Linear Technology Corporation v. Monolithic Power Systems Inc.

Filing 286

MEMORANDUM AND ORDER on the issue of Inequitable Conduct. Signed by Chief Judge Gregory M. Sleet on 9/9/2011. (asw)

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

LINEAR TECHNOLOGY
CORPORA TION,
Plaintiff,

v.

)
)
)
)
)
)
)
)

C.A. No. 06-476-GMS

MONOLITHIC POWER SYSTEMS, INC. )

Defendant.

)
)
)

MEMORANDUM
I.

INTRODUCTION

On August 3, 2006, plaintiff Linear Technology Corporation ("Linear") filed this action
against Monolithic Power Systems, Inc. ("MPS"), alleging that MPS' products infringe United
States Patent Nos. 5,481,178 (the '" 178 patent") and 6,580,258 (the '''258 patent") (collectively,
the "Linear patents"), and that MPS breached a settlement agreement. (D.I. 2.)

MPS filed an

answer generally denying infringement and breach of the settlement agreement. (D.I. 36.) MPS
also asserted affirmative defenses challenging the enforceability and validity of the Linear
patents. (Id.) The court held a Markman hearing in this matter on July 26,2007. On November
20, 2007, the court issued an order construing the disputed claim terms of the Linear patents.

(D.1. 104.)
The court held a jury trial from June 23, 2008 through July 1, 2008. (D.L 23 I -36.) On
July 1, 2008, following the six-day trial, the jury returned a verdict in favor of Linear. In its
verdict, the jury found that: (1) MPS infringes the asserted claims of the Linear patents; and (2)

MPS failed to prove the Linear patents are invalid by reason of obviousness. (OJ. 227.) The
court entered judgment on the verdict in favor of Linear and against MPS on November 17,
2008. (0.1. 240.)
The court tried the issue of inequitable conduct in a bench trial on June 2, 2009. (0.1.
263.) The court has jurisdiction over this action pursuant to 28 U.S.c. §§ 1331, 1338(a), and
2201(a).

Having considered the testimony and documentary evidence, the court makes the

following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure
52(a).

II.

FINDINGS OF FACT

A.
1.

Procedural History

In August 2004, Linear Technology Company ("Linear") filed a complaint with the

International Trade Commission (the "!TC") against Monolithic Power Systems, Inc. ("MPS"),
alleging violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.c. § 1337. The
ITC subsequently initiated an investigation of MPS' alleged conduct.

Specifically, Linear

maintained that MPS' MP1556 and MP1557-1559 voltage regulator circuit products violated
section 337 by infringing Linear's United States Patent Nos. 5,481,178 (the "'178 patent") and
6,580,258 (the "'258 patent") (collectively, the "Linear patents"). (OJ. 2.) On the eve of the
scheduled trial before the ITC, the parties agreed to resolve their dispute by entering into a
Settlement Agreement and a Consent Order Stipulation. After exchanging several drafts and
engaging in negotiations, the parties executed the Settlement Agreement on September 29,2005.
Subsequent to execution of this agreement, MPS began marketing a voltage regulator controller
product designated as MP1543.

2

2.

Linear then brought the above-captioned action against MPS, on August 3, 2006, alleging

that MPS' MP1543 products infringe the Linear patents, and that MPS breached the settlement
agreement. (D.I. 2.) The case was tried by a jury from June 23, 2008 through July 1, 2008.
(D.!. 23-36.)

On July 1, 2008, the jury returned a verdict finding in favor of Linear.

In

particular, the jury determined that: (1) MPS infringed the asserted claims of the Linear patents;
and (2) MPS failed to prove the Linear patents were invalid by reason of obviousness. (D.1.
227.)

The court entered judgment on the verdict in favor of Linear and against MPS on

November 17,2008. (D.I.240.)
3.

Following entry of this judgment, MPS filed a post-verdict motion seeking judgment as a

matter of law ("JMOL") on the issue of obviousness or, alternatively, for a new trial on validity.
(D.I.247.) This court denied MPS' motion for JMOL because MPS failed, as required, to raise
the issue of obviousness in a pre-verdict JMOL motion and, therefore, did not preserve the issue.
See Linear Technology Corp. v. Monolithic Power Systems, Inc., C.A. No. 06-476 OMS, 2009

U.S. Dist. LEXIS 105823, at *9-10 O\[ov. 12,2009). The court also denied MPS' motion for a
new trial, because the jury's verdict was reasonable in light of the evidence presented and MPS
did not support its contention that Linear engaged in fraud materially affecting the verdict. See
id. at *11-20.

