.
b.

Comparability of the QBar License

PI asserts that Opticurrent introduced no evidence to permit the jury to determine that the

13

QBar license is comparable considering that: (1) the products covered by the QBar license (“QBar

14

switches alone”) and PI’s accused products (“a combination of switch and power supply

15

controller”) are “very different”; (2) QBar was not commercially successful whereas PI had

16

revenues of over $600 million for the accused products; and (3) Mr. Congdon owned QBar with a

17

friend at the time he entered the licensing agreement with QBar, whereas Opticurrent and PI are

18

competitors. PI Mot. at 9–10.

19

PI raised the same objections at trial. Tr. at 661:14–17 (Opticurrent “completely failed to

20

show the comparability of the QBar license” and therefore had laid “no foundation” for the

21

proposed royalty rate). However, the Court ruled that “there is a basis for [a royalty rate] because

22

there was testimony about QBar.” Id. at 660:6–9; see id. at 663:6–11. And while there was “not

23

much more testimony in terms of comparing and how much more valuable it is and how you

24

quantify that,” the Court noted that those questions fell within the “province of the jury.” Id. at

25

660:10–13. While not robust, the record shows that Opticurrent did provide a basis for the jury to

26

compare the QBar license and the hypothetical license for the ’623 patent, and to account for the

27

differences PI lists above in calculating damages.

28

First, there was evidence about the distinction between the products covered by the QBar17

1

license and PI’s accused products.3 The QBar license covers only the “QBar Switch,” which is the

2

three-terminal switch that is the subject of the ’323 patent. See Trial Exhibit 2 § 2 (“‘QBAR

3

Switch’ means Three-Terminal Noninverting Transistor Switch as disclosed, claimed, and covered

4

by U.S. Patent #5,134,323.”). Thus, under the QBar license Mr. Congdon received 3% of the

5

value of the switch itself. See id. (“‘Net Sales’ means the sum of Licensee’s and Sublicensee’s

6

invoiced sales of QBAR Switches . . . .”). PI characterizes its accused products as containing

7

more components than just the switch claimed in the ’623 patent. The accused products “are not

8

themselves the accused ‘three-terminal transistor switches,’” but rather larger semiconductor chips

9

that contain “thousands of three-terminal transistors that form the internal circuitry.” Docket No.

10

12 at 4–5.

United States District Court
Northern District of California

11

Had Opticurrent failed to address this distinction with the jury, there may well have been

12

an apportionment problem, because under the QBar license Opticurrent would have received 3%

13

of the value of each switch the licensee produced, whereas multiplying the total revenue for PI’s

14

accused products by 3% would suggest that the jury awarded Opticurrent 3% of the value of each

15

chip PI produced. However, the jury was presented with documentary evidence and testimony

16

that the accused products included more than just a switch. Brad Brunell, Opticurrent’s managing

17

member, testified that the QBar license covered only the “QBar switch[,] . . . a three terminal

18

noninverting transistor switch claimed and covered by the ’323.” Tr. at 435:21–436:4. Mr. Kung

19

then testified at length that PI’s accused products consist of an “intelligent circuit” (or “brain”) in

20

addition to a switch, and that the brain, rather than the switch, “dominates the energy efficiency”

21

capabilities of the accused products. Id. at 556:23–558:6 (testifying that “[w]ithout the brain, the

22

switch itself cannot do anything,” and that “the energy efficiency of the chip is mainly determined

23

by the brains and not the switch”); see also id. at 559:5–13 (testifying that the “brain” is an

24

innovation that PI has its own patent on). Mr. Kung identified the additional circuitry to the jury

25

by reference to circuit diagrams for the accused products. See id. at 558:11–559:13. Indeed, PI

26
27
28

3

There is no dispute that the ’323 patent and the ’623 patent are closely related technologically.
See, e.g., Tr. at 510:19–23 (Congdon testifying on cross-examination that “[t]he ’323 is the core of
the ’623.”).
18

1

later told the Court that “evidence has come in from trial[] [that] the QBar license was for a

2

switch, and the accused products are a switch plus the brains, the controller.” Id. at 661:14–20. In

3

other words, the jury was aware that the QBar switches were not identical to PI’s accused

4

products.

5

Second, Opticurrent presented evidence about the magnitude of QBar’s commercial
operations and their comparability to PI’s operations. Mr. Congdon testified that QBar

7

“manufactured and sold parts for Ford Motor Company, for IBM, for MIT, and several other

8

customers, mostly power supply people.” Id. at 501:5–10. He acknowledged that he was initially

9

only able to “sell our QBar switches with some amount of success” and “was struggling,” but later

10

“got a major customer, Welch Allyn, a medical equipment manufacturer, who started buying these

11
United States District Court
Northern District of California

6

things in significant quantities.” Id. at 502:2–21. Mr. Brunell also testified that the QBar license

12

was “similar to the type of licenses [he] would negotiate at Microsoft,” where he had previously

13

worked in managing intellectual property. Id. at 436:18–437:2. He recounted that at Microsoft,

14

he “would negotiate either the acquisition of small companies, or sometimes bigger companies, to

15

get intellectual property rights, or . . . would license technologies from third parties.” Id. at 416:6–

16

19. The jury thus heard evidence about the ways in which QBar could be considered similar to PI

17

in terms of licensing practices as well as the ways in which QBar differed from PI.

18

Finally, the jury heard evidence regarding the nature of negotiations that culminated in the

19

QBar license. Mr. Congdon testified that he co-owned QBar with a friend when he entered into a

20

license with the company. See id. at 500:4–8 (Congdon testifying that he formed QBar with “[a]

21

friend of mine, David Tralevin”), 511:17–512:6 (Congdon testifying that he and Tralevin each

22

owned 50% of QBar, and “the QBar license agreement was entered into between [Congdon], on

23

the one hand, and QBar, on the other hand”). When cross-examining Mr. Brunell, PI questioned

24

whether the QBar license was the product of arm’s-length negotiations. See id. at 451:14–24 (“Q.

25

Well, is it fair to say you don’t know whether the agreement between Mr. Congdon and QBar was

26

arm’s length? A. Uhm, I believe it was arm’s length enough, based on the conditions.”). This

27

evidence that “[the patentee] did not compete with the licensee as it did with [PI] in the case” was

28

sufficient to “permit[] the jury to properly discount the . . . license.” Finjan, 626 F.3d at 1212. On
19

1

the other hand, the jury also heard evidence that Mr. Congdon was not the solely decisionmaker at

2

QBar—the co-owner had to agree. See Tr. at 500:22–501:4. Mr. Congdon also testified that the

3

royalty rates were suggested by a seemingly neutral party—an attorney retained by QBar with

4

experience in licensing in the semiconductor industry. Id. at 501:11–20.

5

Thus, PI is mistaken to claim that Opticurrent introduced no evidence as to the differences

6

between the QBar license and the hypothetical license between Opticurrent and PI. To be sure,

7

“[w]hen relying on licenses to prove a reasonable royalty, alleging a loose or vague comparability

8

between different technologies or licenses does not suffice.” Virnetx, Inc. v. Cisco Sys., Inc., 767

9

F.3d 1308, 1330 (Fed. Cir. 2014) (citation omitted). “However, we have never required identity of
circumstances; on the contrary, we have long acknowledged that any reasonable royalty analysis

11
United States District Court
Northern District of California

10

necessarily involves an element of approximation and uncertainty.” Id. (citation and internal

12

quotation marks omitted). In light of the evidence summarized above, it cannot be said that

13

Opticurrent alleged merely “a loose or vague comparability”; it has done enough to provide the

14

jury with a basis to evaluate the comparability of the QBar license and the hypothetical negotiation

15

in this case. See id. (upholding damages award where the challenged licenses were

16

technologically related, and “all of the other differences . . . complain[ed] of were presented to the

17

jury, allowing the jury to fully evaluate the relevance of the licenses”). Presumably, aware of the

18

trial evidence on these points, the jury also considered the value of the technology taught by the

19

’623 in arriving at a reasonable royalty rate of 3%.

20

PI faults Opticurrent for failing to quantify the differences between the QBar license and

21

the hypothetical license, and that the jury could not have reliably accounted for those differences

22

in determining a reasonable royalty rate. For the proposition that a comparability analysis must be

23

supported by quantitative evidence, PI cites LaserDynamics, Inc. v. Quanta Computer, Inc., 694

24

F.3d 51 (Fed. Cir. 2012). However, the Federal Circuit in LaserDynamics refused to allow a

25

patentee to rely on two licenses to establish a royalty rate not for a lack of quantitative evidence,

26

but because the licenses were not comparable to begin with. As the court explained, the two

27

purportedly comparable licenses “did not involve the [patent-in-suit], and no evidence shows that

28

it even involves [a similar technology].” LaserDynamics, 694 F.3d at 80. The royalty rate in the
20

1

two licenses was therefore “untethered from the patented technology at issue.”4 Id. at 81.
Minks v. Polaris Indus., Inc., No. 605CV-1894-ORL-31KRS, 2009 WL 3028994 (M.D.

