Fairchild Semiconductor Corporation et al v. Power Integrations Inc.

Filing 695

MEMORANDUM OPINION re pending motions. Signed by Judge Leonard P. Stark on 7/22/19. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
POWER INTEGRATIONS, INC.,
Plaintiff,
C.A. No. 12-540-LPS

V.

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

Warren K. Mabey and Joseph B. Warden, FISH & RICHARDSON P.C., Wilmington, DE
Frank E. Scherkenbach, FISH & RICHARDSON P.C., Boston, MA
Howard G. Pollack, Michael R. Headley, and Neil A. Warren, FISH & RICHARDSON P.C.,
Redwood City, CA
John W. Thornburgh, FISH & RICHARDSON P.C., San Diego, CA
Attorneys for Plaintiff

John G. Day and Andrew C. Mayo, ASHBY & GEDDES, Wilmington, DE
Colette Reiner Mayer and Pieter Sebastian de Ganon, MORRISON & FOERSTER LLP, Palo
Alto, CA
Scott F. Llewellyn, MORRISON & FOERSTER LLP, Denver, CO
Attorneys for Defendants

MEMORANDUM OPINION

July 22, 2019
Wilmington, Delaware

Pending before the Court are the parties' post-trial motions. On November 15, 2018,
during a three-day jury trial, Plaintiff Power Integrations, Inc. ("PI") and Defendants Fairchild
Semiconductor Corporation and Fairchild (Taiwan) Corporation (collectively, "Fairchild") each
filed Motions for Judgment as a Matter of Law ("JMOL"). (D.I. 626, 629) On January 18, 2019,
PI filed a Motion for Permanent Injunction (D.I. 678) and Fairchild filed a Motion for Judgment
as a Matter of Law, or in the Alternative, a New Trial or Remittitur (D.I. 680). Briefing on the
post-trial motions was completed on March 8, 2019. (D.I. 679, 682,685, 686,690,691) The
Court heard oral argument on April 5, 2019. (D.I. 694 ("Tr.")) 1 The Court has decided to deny
all of the motions.

I.

BACKGROUND
This case ("Fairchild III") was filed in May 2012, the third in this District between these

competitors. Following an eight-day jury trial in 2015, a jury found that Fairchild had directly
and indirectly infringed claims 29 and 31 of PI's U.S. Patent No. 7,995,359 (the "'359 patent").
On appeal of a related case (C.A. No. 08-309) ("Fairchild II"), the Federal Circuit remanded for
a new trial on inducement due to errors in the inducement jury instruction. Since the same jury
instruction had been used in the 2015 trial in the instant action, this Court ordered a new trial on
whether Fairchild induced infringement of the ' 359 patent. A three-day jury trial commenced on
November 13, 2018, after which the jury returned a verdict of induced infringement and awarded
PI $719,029.10 in damages. (D.I. 631) Judgment was entered on December 27, 2018. (D.I.
637)

1

The trial transcripts (D.I. 639-41) will be cited as "Trial Tr."
1

II.

LEGAL STANDARDS
A.

Judgment as a Matter of Law

Judgment as a matter of law is appropriate if "the court finds that a reasonable jury would
not have a legally sufficient evidentiary basis to find for [a] party" on an issue. Fed. R. Civ. P.
50(a)(l ). "Entry of judgment as a matter of law is a sparingly invoked remedy," one "granted
only if, viewing the evidence in the light most favorable to the nonmovant and giving it the
advantage of every fair and reasonable inference, there is insufficient evidence from which a jury
reasonably could find liability." Marra v. Phi/a. Haus. Auth. , 497 F.3d 286, 300 (3d Cir. 2007)
(internal quotation marks omitted).
To prevail on a renewed motion for judgment as a matter of law following a jury trial, the
moving party "must show that the jury' s findings, presumed or express, are not supported by
substantial evidence or, if they were, that the legal conclusions implied [by] the jury' s verdict
cannot in law be supported by those findings. " Pannu v. Iolab Corp., 155 F.3d 1344, 1348 (Fed.
Cir. 1998) (internal quotation marks omitted). '" Substantial' evidence is such relevant evidence
from the record taken as a whole as might be accepted by a reasonable mind as adequate to
support the finding under review." Perkin-Elmer Corp. v. Computervision Corp. , 732 F.2d 888,
893 (Fed. Cir. 1984).
In assessing the sufficiency of the evidence, the Court must give the non-moving party,

"as [the] verdict winner, the benefit of all logical inferences that could be drawn from the
evidence presented, resolve all conflicts in the evidence in his favor, and in general, view the
record in the light most favorable to him." Williamson v. Consol. Rail Corp., 926 F.2d 1344,
1348 (3d Cir. 1991 ); see also Perkin-Elmer Corp., 732 F.2d at 893 . The Court may not assess
the credibility of witnesses nor "substitute its choice for that of the jury between conflicting

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elements of the evidence." Perkin-Elmer Corp. , 732 F.2d at 893. Rather, the Court must
determine whether the evidence reasonably supports the jury' s verdict. See Dawn Equip. Co. v.

