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Loral Patent Survives Summary Judgment of Invalidity

September 21, 2001

Decision icon Decision

Last Month at the Federal Circuit - October 2001

Judges: Michel (author), Mayer, and Newman (concurring)

In Loral Fairchild Corp. v. Matsushita Electrical Industrial Co., No. 00-1487 (Fed. Cir. Sept. 21, 2001), the Federal Circuit reversed a SJ of invalidity of claim 1 of U.S. Patent No. 3,931,674 (“the ‘674 patent”) and remanded for further proceedings.

The ‘674 patent concerns a process for manufacturing a charge-coupled device (“CCD”). This case continues what has been more than a decade of litigation between Loral Fairchild Corporation (“Loral”) and numerous Japanese electronics manufacturers and their U.S. subsidiaries, in which Circuit Judge Rader has been sitting by designation since 1995. In another decision, the Federal Circuit has recited the procedural history and affirmed a JMOL that Sony Corporation and its U.S. subsidiary did not infringe the ‘674 patent. Loral Fairchild Corp. v. Victor Co. of Japan, 181 F.3d 1313 (Fed. Cir. 1999). Loral then maintained its action against the only remaining manufacturing Defendants that it believed were literally infringing the ‘674 patent, Toshiba and NEC.

The district court, after a two-day hearing concerning motions for SJ of invalidity, found claim 1 of the ‘674 patent invalid based on a prior publication (“the Erb reference”). Although the Erb reference had been used at the Sony trial, it did not form a basis for the holdings in that case, and in this case, the district court had allowed the parties to both submit new evidence and rely upon the evidence submitted during the Sony trial.

Loral submitted evidence that the inventor of the ‘674 patent, Dr. Gilbert Amelio, had conceived the invention and actually reduced it to practice prior to the publication of the Erb reference. Dr. Amelio’s prior conception is not disputed. However, the critical question is whether Loral’s evidence was sufficient to raise a genuine issue as to whether Dr. Amelio had actually reduced the invention to practice prior to the publication of the Erb reference on December 3, 1973.

In the present case, Dr. Amelio submitted an affidavit executed in April 2000 in which he states that the invention was reduced to practice shortly after September 14, 1973, but no later than mid-October 1973—when Loral had initial production quality devices. The district court had concluded that Dr. Amelio’s affidavit asserted only that he was working on a reduction to practice in June 1973 through mid- March 1974.

The Federal Circuit reversed, highlighting Dr. Amelio’s specific statement that by September 14, 1973, Fairchild had produced working devices and established that the ‘674 patent process would work for its intended purpose. The Court ruled that a district court may not assess the credibility of testimony when granting SJ. Thus, because the Amelio affidavit asserts a reduction to practice prior to publication of the Erb reference, the only issue becomes whether Loral submitted independent evidence sufficient to collaborate this assertion.

Loral pointed to evidence from the Sony trial to collaborate Dr. Amelio’s testimony. Specifically, Dr. David Wen had testified that Loral received masks necessary to practice the invention on or about September 14, 1973, the date stamped on the masks. Loral also pointed to a proposal to the U.S. Air Force as evidence showing that the claimed process was already showing reliable performance and high yield in November 1973.

The Federal Circuit ruled that the district court’s insistence upon documentary evidence to corroborate test results of the alleged reduction to practice was erroneous as a matter of law. Under the “rule of reason,” the Court explained, the inventor’s testimony must be sufficiently corroborated by independent evidence, but not necessarily documentary evidence. Having found the grant of SJ improper, the Federal Circuit declined to rule on the correctness of the district court’s conclusion concerning obviousness based on the Erb reference and remanded for further proceedings.

Judge Newman concurred, but wrote separately to explain why the majority’s opinion was not new law with respect to the requirements for antedating a publication. Judge Newman explained that the evidentiary standard for antedating a reference is not the same as the PTO requirement for establishing priority in an interference contest.