2
3

Fla. Sept. 17, 2009), cited by Opticurrent, is more apposite. There, as here, the inventor licensed

4

the patented technology to a company with which he was affiliated. Id. at *1 n.1. Based on the

5

royalty rate in that license, the jury arrived at a royalty rate for the hypothetical license between

6

the inventor and the defendant. Id. at *2. The court acknowledged that “the evidence [introduced

7

by the inventor] supporting these royalty figures was vague and imprecise,” but nevertheless

8

upheld the damages verdict against the defendant’s challenge that the rate determined by the jury

9

was “speculative.” Id. at *4. The court explained that “a hypothetical royalty negotiation . . . is
inherently speculative in nature” and that “the factual determination of a reasonable royalty

11
United States District Court
Northern District of California

10

‘frequently is not supported by the specific figures advanced by either party.’” Id. (quoting

12

Smithkline Diagnostics, Inc. v. Helena Laboratories Corp., 926 F.2d 1161, 1667 (Fed. Cir. 1991)).

13

Because the inventor had presented some “evidence of the relationship between [the inventor] and

14

[the licensing company], the relationship and dealings between [the inventor] and [the defendant],

15

and various royalty arrangements over time,” the jury could reasonably have reached a decision as

16

to the appropriate royalty rate to award. Id. The Federal Circuit affirmed the district court’s

17

ruling. Minks v. Polaris Indus., Inc., 404 F. App’x 497 (Fed. Cir. 2010).
Here, the evidenced presented to the jury regarding the comparability of the QBar license

18
19

was more fulsome that that deemed adequate in Minks. At the end of the day, “the fact that a

20

license is not perfectly analogous generally goes to the weight of the evidence, not its

21
22
23
24
25
26
27
28

4

PI cites two other cases in which courts have vacated damages awards premised on royalty rates
derived from purportedly comparable licenses. Like LaserDynamics, however, both rulings were
animated by a fundamental lack of comparability. In ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d
860 (Fed. Cir. 2010), the patentee’s expert “used licenses with no relationship to the claimed
invention to drive the royalty rate up to unjustified double-digit levels.” Id. at 870. And in Lucent
Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir. 2009), the flaws in the patentee’s license
theory were manifold: the scopes of the challenged licenses were “vastly different”; the
technology covered by some of the challenged licenses was described only vaguely as “PCrelated,” making it “impossible . . . to determine whether the agreements are at all comparable,”
and the patentee did not even mention “the subject matter or patents covered” by the remaining
licenses; and the patentee pushed for lump-sum damages even though many of the challenged
licenses were not lump-sum agreements at all. Id. at 1327–32. Opticurrent has provided markedly
more evidence regarding the QBar license than the bare showings made in ResQNet.com and
Lucent Technologies.
21

1

admissibility,” Ericsson, 773 F.3d at 1227, and “[d]espite potential flaws in [Opticurrent]’s

2

damages theory, the jury was entitled to hear the [evidence] and decide for itself what to accept or

3

reject,” Finjan, 626 F.3d at 1212 (citation, internal quotation marks and alterations omitted). The

4

jury, having heard competing evidence, did exactly that here in extrapolating a royalty rate based

5

on the QBar license, and the 3% rate it awarded was “within the range encompassed by the record

6

as a whole.” Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 519 (Fed. Cir. 1995).
c.

7

PI finally argues that Opticurrent’s damages theory is deficient because it relied on “import

8
9

Infringing Configuration

rates for PI’s chips in general” without specifying whether all the power supply units imported
into the United States “that include an accused product are built in an allegedly infringing

11
United States District Court
Northern District of California

10

configuration.” PI Mot. at 12. PI does not elaborate on this point, but it appears to be suggesting

12

that a larger product can incorporate PI’s accused chips—which the jury determined to be

13

infringing—and yet still be built in a configuration that is not infringing. But PI does not point to

14

any evidence it introduced tending to show that the products containing the accused chips are not

15

built in an “infringing configuration.” In any event, to the extent PI’s contention is that damages

16

should not be awarded for infringing products imported by third-party manufacturers, that

17

argument is moot because the royalty base has now been adjusted to exclude those products.
Accordingly, PI’s motion for judgment as a matter of law on damages is DENIED.

18
19
20

B.

Opticurrent’s Motion for Judgment as Matter of Law on Inducement
Opticurrent argues that the jury’s verdict that PI did not induce infringement of the ’623

21

patent is incorrect and asks the Court to grant judgment as a matter of law on inducement or, in the

22

alternative, a new trial. Docket No. 303 at 1.

23

1.

Waiver

24

PI contends that, as a threshold matter, Opticurrent cannot seek a Rule 50(b) judgment on

25

inducement because it did not make a motion under Rule 50(a) on the issue before the case was

26

submitted to the jury. Docket No. 304 at 5–6. “As explicitly stated in the Rule, a Rule 50(b)

27

motion may be considered only if a Rule 50(a) motion for judgment as a matter of law has been

28

previously made.” Tortu v. Las Vegas Metro. Police Dep’t, 556 F.3d 1075, 1081 (9th Cir. 2009).
22

1

Opticurrent concedes that it never explicitly sought a Rule 50(a) ruling on induced infringement,

2

but maintains that it “made a timely oral Motion in accordance with Rule 50(a) before the close of

3

evidence.” Docket No. 317 at 4. Namely, when PI rested its case, counsel for Opticurrent stated:

4

“At this time we have a motion under Rule 50 on Power Integrations’ case.” Tr. at 783:17–18.

5

This so-called “oral motion” does not save Opticurrent’s inducement claim. For one thing, it was

6

clearly referencing the written motion for judgment as a matter of law Opticurrent filed on

7

February 12, 2019 (and the only such motion Opticurrent filed during the trial). See Docket No.

8

238. That written motion stated expressly that Opticurrent was only moving for judgment on PI’s

9

“counterclaim and affirmative defense of invalidity.” Id. at 2 (citations omitted). The impression
that Opticurrent was moving for judgment only on the issue of invalidity is reinforced by its

11
United States District Court
Northern District of California

10

counsel’s statement that “[w]e’re going to have a JMOL motion on validity.” Tr. at 755:21–22.

12

Nowhere did Opticurrent indicate that it was moving on the issue of inducement.

13

Undeterred, Opticurrent insists that its oral statement that “we have a motion under Rule

14

50 on Power Integrations’ case” is sufficiently specific to preserve its inducement claim under

15

Rule 50(a). But a Rule 50(a) “motion must specify the judgment sought and the law and facts that

16

entitle the movant to the judgment.” Fed. R. Civ. P. 50(a)(2). The Ninth Circuit has emphasized

17

that “a proper post-verdict Rule 50(b) motion is limited to the grounds asserted in the pre-

18

deliberation Rule 50(a) motion.” Go Daddy, 581 F.3d at 961. Opticurrent’s oral motion did not

19

assert inducement as a ground for judgment nor specify the law and facts that would entitle it to

20

judgment on inducement. To be sure, Rule “50(b) may be satisfied by an ambiguous or inartfully

21

made motion for a directed verdict.” Reeves v. Teuscher, 881 F.2d 1495, 1498 (9th Cir. 1989).

22

Even so, Opticurrent is not absolved of responsibility to at least identify the particular legal issue

23

on which its motion is based. See Cisco Sys. Inc. v. Arista Networks, Inc., No. 14-CV-05344-BLF,

24

2017 WL 4771009, at *10 (N.D. Cal. May 10, 2017) (observing that “[w]hile Rule 50(b) may be

25

satisfied by an ambiguous or inartfully made motion, the argument in some form still needs to be

26

made,” and finding that movant forfeited Rule 50(b) issue where it “made no mention” of the issue

27

in its Rule 50(a) motion); Cotton ex rel. McClure v. City of Eureka, Cal., 860 F. Supp. 2d 999,

28

1010 (N.D. Cal. 2012) (declining to apply Reeves to allow moving party to make Rule 50(b)
23

1

motion on one particular claim where the party “ma[de] a Rule 50(a) motion in which they chose

2

to challenge Plaintiffs’ [other] claim only”) (emphasis in original).
Accordingly, Opticurrent has waived its Rule 50(b) challenge to the jury’s induced

3
4

infringement verdict.

5

2.

Merits

6

In any event, Opticurrent’s motion would fail on the merits. As the Court instructed the

7

jury, “[i]n order to be liable for inducing infringement, Power Integrations must: (1) have

8

intentionally taken action that actually induced direct infringement; (2) have been aware of the

9

’623 patent; and (3) have known that the acts it was causing would infringe the patent.” Jury
Instruction No. 33. With respect to the third element, “Power Integrations may be considered to

11
United States District Court
Northern District of California

10

have known that the acts it was causing would infringe the ’623 patent if it subjectively believed

12

there was a high probability that the direct infringer’s product infringed the patent, in other words,

13

willfully blinded itself to the infringing nature of the direct infringer’s act.” Id.