4.

Following the jury trial, the court held a bench trial regarding MPS' inequitable conduct

defense on June 2, 2009.
B.

5.

The Linear Patents and Technology at Issue

The Linear patents relate to a "high efficiency switching regulator." (D.1. 2, Ex. A at col.

2, 1. 20.) Specifically, the Linear patents "relate to a control circuit and methods for maintaining
high efficiency over broad current ranges, including low output currents, in a switching regulator

3

circuit." (Id. at col. 2, 11. 21-24.)1 These patents disclose a control circuit and method that
improves efficiency by turning off switching transistors under certain operating conditions,
thereby alleviating the need for input from the power source. (Id. at col. 2, 11.31-38.)
6.

Unlike a series regulator, which employs a pass element (e.g., a power transistor) and

transmits power across the pass element as a "steady current flow," a switching regulator
employs a switch (e.g., a power transistor) that can "regulate the flow of power to the load" and,
thro~gh

"inductive energy storage elements," convert the switched current pulses into a steady

load current, allowing power to be transmitted in "discrete current pulses" instead of a single
flow. (Id. at col. 1, 1. 17-30.) This switching regulator method, therefore, generally results in
"reduced amounts of average power dissipation" because, rather than providing a continuous
dissipation of power, the switching regulator either turns off the power when the switch is off, or
releases only a small amount of power when it is on. (ld. at coli, 1. 43-51.) Because of the
higher efficiency provided by switching, as opposed to series regulators, switching regulators are
often employed in battery-operated systems such as laptop computers and hand-held electronic
instruments. (Id. at col. 1, 11. 58-61.) The invention of the '178 patent, therefore, was intended
to provide a high efficiency switching regulator. (Id. at col. 2, 11. 19-20.)
7.

Linear filed its patent application for the' 178 patent on March 23, 1993 and listed Milton

Wilcox ("Wilcox") and Randy Flatness ("Flatness") as the inventors. (D.I. 266 at 6.) Robert
Dobkin ("Dobkin"), Linear's Vice President of Engineering, authorized the filing of the patent
application. (Id.) The' 178 patent was subsequently issued on January 2, 1996. (D.I. 265 at 2.)
The '258 patent, issued on October 15, 2001, is a continuation of the '178 patent and contains a
nearly identical specification, with only the introduction and claim language differing.

(Id. at

I The '258 patent is a continuation of the '178 patent and contains the same specification. Thus, the court
will refer only to the' 178 patent specification.

4

20.) Both patents relate to synchronously switched voltage regulators employing burst mode or
reverse current prevention. (Id.)
8.

The inequitable conduct issue relates to Claim 1 (the "burst mode" claim) and Claims 44­

48, 51, and 54 (the "reverse current prevention" claims) of the' 178 patent. (D.!. 265

~

6.) The

burst mode claim, interchangeably referenced as the "sleep mode" claim, describes a
functionality wherein the switches in the regulator are turned off "so that nothing is drawing
power" in order to "allow the circuitry to run off the reservoir ... and have much lower power
dissipation." (ld.

~

6.) The reverse current prevention claims detail the invention's ability to

"prevent the reversal of current flow in the inductor" and, in so doing, prevent "wasting power
by taking it back out of the capacitor and shortening battery life." (D.!. 266 at 2.)
C.

9.

