*1 competitors par- at unproven, albeit will — COMPANY, LTD., ELECTRIC FUNAI by rapid in industries marked ticularly Appellant, Plaintiff-Cross frequent paradigm and technology advance at 79. Corp., 253 F.3d shifts.” Microsoft v. ELECTRONICS CORPORA- DAEWOO proof by Philips may it be While and Daewoo Electronics Amer- TION technology could never Lagadec ica, Inc., Defendants-Appellants, commercially might be suffi- viable become violation, nei- an antitrust
cient to defeat findings proof nor the ITC’s Philips’ ther Company, Ltd., Daewoo Electronics sug- Philips’ far. witness While reach Corporation Daewoo Electronics development that commercial gested America, Inc. and Daewoo Electric difficult, technology could be he Lagadec Industries, Ltd., Defendants. Motor could testify that these difficulties did not 2009-1225, Nos. 2009-1244. Indeed, ap- the record overcome. not be Laga- evidence of to contain some pears of Appeals, States Court United Sony A memoran- potential. dec’s Federal Circuit. Lagadec proposal dum described 1, 2010. Sept. solutions existed potential indicated that Denied Oct. 2010. Rehearing by Philips’ problems identified some of the Lagadec patent as issued re- expert. The See, Lagadec e.g.,
flected these solutions. (discuss- 11.47-52,col.7 11.54-58
patent col.6 to eliminate distur-
ing band-limitation frequencies). The high and low
bance viabil- only that the commercial
ITC found “doubt- Lagadec technology
ity of
ful,” that it Philips had established commercially viable. be made
could not fails to majority’s strict standard adequate protection against
provide technology, and al- of nascent
suppression prevent holders free rein to
lows potentially competitive development extreme
technologies except the most respectfully I unlikely circumstances.
dissent. *5 Lyons, Morgan,
Michael J. Lewis & LLP, Alto, CA, Palo argued Bockius of appellant. him on the plaintiff-cross With Harry brief were Lorraine M. Casto and F. Doscher. Clark, Law R.
Perry Perry R. of Offices Alto, Clark, CA, argued of Palo for defen- With him on the brief dants-appellants. Jenny Forney, N. Lee L. were and Sarah LLP, Alto, Ellis Of Kirkland & of Palo CA. Zhuanjia Avinash D. counsel were Gu and Lele. NEWMAN, LOURIE, and
Before LINN, Judges. Circuit Judge Opinion for court filed Circuit filed Concurring Opinion NEWMAN. Judge LINN. Circuit NEWMAN, Judge. Circuit judg- final appeal is taken from the This the United District Court ment of States California, on District for the Northern validity, patent infringement, issues liability.1 and successor The dis- damages, 22, 2008) (un- (N.D.Cal. July 04-01830 JCS C Electronics Electric Co. v. Daewoo 1. Funai (N.D.Cal. order); (successor Feb. liability No. C-04-01830 JCS published) Corp., Funai 2009) (final judgment and in (unpublished) Corp., No. Co. v. Daewoo Electronics Electric junction); Elec (N.D.Cal. 2007) Funai Electric Co. v. Daewoo 04-01830 JCS Nov. C (N.D.Cal. F.Supp.2d Corp., tronics (partial summary judgment or- (unpublished) motions); 2009) (order post-trial Funai der); Electric v. Electronics Funai Co. Daewoo No. Corp., v. Electric Co. Daewoo Electronics (Florida) judgment trict court’s as to the are for payment. liable The dis- issues is affirmed. reverse as to suc- We trict court reserved issue until after liability, cessor and remand for further trial on the merits.
proceedings on this issue.
litigation proceeded
The
as to DEC and
(hereinafter
“Daewoo”).
DEAM
together
Background
pre-trial
In
proceedings
various
the dis-
May
In
Funai Electric Company,
trict court narrowed the issues for trial.
(“Funai”)
against
Ltd.
filed suit
four Dae-
held,
Thus the court
on summary judg-
Corpo-
woo entities: Daewoo Electronics
ment, that
patents
three
the six
were
(“DEC”),
corporation
ration
of South
infringed.
The remaining
pat-
three
Korea,
predecessor
compa-
and its
Korean
(“the
6,021,018
ents were U.S. Patent No.
ny
Company
Daewoo Electronics
Ltd.
(“the
patent”);
6,421,210
'018
No.
pat-
'210
(“DECL”); and their United States sub-
ent”);
(“the
6,064,538
and No.
pat-
America,
sidiaries Daewoo Electronics
Inc.
ent”). After a
Markman
hearing,
(“DEAM”),
Corporation,
a Florida
and its
granted
court
summary judgment that the
predecessor Daewoo Electronics Company
patents
'018 and '210
literally
are not
in-
(“DECA”),
of America
a California corpo-
fringed, but
summary judgment
denied
ration.
charge
The
was infringement of
to infringement under
the doctrine of
six
patents
United States
owned
equivalents.
court
denied summary
pertaining to various electrical and me-
judgment
question
on the
of infringement
components
chanical
play-
video cassette
*6
patent,
of the '538
literally
either
or under
(“VCRs”).
ers and recorders
VCRs con-
equivalents.
doctrine of
The court also
vert information stored on video cassette
held,
law,
as a matter of
that the claims of
tapes into images displayed on a screen.
the '538
are not invalid on the
patented
The
inventions are described as
ground of indefiniteness. The remaining
improvements that
pro-
lower the cost of
issues were set for trial
jury.
to a
ducing
maintaining
VCRs while
product
quality.
trial,
After a 14-day
jury
found that
willfully infringed
Daewoo
the '018 and
early
In
2005 DECL and DECA ceased
'210 patents under the doctrine of equiva-
participating in
litigation,
presenting
lents,
willfully infringed
and
pat-
the '538
no defense and refusing discovery. The
ent either literally or under the doctrine of
district court
judgment
entered default
equivalents
infringing
for
occurring
acts
against
and,
them
based on the evidence
25,
and after
October
2002. The
court,
before
$6,956,187
awarded Funai
$7,216,698
awarded Funai
damages
as
in damages for infringement by DECL
DEC,
against
$2,298,590
of which
was
25, 2002,
and DECA before October
plus
jointly
against
assessed
DEC and DEAM.
attorney fees and costs incurred as to
In view of the verdict of
award,
infringe-
willful
these entities. The total
including
ment, the court
prejudgment interest,
$8,066,112.
awarded Funai its
was
attor-
No
ney fees
appeal
expenses,
but
taken from this
declined to
award. How-
ever,
damages
DECL and
enhance the
pay
jury.
DECA did not
awarded
judgment.
asserted,
Funai
then
The court
permanent injunction,
entered
complaint,
amended
the successor
and denied
duly
Daewoo’s
post-trial
made
(South Korea)
companies DEC
and DEAM motions.