14

PI does not dispute Opticurrent established the first two elements.5 However, PI contends

15

that the jury could reasonably have concluded, based on evidence presented at trial, that PI did not

16

know the acts it was causing would infringe the ’623 patent. Docket No. 304 at 2–4. PI is correct.

17

At trial, Cliff Walker, who oversees intellectual property and legal affairs at PI, testified that upon

18

reviewing the ’623 patent after the suit was filed, he believed that PI’s products did not infringe

19

the patent because “it was describing only a three-terminal device,” whereas PI’s “products from

20

2006 had gone to four-terminal devices.” Tr. at 518:6–9, 530:3–21. Walker testified that his

21

conclusion regarding noninfringement remained the same after the Court construed the ’623 patent

22

to cover four-terminal switches in which the fourth terminal was not connected to a power supply,

23

because he understood PI’s products to feature a fourth terminal connected to a power supply. Id.

24

at 530:22–531:16. Walker consulted Michael Matthews, an engineer who is PI’s vice product of

25

development, before reaching this conclusion. Id. at 533:1–11. David Kung, PI’s director of

26
27
28

5

As to the second element, Opticurrent only seeks damages for induced infringement “as of the
date of commencement of this litigation,” when PI became aware of the ’623 patent. Docket No.
303 at 4.
24

1

design engineering, testified similarly. He stated that initially, he believed PI’s products “do not

2

infringe” because “they claim three terminals” and “[w]e use four.” Id. at 596:7–12. After the

3

Court’s claim construction, he maintained the same belief because PI products “have the power

4

supply terminal” connected to the fourth terminal “and that is very different from claim 1.” Id. at

5

596:12–23.
Opticurrent nevertheless contends that the evidence showed PI was willfully blind.

6
7

Opticurrent points to the fact that Walker and Kung did not consult each other before reaching

8

their individual determinations of noninfringement, that Kung admitted he did not initially peruse

9

the ’623 parent but merely “glanced” through it, and that PI never produced Matthews as a trial
witness. However, Opticurrent made these same points to the jury, and the verdict reflects that the

11
United States District Court
Northern District of California

10

jury simply credited the testimony of Mr. Walker and Mr. Kung testimony that PI genuinely

12

believed it was not infringing over Opticurrent’s competing evidence. Opticurrent has not

13

demonstrated that a finding of induced infringement was the “only one” permitted by the

14

evidence, Barnard, 721 F.3d at 1075, or that the jury’s verdict is “contrary to the clear weight of

15

the evidence,” 4.0 Acres of Land, 175 F.3d at 1139.
Accordingly, Opticurrent’s motion for judgment as a matter of law on induced

16
17

infringement is DENIED.

18

C.

Opticurrent’s Motion for Supplemental Judgment on Excluded Products
At trial, Opticurrent argued to the jury that certain products6 within four of PI’s product

19
20
21
22
23
24
25
26
27
28

6

These products are as follows:
 Within the LNK585 and LinkZero-AX Family: the LNK584DG, LNK584GG,
LNK585DG, LNK585GG, LNK586DG, and LNK586DG.
 Within the LNK605 and LinkSwitch-II Family: the LNK603PG/DG, LNK613PG/DG,
LNK604PG/DG, LNK614PG/DG, LNK605PG/DG, LNK615PG/DG, LNK606PG/DG,
LNK616PG/DG, and LNK632DG.
 Within the TNY179 and TinySwitch-LT Family: the TNY174PN, TNY175PN,
TNY176PN, TNY177PN, TNY178PN, TNY179PN, and TNY180PN.
 Within the TNY277 and TinySwitch III Family: the TNY274P, TNY274G, TNY275P,
TNY275G, TNY276P, TNY276G, TNY277P, TNY277G, TNY278P, TNY278G,
TNY279P, TNY279G, TNY280P, and TNY280G.

Docket No. 239, Exh. A (Opticurrent’s expert report on infringement).
25

1

families infringed the ’623 patent. The jury agreed, entering a verdict for Opticurrent on

2

infringement. Opticurrent now moves the Court to enter “supplemental judgment” in its favor and

3

rule that other PI products which the Court expressly excluded from the trial (the “Excluded

4

Products”)7 also infringe the ’623 patent and that Opticurrent is entitled to damages on those

5

products. Docket No. 298 at 1. Opticurrent’s motion is both procedurally improper and

6

substantively meritless.
This district’s Patent Local Rules require a party claiming patent infringement to serve on

7
8

the defendant a “Disclosure of Asserted Claims and Infringement Contentions,” which “shall

9

contain”:

10

(b) Separately for each asserted claim, each accused apparatus,
product, device, process, method, act, or other instrumentality
(“Accused Instrumentality”) of each opposing party of which the
party is aware.” This identification shall be as specific as possible.
Each product, device, and apparatus shall be identified by name or
model number, if known. Each method or process shall be identified
by name, if known, or by any product, device, or apparatus which,
when used, allegedly results in the practice of the claimed method or
process;

United States District Court
Northern District of California

11
12
13
14
15

N.D. Cal. Pat. L.R. 3-1(b) (emphasis added). “Rule 3-1(b) does not permit parties to identify

16

accused products by using categorical or functional identifications, or limited, representative

17

examples.” Geovector Corp. v. Samsung Elecs. Co., No. 16-CV-02463-WHO, 2017 WL 76950,

18

at *4 (N.D. Cal. Jan. 9, 2017). Rather, “a full list of accused products must be disclosed as part of

19

a party’s infringement contentions.” Oracle Am., Inc. v. Google Inc., No. 10-c-03561-WHA, 2011

20

WL 4479305, at *3 (N.D. Cal. Sept. 26, 2011).
In this case, Opticurrent’s expert report on infringement specifically listed the PI products

21
22

that it alleged infringed the ’623 patent. See Docket No. 239, Exh. A. The Excluded Products

23

were not listed. Opticurrent’s infringement contentions and claim charts likewise did not

24

specifically identify the Excluded Products. See Docket No. 64-3. Then, shortly before trial

25

opened, Opticurrent sought to file a trial exhibit summarizing of PI’s revenues in which, for the

26
27
28

7

The Excluded Products are: DAP021, SC1011, SC1128, SC1129, SC1138, TNY375, TNY376,
TNY377, TNY378, TNY379, TNY380, DAP021, LNK623, LNK624, LNK625, LNK626,
SC1097, SC1098, SC1099, SC1103, SC1104, SC1106, SC1125, SC1126, SC1132, SC1135,
SC1139, LNK574, LNK576, and SPS1013P-TL. Docket No. 298-2.
26

1

first time, the Excluded Products were listed as accused products. See Docket No. 235 at 2. The

2

Court ordered briefing to address whether the newly-listed products were admissible. See id. In

3

its responsive brief, Opticurrent did not dispute that the Excluded Products were not specified in

4

its infringement contentions, but argued that it had from the beginning alleged infringement with

5

respect to certain product families “and any other similarly structured or functioning products”;

6

that PI was aware of the scope of the infringement contentions and did not object; and that

7

Opticurrent’s revenue summaries were based on financial information provided by PI which

8

included all products within the accused product families, and not just the specific products listed

9

in Opticurrent’s infringement contentions. Docket No. 237.

10

United States District Court
Northern District of California

11
12
13
14
15
16
17

After considering the parties’ briefing, the Court ruled as follows:
Products PI listed as newly accused . . . are inadmissible. There were
not specifically disclosed in infringement contentions on
Opticurrent’s expert’s report. Plaintiff is required to remove nonaccused products from the summaries and recalculate accordingly.
Plaintiff does not effectively dispute these products belong to
families different from the enumerated accused products; nor does
plaintiff dispute the schematics of the circuitry of these products
differ from that of the accused products.
Docket No. 264 at 1.
Opticurrent’s present motion seeks to relitigate the issue. Its arguments are substantially

18

identical to the ones made in its pre-trial brief. Namely, Opticurrent asserts that it has always

19

accused PI’s entire product families and similar products of infringement, that PI was aware of the

20

scope of those allegations and did not object until shortly before trial, and that the financial

21

information PI had provided to Opticurrent included all products within the accused product

22

families. Docket No. 298 at 1–5. Opticurrent’s motion also argues, by reference to PI’s

23

datasheets, that the Excluded Products have the same components and functionality as the accused

24

products, id. at 5–10, even though the Court had found prior to trial that “Plaintiff does not

25

effectively dispute these [Excluded Products] belong to families different from the enumerated

26

accused products; nor does plaintiff dispute the schematics of the circuitry of these products differ

27

from that of the accused products,” Docket No. 264 at 1.

28

In short, Opticurrent is asking the Court to reconsider its pre-trial ruling excluding the
27

1

newly-accused products. See N.D. Cal. Civ. L.R. 7-9(a) (“Before the entry of a judgment . . . , any

2

party may make a motion before a Judge requesting that the Judge grant the party leave to file a

3

motion for reconsideration of any interlocutory order . . . .”). However, Local Rule 7-9(b) requires

4

that a motion for reconsideration must be based on either “a material difference in fact or law . . .

