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Foreign Sales Do Not Violate Permanent Injunction

March 18, 2004

Decision icon Decision

Last Month at the Federal Circuit - April 2004

Judges: Linn (author), Newman, and Prost

In International Rectifier Corp. v. Samsung Electronics Co., No. 02-1324 (Fed. Cir. Mar. 18, 2004), the Federal Circuit reversed a contempt order holding that Samsung Electronics Company, Ltd. and Samsung Semiconductor, Inc. (collectively “Samsung”) and IXYS Corporation (“IXYS”) had conspired to subvert an injunction preventing Samsung from making, using, selling, and importing infringing products in the United States.

International Rectifier Corporation (“IR”) owns U.S. Patent No. 4,959,699 (“the ‘699 patent”). In previous litigation with Samsung, a permanent injunction was entered barring Samsung from acts that would infringe the ‘699 patent. The injunction excepted products made by Samsung on a foundry basis for nonparty IXYS. The ‘699 patent is directed to vertical planar power metal-oxide semiconductor (VPPM) transistor devices.

Samsung then sold its power MOSFET business, except for certain fabrication of IXYS-design devices at Samsung’s foundry in South Korea. Although IXYS sought to have Samsung import these devices into the United States under the exception to the injunction, Samsung refused. Instead, Samsung agreed to sell its uncut, unpackaged wafers that were precursors to the IXYSdesigned devices to an IXYS subsidiary located in Germany.

Two years after they entered the permanent injunction, IR initiated contempt proceedings against Samsung and IXYS for violating the injunction based on sales in the United States. The Federal Circuit concluded that Samsung’s actions did not take place within the United States and, therefore, did not violate the injunction. Moreover, Samsung and IXYS did not conspire to subvert the injunction, because their agreement pertains only to the manufacture and delivery of devices outside of the United States. Their agreement speaks nothing of importing the devices into the United States, and Samsung does not exercise control over IXYS’s delivery activities. Samsung’s knowledge that some IXYS products were imported into the United States is not sufficient to support an allegation of collusion. Moreover, there was no evidence that IXYS, a nonparty, was in active concert or participation with Samsung to further any U.S. sales, nor was there any evidence that IXYS was acting as an aider or abettor in subverting the preliminary injunction. Accordingly, the Federal Circuit ruled that Samsung’s extraterritorial conduct did not violate the permanent injunction and reversed the contempt order.