Power Integrations Inc. v. Fairchild Semiconductor International Inc. et al

Filing 984

MEMORANDUM ORDER regarding motions in limine and statement of facts. Signed by Judge Leonard P. Stark on 10/31/18. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

POWER INTEGRATIONS, INC.
Plaintiff,
C.A. No. 08-309-LPS

V.

FAIRCHILD SEMICONDUCTOR
INTERNATIONAL INC., FAIRCHILD
SEMICONDUCTOR CORPORATION,
and FAIRCHILD (TAIWAN) CORPORATION,
Defendants.

MEMORANDUM ORDER

At Wilmington this 31st day of October, 2018:
Having reviewed the proposed pretrial order submitted by Plaintiff Power Integrations,
Inc. ("PI" or "Plaintiff') and Defendants Fairchild Semiconductor International Inc. , Fairchild
Semiconductor Corporation, and Fairchild (Taiwan) Corporation ("Fairchild" or "Defendants")
(D.I. 968, 969) ("PTO"), as well as subsequent submissions (D.I. 978, 979, 980), and having
heard argument at the pretrial conference ("PTC") (Oct. 26, 2018 Transcript ("Tr.")), IT IS
HEREBY ORDERED that:
A.

PI's motion in limine ("MIL") No . 2, to preclude Fairchild from relying upon any

advice of counsel, is GRANTED. 1 This motion concerns two pieces of evidence: Justin Chiang' s

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Pl's MIL No. 2 also sought to preclude Fairchild from having its expert testify regarding
Fairchild ' s theoretical defenses, but that portion of the motion was dropped at the PTC (see Tr. at
5) as it relates to the parties' proposed stipulations regarding testimony from experts Baker and
Kelley. (See infra Section C)

testimony and Fairchild's letters to customers. The Court will exclude both.
PI argues that Fairchild is improperly using privilege as a sword and a shield as Fairchild
intends to introduce Fairchild ' s reliance on advice of counsel without disclosing that advice
during discovery. As an initial matter, the Court is persuaded that Fairchild consistently limited
its privilege waiver to privileged information obtained from opinion counsel and claimed
privilege on information obtained from trial counsel. See In re Seagate Tech. , LLC, 497 F.3d
1360, 1373 (Fed. Cir. 2007). Yet, that does not resolve PI's sword and shield concern.
PI argues that Fairchild failed to disclose, and therefore lacks, linking evidence that
Fairchild relied on advice of counsel and actually believed that PI's patents would be found
invalid or that Fairchild's products would be found not to infringe those patents. The Court
agrees with PL Mr. Chiang's testimony regarding his knowledge of the reexaminations and of
litigation counsel's defenses must be excluded. General knowledge of the status of such
proceedings, and even of the positions being advocated in them, does not equate to actual,
subjective belief by Fairchild in the invalidity and/or noninfringement of asserted patent claims.
Having reasonable litigation defenses is not a complete defense to willfulness. See Halo Elecs. ,

Inc. v. Pulse Elecs., Inc. , 136 S. Ct. 1923, 1933 (2016). If (as is unclear after the oral argument)
Fairchild intends to elicit materially new testimony from Mr. Chiang at trial, this would be
improper, as Fairchild had an obligation to disclose evidence of its subjective intent during
discovery, including through its designated Rule 30(b)(6) testimony (including from Mr. Chiang,
who was designated on the pertinent topics). If nothing materially new is to be expected from
Mr. Chiang at trial, then the record will continue to lack the required linking evidence.
The Court will also exclude the customer letters. In the abstract, Fairchild' s