5

from that which was presented to the Court before entry of the interlocutory order,” the

6

“emergence of new material facts or a change of law occurring after the time of such order,” or

7

“[a] manifest failure by the Court to consider material facts or dispositive legal arguments which

8

were presented to the Court before such interlocutory order.” Opticurrent’s motion is not based on

9

any of these three grounds. To the contrary, it simply recycles arguments the Court already
rejected in its prior ruling. See N.D. Cal. Civ. L.R. 7-9(c) (“No motion for leave to file a motion

11
United States District Court
Northern District of California

10

for reconsideration may repeat any oral or written argument made by the applying party in support

12

of or in opposition to the interlocutory order which the party now seeks to have reconsidered.”).

13

Instead of conforming its motion to the standard required for reconsideration, Opticurrent

14

insists that is entitled to recover damages for the Excluded Products as long as it can show that

15

those products are “not colorably different” from the accused products determined to be infringing

16

at trial. See Docket No. 298 at 11–12. Opticurrent is incorrect. The “not colorably different” test

17

is applied in the context of “evaluating whether an injunction against continued infringement has

18

been violated by a newly accused product.” Proveris Scientific Corp. v. Innovasystems, Inc., 739

19

F.3d 1367, 1370 (Fed. Cir. 2014). Some courts have also applied the same test to determine

20

whether a prevailing plaintiff should be awarded ongoing royalty on newly-accused products that

21

were developed subsequent to the filing of the infringement action. See, e.g., Apple Inc. v.

22

Samsung Elecs. Co., No. 12-CV-00630-LHK, 2018 WL 905943, at *8–10 (N.D. Cal. Feb. 15,

23

2018) (applying test to defendant’s products that were allegedly “designed around” the infringed

24

patent); Fractus, S.A. v. Samsung Elecs. Co., No. 6:12-CV-421, 2012 WL 13042583, at *2 (E.D.

25

Tex. Dec. 26, 2012) (applying test to defendant’s products that were purportedly based on

26

“completely different designs” than the infringing products). Opticurrent, however, cannot point

27

to a single instance where the “not colorably different” test was used to determine whether past

28

royalty should be awarded on products that already existed when the plaintiff brought suit but
28

1

were not included in the infringement contentions, much less on products that the court had

2

expressly excluded from the plaintiff’s infringement claims.
Accordingly, Opticurrent’s motion for supplemental judgment on the Excluded Products is

3
4

DENIED.

5

D.

6

Opticurrent’s Motion for Ongoing Royalty
“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.” Fresenius USA, Inc. v.

8

Baxter Intern., Inc., 582 F.3d 1288, 1303 (Fed. Cir. 2009). Thus, “[t]he award of an ongoing

9

royalty instead of a permanent injunction to compensate for future infringement is appropriate in

10

some cases.” Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 670 F.3d 1171, 1192

11
United States District Court
Northern District of California

7

(Fed. Cir. 2012) (citations omitted). Here, in lieu of an injunction against PI, Opticurrent requests

12

ongoing royalty on PI’s infringing products to be awarded at a rate of 5%, rather than the 3% rate

13

set by the jury for past infringement. Docket No. 295 (“Royalty Mot.”) at 1. Citing Amado v.

14

Microsoft Corp., 517 F.3d 1353 (Fed. Cir. 2008), Opticurrent claims that a higher ongoing royalty

15

rate is warranted because “[t]here is a fundamental difference . . . between a reasonable royalty for

16

pre-verdict infringement and damages for post-verdict infringement.” Id. at 1361.

17

Opticurrent’s argument implicates a somewhat unsettled area of the law. In Amado, the

18

Federal Circuit rejected an infringing defendant’s contention that ongoing royalty may not be

19

awarded at a higher rate than the royalty rate determined by the jury for past infringement. Id.

20

The court reasoned that “[p]rior to judgment, liability for infringement, as well as the validity of

21

the patent, is uncertain, and damages are determined in the context of that uncertainty. Once a

22

judgment of validity and infringement has been entered, however, the calculus is markedly

23

different because different economic factors are involved.” Id. at 1362. In particular, the

24

defendant in that case had been “enjoined from further infringing activity yet was permitted to

25

continue only by virtue, and with the imprimatur, of [a] court-ordered stay” on the permanent

26

injunction. Id. Amado concluded that “[w]hen a district court concludes that an injunction is

27

warranted, but is persuaded to stay the injunction pending an appeal, the assessment of damages

28

for infringements taking place after the injunction should take into account the change in the
29

1

parties’ bargaining positions, and the resulting change in economic circumstances, resulting from

2

the determination of liability.” Id.

3

Subsequently, in ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312

4

(Fed. Cir. 2012), the Federal Circuit relied on Amado to affirm an award of an ongoing royalty rate

5

that was higher than the rate applied to pre-verdict infringement. Id. at 1342. In ActiveVideo, as

6

in Amado, the ongoing royalty was awarded after the court had stayed a permanent injunction

7

against further infringement. See id.
PI argues, and some district courts have surmised, that the Federal Circuit’s approval of a

9

higher post-verdict royalty rate in Amado and ActiveVideo was limited to situations in which the

10

patent holder had secured a permanent injunction against the infringer. See Docket No. 308 at 1–

11
United States District Court
Northern District of California

8

3. These courts have interpreted the difference in pre- and post-verdict bargaining power

12

referenced in Amado as being “largely due to the threat of an injunction.” Presidio Components

13

Inc. v. Am. Tech. Ceramics Corp., No. 08-CV-335-IEG NLS, 2010 WL 3070370, at *4 (S.D. Cal.

14

Aug. 5, 2010) (citation omitted), aff’d in part, vacated in part on other grounds, 702 F.3d 1351

15

(Fed. Cir. 2012). Under that view, where a “permanent injunction [is] off the table, the bargaining

16

positions of a willing patentee and infringer are substantially the same as they would have been at

17

the time the infringement began,” because in “determining the reasonable royalty rate during trial,

18

both parties assume[] the . . . patent was valid and infringed.” Id. (emphasis in original); see, e.g.,

19

Univ. of Pittsburgh of Com. Sys. of Higher Educ. v. Varian Med. Sys., Inc., No. 08CV1307, 2012

20

WL 1436569, at *11–12 (W.D. Pa. Apr. 25, 2012) (same), aff’d in part, vacated in part on other

21

grounds, 561 F. App’x 934 (Fed. Cir. 2014); Erfindergemeinschaft UroPep GbR v. Eli Lilly &

22

Co., No. 2:15-CV-1202-WCB, 2017 WL 3034655, at *4–5 (E.D. Tex. July 18, 2017) (same).

23

Because Opticurrent has not sought an injunction here, PI argues that a higher ongoing royalty rate

24

is not justified.

25

However, the Federal Circuit has recently reiterated, in a case in the patentee’s request for

26

injunctive relief was denied, that “[w]hen patent claims are held to be not invalid and infringed,

27

this amounts to a ‘substantial shift in the bargaining position of the parties.’” XY, LLC v. Trans

28

Ova Genetics, 890 F.3d 1282, 1290, 1297 (Fed. Cir. 2018) (quoting ActiveVideo, 694 F.3d at
30

1342). Further, in Arctic Cat Inc. v. Bombardier Recreational Prod. Inc., 876 F.3d 1350 (Fed.

2

Cir. 2017), the court affirmed the district court’s decision to award an ongoing royalty rate that

3

was double the jury rate, even though no injunctive relief was sought or granted. Id. at 1370.

4

Notably, the district court expressly rejected the argument Opticurrent makes here that the

5

bargaining position between parties in an infringement suit does not change post-verdict unless an

6

injunction is entered. See Arctic Cat Inc. v. Bombardier Recreational Prod., Inc., No. 14-CV-

7

62369, 2017 WL 7732873, at *3 n.3 (S.D. Fla. Jan. 3, 2017). The district court observed that,

8

even if the royalty rate set by the jury already assumes patent validity and infringement, once a

9

verdict is entered in favor of the patent holder, any continuing infringement by the defendant is

10

willful, which potentially subjects the defendant to enhanced damages. Id. at *3. However, the

11
United States District Court
Northern District of California

1

higher ongoing royalty rate in Arctic Cat was not based solely on the patentee’s stronger post-

12

verdict bargaining position. The patentee also made a strong showing on several other Georgia-

13

Pacific factors. See id.
Here, even though Opticurrent has not sought injunctive relief, PI’s counsel conceded at

14
15

the hearing that PI faces some degree of risk going forward by virtue of the fact that its post-

16

verdict infringement may be deemed willful. There is thus a basis to award Opticurrent an

17

ongoing royalty rate higher than 3%. However, the 5% rate Opticurrent asks for is excessive,

18

particularly since it has not made a showing on any other Georgia-Pacific factor. Moreover, while

19

Opticurrent’s positioned is strengthened by the possibility that PI may face treble damages for

20

willful infringement, the award of enhanced damages is not mandatory; “district courts have

21

discretion to ‘increase damages up to three times the amount found or assessed.’” Presidio

22

Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017) (quoting 35

23

U.S.C. § 284). On balance, the Court finds that an ongoing royalty rate of 3.5% adequately

24

compensates Opticurrent for its stronger post-verdict bargaining position.
Accordingly, Opticurrent’s motion for ongoing royalty is GRANTED at the rate of 3.5%.

