Presidio Components, Inc. v. American Technical Ceramics Corp.

Filing 574

ORDER Denying Without Prejudice Defendant's Motion to Vacate or Stay Permanent Injunction 571 . Signed by Judge Marilyn L. Huff on 2/5/20. (sxa)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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PRESIDIO COMPONENTS, INC.,
Plaintiff,

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Case No.: 14-cv-02061-H-BGS
ORDER DENYING WITHOUT
PREJUDICE DEFENDANT’S
MOTION TO VACATE OR STAY
PERMANENT INJUNCTION

v.
AMERICAN TECHNICAL CERAMICS
CORP.,

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Defendant.

[Doc. No. 571.]

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On January 10, 2020, Defendant American Technical Ceramics Corp. filed a motion

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to vacate or stay the permanent injunction that was entered in this action. (Doc. No. 571.)

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On January 24, 2020, Plaintiff Presidio Components, Inc. filed a response in opposition to

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ATC’s motion. (Doc. No. 572.) On January 31, 2020, ATC filed a reply. (Doc. No. 573.)

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A hearing on the motion to stay is currently scheduled for Monday, February 10,

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2020 at 10:30 a.m. The Court, pursuant to its discretion under Civil Local Rule 7.1(d)(1),

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determines this matter is appropriate for resolution without oral argument, submits the

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motion on the parties’ papers, and vacates the hearing. For the reasons below, the Court

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denies ATC’s motion to vacate or stay the permanent injunction without prejudice.

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///

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///
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Background
I.

The Present Action

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On September 2, 2014, Plaintiff Presidio filed a complaint for patent infringement

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against Defendant ATC, alleging infringement of U.S. Patent No. 6,816,356 (“the ’356

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patent”). (Doc. No. 1, Compl.) The ’356 patent is entitled “Integrated Broadband Ceramic

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Capacitor Array.” U.S. Patent No. 6,816,356 B2, at 1:1-2 (filed Apr. 14, 2003). The patent

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issued on November 9, 2004 and claimed priority to an application filed on May 17, 2002.

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See id. (See Doc. No. 276-3 ¶ 4; Doc. No. 356-1 at 5.)

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On December 8, 2015, the United States Patent and Trademark Office issued a

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reexamination certificate for the ’356 patent, amending certain claims of the patent. 1 (Doc.

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No. 170-2, FAC Ex. 2.) On December 22, 2015, Presidio filed a first amended complaint,

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alleging infringement of the ’356 patent as amended by the reexamination certificate.

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(Doc. No. 170, FAC.) Specifically, Presidio alleged that ATC’s 550 line of capacitors

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infringes claims 1, 3, 5, 16, 18, and 19 of the ’356 patent. (Id. ¶ 26.) On December 22,

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2015, ATC filed a second amended answer and counterclaims to the first amended

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complaint, adding an affirmative defense of absolute and equitable intervening rights and

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an affirmative defense and counterclaim of unenforceability due to inequitable conduct.

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(Doc. No. 171.)

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On January 12, 2016, the Court denied Presidio’s motions for: (1) summary

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judgment of definiteness; (2) summary judgment of infringement; (3) summary judgment

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of ATC’s equitable affirmative defenses; and (4) summary judgment of no acceptable non-

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infringing alternatives. (Doc. No. 210.) In the order, the Court also denied ATC’s motions

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for: (1) partial summary judgment of non-infringement; (2) summary judgment of

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indefiniteness; and (3) summary judgment of no willful infringement. (Id.) On February

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10, 2016, the Court granted ATC’s motion for summary judgment of its affirmative defense

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The PTO previously issued a reexamination certificate for the ’356 patent on September 13, 2011.
(Doc. No. 170-1, FAC Ex. 1.) This reexamination certificate did not alter any of the claims at issue in the
present action. (Id.)
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of absolute intervening rights and held that Presidio is entitled to infringement damages

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only for the time period following the issuance of the reexamination certificate on

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December 8, 2015. (Doc. No. 234 at 28.) In that order, the Court also dismissed with

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prejudice ATC’s affirmative defense and counterclaim that the ’356 patent is unenforceable

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due to inequitable conduct. (Id. at 33.)

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The Court held a jury trial on Presidio’s infringement claim beginning on April 5,

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2016. (Doc. No. 297.) On April 18, 2016, the jury returned a verdict finding direct

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infringement and induced infringement of claims 1, 3, 5, 16, 18, and 19 of the ’356 patent

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by ATC as to all of the accused products in the action: the 550L, the 550S, the 550U, and

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the 550Z capacitors. (Doc. No. 328 at 2-3.) In addition, the jury found that Presidio had

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proven by clear and convincing evidence that ATC’s infringement of the asserted claims

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was willful. (Id. at 4.) The jury awarded Presidio $2,166,654 in lost profit damages. (Id.)