The Allegedly Withheld Information and MPS' Inequitable Conduct Defense

MPS asserts that Linear withheld material information about the MAX782 from the PTO

during the prosecution of the' 178 patent. (D.!. 265 at 1.) The MAX782, produced by Maxim
Integrated Products ("Maxim"), a semiconductor company located in northern California, is a
"synchronous voltage regulator product ... [that] automatically employ[s] 'burst mode' at low
output current levels to improve efficiency." (Id. at 3.) Specifically, MPS alleges that Linear
knowingly, and with the intent to deceive, failed to provide the PTO with a comprehensive
twenty-six page document (the "EV Kit Documentation") that detailed the MAX782's internal
circuitry and operation. (Id. at 1.) This documentation, which MPS asserts was in Linear's
possession when it submitted its Information Disclosure Statement ("IDS") to the PTO in June
1993, allegedly demonstrated that the MAX782 employed both the burst mode and reverse
current prevention functions included in Linear's' 178 patent claims. (ld. at 3-6.) Consequently,

5

MPS argues that the MAX782 was material to the PTO's assessment of Linear's burst mode and
reverse current prevention claims. (Id. at 3.)
10.

MPS accuses Dobkin, Flatness, and Wilcox (collectively, the "applicants") of committing

inequitable conduct during the prosecution of the' 178 patent. (0.1. 265.) Specifically, MPS
accuses the applicants of intentionally withholding the MAX782 EV Kit Documentation from
the patent examiner.

(Id. at 4-9.)

MPS asserts that the applicants knew of the EV Kit

Documentation's materiality because, even if the MAX782 does not constitute prior art, the EV
Kit Documentation revealed a near simultaneous invention and illustrates the level of knowledge
and skill of the person of ordinary skill in the art, thus implicating obviousness. (Id. at 3.) MPS
alleges that the applicants were in possession of the EV Kit Documentation in March 1993 and,
therefore, intentionally withheld the documentation from its June 1993 IDS and subsequent
disclosure. (Id. at 4-5.)
11.

Linear filed its application for the' 178 patent on March 23, 1993. (Id. at 2.) Linear's

first synchronous controller products employing burst mode capabilities were its LTC 1148 and
LTC1149. (Id. at 3.) Linear announced its release of these products in a February 5,1993 press
release, and had disclosed information about these products pursuant to non-disclosure
agreements prior to this public statement.

(Id.) Maxim announced that it was producing a

synchronous voltage regulator product, the MAX782, in 1992. (ld.) Maxim indicated that the
MAX782 would automatically employ burst mode at low output current levels to improve
efficiency. (ld.) Linear learned of the MAX782 in November 1992 via reports submitted by its
Field Application Engineer ("F AE") that Maxim was marketing its product to Compaq. (Id.)
12.

Dobkin, aware that Maxim was developing a product that would compete with the

LTCl148 and LTC1149, directed his FAEs, beginning at least by January 1993, to find out more

6

information about the MAX782. (Tr. at 57:5-11). In March 1993, the applicants received a
"Rev. A" version of the MAX782 evaluation board from one of its customers. (0.1. 265 at 4.)
Evaluation boards typically include a "printed circuit board containing the integrated circuit of
interest, together with the additional external components required for the part to operate." (Id.)
Linear also received the EV Kit Documentation, which explained the part's operation and
detailed its burst mode and reverse current prevention functions, in March 1993? (0.1. 265 at 4­
5.)

13.

The applicants did not disclose the EV Kit Documentation in its IDS to the PTO. (0.1.

265 at 10.) Instead, the applicants included only an eight-page Advanced Information Data
Sheet ("AI Data Sheet") for the MAX782 that it received on February 18, 1993. 3 (Id. at 4; DX­
323 at 3). This AI Data Sheet did not disclose: that the MAX782 automatically transitioned into
burst mode at low load currents; the circuitry for implementing burst mode; that the MAX782
prevented reverse current through the inductor; or the circuitry, including the current comparator,
used in the MAX782 to prevent current reversals in the inductor. (0.1.265 at 10.) The EV Kit
Documentation included explanation of each of these elements. (Id.)
14.