25
26
27
28

E.

Opticurrent’s Motion for Prejudgment and Postjudgment Interest
Opticurrent seeks an award for prejudgment interest on the jury award, calculated using

California’s statutory interest rate from the date of the first infringement through the date of
31

1

judgment and compounded quarterly, as well as postjudgment interest. Docket No. 296 at 1.

2

1.

Prejudgment Interest

3

Under 35 U.S.C. § 284, a patentee who prevails in an infringement action is entitled to

4

“damages adequate to compensate for the infringement . . . together with interest and costs as

5

fixed by the court.” The Supreme Court has instructed that pursuant to § 284, prejudgment

6

interest “should ordinarily be awarded” because it is “necessary to ensure that the patent owner is

7

placed in as good a position as he would have been in had the infringer entered into a reasonable

8

royalty agreement.” General Motors Corp. v. Devex Corp., 461 U.S. 648, 655, 657 (1983).

9

Section 284 gives courts discretion to deny prejudgment interest if it finds “some justification for
withholding such an award.” Id. at 656–57. “For example, it may be appropriate to limit

11
United States District Court
Northern District of California

10

prejudgment interest, or perhaps even deny it altogether, where the patent owner has been

12

responsible for undue delay in prosecuting the lawsuit.” Id. However, prejudgment interest may

13

be denied on the basis for undue delay only where the delay caused prejudice to the defendant.

14

Lummus Indus., Inc. v. D.M. & E. Corp., 862 F.2d 267, 275 (Fed. Cir. 1988).

15

PI contends that Opticurrent is not entitled to an award of prejudgment interest because it

16

unduly delayed in filing this suit, Docket No. 307 at 1–2, pointing to Mr. Brunell’s testimony that

17

Opticurrent had determined PI was infringing the ’623 patent by 2014 but did not bring suit

18

against PI until 2016, Tr. at 440:20–441:11. However, a review of the case law suggests that this

19

delay is not so unreasonable that it precludes Opticurrent from recovering interest. In most cases

20

in which courts have refused to award prejudgment interest because of undue delay, the delay was

21

longer than the one-and-a-half-year period here, and there was some indication that the delay was

22

self-serving or a litigation tactic. See, e.g., Crystal Semiconductor Corp. v. TriTech

23

Microelectronics Int’l, Inc., 246 F.3d 1336, 1362 (Fed. Cir. 2001) (two-year delay that appeared to

24

be a “litigation tactic” and “self-serving”); Milwaukee Elec. Tool Corp. v. Snap-On Inc., 288 F.

25

Supp. 3d 872, 907 (E.D. Wis. 2017) (five-year delay resulting from plaintiffs’ “tactical decision”

26

to first “try[] out claims against the bigger industry players”); Kaneka Corp. v. SKC Kolon PI,

27

Inc., 198 F. Supp. 3d 1089, 1124 (C.D. Cal. 2016) (four-year delay for which patentee “offer[ed]

28

no compelling explanation”).
32

1

In contrast, Mr. Brunell here explained that Opticurrent was not able to initiate legal

2

proceedings against PI immediately upon verifying infringement because it “had to wait until [it]

3

saved up enough money to afford what this fight would cost.” Tr. at 441:1–11. This rationale,

4

undisputed by PI, does not bespeak gamesmanship. Moreover, PI has not articulated any

5

particular prejudice it suffered due to Opticurrent’s delay, other than the generic accumulation of

6

damages that is present in most infringement cases. See EcoServices, LLC v. Certified Aviation

7

Servs., LLC, 340 F. Supp. 3d 1004, 1032 (C.D. Cal. 2018) (finding no undue delay where

8

defendant put forth no evidence that plaintiff’s delay was a litigation tactic or that defendant was

9

prejudiced in any way); Hynix Semiconductor Inc. v. Rambus Inc., No. CV-00-20905 RMW, 2006
WL 2522506, at *3 (N.D. Cal. Aug. 30, 2006) (refusing to withhold interest absent a “showing

11
United States District Court
Northern District of California

10

that the delays prejudiced [defendant] or that the delays were undue”). Opticurrent may thus

12

recover prejudgment interest.

13

a.

Interest Rate

14

The Court must then determine what interest rate to apply. “Because there is no standard

15

rate for calculating prejudgment interest provided in the statute, the district court has ‘substantial

16

discretion’ to determine the interest rate in patent infringement cases.” EcoServices, 340 F. Supp.

17

3d at 1033 (quoting Gyromat Corp. v. Champion Spark Plug Co., 735 F.2d 549, 556–57 (Fed. Cir.

18

1984)). “A court may use the prime rate, the prime rate plus a percentage, the United States

19

Treasury Bill (‘T-Bill’) rate, a state statutory rate, the corporate rate, or whatever rate the court

20

deems appropriate under the circumstances.” Fujifilm Corp. v. Motorola Mobility LLC, 182 F.

21

Supp. 3d 1014, 1042 (N.D. Cal. 2016) (citation and internal quotation marks omitted). Courts

22

have typically “conclude[d] that the prime rate is the most accurate estimate of the interest rate”

23

that the patentee would have charged the infringer for a loan, since that is “the rate charged by

24

banks to its most credit-worthy customers.” Atmel Corp. v. Silicon Storage Tech., Inc., 202 F.

25

Supp. 2d 1096, 1101 (N.D. Cal. 2002). Opticurrent urges the Court to apply the higher California

26

statutory interest rate of seven percent. Docket No. 296 at 5. PI, on the other hand, argues that the

27

lower T-bill rate is appropriate. Docket No. 307 at 2.

28

Opticurrent has identified only one instance in which this district has awarded the
33

1

California statutory rate, and there, the plaintiff had demonstrated it “actually borrowed funds at a

2

higher rate [than the statutory rate] during the relevant time period.” In re Hayes Microcomputer

3

Prod., Inc. Patent Litig., 766 F. Supp. 818, 824 (N.D. Cal. 1991), aff’d, 982 F.2d 1527 (Fed. Cir.

4

1992). Thus, it was appropriate for the court to award the statutory rate “in order to fully

5

compensate” the plaintiff. Id. Here, in contrast, Opticurrent has not produced any evidence that a

6

seven percent interest rate is necessary to make it whole, and so is not entitled to the statutory rate.

7

As for the choice between the prime rate and the T-bill rate, the law is inconsistent. Some

8

courts have held that the T-bill rate is the proper rate to award unless there is evidence that the

9

patentee borrowed money at a higher rate as a result of the defendant’s infringement. See,
e.g., Laitram Corp. v. NEC Corp., 115 F.3d 947, 955 (Fed. Cir. 1997); Apple, Inc. v. Samsung

11
United States District Court
Northern District of California

10

Elecs. Co., 67 F. Supp. 3d 1100, 1121–22 (N.D. Cal. 2014). Others have held that such evidence

12

is not necessary to support an award based on the prime rate. See, e.g., Uniroyal, Inc. v. Rudkin-

13

Wiley Corp., 939 F.2d 1540, 1545 (Fed. Cir. 1991); Fujifilm Corp., 182 F. Supp. 3d at 1043. In

14

the absence of any compelling argument from either party for a higher or lower rate, the Court will

15

award the prime rate here as that would likely be the loan rate that PI, as a large corporation,

16

would be charged by a bank. See Atmel Corp., 202 F. Supp. 2d at 1101.

17
18

b.

Interest Period

The parties also dispute when the prejudgment interest began to accrue. Opticurrent

19

believes that it is entitled to interest dating back to 2006, the date of first infringement, shortly

20

after the ’623 patent issued. Docket No. 296 at 7. PI disagrees, arguing that Opticurrent’s

21

recovery for both damages and interest is limited by statute to the period starting in 2010, six years

22

before Opticurrent’s complaint was filed. Docket No. 307 at 4.

23

By statute, “no recovery shall be had for any infringement committed more than six years

24

prior to the filing of the complaint or counterclaim for infringement in the action.” 35 U.S.C.

25

§ 286. Opticurrent initiated this action in 2016. Thus, once the jury found infringement, it

26

calculated Opticurrent’s damages for the period beginning in 2010, six years before this suit was

27

filed, rather than the period beginning in 2006, when the ’623 patent was issued and the

28

hypothetical royalty negotiation between the parties would have taken place. Opticurrent has
34

1

offered no reason why prejudgment interest should be calculated any differently. Indeed,

2

prejudgment interest by definition is interest on the “primary or actual” portion of a damages

3

award. Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576, 1580

4

(Fed. Cir. 1991). It would make little sense to allow interest to start accruing before damages can

5

be imposed; the interest on zero damages would simply be zero.

