By Opinion entered by The Honorable Leonard P. Stark in Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., et al., Civil Action No. 04-1371-LPS (D.Del., January 18, 2011), the Court granted in part and denied in part the post-trial motion of the prevailing Plaintiff, Power Integrations, Inc. (“Power”), to declare the case exceptional and to award Power treble damages and its attorneys’ fees. Specifically, the Court granted Power’s motion for enhanced damages under 35 U.S.C. § 284 to the extent that it enhanced Power’s damages two times (i.e. 200%) as opposed to trebling damages. Id. at 22. The Court denied Power’s motion to declare the case exceptional and to award attorneys’ fees under 35 U.S.C. § 285. Id. at 24.
Complete copies of the Court’s Opinion and Order are attached.
By way of background, in October 2004, Power filed suit against Fairchild Semiconductor International, Inc. and Fairchild Semiconductor Corporation (collectively, “Fairchild”) alleging that Fairchild infringed certain of Fairchild’s patents. After discovery was completed and the Court issued its claim construction opinion, the case proceeded to trial in four phases: (1) a jury trial was held on the issues of infringement and willfulness; (2) a second jury issued a verdict on invalidity; (3) a bench trial was held on Fairchild’s inequitable conduct defense; and (4) a second bench trial was held on the issue of willfulness in light of the intervening decision by the Federal Circuit in In Re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007). Significantly, each phase of the litigation went against Fairchild, including the second bench trial on willfulness during which the Court upheld the jury’s previous finding that Fairchild willfully infringed Power’s patents. Id. at 1-2.
In analyzing Power’s motion requesting the Court to declare the case exceptional and to award enhanced damages and attorneys’ fees, the Court recognized that its power to award enhanced damages and, in exceptional cases, attorneys’ fees is derived from statute – specifically from 35 U.S.C. §§ 284 and 285. Under 35 U.S.C. § 284, the “[C]ourt may increase the damages up to three times the amount found or assessed.” Under 35 U.S.C. § 285, the “[C]ourt in exceptional cases may award reasonable attorney fees to the prevailing party.”
The Court noted that a § 284 inquiry has two steps. “First, a determination is made as to whether the infringer acted with culpability. A finding of willful infringement satisfies this culpability requirement. Second, the Court must determine whether, given the totality of the circumstances, damages should be enhanced.” Id. at 12.
With respect to the first step of the § 284 inquiry, the Court determined that it was satisfied because Fairchild had already been found to have willfully infringed Power’s patents. Id. Thus, the Court determined that it needed to analyze and determine whether, given the totality of the circumstances, damages should be enhanced and, to do so, it needed to evaluate the “Read factors”. Id. The Read factors are: (1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer investigated the scope of the patent and had a good faith belief that it was not infringing or that the patent was invalid; (3) the infringer’s behavior during litigation; (4) the infringer’s size and financial condition; (5) any remedial actions taken; (6) the closeness of the case; (7) the duration of the infringing conduct; and (8) any concealment on the part of the infringer. Id. at 12-13. The Court noted that “[n]o one factor is dispositive.” Rather, the paramount determination in deciding whether to grant enhanced damages and the amount thereof is the egregiousness of the infringer’s conduct based on all of the facts and circumstances. Id. at 13.
After analyzing the Read factors and taking into consideration both jury verdicts against Fairchild, the Court’s unequivocal willfulness opinion, the parties submissions and the rationale underlying enhanced damages, the Court concluded that Fairchild’s conduct was sufficiently culpable to justify enhancing damages and that enhanced damages were appropriate in this action. Id. at 22. However, the Court was not convinced that the circumstances of the case were sufficiently egregious to justify a full trebling of damages and, thus, decided to double the damages awarded instead of tripling the damages. Id.
With respect to Power’s motion for attorneys’ fees, the Court noted that, “[i]n undertaking a § 285 inquiry, the Court focuses in particular on the actual conduct of the parties during the course of litigating or prosecuting the patent.” Id. at 23. Moreover, the Court noted that the “Federal Circuit has made it clear that attorneys’ fees should be awarded only in ‘limited circumstances’ and are not to become an ‘ordinary thing in patent litigation.’” Id. After analyzing Fairchild’s conduct during the litigation, the Court determined that it would not declare this case exceptional under § 285 and refused to award attorneys’ fees. Thus, Power’s motion was denied to the extent it sought to declare the case exceptional and recover its attorneys’ fees. Id. at 24.