CRB,
Corp., No. C 04-01830
2006 WL
nai Electric
Corp.,
Co. v. Daewoo Electronics
(N.D.Cal. Dec.20,
CRB,
2006) (partial order); (N.D.Cal. Mar.1, summary judgment 2006) (claim construction). Fu- gear driving for said a holder drive Fu- considered court then district The mechanism so had holder via a damages gear cassette request that the nai’s defaulting pre- positioned cassette holder against said been awarded DECA, be said slide arm is companies, position DECL initial when decessor companies posi- their successor and is against position, at a first positioned assessed applied court The and DEAM. when said play position DEC in said tioned liabili- to successor Korea as posi- law of South at a second positioned arm is slide DEAM nor that neither DEC ty, and ruled tion; and against entered judgment for the is liable door in driving arm for said a door predecessors. their of said slide accordance with movement that were aspects arm, slide arm slides appeals the so that when said viz., it, the issues adversely to toward said position said second decided from indefiniteness, and claim infringement, opens door arm said position, first said the district cross-appeals damages. slides from the while said slide arm door damages based refusal to enhance court’s position a third towards position first and the findings jury’s willfulness on the arranged between said first which is misconduct, and also attorney sanctioned drive and said holder positions, second liability. to successor appeals cassette holder to drive said gear starts towards said play position said from I after said slide arm position initial position third so that said passes said PATENT THE 018 said cassette hold- opened door is before February patent, issued The cassette holder is is moved when said er for “Loading Mechanism is entitled said initial position. moved to claims are directed Video Cassette.” at issue aspects added to the (Emphasis the movement of the improvement to an infringement.) position initial between an cassette holder *7 of the that the door play position, a so and products Daewoo are VCR The accused the cassette opened before cassette and decks and combination TV/VCR DVD/ motion sequential This holder is moved. a decks, what is called that include VCR to the door be closer allows the cassette to Wit- loading “T-Mecha” mechanism. beneficially colliding, reduc- without thus opera- the explained nesses structure 1 of size of the VCR. Claim ing the overall and the patented mechanism tion patent is as follows: the '018 The district court products. Daewoo a loading for loading A mechanism 1. summary judgment that granted in a play position a video cassette into is not literal- gear” “holder drive limitation comprising: cassette deck video products, and the ly bymet the Daewoo receiving for having opening a an door is met under that this limitation jury found cassette; said video equivalents. The other doctrine of holder, vid- based on holding disputed for said limitation was a cassette term, presented for not position, and which was “opened” at an initial eo cassette granted said court jury cassette between because the moving said video district while this limitation is play position summary judgment a position initial cassette; that claims jury video The found holding literally said met. infringed. were patent 1-4 of the '018 sliding paral- capable of a slide arm rulings and find- appeals those Each side of said video direction lel to an insertion it. ings adverse to cassette; mary A. “Holder Drive judgment Gear” that the claims could not literally be found to be infringed. summary appeals judg patent ment that 1-4 of claims the '018 are appeal On Funai argues that the “holder literally infringed not based on the court’s gear” drive literally limitation is met gear” interpretation, “holder drive and whenever the products accused are not appeals summary judgment Daewoo loaded with a cassette tape, which time “opened” literally limitation is pin and springs implicated. are not met. The other limitations of these claims However, the claims are predicated on the were conceded Daewoo to be embodied presence tape, cassette for all of the in its accused cassette decks. “loading,” claims recite “receiving,” “hold- ing,” “moving” a video cassette. We products, In loading the Daewoo when affirm the district court’s that the deck, cassette into a T-Mecha the cassette gear” “holder drive limitation could not be placed in the cassette holder an “ini- met, literally found to be negating literal tial position” and thereafter is driven to infringement of claims 1-4 of the pat- position, called an “intermediate” position, ent. from which a pin on the cassette holder
pushes the cassette downward about two “Opened” B. millimeters, to the play position. The jury The infringement found ejection similar, Daewoo sequence is but 1-4 of claims the '018 in terms of the actions occur in the reverse order. the doctrine equivalents. only ejection During of a cassette the pin is claim limitation presented consid released, allowing embedded springs to equivalency eration of was the holder drive push the upward cassette from the play gear. Daewoo does challenge position millimeters, about two whereupon jury’s finding of equivalency of the holder it arrives at the position intermediate However, gear. drive argues the door is opened. While in the interme- the district court erred its determina position, diate and before further move- tion summary judgment ment of the cassette holder to the initial “opened” literally limitation infringed, position, the door fully opened. becomes and that infringement under the doctrine The district court ruled that the Dae- equivalents cannot be found because of woo cassette decks could not be found to prosecution history estoppel as to the literally meet the claim limitation that “opened” limitation. *8 “said holder drive gear starts to drive said argues Daewoo that the court erred as cassette holder from play position said to- “opened” by limitation focusing only wards said initial position,” for in the Dae- on the upon status of the door woo “it movement decks is the arm slide cam’s re- of the cassette holder to the pin posi- lease of the initial that moves the holder tion, without Funai, accounting from also play position.” the for the 2006 WL requirement claim’s that at *8. The court the VCR door explained that in is opened products the Daewoo before the the cassette holder release of the moves pin from holding cassette, play position. down the the video and states the subsequent force of its VCRs the springs ap- opened only door is plied to upon the cassette after the cassette the release of holder has moved two pin, move the cassette holder millimeters. The from the district court held that: play position toward position. the initial “It does not matter that the door does not Since this action is not performed by the before the move holder shifts from the holder drive gear, by the court play position ruled sum- position. the intermediate electrically motor disputed by par- being said insulated point, The critical ties, the holder chassis; when is moved is that from said deck position initial from the inter- towards the driving by said direct motor controlled already the door has be- position, mediate (PWM) pulse a modulation width con- Funai, motion.” 2006 WL gun opening its trol; and Funai states that the dis- at *8. including said motor driving direct a correctly trict construed court axis, a capstan rotational axis as a rotor limitation to mean “moved from “opened” axis, which is mounted on said rotational has position a such the door closed by a a stator core which is wounded coil that ejecting cassette so cleared the current being supplied control PWM and interfere with the door.” cassette will not rotor, bearing faces to and a said holder Funai, agree at *7. 2006 WL We which core and sup- holds said stator correct, is construction for this claim axis, ports said and said rotational direct specification. it in the This is described driving through motor is mounted said construction, summary judgment and the bearing chassis; holder on the deck thereon, not been have shown to be based hearing wherein said holder is made court’s error. The an insulating material. literally of “opened” by limitation is met A preventing 5. for propa- mechanism en- products accused is sustained. On the claim, gation driving motor noise and tirety verdict of vibra- infringement supported is substantial on a a tape comprising tion deck deck evidence, and is affirmed. chassis, pinch a a capstan roller and axis conveying tape, for a a motor which is
II mounted on deck chassis for driving said axis, capstan cylinder said and a drum PATENT THE '210 which is mounted on said deck chassis July 16, 2002, patent, issued is provided magnetic- for with a head for Preventing Prop- entitled “Mechanism recording playing tape: on the agation Driving Motor Noise and Vibra- a driving wherein said motor is direct Deck, Tape tion Tape on a Deck Hav- directly motor which a motor shaft is 1, 2, 4-7, 9, ing the Same.” Claims and 10 axis, coupled to and which capstan were Funai. asserted Claims and 5 switching; controlled current are representative: comprises wherein a said motor rota- 1. for preventing propa- A mechanism axis, axis a capstan tional as a rotor gation driving noise motor and vibra- axis, which is mounted in said rotational deck, tape comprising: tion on a by a a stator core which is wound coil chassis, pinch a a deck roller and being supplied switching control current conveying a tape, axis for a mo- capstan rotor, bearing and faces to said holder tor is mounted said deck chas- which insulating which made of an material axis, capstan driving cylin- said sis *9 holding support- and for said stator core mounted on der drum which is said deck axis, said and a ing rotational motor with for provided chassis and a head board) (printed which PCB circuit is playing and on the magnetic-recording holder and supported by bearing said on tape; controlling which circuit elements for being a direct mo- driving said motor mounted, motor and are wherein directly tor in which a motor shaft is axis, the deck said motor is secured on chas- capstan to the and which is coupled holder; and, through bearing switching; current sis controlled limit, in resistivity said motor PCB is held cal such as 107 ohm-cm or wherein bearing greater, corresponds holder which to the resistivi close to where the is chassis, ty in speci of materials illustrated the '210 sup- mounted on the deck and fication, in provide certainty in an order to and ported by supporting a member clarity to the claims. Funai that responds at a electrically insulating state dis- “poor electrical conduction” adequately de tance from where the motor PCB is insulating scribes the material in used this held. context, and that a person ordinary skill to the term at on (Emphasis added issue insulating the field of motors and read only appeal.) disputed aspect this ing specification would have no trouble insulating the '210 relates to the understanding what is covered material. The district court ruled on sum- claim. mary judgment that there was not literal argues Daewoo also the district limitation, infringement as and the to this description court’s further of “insulating equivalency given jury. issue of to the material” a sup- as material that “acts to Funai contends that the district court press switching generated by pulse noise summary judgment erred in width modulation control of the direct driv- literally infringed, this element was not ing motor” is “functional” and therefore challenges and Daewoo the court’s defini- “circular,” improper. and thus In re- “insulating tion of material” argues sponse points specification’s to the prosecution history in- estoppel bars insulating sup- statement material fringement equiva- under the doctrine of noise, presses such supporting as lents. court’s construction. “Insulating A. Material” comparative The use of and func “insulating The district court construed language tional to explain construe and material” as follows: claim term improper. description is not A a material poor with electrical conduc- component of what a may clarity does add tion that suppress acts to switching and understanding meaning generated by noise a pulse width modu- scope of the claim. The criterion is wheth lation driving control of the direct mo- explanation er the aids the court and the tor, thereby suppressing the video jury in understanding the term it is screen and audio noise caused electri- used in the claimed invention. There was cal produced by noise capstan motor. evidence in the persons district court that Daewoo argues that the court’s definition experienced in this field would understand of insulating material as a material having material, this description insulating “poor electrical conduction” renders the used, in the context in which it poor as a fatally claim construction flawed because it electrical serving conductor the function improperly comparative uses language. set forth in the claim. No error can be Daewoo states that the district court its comparative attributed to this use of claim merely replaced construction one functional explanation construing these vague term (“insulating”) with an even va claims. conduction”).