6

Although appellate courts have yet to squarely address the issue, district courts that have

7

been urged by a prevailing plaintiff to award prejudgment interest stretching beyond the six-year

8

statutory limitations period have refused to do so. See Trustees of Bos. Univ. v. Everlight Elecs.

9

Co., 187 F. Supp. 3d 306, 322–23 (D. Mass. 2016); Imperium IP Holdings (Cayman), Ltd. v.
Samsung Elecs. Co., No. 4:14-CV-00371, 2017 WL 1716589, at *4 (E.D. Tex. Apr. 27, 2017). In

11
United States District Court
Northern District of California

10

particular, the court in Trustees highlighted the flaws in the exact argument Opticurrent makes

12

here—that the trigger date for awarding interest should be the date of the hypothetical negotiation.

13

The court explained that while the parties may have “stipulated to a hypothetical negotiation

14

taking place. . . on the eve of [the first] infringement,” that is not the same as an agreement as to

15

“when infringement for purposes of triggering damages actually began.” 187 F. Supp. 3d at 322.

16

To the contrary, the Federal Circuit has expressly instructed courts to be “careful to distinguish the

17

hypothetical negotiation date from other dates that trigger infringement liability.” LaserDynamics,

18

694 F.3d at 75. “For example, the six-year limitation on recovery of past damages under 35

19

U.S.C. § 286 does not preclude the hypothetical negotiation date from taking place on the date

20

infringement began, even if damages cannot be collected until some time later.” Id.
Opticurrent purports to have found two cases in which the Federal Circuit approved

21
22

prejudgment interest that extended beyond the six-year limitations period. Opticurrent is wrong

23

on both counts. In Comcast IP Holdings I LLC v. Sprint Commc’ns Co., L.P., 850 F.3d 1302 (Fed.

24

Cir. 2017), the Federal Circuit affirmed the district court’s decision to award prejudgment interest

25

dating to 2006, the date of the hypothetical negotiation. Id. at 1315. But the complaint in that

26

case was filed in 2012, so 2006 was within the limitations period.8 And in SSL Servs., LLC v.

27
28

8

Opticurrent quotes as support for its argument the language in Comcast IP’s that “[p]rejudgment
interest runs from the earliest date of infringement for any patent issued at the time of the
35

1

Citrix Sys., Inc., 769 F.3d 1073 (Fed. Cir. 2014), the Federal Circuit affirmed an award of

2

prejudgment interest calculated from 2004. Id. at 1094. However, that lawsuit was initiated in

3

2009, so again, 2004 was within the limitations period. Id.
Accordingly, prejudgment interest began to accrue in 2010, at the same time as damages.

4

c.

5

Compounding

6

Opticurrent asks the Court to compound the prejudgment interest on a quarterly basis.

7

Docket No. 296 at 6. Determining the method of compounding interest is “largely within the

8

discretion of the district court.” Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1555 (Fed. Cir.

9

1995). PI did not express any opposition to quarterly compounding. The Court will thus award

10

Opticurrent prejudgment interest at the prime rate, starting in 2010, compounded quarterly.

United States District Court
Northern District of California

11

2.

Postjudgment Interest

12

Finally, Opticurrent seeks postjudgment interest. Postjudgment interest is mandatory

13

under 28 U.S.C. § 1961, which provides that “interest shall be allowed on any money judgment in

14

a civil case recovered in a district court,” and “shall be calculated from the date of the entry of the

15

judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as

16

published by the Board of Governors of the Federal Reserve System, for the calendar week

17

preceding the date of the judgment.” PI does not dispute that Opticurrent is entitled to

18

postjudgment interest as provided in § 1961. Docket No. 307 at 5.
Accordingly, Opticurrent’s motion for prejudgment and postjudgment interest is

19
20

GRANTED.

21

F.

22
23

Opticurrent’s Motion for Attorneys’ Fees
Opticurrent moves for attorneys’ fees and costs under 35 U.S.C. § 285, which authorizes

courts to award attorneys’ fees in “exceptional cases.” Opticurrent asserts that this is an

24
25
26
27
28

hypothetical negotiation.” 850 F.3d at 1315. However, as PI points out, the court made that
statement in the context of addressing a completely different question: whether prejudgment
interest should be apportioned where only one out of the three infringed patents had been issued at
the time of the first infringement. See id. at 1314–15. The Federal Circuit allowed interest on all
three patents to be calculated from the date of the first infringement, without apportionment, only
because the jury had been informed that a hypothetical negotiation for the first patent “would have
included the issuance of any later patent relating to the same technology.” Id. Thus, Opticurrent’s
reliance on this out-of-context statement is misplaced.
36

1

“exceptional case” because PI: (1) willfully blinded itself to the possibility that its products

2

infringe the ’623 patent rather than conduct an adequate investigation into infringement; (2) hid a

3

key patent license during discovery; (3) opposed Opticurrent’s efforts to amend its infringement

4

contentions in bad faith; (4) misrepresented the nature of PI’s products in persuading the Court to

5

exclude them from the trial; (5) introduced improper invalidity arguments through its expert

6

report; (6) abandoned its invalidity contentions shortly before the start of trial; (7) refused to

7

produce updated sales figures; (8) delayed in exchanging pretrial materials; (9) included trial

8

exhibits it never intended to use at trial; (10) and engaged in ad hominem attacks. Docket No. 292

9

at 2–9.
1.

11
United States District Court
Northern District of California

10

Legal Standard

Section 285 of the Patent Act provides that “[t]he court in exceptional cases may award

12

reasonable attorney fees to the prevailing party.” An exceptional case is “one that stands out from

13

others with respect to the substantive strength of a party’s litigating position (considering both the

14

governing law and the facts of the case) or the unreasonable manner in which the case was

15

litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).

16

“District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their

17

discretion, considering the totality of the circumstances.” Id. Relevant factors in assessing

18

whether a case is exceptional include “frivolousness, motivation, objective unreasonableness (both

19

in the factual and legal components of the case) and the need in particular circumstances to

20

advance considerations of compensation and deterrence.” Id. at 554 n.6. “[P]ost-Octane decisions

21

awarding fees have generally cited egregious behavior” as the basis for deeming a case

22

“exceptional.” Vasudevan Software, Inc. v. Microstrategy, Inc., No. 11-CV-06637-RS, 2015 WL

23

4940635, at *5 (N.D. Cal. Aug. 19, 2015) (citing cases).

24

2.

Analysis

25

Opticurrent asserts that PI litigated this case in an “unreasonable manner” per Octane.

26

However, none of the behavior cited by Opticurrent, considered in isolation or in the aggregate, is

27

egregious or exceptional.

28

Opticurrent first argues that PI conducted a “[s]ham [i]nvestigation” into the merits of the
37

1

suit and willfully blinded itself to the possibility that its products infringe the ’623 patent. Docket

2

No. 292 at 2–3. However, as discussed in more detail above, in concluding that PI did not induce

3

infringement, the jury found that PI was not willfully blind as to the possibility of infringement.

4

See Part II.B.2., supra. PI’s witnesses Mr. Walker and Mr. Kung both testified that they

5

determined after seeing the ’623 patent that PI’s products did not infringe. They explained the

6

bases for their determinations—that the accused products were four-terminal switches whereas the

7

’623 patent described a three-terminal switch, and the fourth terminal in the accused product was

8

connected to a power supply whereas Judge Gilstrap construed the ’623 patent to cover switches

9

in which the fourth terminal was not connected to a power supply. Although the jury ultimately
decided that the accused products did infringe, its verdict of non-inducement reflects that it

11
United States District Court
Northern District of California

10

credited PI’s evidence that the infringement was not knowing or willful.

12

Second, Opticurrent asserts that PI did not disclose a patent license agreement between PI

13

and its subsidiary, Power Integrations International Ltd. (the “License”), even though Opticurrent

14

had made a Rule 30(b)(6) request for PI’s patent licensing agreements. Docket No. 292 at 3–4. In

15

addition, Opticurrent represents that it asked Mr. Walker in his deposition “directly about existing

16

licenses to which Power Integrations was a party (including licenses that Power Integrations

17

believed were relevant and those it contends were not relevant), and he did not disclose the

18

existence of this License.” Id. at 4. It was not until Opticurrent’s counsel attended a trial in the

19

litigation between PI and Fairchild Semiconductor that Opticurrent became aware of the License.

20

Id.

21

Once Opticurrent became aware of the License, it moved the Court to compel PI to

22

produce it, to allow Opticurrent to supplement its expert report with information from the License,

23

and to issue sanctions for PI’s non-disclosure. Docket No. 174 at 27–28. Judge Orrick denied all

24

three of Opticurrent’s requests. He explained that he had already denied Opticurrent’s previous

25

“request to compel production of certain damages-related documents arising from the Fairchild

26

litigation because the cases were unrelated, the experts were unrelated, they involved different

27

patents, and Opticurrent already had sufficient materials in the public record related to the case.”