Ky. Farms Inc. , 140 F.3d 1009, 1014 (Fed. Cir. 1998); Gomez v. Allegheny Health Servs. Inc. , 71
F.3d 1079, 1083 (3d Cir. 1995) (describing standard as "whether there is evidence upon which a
reasonable jury could properly have found its verdict"); 9B Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, Federal Practice & Procedure§ 2524 (3d ed. 2008) ("The question
is not whether there is literally no evidence supporting the party against whom the motion is
directed but whether there is evidence upon which the jury properly could find a verdict for that
party.").

B.

New Trial

Federal Rule of Civil Procedure 59(a) provides in pertinent part, " [t]he court may, on
motion, grant a new trial on all or some of the issues - and to any party- as follows: . . . after a
jury trial, for any reason for which a new trial has heretofore been granted in an action at law in
federal court." New trials are commonly granted where "the jury' s verdict is against the clear
weight of the evidence, and a new trial must be granted to prevent a miscarriage of justice,"
where "newly-discovered evidence exists that would likely alter the outcome of the trial," where
" improper conduct by an attorney or the court unfairly influenced the verdict," or where the
jury' s verdict was "facially inconsistent." Zarow-Smith v. N J Transit Rail Operations, 953 F.
Supp. 581, 584-85 (D. N.J. 1997) (internal citations omitted).
The decision to grant or deny a new trial is committed to the sound discretion of the
district court. See Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33 , 36 (1980); Olefins Trading,

Inc. v. Han Yang Chem Corp., 9 F.3d 282, 289 (3d Cir. 1993) (reviewing " district court' s grant
or denial of a new trial motion" under "abuse of discretion" standard). Although the standard for

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granting a new trial is less rigorous than the standard for granting judgment as a matter of law, in
that the Court need not view the evidence in the light most favorable to the verdict winner,
ordinarily a new trial should only be granted "where a miscarriage of justice would result if the
verdict were to stand," the verdict "cries out to be overturned," or the verdict "shocks [the]
conscience." Williamson , 926 F.2d at 1352-53 .

III.

DISCUSSION
A.

Fairchild's Motion to Set Aside the Inducement
Verdict and for a New Trial on Inducement

PI's case for induced infringement was largely built on circumstantial evidence and a
chain of inferences. Fairchild essentially challenges every link in the chain. (See, e.g. , D.I. 682
at 1; id. at 6 ("PI' s case depends on a chain of unsupported assumptions.")) Applying the
governing legal standards - that is, for purposes of JMOL viewing the evidence in the light most
favorable to PI and giving PI the advantage of every fair and reasonable inference, and for
purposes of a new trial assessing whether the verdict was against the clear weight of the evidence
and if a new trial must be granted to prevent a miscarriage of justice - the Court will deny
Fairchild's motion.
In its brief, PI outlines the evidence from which the jury could have reasonably found

each of the elements of induced infringement. (See, e.g. , D.I. 685 at 2-4) Tue Court agrees that
the record contained substantial evidence from which the jury could have found each element of
induced infringement, consistent with the instructions given to them. (See, e.g. , Trial Tr. at 53942)
Fairchild's motion seems predicated largely on a combination of ignoring the evidence
that was presented to the jury (and which the jury was free to credit), incorrect suggestions that
only direct (and not also circumstantial) evidence can be sufficient to support the verdict, and
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rehashes oflegal arguments that have already been rejected (by this Court or even the Federal
Circuit, in the context of one or more of the related cases).
Illustrative of Fairchild's attack is its assertion: "PI presented no evidence that a
reasonable jury could rely upon to find that any chip sold by Fairchild outside the United States
ultimately resulted in an infringing act." (D.I. 682 at 4 (emphasis added); see also D.I. 691 at 1
("PI presented literally no evidence that Dell imported or sold the F AN6756 in the United
States.")) The Court does not agree. Instead, as PI summarizes in its brief:

It was undisputed that " [a]t least one unit of Fairchild' s FAN6756 products have
been imported into, or sold in the United States by a third party." (Tr. 155:15-17.)
Fairchild's U.S . Distributor also shipped FAN6756 demo boards to a U.S.
address. (Tr. 285:19-286:17 (Kelley); DPX-4, DPX-5.) In addition, the evidence
included admissions from Fairchild that its customers import the accused products
into the U.S. (Tr. 222:22-223:5 (Chan); 242:13-243:15, 246:9-13 (Lam); 270:2325 (Tu); Tr. 271 :17-20 (Allexandre).) There was also substantial evidence that
while it is impossible to know with precision the exact number of imported
accused products, reliable estimates of importation rates range up to 40 percent in
this case. (Tr. 180:9-17 (Matthews); Tr. 207:25-209:17 (Shah); Tr. 250:10-16
(Norman); 343:23-345:15 , 349:8-351:8 (Robinson); DX-1353; DX-1440.)
(D.I. 685 at 4) Moreover, the jury was instructed:

It was already determined that Fairchild's FAN6756 products directly infringe the
'359 patent if used, sold, or imported into the United States, and that Fairchild has
imported at least some of the FAN6756 products into the United States.
(Trial Tr. at 537) 2 In the Court's view, PI did present evidence on which a reasonable jury could
rely to find that chips sold by Fairchild outside the U.S. did ultimately result in an infringing act
in the U.S. in a Dell product. (See also, e.g., D.I. 685 at 2) (summarizing evidence supporting
finding that Dell was Fairchild' s main customer for FAN6756 chips and affirmative actions
Fairchild took to help Dell sell in U.S.)

2

Fairchild also raises its prior objections to the Court's jury instructions. (See D.I. 682 at 15)
Those objections were already ruled on and are preserved for appeal.
5

Fairchild' s motion also seems predicated on the view that what happened at trial - most
especially the reasonable inferences the jury implicitly chose to draw - is somehow irrelevant to
resolution of the parties' legal disputes. For instance, Fairchild points out that "a design win [by
Fairchild with Dell] does not necessarily mean that Fairchild ultimately secured the business,"
and observes that "PI agrees that a design win does not necessarily guarantee large volume sales,
let alone exclusive sales." (D.I. 682 at 5) These are true statements - but also true is that it was
for the jury to draw whatever reasonable inferences it believed the evidence best supported. The
jury's implicit finding that Fairchild's design win did lead to infringing Fairchild products being
imported into the U.S. in Dell products, in substantial quantities, was supported by substantial
evidence. Similarly, Fairchild argues: "PI presented evidence that Fairchild communicated with
a particular Dell entity with respect to a design win for the FAN6756, but not evidence that the
same Dell entity actually infringed." (D.I. 682 at 8) (emphasis added) But, again, the jury is
permitted to draw reasonable inferences, and it was reasonable to infer from the evidence that the
Dell entity that actually infringed in the U.S. was induced to do so by the communications
Fairchild made to whatever Dell entity was the initial recipient of those communications. 3
Likewise, while Fairchild is of course correct that '"wanting' something is not the same as
' causing' something" (D.I. 682 at 9), the undisputed fact that Fairchild "wanted" its customers to
import into the U.S. may reasonably have been viewed by the jury as strong circumstantial

3

The Court rejects Fairchild's contention that "inducement requires that the defendant induce
direct infringement, not indirect infringement." (D.I. 682 at 10) The statute, 35 U.S.C. § 271(b),
creates liability for anyone who "actively induces infringement" without specifying what type of
infringement must be induced. Contrary to Fairchild's view (see, e.g., D.I. 682 at 7), the Federal
Circuit's decision in Crystal Semiconductor Corp. v. TriTech Microelectronics Int'!, Inc., 246
F.3d 1336, 1351 (Fed. Cir. 2001), does not reject PI's position, as that case merely stated that
"[i]nducement only occurs if the party being induced directly infringes the patent," and PI does
not dispute that it must show that some party was ultimately induced to directly infringe.
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evidence that, in combination with the totality of evidence, supported a finding that Fairchild did,
in fact, cause direct infringement.
Finally, the Court also agrees with PI that " (t]he evidence in this case is much the same as
in [Fairchild 11] , where this Court has twice found that inducement is a factual issue for the jury,
and the Federal Circuit agreed." (D.I. 685 at 5-6) (summarizing and citing to pertinent rulings in
Fairchild II)

For all of these reasons, Fairchild' s motion with respect to induced infringement will be
denied.

B.

Fairchild's Motion for a New Trial on Damages or for Remittitur

Fairchild argues that the jury' s damages award is against the great weight of the evidence
and, in the alternative, should be remitted. See, e.g., Cortez v. Trans Union, LLC, 617 F.3d 688,
715 (3d Cir. 2010) (stating that remittitur is appropriate where "the trial judge finds that a
decision of the jury is clearly unsupported and/or excessive"). In particular, Fairchild contends
that "PI did not present sufficient evidence from which a reasonable jury could conclude that
30% of Fairchild' s FAN6756 chips were ultimately imported into or sold in the United States by
third parties, and thus directly infringed." (D.I. 682 at 11)
The Court disagrees. (See generally D.I. 685 at 5) (summarizing evidence supporting
damages verdict) The damages award is supported by substantial evidence and is not excessive.
Instead, the Court agrees with PI that the jury was presented with "reliable estimates of
importation rates rang[ing] up to 40 percent in this case." (D.I. 685 at 4 (citing evidence); see
also Trial Tr. at 208-09 (Fairchild employee Shah opining that 20-30% of all Fairchild products

are imported into U.S.))