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On June 17, 2016, the Court issued a memorandum decision finding in favor of

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Presidio and against ATC on all issues submitted to the Court, including indefiniteness,

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equitable intervening rights, equitable estoppel, and laches. (Doc. No. 368.) On June 17,

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2016, the Court entered judgment in favor of Presidio on all causes of action and awarded

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Presidio $2,166,654 in damages. (Doc. No. 369.)

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Following the Court’s entry of judgment, the parties filed various post-trial motions,

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including Presidio’s motion for a permanent injunction. (Doc. No. 373.) On August 17,

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2016, the Court issued an order ruling on the parties’ post-trial motions. (Doc. No. 440.)

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In the order, the Court denied ATC’s Rule 50(b) motions for judgment as a matter of law

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and Rule 59(e) motions for a new trial. (Id. at 7-27.) The Court also granted Presidio’s

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motion for a permanent injunction; denied Presidio’s motion for enhanced damages and

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attorney’s fees; and granted Presidio’s motion for supplemental damages and interest. (Id.

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at 27-48.) In granting Presidio’s motion for a permanent injunction, the Court denied

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ATC’s request to stay the injunction pending appeal, but included a 90-day sunset

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provision in the injunction. (Id. at 38-39.) On August 27, 2016, the Court entered the

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permanent injunction. (Doc. No. 441.)
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The parties cross-appealed to the Federal Circuit. (Doc. Nos. 443, 453.) On October

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21, 2016, the Federal Circuit granted a stay of the injunction until March 17, 2017 with

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respect to ATC’s customers that purchased the infringing capacitors prior to June 17, 2016.

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Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1375 (Fed. Cir.

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2017) (“Presidio II”). On November 21, 2017, the Federal Circuit issued an opinion in the

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above case: (1) affirming the Court’s finding of definiteness, grant of absolute intervening

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rights, and denial of enhanced damages; (2) reversing the award of lost profits and

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instructing that on remand, the damages award should be limited to a reasonable royalty,

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and a new trial should be conducted as necessary to determine the reasonable royalty rate;

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and (3) vacating the permanent injunction and remanding with instructions to consider the

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relevant evidence and determine whether Presidio has established irreparable injury. Id. at

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1384.

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Following the Federal Circuit’s decision on appeal in this case, on February 14,

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2018, the Court held an appeal mandate hearing and a telephonic case management

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conference. (Doc. No. 464.) On February 16, 2018, the Court issued a scheduling order

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setting forth dates and deadlines related to a damages retrial. (Doc. No. 466.) On March

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22, 2018, the Court issued a scheduling order setting forth dates and deadlines related to

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Presidio’s renewed motion for a permanent injunction. (Doc. No. 470.)

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On April 23, 2018, the Court granted the parties’ joint motion for the entry of

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judgment on the reasonable royalty rate for the accused products, and the Court vacated

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the scheduled damages retrial. (Doc. No. 485.) On August 13, 2018, the Court granted

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Presidio’s renewed motion for a permanent injunction, and the Court entered a permanent

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injunction. (Doc. Nos. 517, 518.)

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On August 15, 2018, the Court entered an amended judgment in favor of Presidio.

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(Doc. No. 519.) On September 6, 2018, Presidio filed a notice of appeal to the Federal

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Circuit. (Doc. No. 520.) On September 12, 2018, ATC also filed a notice of appeal to the

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Federal Circuit. (Doc. No. 521.) On October 30, 2018, the Court granted the parties’ joint

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motion for entry of a second amended judgment, and the Court entered a second amended
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judgment in favor of Plaintiff Presidio on all causes of action and awarded Presidio a

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reasonable royalty rate of $0.25 per unit for each 550 capacitor sold by Defendant from

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December 8, 2015 through August 16, 2018 in the amount due to Plaintiff by Defendant of

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$4,352,301, plus interest and costs as previously awarded by the Court and as allowed by

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law. (Doc. Nos. 537, 538.)

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On November 13, 2019, the Federal Circuit summarily affirmed the Court’s

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judgment and permanent injunction. (Doc. No. 570.) On January 10, 2020, the Court held

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an appeal mandate hearing. (Doc. No. 569.) ATC represents that it satisfied the final

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judgment in this action in full on January 15, 2020. (Doc. No. 573 at 8.) By the present

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motion, ATC requests that the Court vacate or stay the August 13, 2018 permanent

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injunction pending the resolution of the current ex parte reexamination proceedings for the

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’356 patent.