guer term (“poor electrical Infringement B. Literal argues “poor” that the word term, comparative raising but not answer granted summary The district court ing the question “poor relative what?” judgment products that Daewoo’sVCR did *10 Daewoo adequate material,” states that an “insulating definition not use an and thus of “insulating requires material” a numeri that patent the asserted claims of the '210 taught patent, in the '210 literally infringed. terial as to be not be found could determination, summary judgment stat- therefore that of no this challenges Funai ques- inappropriate. disputed infringement a factual literal there was ing that material was other evidence that Funai points the Daewoo Funai to tion of whether insulating re- support jury in terms of the could a verdict of liter “insulating” states invention. patented infringement, citing of the al a National Science quirements Project Foundation article that was intro using illustrates resin patent The '210 expert, duced Daewoo’s which describes The Funai insulating material. as an in the range materials with resistivities having polycarbonate resin products use range 102 to 101 ohm-cm—-which includes The accused name Lexan®. the brand polycarbonate Daewoo’s material —as poly- also use a Lexan® products Daewoo slightly conducting ap electrical “used for resin, expert Daewoo’s testi- but carbonate Funai states that this shows plications.” Daewoo material is “filled” fied that the sufficiently that the Daewoo material is Funai, carbon fibers. containing 8% resin insulating to serve the functions set forth (N.D.Cal. JCS, at Nov. 04-01830 No. C that a patent, in the '210 reasonable 2007) (quoting declara- (unpublished) jury could have so found. The Daewoo expert). Daewoo’s tion of in- that the carbon fibers expert stated infringement, the issue of literal On electrical conduc- the thermal and crease summary judgment court stated on district conductive, material, it making tivity of the any produce that Funai “failed to evidence expert testi- insulating. The ordinary in the art that one of skill would polycar- chose the filled fied that Daewoo bearing consider Daewoo’s holders to be static, dissipate ability for its to bonate ‘poor with electrical con- made of material ” consistent property this is stating appears Id. at 34. This to be duction.’ and inconsistent being with a conductor inaccurate, the evidence adduced on Funai being an insulator. Id. 33. with cross-examination, and the National Sci- polycar- Lexan® argues that the Daewoo Report designating the ence Foundation resin, insulating an bonate is still 92% “slightly Lexan® as con- specific Daewoo despite is not lost property that this the characterization of ducting,” support 8% carbon filler. conduction” when viewed “poor electrical summary favorably party opposing cross-examination, expert Daewoo’s
On
Liberty
v.
Lob-
judgment. See Anderson
polycarbo
acknowledged that the Daewoo
Inc.,
242, 248-49,
106 S.Ct.
by,
U.S.
1 million and 100
nate resin is between
(1986)
(summary
chassis, Funai states that the pinch capstan roller and a district court cor- axis 'rectly conveying tape, estoppel for a motor which held no existed with re- driving spect mounted on said deck equivalency “insulating chassis when, here, judgment, by cross-appeal independent consequences. or The motion to cross-appellant states issue has strike is denied.
1369 3, claims, application, '210 Office Action of Jan. the for this element of material” “merely tan- original to or 2002. The examiner stated that was unrelated aspect Festo, In 535 prosecution. 4, the gential” to claim and other claims that had not been 741, 1831, 122 the Court at S.Ct.
U.S. rejected, applicant would be allowed. The stated: presented argument, simply no cancelled however, cases, claims, where 4 in rejected
There are some the and rewrote claim reasonably cannot be the amendment independent form. Claim 4 then issued as surrendering particular viewed patent. claim 1 of the underly- rationale equivalent.... “[T]he argues Daewoo that the cancellation of no more may the amendment bear ing 2 presumption 1 and raised the claims equiva- to the tangential than a relation scope entire between surrender the In those cases the question;.... lent in 2, 4 1 whether or not claim and claims and presumption can overcome patentee any in scope specif- that had been involved history estoppel bars a prosecution that rejection argument. ic or Daewoo cites equivalence.” finding of Honeywell, 370 F.3d at for its hold- any presumptive estop- that Funai states ing presumption that: “A of surrender ... points Funai also out pel was overcome. rewriting dependent if claims arises at all claim 5 was not amended that issued form, independent along into with cancel- any that and states during prosecution, claims, ing original independent consti- apply to estoppel does not presumptive narrowing tutes a amendment.” Funai ar- 5. claim 2 gues that the cancellation of claims and prosecu- The district court reviewed narrowing cannot be deemed amendment reject- wherein the examiner history, tion material, insulating nature of as to the obviousness, ed, original ground conductivity, for there was no re- and its and 6 based on U.S. Patent claims 1-3 jection concerning no the nature issue 6,147,833 in view of Pat- to Watanabe U.S. insulating of the material or its conductivi- 3,881,188 rejecting to Zenzefílis. In ent ty. Funai states that the examiner’s Wa- examiner stated: claims and rejection focused on tanabe/Zenzefilis the motor elec- does not show Watanabe any whether there was electrical insulation trically from the deck chassis. insulated all, description that the same ( taught by Zenzefílis This feature appears original claim 4. Fu- insulation 126; Figure mounting blocks] [rubber of claim 4 argues patentability nai 3). It have been obvious to one of would based on the other limitations clearly was in the art at the time the ordinary skill of claim 4. electrically insu- invention was made to apparent the nature of the It motor of on the deck late the Watanabe insulating material was not a factor taught by chassis as Zenzefílis. The aspect allowance of claim for this ordinary is as follows: One of rationale limi- during prosecution. not at issue This in the art at the time of the inven- skill category tation is in the the Court to elec- tion would have been motivated “merely tangential” prosecu- to the called driving motor of trically insulate tion, in Festo. Thus the dis- as discussed by Zenzefílis in or- taught Watanabe as cancella- correctly trict court held switching to reduce the noise that der claims 1 and did not surrender tion of of a video frequency contains elements to the equivalency respect with access that video and a sound band so band ap- The district court insulating material. noise is de- screen noise and audio equivalen- question tried the propriately creased. estoppel, erasing signals cy jury. Absent recorded an azimuth *13 that substantial evi- challenge track, does not or the azimuth track and a linear jury’s finding of in- supports dence track, of a magnetic tape, and a linear That fringement by equivalents. judg- erasing record head for erasing signals ment is affirmed. mag- recorded the linear track of the tape, comprising: netic