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communications with its customers are relevant to the issue of whether Fairchild induced those
customers to infringe PI 's patents. Sometimes, however, even plainly relevant evidence must be
excluded, and this is such an instance. As already explained, the record lacks linking evidence
that would allow a reasonable factfinder to find that Fairchild subjectively believed in its
defenses (and, therefore, subjectively believed what it was telling its customers). As importantly,
Fairchild chose during discovery not to disclose its reliance on advice of counsel, so PI had no
opportunity to explore the substance of this advice. Consequently, were the jury to be presented
with the customer letters - which were drafted by and at the direction of counsel - the jury would
have to find either: (i) these communications were directed by counsel, so Fairchild must have
been following the advice of counsel, allowing Fairchild to obtain the benefit of reliance on
advice of counsel without permitting appropriate discovery into it; or (ii) these communications
were authored by a non-lawyer Fairchild executive or employee, who subjectively believed what
he or she was communicating, which would give the jury an erroneous impression, given what
the Court has already explained about the lack of linking evidence. Either way, the risk of unfair
prejudice to PI substantially outweighs the probative value of the evidence at issue in this
motion. Therefore - as logic, fairness, and Federal Rule of Evidence 403 require - the Court will
exclude the evidence.
B.

Fairchild's MIL No. 1, to preclude PI from referring to the existence of, outcomes

in, and alleged bad acts specific to other litigations between the parties, is GRANTED IN PART
and DENIED IN PART.
While the upcoming trial in this case is focused on a few discrete issues, the procedural
history of this case, as well as the history of litigation between the parties in other cases in this

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Court and in other tribunals, is very complicated. Admission of any piece of evidence relating to
a different litigation or proceeding risks requiring innumerable additional admissions of more
and more evidence (for context, clarity, or fairness) from other litigations and proceedings. Such
a result would cause immense confusion for the jury, which needs to remain focused on the few
issues it is actually being asked to decide. At the same time, the Court is persuaded that some of
the facts established in prior proceedings are relevant to willfulness, intent to induce, and/or
damages in this case.
Accordingly, the Court finds it is necessary and appropriate to read into the record before
the jury certain facts established in prior litigation and/or other proceedings between the parties,
and to preclude the parties from presenting additional evidence related to these facts or to the
prior litigations and other proceedings. The parties shall not mention to the jury at any time
during trial that the parties have engaged in prior litigation, a reexamination, or any other legal
proceeding with one another. The parties are also precluded from mentioning prior court orders,
hearings, or trials involving the parties.
Given that the Court is substantially limiting the amount of evidence of prior litigations
that may come in, and given that Fairchild cannot provide linking evidence that Fairchild relied
on the reexaminations in forming its good faith belief in invalidity and noninfringement of PI's
patents, the parties are further precluded from mentioning the reexamination proceedings to the
Jury.
The Court will include among its established "Facts" certain facts related to the
importance of PI's patents to the industry, to Fairchild, and to Fairchild ' s customers, because
those facts (which have been established in prior litigation and cannot now be challenged by

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Fairchild) are relevant to the value of PI's patents and to Fairchild' s intent. The Court will also
read established facts related to Fairchild' s copying and reverse-engineering of PI's products, as
those facts are relevant to PI' s claim of willfulness, but the Court will also tell the jury the
uncontested fact that it was a different business unit of Fairchild that copied and reverseengineered products that are not the products at issue in this case. The Court will not tell the jury
that Fairchild has previously been found to infringe PI's patents, which would be unfairly
prejudicial to Fairchild, especially were the jury to be told that a prior jury, judge, or the Court of
Appeals found Fairchild liable. It is already stipulated that the products at issue in this case
infringe in the United States; any additional statements from the Court regarding infringement
would unfairly tarnish the jury's view of Fairchild and confuse the issues for them.
While the parties are not permitted to admit the underlying evidence that forms the bases
of the Facts the Court will read to the jury, the parties' experts are permitted to refer to the Facts
if they previously relied on the Facts or underlying evidence in forming their expert opinions.
The parties may also make any appropriate argument to the jury based on the Facts.
Thus, the Court will read the following "Facts" into evidence. Either side may also
display one or more of these Facts as a demonstrative exhibit. Should either party have any
objections to the following Facts or wish to provide any modifications, such objections must be
provided to the Court in short letter briefs no later than November 1 at 12:00 p.m. and any
responses shall be filed no later than November 2 at 12:00 p.m.
FACTS
1.