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II.

The Reexamination Proceedings at Issue

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On April 20, 2018, ATC filed a request for ex parte reexamination of the asserted

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claims of the ’356 patent with the United States Patent and Trademark Office. (Doc. No.

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571-6, Ex. 5.) On May 23, 2018, the PTO issued a decision granting ATC’s request for ex

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parte reexamination of the ’356 patent. (Doc. No. 571-7, Ex. 6.)

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On April 17, 2019, the PTO Examiner issued a final office action, rejecting the

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asserted claims of the ’356 patent as anticipated under pre-AIA 35 U.S.C. § 102(b) by the

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1999 MLC Catalog. (Doc. No. 517-9, Ex. 8 at 4-5.) On June 17, 2019, Presidio filed a

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response to the Final Office Action. (Doc. No. 517-10, Ex. 9.) On July 2, 2019, the PTO

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Examiner issued an Advisory Action, stating that Presidio’s June 17, 2019 proposed

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response failed to overcome the rejections in the April 17, 2019 Final Office Action. (Doc.

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No. 517-11, Ex. 10.)

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On August 19, 2019, Presidio filed a notice of appeal, appealing the Examiner’s

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rejection to the Patent Trial and Appeal Board. (Doc. No. 571-13, Ex. 12.) Presidio’s

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appeal before the PTAB is now fully briefed and is awaiting a final ruling from the PTAB.2

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(See Doc. No. 571-14, Ex. 13; Doc. No. 571-15, Ex. 14; Doc. No. 573-5, Ex. 18.)

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Discussion
I.

Legal Standards

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A.

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The Patent Act provides a patentee with the “right to exclude others from making,

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using, offering for sale, or selling the [patented] invention.” 35 U.S.C. § 154(a)(1). “In

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furtherance of this right to exclude, district courts ‘may grant injunctions in accordance

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with the principles of equity to prevent the violation of any right secured by patent, on such

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terms as the court deems reasonable.’” Apple Inc. v. Samsung Elecs. Co., 809 F.3d 633,

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638 (Fed. Cir. 2015) (quoting 35 U.S.C. § 283).

Legal Standards Governing Permanent Injunctions

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For a permanent injunction to issue, the party requesting the injunction must

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demonstrate that: (1) it has suffered an irreparable injury; (2) legal remedies, such as money

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damages, are inadequate to compensate for that injury; (3) the balance of hardships

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warrants an injunction; and (4) the public interest would not be disserved by an injunction.

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eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006); Nichia Corp. v. Everlight

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Americas, Inc., 855 F.3d 1328, 1341 (Fed. Cir. 2017). The Federal Circuit has explained

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that “[t]his analysis proceeds with an eye to the ‘long tradition of equity practice’ granting

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‘injunctive relief upon a finding of infringement in the vast majority of patent cases.’”

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Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 702 F.3d 1351, 1362 (Fed. Cir.

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2012) (“Presidio I”); see also Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142, 1149

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(Fed. Cir. 2011) (“Although eBay abolishes our general rule that an injunction normally

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will issue when a patent is found to have been valid and infringed, . . . it does not follow

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that courts should entirely ignore the fundamental nature of patents as property rights

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granting the owner the right to exclude.”). “The decision to grant or deny permanent

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The parties estimate that a final ruling from the PTAB should issue around August 2020. (See
Doc. No. 572 at 2, 4-5; Doc. No. 572-1, Ex. A at 14.)
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injunctive relief is an act of equitable discretion by the district court, reviewable on appeal

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for abuse of discretion.” eBay, 547 U.S. at 391.

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B.

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Federal Rule of Civil Procedure 60(b)(5) provides: “On motion and just terms, the

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court may relieve a party or its legal representative from a final judgment, order, or

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proceeding for the following reasons: . . . (5) . . . applying it prospectively is no longer

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equitable.” Fed. R. Civ. P. 60(b)(5). Rule 60(b)(5) “codifies the courts’ traditional

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authority, ‘inherent in the jurisdiction of the chancery,’ to modify or vacate the prospective

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effect of their decrees.” Bellevue Manor Assocs. v. United States, 165 F.3d 1249, 1252

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Legal Standards Governing Modification of a Permanent Injunction

(9th Cir. 1999).