28

Id. at 28 (citing Docket No. 99). Judge Orrick determined that the License was encompassed in
38

1

that prior ruling because it was irrelevant to this litigation. See id. Moreover, he reminded

2

Opticurrent that its Rule 30(b)(6) request “only sought licenses that PI ‘contends are relevant to

3

the hypothetical negotiation,’” and therefore “continues to exclude” the newly-disclosed License.

4

Id. at 29. Accordingly, there was no basis to bring the License, much less sanction PI for

5

withholding it. This Court affirmed Judge Orrick’s ruling prior to trial, denying Opticurrent’s

6

attempt to use the License to establish a royalty rate here. See Docket No. 235 at 2 (finding “lack

7

of comparability” between the License and that which would have resulted from the hypothetical

8

negotiation between Opticurrent and PI).
In light of the above, Opticurrent is incorrect to claim that PI “hid” the licensing agreement

9
10

or otherwise acted inappropriately in not producing it.9
Third, Opticurrent argues that PI “vigorously opposed Plaintiff’s efforts to amend its

United States District Court
Northern District of California

11
12

Infringement Contentions” despite having “no legitimate basis for doing so.” Docket No. 292 at

13
14
15

9

To the extent Opticurrent believes Mr. Walker was less than forthcoming in his deposition when
asked about PI’s patent licenses, it is worth noting that Opticurrent’s questioning was ambiguous.
Opticurrent maintains that the follow exchange shows that Mr. Walker’s concealed the License:

16
17
18
19
20
21
22
23
24
25
26
27
28
39

1

5–6. In Opticurrent’s telling, when it moved to amend its infringement contentions in May 2017,

2

it was merely trying to “update[] the information relating to conception and reduction to practice

3

[of the ’623 patent] that had already been produced and identified during discovery,” and was “not

4

seeking to provide a new conception date.” Id. at 5. Opticurrent alleges that PI opposed the

5

motion with “threats” to overhaul its own case in response to Opticurrent’s amendments. Id. at 6.

6

Opticurrent’s account of events is, at best, skewed. Although Judge Orrick ultimately

7

allowed Opticurrent to amend its infringement contentions, he observed that the need for

8

amendment arose because Opticurrent was “putting PI on notice of its ‘new’ conception date,”

9

which by Opticurrent’s own account was “critical because the earlier conception and reduction to
practice dates knock out at least one of defendants’ prior art references.” Docket No. 96 at 9.

11
United States District Court
Northern District of California

10

Judge Orrick also underscored that the dispute was triggered by Opticurrent’s last-minute

12

production of documents, shortly before the close of fact discovery, indicating the Mr. Congdon

13

had conceived the ’623 patent in 1997, significantly earlier than the previously-asserted

14

conception date of 2001. See id. Before producing those documents, Opticurrent had informed PI

15

that “no documents pertaining to conception dates and reduction to practice exist because it was

16

not aware of an actual reduction to practice prior to the earliest effective filing date of the ’623

17

patent” in 2001. Id. Judge Orrick decided to allow the amendment only after granting PI a two-

18

month discovery extension to ameliorate the prejudice caused by Opticurrent’ amended

19

infringement contentions. See id. at 11–12.

20

Fourth, Opticurrent claims that PI’s “mischaracterizations about the accused product

21

families resulted in the exclusion of certain products” from this case. Docket No. 292 at 6. As

22

explained above, the Court excluded those products not because PI mischaracterized them, but

23

because Opticurrent did not alert PI that it was including them as accused products until mere days

24

before trial opened. See Part II.C., supra.

25

Fifth, Opticurrent contends that PI engaged in litigation misconduct when its technical

26

expert, William Bohannon, submitted a rebuttal report that improperly made a “practicing the

27

prior art” invalidity argument under the guise of providing noninfringement opinions. Docket No.

28

292 at 6–7. Judge Orrick granted Opticurrent’s Daubert motion to strike the relevant portion of
40

1

Mr. Bohannon’s report, agreeing with Opticurrent that “Bohannon’s prior art testimony . . .

2

ignores the Federal Circuit’s clear directive that ‘infringement is determined by construing the

3

claims and comparing them to the accused device, not by comparing the accused device to the

4

prior art.’” Docket No. 174 at 24–27 (quoting Tate Access Floors v. Interface Architectural Res.,

5

279 F.3d 1357, 1366 (Fed. Cir. 2002)). However, “[a]n exclusion of expert testimony

6

under Daubert does not in most cases trigger a finding of litigation misconduct” unless “the

7

circumstances are ‘sufficiently egregious.’” Digital Reg of Texas, LLC v. Adobe Sys., Inc., No. C

8

12-1971 CW, 2015 WL 1026226, at *2 (N.D. Cal. Mar. 9, 2015) (quoting MarcTec v. Johnson &

9

Johnson, 664 F.3d 907, 920 (Fed. Cir. 2012)). Judge Orrick did not indicate that Mr. Bohannon’s

10

United States District Court
Northern District of California

11

references to prior art were egregious or made in bad faith.
Sixth, Opticurrent argues that PI abruptly abandoned its invalidity contentions on the eve

12

of trial after contesting the validity of the ’623 patent throughout the litigation, forcing Opticurrent

13

to spend unnecessary time and resources responding. Docket No. 292 at 7–8. But, as the Federal

14

Circuit has explained, withdrawing claims or defenses is not in itself litigation misconduct that

15

gives rise to attorneys’ fees under § 285. “Claims . . . frequently are dropped and amended during

16

the course of a lawsuit,” and “sound judicial policy encourages a narrowing of issues.” Union

17

Pac. Res. Co. v. Chesapeake Energy Corp., 236 F.3d 684, 694 (Fed. Cir. 2001). Opticurrent has

18

not shown that PI’s decision to narrow the scope of the trial by not contesting validity was

19

“exceptional or vexatious as compared to normal litigation.” Id.; see Chrimar Holding Co., LLC

20

v. ALE USA Inc., 732 F. App’x 876, 891 (Fed. Cir. 2018) (affirming district court determination

21

that defendant’s conduct in “press[ing] a large number of defenses and counterclaims for years,

22

only to drop most of them (e.g., . . . some invalidity grounds) late in the litigation, even during

23

trial” fell “within the range of ordinary practices involving the narrowing of claims for trial”).

24

Opticurrent cites Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352 (Fed. Cir. 2008) as a case

25

in which the court deemed the withdrawal of claims before trial to be inequitable conduct under

26

§ 285. There, however, the “exceptional case” determination was premised on the cumulative

27

effect of numerous instances of inequitable conduct: the appellants “provided incorrect responses

28

to interrogatories and never filed a formal correction, then attempted to exclude the interrogatories
41

1

for impeachment purposes because they were not signed; . . . [the inventor] arguably waived his

2

attorney-client privilege during trial without providing notice to [the appellee]; [and] appellants

3

produced documents near the end of trial that had been requested earlier.” Id. at 1358–59. And

4

the appellant in Nilssen did not merely drop one defense or counterclaim before trial; it “withdrew

5

sixteen of the originally-filed patents from their suit.” Id. at 1359. The circumstances evidencing

6

inequitable conduct in Nilssen are not present here.

7

Seventh, Opticurrent faults PI for “refus[ing] to supplement its damages related

8

documentation” in the weeks leading up to trial. Docket No. 292 at 8. Yet, Opticurrent’s own

9

characterization of the supposed dispute shows that PI provided the requested documentation once
it became available. When Opticurrent requested updated sales figures before trial, PI did not

11
United States District Court
Northern District of California

10

provide them immediately because that it had not yet “closed its books.” Id. Once PI’s year-end

12

accounting process was completed in March, it produced the requested information. Id.

13

Opticurrent argues that PI updates its sales figures on a monthly basis and therefore could have

14

passed that information on to Opticurrent each month, but does not explain why that method of

15

production is preferable to a one-time production.

16

Eighth, Opticurrent asserts that PI did not provide all the pretrial materials on December

17

10, 2018, as it was required to. Docket No. 292 at 9. PI does not dispute that it did not turn over

18

some materials on December 10, but notes that it alerted Opticurrent that it would provide them by

19

December 12 and did, in fact, do so. See Docket No. 305-3 (email exchange between parties’

20

counsel). There is no evidence that the delay was the result of bad faith or that it prejudiced

21

Opticurrent, as the parties were able to file their pretrial submissions three days before the court-

22

ordered deadline. See Docket Nos. 170–73. PI’s conduct was not egregious.

23

Ninth, Opticurrent protests that PI “insisted on the inclusion of hundreds of trial exhibits,”

24

of which many were not ultimately introduced at trial. Docket No. 292 at 9. It is perfectly routine

25

for parties to selectively introduce exhibits at trial depending on evolving trial strategies, issues

26

that are raised or not raised during trial, evidentiary objections, and other considerations.

27

Opticurrent certainly did not introduce all the exhibits on its exhibits list and does not cite any

28

authority for the proposition that it is unreasonable for a litigant to not introduce every piece of
42

1

evidence on its exhibit list.