Fairchild recognized the importance of Power Integrations' patents to the
industry, describing them as key patents with epoch making technology.

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2.

The importance of the frequency jitter technology was known in the industry and
to Fairchild.

3.

Customers in the industry sought the Power Integrations' jitter technology in the
products that they purchased prior to September 2007.

4.

It has not been determined that customers of Fairchild sought frequency jitter
technology in the products at issue in this case.

5.

Prior to September 2007, a particular business unit of Fairchild not at issue in
this case reverse-engineered Power Integrations' products with the patented jitter
technology.

6.

Prior to September 2007, a particular business unit of Fairchild not at issue in
this case copied the technology in the '876 patent.

7.

It has not been determined that Fairchild reverse-engineered or copied any
technology or products of Power Integrations with respect to the products at issue
in this case.

C.

The testimony of PI's technical expert Arthur Kelley and Fairchild's technical

expert Jacob Baker will be circumscribed as set forth below:
1.

Neither Dr. Kelley nor Dr. Baker will provide testimony regarding Defendants'
subjective beliefs, state of mind, good faith, or intent.

2.

Neither Dr. Kelley nor Dr. Baker will provide testimony regarding any defense to
invalidity or infringement, including whether there was a basis to believe in such a
defense, or whether it presented a close question whose answer could not be
known in advance of judicial resolution.

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3.

Neither Dr. Kelley nor Dr. Baker will affirmatively offer testimony on the
ultimate questions of inducement or willful infringement- that is, neither expert
will opine that Defendants induce or do not induce infringement or that any
infringement was or was not willful.

4.

Neither Dr. Kelley nor Dr. Baker will testify regarding whether it would be
reasonable to conclude that Defendants ' actions led to infringing imports or the
reasonableness of a conclusion someone else might reach on that issue.

5.

Dr. Kelley will not offer testimony that Defendants' change in experts shows that
Dr. Wei's opinion is unreasonable. This does not prevent Dr. Kelley from
testifying about the technical differences between the opinions of Fairchild ' s
experts.

6.

Dr. Kelley will not offer conclusions that Defendants copied.

Additionally, Dr. Kelley will not offer any of the following opinions until Power
Integrations' rebuttal case, and then only on subjects for which any Fairchild witness is allowed
to and does first offer testimony:
7.

Whether any alleged technical defenses were reasonable or credible ·from a
technical perspective.

8.

Whether there was a basis, from a technical perspective, for Defendants to believe
in a particular defense.

9.

Whether any technical defenses present close technical questions or whether the
answers to those questions could not be known in advance of a determination by
the patent office, jury, or Federal Circuit.

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Nothing the Court has stated here prohibits Dr. Kelley from providing technical testimony
during Power Integrations' case-in-chief about the similarities and differences between Power
Integrations' patents and the infringing products, or between Power Integrations' patents and the
prior art, to assist the jury in understanding those technical issues.
Should either party object to the foregoing restrictions on the experts ' opinions, they shall
present such objections in short letter briefs to be filed no later than November 1 at 12:00 p.m.
and November 2 at 12:00 p.m.
D.

Finally, given the Court's understanding of the scope of the parties' disputes, and

given the evidentiary limitations included in this Order, and while mindful of the parties'
requests for thirteen (13) hours per side for their trial presentations, each side will be allocated

eleven (11) hours for its trial presentation, including the one (1) hour the Court will tentatively
hold in reserve for each party' s closing arguments, all subject to the methods for counting time
discussed at the PTC. The Court finds that this is a reasonable and sufficient amount of time in
which each side may be fully and fairly heard at trial.

f~P-k

HONORABLE LEONARD P. STARK
UNITED STATES DISTRICT COURT

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