III connecting a series circuit in series THE PATENT through junction point a series at least erasing between said linear record head patent, May The '538 issued and one of said entire-width erasing “Biasing/Erasing 2000 for a Oscillation element; head and an inductance Magnetic Tape Recording Ap Circuit for paratus,” relates to the oscillation circuit capacitor an oscillating connected in magnetic erasing for heads a VCR. circuit; parallel with said series Magnetic have electrical heads coils that having a a transistor collector and a magnetic read the information on a video having base and an emitter connected to tape transmit an cassette electrical junction point; said series signal that erases the information stored a direct current blocking capacitor art, In tape. prior on the these eras connected between one end of said ser- ing signals generated by separate were a base; ies circuit and said transformer. patent The '538 describes a circuit that eliminates the a sepa need for a providing bias resistor a bias transformer, rate by using the electrical voltage to said base. coils generate themselves to signal An according 3. oscillator to claim By erases information on the tape. wherein said inductance element an transformer, eliminating the manu VCR inductor. facturing reliability costs are reduced and 4. An according oscillator to claim is improved. wherein said series circuit includes two claims, The district court construed the erasing heads of said entire-width eras- and the found that claims 1 and 3-5 ing head and said linear erasing record willfully Daewoo,
were infringed by either inductor, junc- head and said said series literally or under the equiva- doctrine of point junction point tion is a between lents. The finding infringement not erasing said two heads and said induc- appealed insofar as it is based on the tor, district claim court’s construction. How- 5. A biasing/erasing oscillator in a ever, challenges the correctness of magnetic tape recording apparatus hav- the claim construction. Daewoo also does ing erasing an entire width head for appeal jury’s verdict erasing signals recorded in an azimuth claims are not ground invalid on the track, or the azimuth track and a linear obviousness, but challenges the district track, magnetic tape, of a linear court’s comply that the claims with erasing erasing signals record head for requirement definiteness of 35 U.S.C. recorded in linear track § 112 2. mag- ¶ tape, comprising: netic The claims at issue for the '538 are as connecting follows: series circuit in series through junction point a series
1. A said en- biasing/erasing oscillator magnetic erasing tire-width head and tape recording apparatus hav- said linear ing head; erasing an entire width erasing head for record oscillating capacitor connected in affirm the district court’s claim an construc- circuit; tion, with said series parallel for it is in with specifi- accordance including cation the drawings, whereas having a transistor a collector and a an Daewoo’s having base and emitter connected to construction would exclude the See, junction point; Figure said series embodiment in 5. e.g., Hoechst Ltd., Corp. Celanese v. BP Chems. 78 F.3d blocking capacitor a direct current (Fed.Cir.1996) (a 1575, 1581 claim connected between one end of said ser- con- *14 base; ies circuit and said struction that a preferred excludes embod- correct). ever, rarely, iment is if biasing providing voltage means a bias to said base. On district court’s construction of claims, jury verdict of infringement Infringement A. challenged is not on appeal. jury’s finding Daewoo states that the infringement was due to the district Validity B. court’s erroneous claim construction. Re- argues 1, 3, Daewoo that claims in
ferring requirement claim 5 of “a and 4 are invalid failure to meet the circuit in connecting through series series claim requirements definiteness of 35 junction point a series said entire-width ¶ § 112 U.S.C. 2. The did not address erasing head linear and said record eras- question, this for the district court had head,” argues Daewoo that the district ing reserved it to be resolved aas matter of incorrectly court construed the “series cir- if infringement law were jury. found by “vitiating” phrase cuit” limitation The issue of claim definiteness receives “through junction point.” a series The review, plenary a question as of law. See question requires is whether the claim Computing AllVoice PLC v. Nuance junction point the series must lie between Commc’ns, Inc., (Fed. 504 F.3d 1240 heads, erasing or whether the claim is .2007). Cir met when the series circuit includes a ser- position Daewoo’s is that the claim junction point ies that is not between the junction point clause “a series least The court heads. district construed the between claims, erasing said linear record head stating that claim language “[t]he require junction erasing and one of said entire-width does not the series head heads, point be fatally must betiueen the two but and an inductance element” is in- all in only that three must be series.” “gram- definite. Daewoo on the focuses (Emphasis original). The court re- matically incongruous wording” specification, ferred to the and observed least,” “between,” of,” “at terms and “one Figure patent shows the says which Daewoo inconsistently are used junction point series located between the ordinary usage with their in the English heads, erasing Figure two 5 shows a language. particularly points Daewoo junction point series is not located uncertainty the words “at least” and the erasing between the two heads. modify. to what these words The district is, wording court observed that “the at the argues requires that the claim least, awkward,” very but deemed the junction that the series lies point between claim amenable to construction. The court erasing the two heads. The district court ordinary reasoned that “one of skill in the argument stated that Daewoo’s is an “at- interpret art would the use of ‘at least’ in tempt preferred to limit the claim to a ] embodiment, Otherwise, modifying claim 1 as ‘one of.’ though even this limitation is language meaning not found in the of claim 5.” ‘at at all.” We least’ would have no scrutiny lay legal survive the Funai, at *11. The ent must 2006 WL junction point” juries. Judge Hand under- judges the “series court construed burden, writing Dorsey v. limitation as: stood this (2d (1) Co., F.2d Pilot Electric circuit between on said series point Cir.1929), any other written erasing head and the that: “As record the linear (2) head, instrument, the linear erasing are [of claim] entire-width words and an inductance erasing head many meanings; record we must trans- capable of (3) erasing linear record or element underlying purpose of late them into the erasing the entire-width and both head their user.” For the terms whose definite- element. head and an inductance Daewoo, challenged by the district ness is implemented guidance, that the court this explained properly court Id. at *12. The supports placements these has often been reinforced. specification which consistent with junction point, implement court construed the terms to *15 of Exxon Chemical Pat- requirement the in meaning specifi- their as manifested the ents, Corp., Lubrizol 64 F.3d Inc. v. prosecution history, the cation and (Fed.Cir.1995), give must that “We 1557 in- correctly rejected charge Daewoo’s of in all the words claims.” meaning [the] to definiteness. This is affirmed. conclude that this construction We correct, comports specifi with the for it IV An prosecution record. cation and the indefinite, thereby
ungainly claim is not DAMAGES by a meaning can be understood when its $7,316,698in jury The awarded a total of in experienced in the field of the person damages. raises several issues vention, patent the docu on review of award, and respect damages with Power-One, Artesyn Inc. v. ments. See in- argues that Funai’s letter notice of (Fed.Cir. Techs., Inc., 1343, 1350 599 F.3d Fu- fringement inadequate was and that 2010) (“To § 112’s definite comport with incom- marking products nai’s of its requirement, the boundaries of the ness plete, damages that could not accrue such court, claim, as construed the must be infringement filing for before the of suit on discernible to a skilled artisan based on 7,May 2004. claim, language specification, the the prosecution history, and the as well as her A. Actual Notice art.”).