2

Finally, Opticurrent complains that PI has engaged in “[c]onstant ad hominem attacks and

3

unnecessarily heated rhetoric” throughout this litigation. Docket No. 292 at 9–10. The ostensibly

4

supporting examples Opticurrent cites, however, do not contain any language that could be

5

construed as ad hominem or unreasonably heated. Opticurrent merely lists filings PI has made in

6

support of motions that ended up being denied. See id. (listing PI’s claim construction brief,

7

opposition to Opticurrent’s motion to amend infringement contentions, and two case management

8

statements in which PI stated its position that Opticurrent’s infringement contentions are

9

meritless).
As the Supreme Court has stressed, the fee-shifting statute that was the precursor to § 285

11
United States District Court
Northern District of California

10

did not contemplate the award of fees “as a penalty for failure to win a patent infringement suit.”

12

Octane Fitness, 572 U.S. at 548–49 (noting that § 285 “did not substantively alter the meaning of

13

the [precursor] statute”). Thus, “the mere fact that [PI] moved” for relief of various forms “during

14

the course of this litigation—and that the court ruled in [Opticurrent’s] favor each time—does not

15

suggest exceptional circumstances.” Adaptix, Inc. v. Apple, Inc., No. 5:13-CV-01776-PSG, 2015

16

WL 5158716, at *2–4 (N.D. Cal. Sept. 2, 2015) (denying fees under § 285 where the losing

17

party’s position “was not entirely unreasonabl[e]” and not “based on anything but a good faith

18

belief”); see TVIIM, LLC v. McAfee, Inc., No. 13-CV-04545-HSG, 2016 WL 74637, at *7 (N.D.

19

Cal. Jan. 7, 2016) (“But the fact that Plaintiff lost on both its infringement and invalidity

20

arguments cannot, by itself, justify a fees award.”).

21

3.

Conclusion

22

A case, like this one, that has been “hard fought and zealously litigated” inevitably sees

23

“various disputes between the parties,” but Opticurrent “has failed to identify any conduct by [PI]

24

that would rise to the level of misconduct necessary to find this an ‘exceptional case’ and award

25

attorneys’ fees under Section 285.” Finjan, Inc. v. Sophos, Inc., 244 F. Supp. 3d 1016, 1029 (N.D.

26

Cal. 2017). Accordingly, Opticurrent’s motion for attorneys’ fees is DENIED.

27

G.

28

PI’s Motion to Stay Execution of Judgment Pending Appeal
Under Federal Rule of Civil Procedure 62(b), “[a]t any time after judgment is entered, a
43

1

party may obtain a stay by providing a bond or other security.” A supersedeas bond ensures that

2

the appellee will be able to collect the judgment plus interest should the court of appeals affirm the

3

judgment. See Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1505 n.1 (9th Cir. 1987). When a

4

party posts a supersedeas bond with the district court in compliance with Rule 62(b), “it [is]

5

entitled to a stay as a matter of right.” Bennett v. Franklin Res., Inc., 360 F. Supp. 3d 972, 977

6

(N.D. Cal. 2018) (quoting American Civil Liberties Union of Nevada v. Masto, 670 F.3d 1046,

7

1066 (9th Cir. 2012)) (alteration in original). If no bond is posted, “the grant or denial of [a] stay[]

8

[i]s a matter strictly within the judge’s discretion.” Matter of Combined Metals Reduction Co.,

9

557 F.2d 179, 193 (9th Cir. 1977). “The appellant has the burden to ‘objectively demonstrate’ the
reasons for departing from the usual requirement of a full supersedeas bond.” Cotton ex rel.

11
United States District Court
Northern District of California

10

McClure v. City of Eureka, Cal., 860 F. Supp. 2d 999, 1028 (N.D. Cal. 2012) (quoting Poplar

12

Grove Planting & Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir.

13

1979)).

14

Here, PI asks the Court to enter a stay pending appeal without requiring a supersedeas

15

bond. Instead, PI proposes that it will provide “other security” in the form of quarterly financial

16

updates to demonstrate its continued ability to pay the judgment and a representation that PI will

17

“pay any judgment within 30 days of the Federal Circuit issuing its mandate.” Docket No. 313 at

18

4. Opticurrent objects, and instead requests that the Court “require Power Integrations to get a

19

letter of credit to secure the judgment on its behalf.” Docket No. 322 at 1.

20

In Dillon v. City of Chicago, 866 F.2d 902, 904 (7th Cir. 1988), the Seventh Circuit

21

articulated five factors to guide courts in exercising their discretion regarding whether to waive the

22

bond requirement. “Courts in the Ninth Circuit regularly use the Dillon factors in determining

23

whether to waive the bond requirement.” Kranson v. Fed. Express Corp., No. 11-CV-05826-

24

YGR, 2013 WL 6872495, at *1 (N.D. Cal. Dec. 31, 2013) (citing Cotton, 860 F. Supp. 2d at

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1028). The Dillon factors are: (1) the complexity of the collection process; (2) the amount of time

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required to obtain a judgment after it is affirmed on appeal; (3) the degree of confidence that the

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district court has in the availability of funds to pay the judgment; (4) whether the defendant’s

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ability to pay the judgment is so plain that the cost of a bond would be a waste of money; and (5)
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whether the defendant is in such a precarious financial situation that the requirement to post a

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bond would place other creditors of the defendant in an insecure position. Dillon, 866 F.2d at

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904–05.

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PI argues that it should not be required to post bond because it satisfies all of the Dillon
factors. According to PI, the third through fifth factors are met because the judgment in this case

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is small relative to PI’s assets—its latest SEC Form 10K indicates that PI had net revenues of $416

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million, shareholders’ equity of $527 million, and cash-on-hand of $134 million. Docket No. 313,

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Exh. A at 21. Further, PI believes its assurance that it will pay any judgment within 30 days of an

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appellate mandate satisfy the first and second factors. Opticurrent argues, on the other hand, that

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PI’s size is no guarantee of solvency, and indeed that PI has acknowledged in its SEC filings that

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United States District Court
Northern District of California

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it is in patent litigation against a competitor, Fairchild Semiconductor, and there is a possibility

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that PI “may be required to pay substantial damages, stop our manufacture, use, sale, or

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importation of infringing products, or obtain licenses” if it loses the case. Docket No. 322, Exh. 2

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at 15. Opticurrent further contends that PI’s “conclusory statements about agreeing to pay within

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30 days are not enough to carry its burden” on the first two Dillon factors. Id. at 3.

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Courts have accepted the type of security PI proposes in lieu of supersedeas bond. In

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Kranson v. Fed. Express Corp., No. 11-CV-05826-YGR, 2013 WL 6872495 (N.D. Cal. Dec. 31,

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2013), the court waived the bond requirement in light of the defendant’s plain ability to pay the

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judgment and its counsel’s attestation that “once a completed payment request is submitted, it

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takes less than 30 days . . . to issue payment.” Id. at *1–2. In Am. Color Graphics, Inc. v.

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Travelers Prop. Cas. Ins. Co., No. C 04-3518 SBA, 2007 WL 1520952 (N.D. Cal. May 23, 2007),

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the court allowed the defendant to “submit copies of its quarterly and annual financial statements

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to [plaintiff] and the Court while the appeal is pending” in lieu of a bond. Id. at *2. However, the

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circumstances in this case are somewhat different. Unlike in Kranson, PI’s ability to pay the

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judgment is not beyond question given the risks attendant to its litigation with Fairchild

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Semiconductor. Unlike in American Color, where the plaintiff consented to the defendant’s

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alternative form of security, Opticurrent opposes PI’s request here. Am. Color Graphics, 2007

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WL 1520952, at *2.
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Accordingly, the Court finds that PI has not met its burden to demonstrate that the usual

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requirement of a full supersedeas bond is not warranted. Cotton, 860 F. Supp. 2d at 1028. PI’s

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motion the stay execution of the judgment pending appeal is DENIED. To stay execution of the

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judgment pending appeal, PI must file a supersedeas bond equal to 125% of Opticurrent’s

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$1,199,967.26 award, i.e., $1,499,959.08. See id. at 1029 (“[A] bond of 1.25 to 1.5 times the

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judgment is typically required.”) (citation omitted).
III.

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CONCLUSION

For the foregoing reasons, PI’s motion for judgment as a matter of law is GRANTED as to
the royalty base and DENIED otherwise; Opticurrent’s motions for judgment on induced
infringement and on the Excluded Products are DENIED; Opticurrent’s motions for ongoing

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United States District Court
Northern District of California

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royalty and for prejudgment and postjudgment interest are GRANTED; Opticurrent’s motion for

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attorneys’ fees is DENIED; and PI’s motion to stay execution of judgment pending appeal is

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DENIED.

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This order disposes of Docket Nos. 292, 295, 296, 298, 303, 309, and 313.

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IT IS SO ORDERED.

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Dated: June 5, 2019

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______________________________________
EDWARD M. CHEN
United States District Judge

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