MPS maintains that the EV Kit Documentation was especially material to the

patentability of several of the '178 reverse current prevention claims because the MAX782
"arguably anticipated (not merely obviated) those claims." (Id. at 7.) Indeed, the MAX782
"practiced the reverse current prevention claims and the EV Kit Documentation disclosed the
2 Linear disputes that it received the EV Kit Documentation in March 1993.
(0.1. 266 at 12-13.)
Specifically, both Dobkin and Flatness testified at trial that they did not receive this documentation until June 1993.
(Tr. at 82:2-6; 148: 14-15.) This testimony, however, directly contradicts Dobkin and Flatness' earlier deposition
testimonies that the EV Kit Documentation was received in March 1993. (DX-68; DX-123). The witnesses' revised
recollections are unsupported by documentary evidence attesting to the changed date. (Tr. at 81: 1-6.) Moreover,
Dobkin gave his earlier deposition testimony as Linear's Rule 30(b)(6) representative and after consultation with
Linear's attorneys. (ld. at 79: 15-21.) See ~ 32 below, discussing Dobkin and Flatness' inconsistent testimony.
3 Linear contends that it did not received the AI Data Sheet until May 1993. (0.1. 266 at 9.) MPS asserts
that, per statements made in Linear's Amended Response to Maxim Integrated Products, Inc.'s Third Set of Non­
Uniform Interrogatories (DX-323), Linear received this documentation on February 18, 1993. (0.1.265 at 4.)

7

circuitry that met the claim limitations." (ld.) In particular, the EV Kit Documentation disclosed
that the MAX782 contained a "'current comparator, labeled the 'Synchronous Switch Control,'
that monitored the inductor current, compared it to a threshold, and prevented reversals of
current through the inductor." (ld.)
15.

MPS asserts that the applicants' actions constituted selective disclosure. (D.l. 265 at 8­

9.) Specifically, MPS accuses the applicants of knowingly withholding material information, the
EV Documentation Kit, which was in their possession at the time they disclosed the AI Data
Sheet to the PTO. (rd.) MPS alleges that because the applicants were aware-from their testing
of the evaluation boards and familiarity with the EV Kit Documentation-that the MAX782
disclosed each claim limitation when it assembled information to submit to the PTO, the
applicants: (l) knew that the MAX782 was material either as prior art or as a near simultaneous
invention4 illustrating the level of knowledge and skill of the person of ordinary skill in the art;
and (2) intentionally withheld the EV Kit Documentation to mislead the PTO. (ld. at 9-10.)
16.

Linear, on the other hand, asserts that the MAX782 was neither prior art nor material as a

near simultaneous invention. (DJ. 266 at 15-17.) Linear asserts that it conceived and reduced to
practice the inventions claimed in the patents in suit in August 1991. (Id. at 1-5.) Linear notes
that its research and development project that resulted in the' 178 and '258 patent inventions, the
LTC1148 ("'HES") project, was initiated, in part, to "'prevent the reversal of current flow in the
inductor" and thus reduce "wasting power by taking it back out of the capacitor and shortening
battery life." (Id. at 1-2.) In order to monitor the current to the load, Linear decided to "'emulate

MPS argues that because Linear's presumptive invention date is March 23, 1993, the date the '178 patent
application was filed, the MAX782 is clearly a near simultaneous invention. (D.l. 265 at 6.) Specifically, the
MAX782 controller block diagram showing the circuitry employed to implement burst mode and reverse current
prevention was February 28, 1993, the schematic for the voltage regulator implemented on the MAX782 evaluation
board was March 5,1993, and the publication date on the EV Kit Documentation was March 16, 1993. (Id.)

4

8

the current in the inductor by discharging a capacitor rather than measure[ing] the current
directly." (Id. at 2.)
17.

Linear further asserts that Flatness and Wilcox built a breadboard in August 1991 that

practiced the claims of the' 178 patent. (rd. at 3.) Linear contends that the Federal Circuit's
conclusion in Linear Tech Corp. v. lTC, that "prior invention of monitoring voltage is sufficient
to show a prior invention of the 'monitoring the current' limitation," negates MPS' argument that
the EV Kit Documentation should have been disclosed because it potentially represented a prior
invention date. (rd. at 17) (citing Linear Tech Corp. v. lTC, 566 F.3d 1049, 1066 (Fed. Cir.
2009». Specifically, Linear seemingly maintains that the Federal Circuit's conclusion supports
its assertion that the HES project breadboard and LTC 1148 conceived and reduced to practice
the reverse current prevention claims in its '178 patent and, therefore, establishes that the
MAX782 was not prior art and thus not material. (Id.)
18.

At trial, MPS' counsel explicitly stated that MPS was not asserting the MAX 782 as prior

art against the Linear patents. (See Tr. 16.)

III.

LEGAL STANDARDS

19.