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“[I]n order to grant a Rule 60(b)(5) motion to modify a court order, a district court

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must find ‘a significant change either in factual conditions or in law.’” S.E.C. v. Coldicutt,

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258 F.3d 939, 942 (9th Cir. 2001) (quoting Rufo v. Inmates of Suffolk Cty. Jail, 502 U.S.

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367, 384 (1992)).

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modification is suitably tailored to resolve the problems created by the changed factual or

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legal conditions.” United States v. Asarco Inc., 430 F.3d 972, 979 (9th Cir. 2005). This is

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“a general, flexible standard.” Bellevue Manor, 165 F.3d at 1255. And the district court

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should “take all the circumstances into account.” Id. at 1256.

“The district court must then determine whether the proposed

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“Modification ‘may be warranted when changed factual conditions make

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compliance with the decree substantially more onerous. . . . Modification is also appropriate

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when a decree proves to be unworkable because of unforeseen obstacles, or when

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enforcement of the decree without modification would be detrimental to the public

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interest.’” Coldicutt, 258 F.3d at 942 (quoting Rufo, 502 U.S. at 384). “Relief from a court

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order should not be granted, however, simply because a party finds ‘it is no longer

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convenient to live with the terms’ of the order.” Id. (quoting Rufo, 502 U.S. at 383).

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The party seeking relief under Rule 60(b)(5) “bears the burden of establishing that a

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significant change in circumstances warrants revision of the decree.” Rufo, 502 U.S. at

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383. A district court’s determination of a Rule 60(b)(5) motion is reviewed for abuse of
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discretion. See Coldicutt, 258 F.3d at 941.

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II.

Analysis

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ATC argues that the Examiner’s final rejection in the ex parte reexamination

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proceedings of all of the asserted claims of the ’356 patent as anticipated by the 1999 MLC

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Catalog constitutes significant changed circumstances warranting vacatur of the Court’s

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August 13, 2018 permanent injunction. (Doc. No. 571 at 9-14.) ATC argues that because

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the validity of the asserted claims of the ’356 patent is extremely suspect in light of the

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current status of the reexamination proceedings, it is no longer equitable to for the Court

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to continue to enjoin ATC. (Id. at 14.) ATC argues, therefore, the permanent injunction

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should be vacated or stayed until such time that Presidio can reverse the current finding in

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the PTO that the claims of the ’356 patent are invalid. (Doc. No. 571 at 14; Doc. No. 573

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at 1.)

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In response, Presidio argues ATC’s motion should be denied because ATC has failed

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to demonstrate a significant change in circumstances. Presidio argues that the ex parte

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reexamination is still in its early stages with an appeal before the PTAB currently pending,

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and the potential for a subsequent appeal to the Federal Circuit still remaining. (Doc. No.

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572 at 1, 7.) Presidio also argues that it has demonstrated that the reexamination request

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will likely fail on the merits. (Id. at 7-9.) In addition, Presidio argues that it would suffer

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irreparable harm if the Court were to vacate or stay the permanent injunction. (Id. at 9-12.)

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After reviewing the parties’ arguments and the record in this action and in the

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reexamination proceedings, the Court acknowledges that the Examiner’s April 17, 2019

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Final Office Action in the ex parte reexamination proceedings rejecting all of the asserted

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claims of the ’356 patent as anticipated by the 1999 MLC Catalog represents a change in

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the circumstances of this case. Nevertheless, upon reweighing the eBay factors and the

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equities in this case, the Court declines to vacate or stay the permanent injunction at this

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time. Presidio’s appeal of the Examiner’s decision is fully briefed and is pending before

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the PTAB. (See Doc. No. 571-14, Ex. 13; Doc. No. 571-15, Ex. 14; Doc. No. 573-5, Ex.

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18.) Both parties estimate that the PTAB should issue a final decision in the appeal around
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August 2020, which is only six months away. (See Doc. No. 572 at 2, 4-5; Doc. No. 572-

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1, Ex. A at 14.) In light of this, the Court, exercising its sound discretion, concludes that

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the prudent course is to deny ATC’s motion to vacate or stay the permanent injunction for

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now without prejudice to ATC renewing its motion upon a final decision by the PTAB on

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Presidio’s appeal.

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Conclusion

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For the reasons below, the Court denies ATC’s motion to vacate or stay the

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permanent injunction without prejudice to ATC renewing its motion upon a final decision

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by the PTAB in the ex parte reexamination proceedings.

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IT IS SO ORDERED.
DATED: February 5, 2020
MARILYN L. HUFF, District Judge
UNITED STATES DISTRICT COURT

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