Infringing Direct Competitor Strongly Supports Irreparable Harm Finding, Even Where Plaintiff’s Product Does Not Practice the Patent
December 19, 2012
Last Month at the Federal Circuit - January 2013
Judges: Rader (author), Plager, Wallach
[Appealed from: S.D. Cal., Chief Judge Gonzalez]
In Presidio Components, Inc. v. American Technical Ceramics Corp., Nos. 10-1355, 11-1089 (Fed. Cir. Dec. 19, 2012), the Federal Circuit affirmed the district court’s decision on infringement and lost profits, but vacated its finding of no irreparable harm, no permanent injunction, and an ongoing royalty. Finally, the Court vacated the trial court’s false marking judgment due to the recently enacted Leahy-Smith America Invents Act (“AIA”).
Plaintiff Presidio Components, Inc. (“Presidio”) is a manufacturer of monolithic capacitors sold under the tradename Buried Broadband capacitor (“BB capacitor”). Presidio asserted that American Technical Ceramics Corporation’s (“ATC”) competing 545L capacitors infringed certain claims of U.S. Patent No. 6,816,356 (“the ’356 patent”). The ’356 patent is directed to a capacitor having a one-piece design that improves upon previous-generation two-piece designs that have to be joined together.
In February 2008, Presidio filed suit in the Southern District of California, and ATC later filed counterclaims based on alleged false marking of the BB capacitor with the ’356 patent. In July 2009, ATC requested an ex parte reexamination of the ’356 patent, but in September 2011, the PTO confirmed the patentability of the asserted claims of the ’356 patent without amendment.
After a trial in December 2009, a jury found the asserted claims willfully infringed and not invalid. The jury awarded Presidio over $1 million in lost profits and denied ATC’s claim for false marking. Following trial, both parties filed numerous JMOL motions, which were the subject of the present appeal.
On appeal, the Federal Circuit affirmed the jury’s finding that ATC’s 545L capacitors literally infringed the asserted claims of the ’356 patent. The parties disputed whether the accused capacitors were “a substantially monolithic dielectric body.” ATC pointed to the admission of Presidio’s expert that ATC’s 545L capacitors could contain one or two percent of “porosity,” i.e., that they were not monolithic. Slip op. at 10. The Federal Circuit discounted this statement. It held that, “taken as a whole,” Presidio’s expert supported the jury’s determination. Id. at 9. Even though the accused capacitors may have “seams,” the Court held that substantial evidence supported the jury’s infringement finding. The Court considered but summarily rejected ATC’s “numerous other arguments” regarding infringement, finding no reversible error. Id. at 11.
On the lost profits issue, Court found that substantial evidence supported the jury’s decision. The Court addressed the disputed first two factors of the four-factor Panduit test. As to the first Panduit factor, “demand for the patented product,” the Court held that even though Presidio’s BB capacitor did not practice the ’356 patent, the demand for the “patented product” could still arise from a competing product, i.e., ATC’s 545L capacitors. Id. at 12. The Court found sufficient record evidence to support the jury’s finding that the ATC and Presidio capacitors were in fact competitors. As to the second Panduit factor, “absence of acceptable noninfringing substitutes,” the Court found that the noninfringing substitutes that ATC pointed out were not in fact competitors at all since they used a two-piece design of the previous capacitor generation. Because this two-piece design did not perform as well as the patented one-piece design, the Court held that the alleged substitutes were not “acceptable substitutes” under the second prong of the Panduit test.
As to Presidio’s cross-appeal, the Court vacated the district court’s denial of Presidio’s motion for a permanent injunction. The Court found that competition between the parties could not at once be sufficient for money damages but insufficient for irreparable harm, as the district court found. The Court said that the district court appeared to place too much emphasis on the fact that Presidio conceded that its capacitors did not practice the ’356 patent. “Even without practicing the claimed invention, the patentee can suffer irreparable injury. Direct competition in the same market is certainly one factor suggesting strongly the potential for irreparable harm without enforcement of the right to exclude.” Id. at 19. Because the products did compete and irreparable harm existed, the Court held that the district court abused its discretion in denying Presidio a permanent injunction.
As to false marking, the Court held that the intervening AIA applied retroactively to this appeal. Further, the AIA’s change of law led the Court to vacate the false marking issue as moot. Under the new law, only the United States can bring a false marking claim, and so ATC could not maintain its claim against Presidio.
Summary authored by Aidan C. Skoyles, Esq.