knowledge of relevant field of protocols writing of claim can lead to The gave Funai stated that it Daewoo actual for the claim is re phrasing, awkward infringement, by letter dated notice of sentence, single stricted to a no matter April Manager 2003 from the General invention; and claim con complex how Department Property Funai’s Intellectual Judge tradition. tent is burdened in of Daewoo Electron- Japan to CEO with the obser Learned Hand is credited in Korea. The let- Corporation ics South drafting patent docu vation ter included citation of six United States challenging of tasks. In ments is the most patents, as follows: patents part challenge arises because your products in- believe We knowledgeable in persons are written for or more claims of the afore- fringe one invention, every patent the field of the patents. our mentioned in a specific must describe its advance (Japan confirmed Your VCRs We technological yet or intellectual art — DV- and U.S.A. Model ultimately pat- Model DR-MC3 draftsman knows T8DN) Co., (Fed.Cir.1994). infringed ings that was at least our F.3d patents as follows: However, when specificity the threshold 5,815,218 met, ensuing discovery
USP of other models 5,987,209 products may and related bring those USP products scope within the of the notice. 6,021,018with certificate of cor- USP jury was instructed to rection the notice requirements, and to consider aspect this 6,064,538 USP calculation A damages. its reason- 6,421,210 USP proce- able could have followed this 37,332 Re. USP dure, for it has not been shown that the jury’s calculation of im- damages does not each please copy Enclosed find plement this instruction. patents. these with This letter was followed June 2003 B. Constructive Notice Funai, F.Supp.2d claim charts. See argued that it is entitled to dam- dispute 1114. Daewoo did not ages from the date of commencement of provided infringe- letter actual notice of infringement, Daewoo’s based on construc- product ment as to the two models men- letter, argued marking tioned but that the tive notice as to the pat- provide legally letter was insufficient ent. Funai *16 states that the '210 any actual notice as to other Daewoo VCR subject not to marking requirement, the models, limiting period thus of dam- stopped for Funai practicing that invention ages at least as to those models. prior to issuance of the patent. See Texas argued
Funai that this letter was ade- Inc., Digital Sys., Inc. v. Telegenix, 308 quate infringement actual notice of as to (Fed.Cir.2002) (“The 1193, 1220 F.3d re- products having all the same or substan- covery of damages is not limited where tially circuitry similar deck and as the mark, i.e., there is no to ... failure where pointed Model DV-T8DN. Funai out that mark.”). products there are no to interrogatory responses Daewoo’s and Satisfaction of the constructive notice stipulations during discovery showed that 287(a) § requirements question of is a of several Daewoo models contained the same Inc., fact, Baker, Maxwell v. J. 86 F.3d infringing components namely, the T- — (Fed.Cir.1996), 1111 and when tried deck, polycarbonate Mecha insulating ma- jury, a accordingly. to is reviewed The terial, biasing circuitry and eraser in—as follows, jury was instructed as with re- the DV-T8DN model. See J.A. 32713-36 spect to damages the date from which (interrogatory responses with table identi- should be calculated: fying products accused compo- their ¶¶ begin You should to calculate nents); 13, 33, damages (stip- J.A. 45273-82 regarding ulations for the '018 and '210 products). patents accused as of Octo- 25, 2002, ber or the date that Funai first notice, To serve actual letter gave notice to each defendant of its sufficiently specific support must be to an patent claim of infringement, whichever objective understanding recipient that the is later.... may infringer. be an v. Logitech, Gart give infringement Funai can notice of Inc., (Fed.Cir.2001). F.3d patents ways. of the '018 and '210 two charge The letter must communicate a of way give The first is to notice to the infringement specific spe patents public general. Funai can do this cific product group products. or Am Buckeye placing “patent” sted Industries Inc. v. Steel Cast- the word or the abbre- argued that Funai did not com- Daewoo the number of “PAT” with viation products mark all with the '018 substantially products pletely all the patent on licensees, that sold, products or and marked no with patent, it itself either This patented lapses invention. and that these eliminat- patent, included '538 from the date notice is effective Fu- type any of constructive notice. ed benefit substantially all of to mark began Funai responded products that 88-91% of its nai in- patented that use the products marked, their properly sold at retail were If Fu- number. patent vention with remaining products unmarked all substantially nai not mark did Original Funai’s through were sales in- patented that use the products their (“OEM”) Equipment Manufacturer cus- number, then patent vention with argued Funai tomers for resale. way. in this provide notice Funai did perfect, provided that marking need not be way provide Funai can no- A second that the interest- sufficiently complete it is is to communicate patents tice of its reasonably apprised of the public ed charge that the ac- specific patented product. status of the infringed the '018 and product cused until The evidence at trial was that This actual notice is effec- patents. '210 2003, approximately end of 88% of Funai’s given. time it is tive from the all products sales were sold as event, the date Funai first any In patent. were marked with infringement of the '018 gave notice of 12%, remaining through sold OEM cus- can no later than patents and '210 be tomers, num- did not bear Funai’s 7, 2004, May filing date of the law- Fu- approximately ber. In 91% of suit. products, nai’s were of Funai brand sales 39^10). (Jury Instruction Nos. J.A. 148-49 patent. all marked with the '018 and were marking for which no patent, For the '538 *17 statute, 287(a), § marking The 35 U.S.C. Funai, jury the was in- was asserted “Patentees, applies persons making, to that, begin ‘You should to calcu- structed sale, within the offering selling for or Unit- of damages patent late for the '538 any patented ed article for or under States April 3, (Jury 2003.” J.A. 148 Instruction importing any patented them or article 39). No. into the United States.” Daewoo stated object Daewoo did not to these requires marking that of all the statute argues that the instructions. Daewoo now by Funai products, Funai whether sold incorrect, and that the instructions are directly, customers. Fu- through or OEM permits lapse no in the marking statute nai that the sales the OEM stated review completeness marking. of the We customers were not sold “for or under [the challenges jury to instructions under the patentee],” non-marking and thus is rea- regional circuit in which the law of the sonably by the statute. Funai excused sits, court here the Ninth district Circuit. in un- states that all events the 9-12% Lilly Aradigm Corp., v. 376 F.3d Eli & Co. part items were a minor of the marked (Fed.Cir.2004). Ninth 1359 Under Fu- patented products. total sales of the law, object to to party’s Circuit “[f]ailure fully nai stresses that Daewoo was aware Image an waives review.” instruction Funai and was not “inno- products Co., Tech. v. Eastman Kodak 125 Servs. cently” prejudiced, citing purpose the (9th Cir.1997). Daewoo F.3d 1206 marking the statute. instructions, object jury thus did not cites American Medical of the error it Daewoo waiving appellate review Engineering Inc. v. Medical Systems, now raises.