A determination of inequitable conduct is committed to the discretion of the district court.

Kingsdown Med. Consultants v. Hollister, Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en bane),
cert. denied, 490 U.S. 1067 (1989). As a general matter, patent applicants and their attorneys
have a duty of candor, good faith, and honesty in their dealings with the PTO. 37 C.F.R. §
1.56(a). The duty of candor and honesty includes the duty to disclose to the PTO material
information known to the patent applicants, or their patent attorneys. Elk Corp. ofDallas v. GAF

Bldg. Materials Corp., 168 F.3d 28, 30 (Fed. Cir. 1999). The court may find inequitable conduct

9

where there has been a breach of the duty of candor, good faith, and honesty. Id. Upon a finding
of inequitable conduct, the entire patent is rendered unenforceable. Kingsdown, 863 F.2d at 877.
20.

The Federal Circuit clarified the legal standards for inequitable conduct in Therasense v.

Becton Dickenson & Co., No. 2008-1511, 2011 WL 2028255 (Fed. Cir. May 25, 2011), in an
opinion that was issued after completion of the bench trial and post-trial briefing in the above­
captioned case. Under Therasense, an accused infringer asserting inequitable conduct "must
provide evidence that the applicant in question (1) misrepresented or omitted material
information, and (2) did so with specific intent to deceive the PTO." American Calcar, Inc. v.

American Honda Motor Co., Inc., No. 2009-1503, 2011 WL 2519503, at *10 (Fed. Cir. lun 27,
2011). After Therasense, "the materiality required to establish inequitable conduct is, in general,
but-for materiality." American Calcar, 2011 WL 2519503, at *10. "When an applicant fails to
disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed
a claim had it been aware of the undisclosed prior art." Id.

The Federal Circuit also noted that

this standard for materiality is narrower than the standards set forth in PTO Rule 56. Id. at * 14.
21.

The Therasense court further held that intent and materiality are separate requirements.

Therasense, 2011 WL 2028255, at * 10. District courts "should not use a 'sliding scale,' where a
weak showing of intent may be found sufficient based on a strong showing of materiality, or vice
versa." Id.

IV.

CONCLUSIONS OF LAW

22.

Having considered the record, the parties' written submissions, and the applicable law,

the court concludes that MPS has failed to prove by clear and convincing evidence that the
MAX782 EV Kit Documentation is material. Under the new standard for inequitable conduct
established by the Federal Circuit in Therasense, there is no longer a "balancing test" between

10

materiality and intent; both elements must be present before the court can find a patent
unenforceable due to inequitable conduct. 5 Since the court concludes that the materiality prong
has not been met in this case, the court will find in favor of Linear on the issue of inequitable
conduct.
23.

At trial, MPS did not assert the MAX782 EV Kit Documentation as a basis for

anticipation or obviousness. Indeed, MPS did not assert at trial

and does not assert now - that

the MAX782 products are even prior art, and MPS's counsel stated at the start of the jury trial
that "[MPS is] not saying that the Max 782 is a piece of prior art." (Tr. 16.) Rather, MPS's
materiality argument is that the MAX782 is "material" for the purposes of inequitable conduct
regardless of whether the MAX782 is prior art or potentially invalidating. (E.g., D.L 265 at 5,
15.) In support of its assertion of materiality, MPS argues that the EV Kit Documentation:

ill is relevant under PTO Rule 56(b)( 1) because it "established a prima facie case
of materiality for virtually all the claims of the' 178 patent," though MPS makes
no such assertion with respect to the '258 patent. (See D.L 265 at 5, ~ 15.)

ill is relevant under PTO Rule 56(b)(2) because it refuted or was inconsistent
with a position the applicant took in asserting an argument of patentability. (See
id. at 6, ~ 16.)

ill is

relevant under the reasonable examiner standard, regardless of whether it

technically qualified as prior art, because it is "[e]vidence of near simultaneous,

5 The Therasense court recognized an exception to the general rule of but-for materiality "in cases of
affirmative egregious misconduct" such as "the filing of an unmistakably false affidavit" and other "extraordinary
circumstances." 2011 WL 2028255, at *12-*13. MPS does not allege any such affirmative acts offraud in this
case, instead asserting only that Linear withheld material information from the PTO. (See OJ. 265 at 9-13.) The
court concludes that the alleged misconduct, even if true, would not fall within the "extraordinary circumstances"
exception to the but-for materiality rule.

