District Court Does Not Abuse Its Discretion on Expert Witness Appointment When Confronted by an Unusually Complex and Conflicting Case
March 05, 2009
Last Month at the Federal Circuit - April 2009
Judges: Rader (author), Plager, Gajarsa
[Appealed from: N.D. Cal., Judge Wilken]
In Monolithic Power Systems, Inc. v. O2 Micro International Ltd., Nos. 08-1128, -1136 (Fed. Cir. Mar. 5, 2009), the Federal Circuit held that the district court did not abuse its discretion in appointing an independent expert witness under Fed. R. Evid. 706, and affirmed the district court’s denial of O2 Micro International Limited’s (“O2 Micro”) JMOL that U.S. Patent No. 6,396,722 (“the ’722 patent”) is not obvious under 35 U.S.C. § 103.
The ’722 patent relates to power inverter circuitry for laptop computers. In May 2004, Monolithic Power Systems, Inc. (“Monolithic”) filed suit against O2 Micro in the Northern District of California, seeking a DJ finding O2 Micro’s ’722 patent invalid, not infringed, and unenforceable. O2 Micro counterclaimed for infringement and joined Advanced Semiconductor Manufacturing Corporation, Ltd. (“ASMC”), Monolithic’s foundry, as a counterdefendant. In September 2004, O2 Micro filed suit against Monolithic in the Eastern District of Texas, accusing Monolithic of infringing U.S. Patent No. 6,804,129 (“the ’129 patent”). Later, O2 Micro amended the complaint to also accuse ASMC of infringing the ’129 patent and to accuse ASUSTeK Computer Inc. (“ASUS”) of infringing U.S. Patent No. 6,259,615 (“the ’615 patent”), the ’722 patent, and the ’129 patent. In March 2006, the Eastern District of Texas transferred O2 Micro’s case to the Northern District of California, which then consolidated the two cases.
The district court then dismissed O2 Micro’s claims regarding the ’129 patent and granted SJ of noninfringement of the ’615 patent in favor of ASUS. Before trial, the district court, in a case management conference, expressed its frustration with the technical complexities of the ’722 patent and entertained the idea of appointing an independent expert under Fed. R. Evid. 706. After a series of disagreements, the parties ultimately agreed upon an expert, Dr. Enrico Santi. At trial, the defendants presented evidence that the ’722 patent was invalid, and Dr. Santi offered testimony largely consistent with Monolithic’s theory of the case. The jury found that the asserted claims of the ’722 patent were invalid under both Monolithic’s obviousness and on-sale bar theories. O2 Micro appealed.
On appeal, O2 Micro argued that the district court’s appointment of Dr. Santi unduly burdened its Seventh Amendment right to a jury trial and violated established Ninth Circuit precedent that there is no “complexity exception” to the Seventh Amendment right. Upon review of the record, the Federal Circuit found no denial or encumbrance of O2 Micro’s jury demand or Seventh Amendment rights. Rather, the district court allowed the parties to show cause why an expert witness should not be appointed. The district court also instructed the parties to nominate candidates and confer upon a mutually agreeable expert. In addition, the district court instructed the parties to share Dr. Santi’s reasonable fees and expenses. Furthermore, the district court did not limit the parties’ ability to call their own experts and allowed these experts to attack, support, or supplement the testimony of Dr. Santi. At trial, the district court instructed the jury not to give Dr. Santi’s opinion greater inherent weight due to his independent status. Moreover, the Federal Circuit noted that the Supreme Court has long recognized the constitutionality of court-appointed experts. Accordingly, although it recognized that Rule 706 should be invoked only in rare and compelling circumstances, the Federal Circuit found no abuse of discretion in appointing an independent expert in this case where the district court was confronted by what it viewed as an unusually complex case with starkly conflicting expert testimony.
O2 Micro also disputed the underlying factual findings implicit in the jury’s obviousness verdict. O2 Micro argued that substantial evidence does not support the jury’s finding that U.S. Patent No. 5,923,129 (“the Henry patent”) discloses various features of the ’722 patent’s claims. Specifically, O2 Micro argued that the Henry patent does not teach the “flow-through switch” of claims 2 and 9; the “second state” limitation of claims 1, 2, 9, and 18; and the “only if” limitation of claims 12 and 14.
Claims 2 and 9 of the ’722 patent require a flow-through switch. Monolithic’s expert, Dr. Horenstein, testified that comparator 740 in Figure 8B of the Henry patent teaches “a flow-through switch.” O2 Micro did not cross-examine Dr. Horenstein on this point, and O2 Micro’s own expert did not testify on this subject. Accordingly, the Federal Circuit held that the record stands unrebutted with evidence showing that the Henry patent includes a flow-through switch and that O2 Micro’s attorneys’ argument on appeal cannot create an evidentiary gap.
Claims 1, 2, 9, and 18 of the ’722 patent require an inverter with a second pulse signal having a first state and “a second state which overlaps the first signal with a predetermined minimum overlap to deliver a predetermined minimum power to the load.” Slip op. at 13. O2 Micro challenged that the Henry patent does not disclose this second state. However, Monolithic’s expert, Dr. Horenstein, testified that the “sawtooth generator” of the Henry patent teaches the second state. Although O2 Micro’s expert, Dr. Rhyne, provided conflicting testimony, the Federal Circuit found that Dr. Horenstein embraced Dr. Rhyne’s characterization of the Henry patent’s sawtooth generator as consistent with the claimed second state. Accordingly, the Federal Circuit held that there is no reason to disturb that implicit factual finding.
Claims 12 and 14 of the ’722 patent require a feedback circuit that delivers power “only if said feedback signal is above a predetermined threshold.” Id. at 15 (emphasis added). Drs. Santi and Horenstein concurred that the Henry patent teaches this limitation because it teaches disengaging feedback and going into a fixed minimal voltage output state when the feedback signal drops below a predefined threshold. Accordingly, the Federal Circuit held that substantial evidence supports the Henry patent’s teaching of this “only if” limitation.
O2 Micro also argued that even if substantial evidence supports the finding that every element of the asserted claims was in the prior art, the verdict must fail because Drs. Santi and Horenstein articulated no reasons for combining the cited references. On the contrary, the Federal Circuit found that Dr. Horenstein testified that a skilled artisan would have been motivated to combine the full bridge inverter in Figure 2 of the Henry patent with the sawtooth generator in Figure 8 of the Henry patent. Accordingly, the Federal Circuit concluded that the asserted claims of the ’722 patent were obvious as a matter of law.