1375 (Fed.Cir.1993), court, Corp., upon thorough for The district F.3d review of marking its statement “must be sub Daewoo, challenges raised found in stantially consistent and continuous or supported substantial evidence party to avail itself of the der for Funai, jury verdict. 593 F.Supp.2d at provisions constructive notice of the stat 1102-08. However, precedent ute.” also states that profits evidence of lost prem- patentee than the are in when others primarily ised on Funai’s loss to Daewoo of in public, volved sales to the a “rule of customer, long-time large business of a applied, reason” is “consistent with established, for which direct losses were of the constructive notice purpose provi presentation expert with the testimony encourage patentees sion—to to mark essentially and evidence that this was products provide them in order to notice to two-supplier market. Although Daewoo public of the existence of the arguments, raises various it pres- did not prevent infringement.” and to innocent contradictory ent respect evidence. With Maxwell, at 86 F.3d 1111-12. Funai sales, to other expert VCR Funai’s testi- states that substantial evidence at trial during fied that the time period ques- notice, supported jury findings actu tion Funai’s market share was about 30% constructive, damages al or reflected in and, applying this percentage, that Funai calculations. The court found that district $1,698,262 had profits. lost Daewoo supported jury’s substantial evidence argues that that, Funai failed to establish application ques of a rule of reason to the notice, infringement, but for the tion of constructive and the calcula would have sales, applying tions constructive notice to the made 30% of these VCR but intro- patent, as discussed the court’s contrary duced no market share evidence Funai, on post-trial order motions. testimony. or rebuttal (“The F.Supp.2d Court concludes argues, also as it did in the evidence constitutes substantial th[e] court, district patented Funai’s tech- evidence from which the could find nology was not the basis demand for marking products that Funai’s that in products, the Daewoo and therefore that corporated the '018 invention was ‘sub damages should not have been based on stantially consistent and continuous.’ The the entire lost sales value. The district jury’s Court further concludes that *18 supported court held that the evidence this finding contrary was not weight to the of Servs., measure. See Imonex Inc. v. W.H. evidence.”). affirm ruling. We this GmBH, Munzprufer Dietmar Trenner 408 (Fed.Cir.2005) (under 1374, F.3d Damages C. The Award rule, “entire market appa- value” where an $7,316,698 jury The awarded in features, ratus contains patent several DEC, $2,298,590 damages against of which may holder recover damages based on the jointly against was assessed DEAM. These apparatus entire where it can show that damages apply only period after pat- the basis for customer is the demand 2002, October the date at which the feature). ented The evidence at trial por- original defendants DECL and DECA trayed general industry demand for transferred their business to their succes smaller, faster, cheaper, and more reliable companies sor DEC and DEAM. See Part VCRs, presented and Funai that evidence V, post. The award was based on lost patented technology furthers these profits products, as to certain and a rea jury goals. The heard evidence that the royalty products sonable for those for profits which lost were not established. invention in the '018 shrank the “only weakly damages, one factor VCRs, reduced ment of the '538 invention size VCRs, enhancement, and the re- reliability supports” an and increased costs use of a invention enabled five factors do not favor enhance- maining and the '210 re- motor that reduced that court in high-performance argues ment. Funai erred tapes. for VCR cassette speeds wind that analysis its of three of the five factors these benefits enhancement, There was evidence the court found did not favor Fu- customer demand. the basis for were in and that the court abused its discretion there evidence that presented nai also damages declining to enhance the award. noninfringing alternative available were no disputed of the three The first Mining Mfg. & Minnesota products. See of the Read factors concerns duration Orthopaedics, & Johnson Co. v. Johnson knowing infringement. defendant’s (a (Fed.Cir.1992) Inc., 1559, 1577 976 F.2d infringe to argues that Daewoo continued may profits lost patent holder demonstrate after it received direct written notice of (1) patented demand for the by proving infringement. Funai states the dis (2) nonin- acceptable absence of product, trict court erred its statement “the (3) substitutes, capability its fringing focus of factor is whether or not the this (4) demand, the amount of exploit the infringer infringe has continued to after made). profit it would have judicial finding that a there has been damages cal- specific The details particular infringes device the asserted review, oth- presented are not for culation Funai, patent.” F.Supp.2d at 1116 principles we have er than as based on the (emphasis original). Funai contends that arguments presented All of the discussed. court should have considered district considered, they by Daewoo have been all of circumstances of delib Daewoo’s court, they not by the district but do were infringement, continuation of start erate sufficiency of the evidence undermine ing with when Daewoo received notice of sup- The award supporting the verdict. infringement April and that it evidence, and is af- ported substantial infringe litigation continued to while the firmed. including after the ongoing, district court’s Markman which was ad Infringement D. Willful responds verse to Daewoo. Daewoo found that Daewoo’s err, did, court did not or if it district However, the infringement was willful. the error was harmless because the dis request district court denied Funai’s trict court the other Read fac considered damages. enhancement of We review Although agree tors. we with Funai that on the standard of district court’s decision presented rigid the district court too Odetics, Inc. v. abuse discretion. Stor factor, aspect alone view this this (Fed. age Corp., Tech. 185 F.3d dispositive. The decision as to enhance *19 Cir.1999). damages the total ment is “informed Portec, Inc., Corp. In Read v. 970 F.2d Odetics, circumstances,” ity of the 185 (Fed.Cir.1992), 816 this court identified 1274, apparent F.3d at and it is that all of may nine factors that be relevant to deter the circumstances were before the district damages mination of whether enhanced court. an should be awarded. The district court disputed Read factor The second factors, alyzed each of the nine Read Funai, of the concerns the closeness case. a call.” called its decision “close that, recognized district court as to two of at 1117. The court found F.Supp.2d 593 Daewoo’s in- infringed patents, that three of the factors favor an enhance- the three
1377 Mfg. was found under the doctrine loser.” Modine fringement Group, Co. v. Allen infringe- Inc., rather than literal equivalents, 538, (Fed.Cir.1990) 917 F.2d may aspect weighed ment. This be as Son, (quoting S.C. Johnson & Inc. v. Car analysis. Gaming, of the See part WMS ter-Wallace, Inc., 198, (Fed. 781 F.2d Tech., 1339, Inc. v. Int’l Game 184 F.3d Cir.1986)). persuaded We are not that the (Fed.Cir.1999). 1354-55 The court also district court’s denial of request to prevailed, during observed Daewoo damages enhance the an abuse of pre-trial summary judg- motions for discretion. This decision is affirmed. ment, non-infringement toas three of patents initially Although the six noticed. V points out that infringe- Daewoo’s patents ment as to the three that were SUCCESSOR LIABILITY willful, fully litigated was found to be filed, this lawsuit was four When this verdict is unrelated to whether Daewoo entities were named as defen may infringed not have other pat- ante, dants. As mentioned DEC and its ents, aspect this does not of itself show predecessor DECL are South Korean abuse of discretion. companies, and DEAM and predecessor its disputed The third Read factor DECA are United companies. States On infringer’s par concerns the behavior aas 25, October DECL South Korea ty litigation. to the The district court transferred its VCR business to DEC remarked, decision, post-trial its “Agreement an for Sale and Purchase of Daewoo had committed during misconduct Assets,” as translated Daewoo. As litigation and that the court im had part DECA, of the same asset transfer However, posed sanctions. the court corporation California, transferred its found that “the conduct on which those DEAM, entire business to a corporation of sanctions were based is so severe as to Florida. justify an damages.” award of enhanced Funai, Approximately year one into in- this F.Supp.2d at 1115. Funai ar fringement litigation, gues that the district court DECL and confused the DECA defense, punitive purpose and, of enhancement of ceased all refusing discovery dam ages compensatory with the purpose of according parties, presenting no de- sanctions, litigation and that misconduct is argument fense or to liability for in- remedy. indeed basis for enhancement of fringement or Funai’s asserted basis for Again, although agree with Funai that we 7, of damages. measure On October litigation misconduct can render case 2005 the district court entered default 285, “exceptional” § under 35 it U.S.C. DECA, judgment against joint- DECL and dispositive, not of itself but is a factor to ly severally, infringing sales be- part entirety be considered as of the January tween 2001 and October circumstances. $8,066,112 including the amount of interest, fees, attorney and costs. DECL Overall, we will not disturb the pay judgment. and DECA did not In district court’s conclusion. “The trial response requesting to Funai’s motion judge position weigh the best con judgment applied be to the successor siderations such as the closeness of the *20 DEAM, companies DEC and the district case, counsel, the tactics of the conduct of court held that company neither successor parties, any may the and other that factors judgment against is liable for the pre- contribute to a fair allocation of the its bur decessor, litigation dens of ground between winner and on the that the law of DEAM, its subsidiary DECA to successor permit not successor does Korea South liability expressly reasoning as follows: is unless the liability Funai, No. C 04- by contract. case, assumed interest strong Korea has a In this 2008) (un- (N.D.Cal. July JCS applied because the having in its law order). (successor liability Fu- published) en- Agreement was a contract Transfer application of challenge nai does not cor- between two Korean tered Korea companies the Korean law to Korean of the assets where most porations, DEC, that Korean argues but and DECL in Korea. DECL transferred were also the successor liabili- apply law does not reasonably have ... and DEC would companies DECA States ty of United Agreement that the Transfer expected claim is that its DEAM. Funai states under governed by Korean law would be Korean claim under the not a contract Further, to the circumstances. these court’s contract, attributes the district that the transfer between DECA extent Funai stress- misperception. error to this outgrowth an DEAM was liability a of succes- (as that the issue is es Agreement Funai itself as- Transfer for the company sor to a United States serted) ap- expectation the same would court for of a United States judgment liability in ply to the issue of successor patents by of States infringement United that context. by a in the United States United activities (N.D.Cal. Funai, July No. C 04-01830 JCS in the doing business corporation States 22, 2008), out that the points at 14. Funai any position Funai’s is United States. and en interpretation not of question is liability governed by is such successor Korean contract between forcement of the and the applica- laws of the United States enforcement of companies, the Korean but state law.