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PI's expert, Mr. Robinson, "assumed that, during a hypothetical negotiation in 2011 before infringement began- PI and Fairchild would have agreed to use 30% as an importation
rate." (D.I. 682 at 11) (internal emphasis omitted) This is true - but, contrary to Fairchild' s
characterization, it does not constitute "speculation untethered to evidence of the parties'
conduct." (Id. at 11-12) Instead, the jury heard substantial evidence that in the face of
complexity and uncertainty as to the precise importation rate, during a hypothetical negotiation
the parties would have used a rule-of-thumb number such as 30%. (See Trial Tr. at 343-45)
Nor has Fairchild persuaded the Court it is entitled to relief with respect to the royalty rate
or the relative value of the damages award to Fairchild' s profits. (See, e.g. , D.I. 685 at 5, 12-13)
For all of these reasons, Fairchild' s motion with respect to damages will be denied.

C.

Pl's Motion for Permanent Injunction

PI has moved for entry of a permanent injunction. (D.I. 678) To obtain its requested
permanent injunction, PI must demonstrate:

(1) that it has suffered an irreparable injury; (2) that remedies available at law,
such as monetary damages, are inadequate to compensate for that injury; (3) that,
considering the balance of hardships between the plaintiff and defendant, a
remedy in equity is warranted; and (4) that the public interest would not be
disserved by a permanent injunction.

eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006). The grant of an injunction
is not a matter of right following a finding of infringement, but is instead " an act of
equitable discretion by the district court." Id. " [S]uch discretion must be exercised
consistent with traditional principles of equity." Id. at 394. Because PI has not met its
burden to show that it has suffered and will continue to suffer an irreparable injury that
cannot be adequately addressed by remedies available at law - including a reasonable
royalty - the Court is not persuaded that equity warrants entry of an injunction.
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ON Semiconductor Corporation ("ON"), which has acquired Fairchild, has issued
an end-of-life notice advising its customers that on August 15, 2019, less than one month
from now, it will cease sales of the accused FAN6756 product. (See D.I. 686 at 3; see
also D.I. 687 ,r 4) As Fairchild further represents: "Not only will production cease, but

the FAN6756's masks and reticles will be discarded, preventing later manufacture of any
FAN6756-type product." (D.I. 686 at 2-3; see also D.I.

687,r 3)

Moreover, "ON

Semiconductor has ceased competing for any design wins based on the F AN6756MRMY
or any other FAN6756-type product." (D.I. 686 at 3 n.1 ; see also D.I. 687 ,r 5)
In response, PI points to "Fairchild' s history of violating even court ordered
injunctions," so "Fairchild' s non-binding promise is oflittle comfort and gives PI no
legal recourse should Fairchild later have a change of heart." (D.I. 690 at 1) While it is
true there was some limited non-compliance with the injunction the Court entered in a
related case, C.A. No. 04-1371 ("Fairchild I" ) D.I. 700; see also id D.I. 930, that
noncompliance did not warrant an order of contempt (see id at D.I. 871), and it does not
justify the skepticism of Fairchild and ON' s representations that PI asserts. Fairchild's
parent, ON, and PI are parties before the undersigned Judge in yet another patent
infringement action, one scheduled to go to trial in February 2020. (See ON
Semiconductor Corp. v. Power Integrations, Inc., C.A. No. 17-247 D.I. 23) Considering

the totality of circumstances, and recognizing that the relief PI is seeking is equitable in
nature, the Court sees no reason not to accept Fairchild' s representations, and is confident
that PI will find a mechanism to make the Court aware of any action by Fairchild
inconsistent with those representations. At bottom, the Court finds that "the evidence is
very persuasive that further infringement will not take place." WL. Gore & Assocs. , Inc.

9

v. Garlock, Inc., 842 F.2d 1275, 1281-82 (Fed. Cir. 1988), abrogated on other grounds
by eBay Inc., 547 U.S. at 388.
PI' s motion will be denied.
IV.

CONCLUSION
For the reasons stated above, the Court will deny as moot the parties' initial JMOLs (D.I.

626, 629), deny Fairchild' s post-trial motion (D.I. 680), and deny PI's post-trial motion (D.l.
678). An appropriate Order follows .

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