Latest Federal Court Cases – December 2023 #2 | Schwabe, Williamson & Wyatt PC
VLSI Technology LLC v. Intel Corporation, Appeal No. 2022-1906 (Fed. Cir. December 4, 2023)
In this week’s Case of the Week, the Federal Circuit vacated an approximately $2.2 billion damages award against appellant Intel Corporation for infringement of two microprocessor patents owned by appellee VLSI Corp. The Court reversed the jury’s verdict of infringement as to one patent and affirmed as to the other, but vacated the entire damages award due to a significant technical error in VLSI’s experts’ calculation of damages. The Federal Circuit also held that the district court erred in denying Intel’s pretrial motion to add a license defense.
The patents at issue were VLSI’s U.S. Patent No. 7,523,373, directed to certain low-voltage operating techniques; and U.S. Patent No. 7,725,759, directed to techniques for microprocessor clock speed management. The jury had found that certain Intel processors literally infringed the ’373 patent and infringed the ’759 patent under the doctrine of equivalents. The Federal Circuit affirmed the jury’s finding on the ’373 patent as supported by substantial evidence, but reversed the finding as to the ’759 patent. The Court emphasized that application of the doctrine of equivalents must be carefully limited to avoid infringing on the primacy of the claim language as defining the scope of the invention. As such, in order to support DOE infringement, a patentee must provide “particularized testimony and linking argument,” on a limitation-by-limitation basis, to establish the insubstantiality of any differences between the claimed and accused device.
In this case, VLSI’s expert had testified that certain differences between the claimed and accused functionalities were merely a “design choice,” which boiled down to “where an engineer draws [a particular] data line.” The Federal Circuit held that simply labeling something as a “design choice” was insufficient to support a finding of infringement under the doctrine of equivalents, and that VLSI was required to provide more particularized and concrete evidence to show that the ways in which the claimed and accused elements functioned were insubstantially different. Because VLSI had not adduced such evidence at trial, the Federal Circuit reversed the judgment of infringement as to the ’759 patent its associated $675 million damages award.
As to the ’373 patent, the jury had awarded another $1.5 billion in damages that closely tracked the approximately $1.6 billion figure proposed by VLSI. In order to arrive at that amount, VLSI’s experts had submitted technical and economic analyses to quantify the impact of the patented technology on the speed of Intel’s accused processors; to estimate the effect of that speed improvement on the price Intel could fetch for its products; and thence to use that price differential to inform the remainder of a “hypothetical negotiation” analysis. However, in arriving at the initial “speed savings” figure, VLSI’s technical expert had erroneously included data from both infringing and non-infringing processor states, when the non-infringing states actually accounted for the majority of the inputs used. Because that error would have had a significant downstream impact on the price differential underlying VLSI’s hypothetical negotiation evidence, the Court set aside the damages award based on the experts’ testimony.
Finally, the Federal Circuit held that the district court erred in denying Intel’s pre-trial motion to add a license defense based on its pre-existing license agreement with Finjan, Inc. That agreement had given Intel broad rights to practice “Finjan’s” patent portfolio, where “Finjan” was defined to include “affiliates” under common control with Finjan, Inc. Shortly before trial in VLSI’s infringement case, VLSI was acquired by Finjan’s parent, Fortress Investment Group LLC, so that (Intel argued) VLSI became an “affiliate” of Finjan and Intel now held a license to Finjan’s asserted patents. The district court denied Intel’s motion to amend, finding undue delay due to the length of time between the Fortress/VLSI acquisition and Intel’s motion, and also futility based on governing Delaware law to the effect that contracts typically will not bind non-parties. The Federal Circuit reversed, finding that Intel’s “delay” was due to its diligent observance of certain required dispute resolution provisions of the license agreement, and that the “general rule” under Delaware law was subject to exceptions, such that it was inappropriate to deny Intel’s requested amendment on futility grounds alone. Although the Federal Circuit was careful to note that Intel’s defense may yet be subject to dismissal as a matter of law or other pretrial disposition, the Court held that on the record presented, the district court had abused its discretion by denying Intel the ability to add the defense to the case.
The case was remanded to the district court for a new trial on damages as to the ’373 patent only, and other proceedings consistent with its opinion.
The opinion can be found here.
By Jason A. Wrubleski
ALSO THIS WEEK
H. Lundbeck A/S v. Lupin Ltd., Appeal Nos. 2022-1194, -1208, -1246 (Fed. Cir. December 7, 2023)
In this appeal and cross-appeal from the United States District Court for the District of Delaware, the Federal Circuit addressed the district court’s determination as to whether the defendants’ Abbreviated New Drug Application will infringe certain patents owned by the plaintiffs related to the drug Trintellix—a treatment for depression in adults that contains the active ingredient vortioxetine. The district court had found that the defendants’ ANDA did not infringe the plaintiffs’ patents related to a method of use for treating depression, but would infringe one of the patents related to the manufacture of vortioxetine. Lundbeck et al. appealed the non-infringement determination and defendants Lupin et al. cross-appealed the infringement determination. On the plaintiffs’ appeal, the Federal Circuit affirmed, with the reasoning that the district court correctly found that Lundbeck and related Takeda Pharmaceuticals entities were not seeking approval for an indication claimed by the plaintiffs’ patents, so there was no infringement with regard to a method of use for treating depression. On the defendants’ cross appeal, the Federal Circuit also affirmed, and ruled that the district court did not err in its claim construction and ultimate determination of infringement as to the manufacture of vortioxetine.
The opinion can be found here.
By Mario E. Delegato
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.