ble
judgment against United
a United States
Korean
applied
The district court
of
companies,
the circumstances
States
law,
Korean law there
company
and held
under
successor
this case where the
DECA,
liability as between
infringing
is no successor
business of
simply continues
address,
corporation, and
defaulting
change
California
without
of
predecessor,
its
DEAM,
corpora-
the Florida
any
aspect
its successor
that has
personnel, or
other
decision.
appeals
tion. Funai
this
in United States
been considered relevant
argues
liability. Funai
laws of successor
Application
A.
of South Korean Law
DEAM is
question
of whether
judgment against
DECA is
liable for
foreign
law is re
The determination
applica
in accordance with the
of law. See Fed.
determined
question
viewed as
law,
(determination
not the law of South Korea.
ble state
foreign
44.1
law
R.Civ.P.
law).
question
on a
is treated as
court held that be
The district
Similarly,
question
the threshold
of wheth
transfer between the Korean
cause the
foreign
law that of a
applicable
er the
is
entered in
corporations
bywas
a “contract
question
of law.
country is determined as
law,
by Korean
governed
Korea” that
court,
“outgrowth” transfer between
Funai and Daewoo the
In the district
gov
also
corporations was
that the law of South United States
agreement
were in
The district court
erned
Korean law.
recognize
successor liabili-
Korea does
fact
weight on the
apparently placed some
ty
express agreement
of an
the absence
in
entity that owns the
the Funai
liability.
The district
assumption
company,
foreign
itself a
fringed patents
applied
court held that
law
Korean
for the court stated:
from the Daewoo United States
transfer
*21
Jersey
Applying
guidance
New
law on successor lia-
While
of the rules
bility protects
parties seeking
states,
third
to
of choice of law among competing
against
corpora-
successor
overriding
assert claims
United States has an
inter
tions,
Jersey’s
New
interest
in advanc-
est in the integrity
judgments
of its
ing
policy
is not involved under the
respect
courts with
to violations of United
First,
point[s]
doing
facts here.
as
States law entities
in
[Daewoo]
business
out,
in
plaintiff
this action is not United States.
takeWe
note of the district
Funai-USA,
explanation
but rather Funai Electric
court’s
Jersey
that New
does
Ltd.,
Company,
Japanese
an
company.
applying
have
interest in
its laws to
Thus,
Daewoo,
Jersey
New
has no
in
Jersey
interest
“as New
law is less advan
law
Funai.
applying
protect
tageous
its
to
Nor
to
than
Korean law.”
Jersey
interest,
does New
have an interest
in That concern reflects Daewoo’s
Daewoo,
having
applied
its law
to
as not the
Jersey
interest of New
in assuring
Jersey
advantageous
New
law is less
to that
in
Jersey
subject
businesses New
are
See,
Daewoo than Korean law.
Jersey.
laws of New
e.g.,
Guyot,
113, 163,
Hilton v.
159 U.S.
However,
Id. at 14-15.
it is fundamental
(1895)
(“No
S.Ct.
1380 argues any material dif- party Neither liability between of successor question the liability, of successor is a Florida ference in the laws DEAM and DECA. DEAM Florida, California, place of busi- and New Jer- principal among its corporation with is a Cali- Jersey, appropriate and DECA the law sey. in New Funai states that ness principal place its with corporation Jersey, fornia indeed the that of is New conformity In Jersey. in New of business conflict-of-laws conducted its district court the forum of law rules of the choice with Ko- the laws of South analysis as between California, Fi- see Paracor state, here Jersey. The selection of rea and New nance, Capital v. Electric Inc. General comports princi- with the Jersey New also Cir.1996) (9th 1151, 1164 Corp., 96 F.3d ruling in Hertz Supreme of the Court’s ple (“In the question action where a federal Friend, -, -U.S. 130 S.Ct. Corp. v. supplemental exercising federal court - — (2010), 1181, 1192, L.Ed.2d claims, the court over state jurisdiction diversity that for the Court held wherein the forum choice-of-lawrules of applies the jurisdiction “principal place the busi- state.”), analyze the in accor- we situation place corporation’s where a ness” is “the interest” “governmental the dance with control, direct, the officers and coordinate Washington Mut. test. See choice-of-law activities,” from which it fol- corporation’s Court, Bank, 24 Superior FA v. Cal.4th principal place the lows that the laws of 1071, 320, 906, Cal.Rptr.2d 15 P.3d 103 normally apply should to transac- business (“[W]hen (2001) no advance there is 1080 corporation’s “nerve flowing tions from law, ac- but the agreement applicable 1193, 1195. The center.” Id. at Court claims of residents from tion involves the “in it should nor- explained practice California, may ana- the trial court outside mally place corporation where the be var- interests of the lyze governmental headquarters provided its maintains — jurisdictions involved to select ious actual center of headquarters is the law.”). appropriate most coordination,” direction, control, three-step applies a
California corpora- simply “not an office where whereby the court first deter analysis, at meetings.” tion holds its board Id. there is a material differ mines whether Jersey that New disputed 1192. It is not in ence the laws of the states between criteria, these for both DECA and meets “if the laws of each state are question, for DEAM. Thus we reach the its successor identical, If problem.” no Id. there is liability under New question of successor different, materially then the laws are Jersey law. step proceed “must to the second court law, Jersey the trans Under New interest, any, what if each and determine ordinarily is not corporate feree of assets having applied its own law state has the debts of the transferor com liable for “Only if the trial court the case.” Id. exceptions. The pany, subject to several materially the laws are determines (1) where exceptions include instances has an inter different and that each state assumption express implied there an or thus having applied, its own law est (2) liabilities; the transaction conflict, court an actual must the reflecting an actual or de consolida amounts to step the final and select the law take facto (3) merger corporations, of the two tion or ‘more im state whose interests would be corporation is a mere con purchasing applied.” were not Id. paired’ if its law (4) seller, or the transac Club, tinuation of v. Harrah’s 16 (citing Bernhard purpose escap fraudulent tion is for the 546 P.2d Cal.Rptr. Cal.3d K.P. (1976)) v. ing the seller’s liabilities. (emphasis original). Lefever *23 Enters., Inc., 307, nary Hovnanian 160 N.J. 734 business and dissolution of the prede (1999). 290, practically legally cessor as soon as and A.2d 292 consideration (iii) possible; assumption by the may the successor also be consid- successor paid ordinarily of the necessary liabilities Mettinger Slicing ered. See v. Globe the uninterrupted continuation of the Co., 371, 779, busi 709 Mach. 153 N.J. A.2d 783 (iv) of predecessor; ness the and (1998) (“A continui fifth exception, sometimes incor- ty ownership/shareholders.” Woodrick in porated preceding exceptions, one of the Estate, Inc., v. Jack J. Burke Real 306 of adequate arises from the absence con- (1997). 61, 306, N.J.Super. 