11

independent invention" and thus "is strong evidence of the level of skill of the
POSITA and thus relevant to determining what is unpatentable as obvious.
24.

None of these arguments, however, come close to establishing the type of "but-for"

materiality required under the Therasense standard. As to (2), the court simply does not see how
such an inconsistency is of more than marginal relevance after Therasense, particularly given the
Therasense court's caution that the Rule 56(b)(2) standard is unsuitable for inequitable conduct

because it "broadly encompasses anything that could be considered marginally relevant to
patentability." Therasense, 2011 WL 2028255, at *14.
25.

With respect to (1), MPS has not asserted that the EV Kit Documentation is prior art, and

MPS does not explain how the EV Kit Documentation could have possibly established a prima
facie case of unpatentability if it was not prior art. Since it is not this court's responsibility to

speculate as to how the documentation might be invalidating, MPS' s failure to clarify how the
documentation could have rendered the Linear patents prima facie unpatentable is fatal to this
argument for materiality on this basis. 6 Moreover, Therasense made it clear that a prima facie
case of unpatentability under Rule 56 is itself insufficient to meet the standard of materiality for
inequitable conduct, since it does not account for the possibility that "the information would be
rendered irrelevant in light of subsequent argument or explanation by the patentee." Id.
26.

Finally, with respect to (3), the court also finds that the relevance of the EV Kit

Documentation to the level of skill in the art, even when taken with MPS' s other assertions, is
not sufficient to establish materiality. In the months since it issued Therasense, the Federal
Circuit has not provided further guidance on the interplay between materiality and a jury's

6 Similarly, Monolithic argues that the documentation "arguably anticipated (not merely obviated)" claims
44-47 of the '178 patent. (D.I. 265 at *7-*9, at
17-21.) Once again, however, Monolithic fails to explain how the
EV Kit Documentation might have been anticipating even if it was not prior art. Since the evidence does not
support a frnding that the documentation is prior art, the court carrnot find materiality on this basis.

mr

12

verdict on anticipation and obviousness. In the court's view, however, a jury verdict of non­
obviousness creates a strong presumption against but-for materiality, particularly where, as here,
the accused infringer used the allegedly withheld information for a similar purpose during the
invalidity portion of the triaL At trial, MPS presented, over Linear's objection, the MAX782 as
evidence of a near-simultaneous invention for the purposes of showing the level of skill in the art
and as an objective indicator of obviousness. (See Tr. 13-17.) MPS brought up the MAX 782 on
cross-examination (see Tr. 243-49), through deposition testimony (see Tr. 597-618), and during
its closing statement (see Tr. 1085-89 & 1092-93).

The jury's verdict of non-obviousness

implicitly rejected MPS's arguments on that point, and the court does not perceive any basis to
conclude that the PTO would have rejected the asserted claims if it had been presented, as the
jury was, with more information regarding the nature of the MAX 782.
27.

For these reasons, the court concludes that MPS has failed to show by clear and

convincing evidence that the applicants withheld material information. The court therefore will
find in favor of Linear on the issue ofunenforceability.

V.

CONCLUSION
For the aforementioned reasons, the court concludes that MPS has failed to establish by

clear and convincing evidence that the applicants committed inequitable conduct during the
prosecution of the' 178 patent.

Dated: September.3-, 2011
GE

13

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DEL AWARE

LINEAR TECHNOLOGY
CORPORATION,
Plaintiff,

v.

)
)
)
)
)
)
)
)

C.A. No. 06-476-GMS

MONOLITHIC POWER SYSTEMS, INC. )

Defendant.

)
)
)

ORDER

For the reasons stated in the court's Memorandum of this same date, IT IS HEREBY
ORDERED that:
1. The' 178 patent is not unenforceable due to inequitable conduct.
2. The clerk shall enter judgment in favor of the plaintiff, Linear Technology
Corporation and against the defendant, Monolithic Power Systems, Inc., on
Monolithic Power System's inequitable conduct defense.

Dated: September~, 2011