703 A.2d 312 transfer.”). sideration for the sale or Not all of present these factors need be in argues that the second and third order for the successor to assume the lia exceptions of these well fit the succession predecessor. bilities of the Id. New Jer from to DEAM. Funai DECA states sey applies straightforward inquiry: the transaction DECA-DEAM amounted [T]he most relevant factor is degree the merger, to a de the successor facto to which predecessor’s the business enti- predeces- was a mere continuation of the ty intact. remains The more a corpora- sor, any and that consideration paid physically tion predeces- resembles its DEAM to DECA was unrelated to these sor, ... the more reasonable it is to hold exceptions. Applying Jersey two New law fully the successor responsible. In this Chilling in Berg Systems, Inc. v. Hull innocent, way, injured the consumer is (3d 455, Cir.2006), Corp., 435 F.3d 468 protected without possibility of be- explained Third Circuit that: “The defacto ing remedy left without a due to the merger exception is similar to the continu- subsequent corporate history of the ation exception, save the latter focus- manufacturer. purchaser es situations which the v. Corp., Wilson Fare Well 140 N.J.Super. merely reorganized a restructured or form 458, (1976); 356 A.2d 466 see Luxliner of the seller.... follow the trend of [W]e RDI/Luxliner, Inc., P.L. Export, Co. v. 13 the courts here and treat exceptions (3d Cir.1993) (“In F.3d determining identically.” See also Fin. Ser- Portfolio exceptions whether either of these de [the Sharemax.com, Inc., vicing v. Co. merger facto excep- or mere continuation (D.N.J.2004) (“Courts F.Supp.2d applies, the tions] factfinder must consider analyzed applied have and liabili- successor part purchase whether stock was ty by treating the ‘de consolidation’ facto assets; price for the whether there was a and ‘mere exceptions togeth- continuation’ business, continuity of manage- control or er.”). ment corporations; between the two and disputed It is not that DECA’s alleged corporation whether the successor sales activities the United States contin assumed the predecessor debts cor- poration.”). ued as DEAM without interruption, corporate headquarters same and sales fa stipulated It was that DEAM continued Jersey, substantially cilities New with DECA, operations business includ- managers employees. same and other ing products sales of the VCR here ac- argues Thus Funai that DEAM ais mere infringement. cused of DEAM continued DECA, continuation of like a de address, Jersey at the same New with the facto merger. Jersey precedent New identifies facilities, software, equipment, same ac- four pertinent inquiry: factors as to this counting systems, and office furniture that “(i) continuity management, personnel, corporate DECA had used. DECA’s location, assets, physical general busi headquarters management and em- (ii) operations; ployees ness cessation of ordi- became DEAM’s. DECA ceased and this court here- fully developed not name, collecting outstand in its operations appli- directly addressed building to tofore has accounts, its office selling ing notice to OEM cability of constructive corpo as a DEAM, dissolving DECA ful- sales, evidence and because substantial Recognizing ration, end of 2004. all jury’s verdict even assum- ly supports there is whether inquiry crucial that “[t]he *24 apply, notice does not ing that constructive of the contract part on the an ‘intent was of the affirm on the basis simply con I would merger a or effectuate parties to ing ” assets,’ not decide the evidence and a of substantial than sale rather solidation question. McKee v. constructive notice Luxliner, (quoting at 73 F.3d 13 555, Co., N.J.Super. 109 Harris-Seybold conditions un- lays 287 out the Section (1970)), 98, agree we with 104 264 A.2d notice attaches and der which constructive controlling whether not Funai that it is “persons and specifies “patentees” DEAM and passed between consideration any patented ... article for or making with the transfer. in connection DECA may “pub- notice to the give under them” Wilson, by marking patented the article. The A.2d at lic” 356 In the words of pat- to the unambiguously relates DECA and DEAM statute transfer between the products by and its terms extends hat” for DECA. It is entee’s simply a “new was licensees, “making ... by who are in full accord with to sales appropriate, and thus paten- ... under law, patented articlefs] [the DEAM should be Jersey New majority opinion As the makes judgment entered tee].” liable for the default clear, avail itself of the patentee re- for a to litigation. in this We against DECA § provisions notice of the contrary ruling. constructive the district court’s verse marking of its “must be substan- products Conclusion tially consistent and continuous.” See Corp., Sys., Eng’g Inc. v. Med. Am. Med. infringement of the judgment (Fed.Cir.1993). F.3d Our the patent, the '210 and '538 patent, '018 recognizes that because precedent also infringe- such damages and the for patent, directly involved the patentee is ment, reverse the district is affirmed. We manufacturing packaging and activities of no lia- determination of successor court’s licensees, to applies a “rule of reason” its appropriate pro- for bility, and remand circum- marking requirement the those ceedings as to this issue. Baker, Inc., v. stances. See Maxwell J. AFFIRMED-IN-PART, REVERSED- (“When (Fed.Cir.1996) 1098, 1111-12 F.3d IN-PART, REMANDED and failure to mark is caused someone the may patentee, other than the the court LINN, Judge, concurring. Circuit made rea- patentee consider whether the join of the pleased opinion I am compliance with sonable efforts to ensure IV.B, exception court with the of Section But how marking requirements.”). join, I for a differ- the result of which but § marking requirement applies of 287 section, majority In that ent reason. patentee products to sales of made post-trial ruling affirms the district court’s distinguished for an OEM customer as supported jury’s application made a licensee products from sales of 35 U.S.C. provisions constructive notice entirely clear. Our patent is not under § related to Funai’s 287. This yet directly has not addressed court Equipment Manufacturer Original question. (“OEM”) by the sales of articles covered trial that Here, Funai did not contest pat- marked with the patent '018 but not were sold at products of its before us while 88-91% ent number. Because the record marked, relatively properly remaining retail and was small. Funai Trial Ex. Moreover, # products presented 9-12% of its were sold to Funai’s 34. evi dence that the profits portion OEM customers for resale and were not entire lost damage request pat- marked with the number of the '018 was due to the sale of articles that justified by pointing infringed ent. Funai this the '210 witness, Mizoo, itself testimony significantly greater of its Mr. than the jury’s Thus, damages award. packag- the OEM customers controlled we can as sume that the ing damages and wanted to differentiate their awarded slightly higher priced products patent only periods from those for those time Funai. which Funai carried its Because the statute makes no burden of show ing that Daewoo actual explicit distinction between direct sales had notice. See i4i Ltd. purchasers, P’ship Corp., sales to v. OEM because 598 F.3d *25 Microsoft (Fed.Cir.2010) (“We directly this court has not extended the will not set sales, general simply aside a verdict rule of reason to OEM the relevance because the jury testimony might have on a Beyond ground of that is uncertain. decided supported by was testimony, neither the nature of Fu- insufficient evidence. uphold will agreements nai’s OEM with its customers We such a verdict if there was relating any markings support any nor the facts sufficient evidence to or plaintiffs theories; markings lack of on alternative factual repackaged OEM we assume jury considered all products is set forth this record. the evi upon dence and relied a factual theory for position I take no on whether the dis- satisfied.”) which the proof burden of was right wrong support- trict court was or (internal quotation marks and citations ing jury’s application of constructive omitted). notice In my under these circumstances. reasons, For these I would not moment, decide opinion, thedssue is of no because question of constructive notice and any might error have been made simply would affirm on the substantial evi- would have been harmless. The evidence dence that fully supports jury’s verdict presented jury damages sales, apart from the leaving OEM broken down at in part period least question constructive notice itas relates to by patent. This data could have enabled day OEM sales for another aon record damages to assess Funai’s theo- comprehensively presents more by period ries and calculate the award question requires an answer. patent. For the '018 during the notice) applicable period (prior to actual royalty
the amount of reasonable damages
sought part prof- of Funai’s mixed lost royalty theory on damages
its/reasonable