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Presidio Components, Inc. v. American Technical Ceramics Corp.

United States Court of Appeals, Federal Circuit

November 21, 2017

PRESIDIO COMPONENTS, INC., Plaintiff-Cross-Appellant
v.
AMERICAN TECHNICAL CERAMICS CORP., Defendant-Appellant

         Appeals from the United States District Court for the Southern District of California in No. 3:14-cv-02061-H-BGS, Judge Marilyn L. Huff.

          Brett A. Schatz, Wood, Herron & Evans, LLP, Cincinnati, OH, argued for plaintiff-cross-appellant. Also represented by Gregory F. Ahrens.

          Ronald E. Cahill, Nutter McClennen & Fish LLP, Boston, MA, argued for defendant-appellant. Also represented by Heather Burnadette Repicky; Peter F. Snell, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, NY.

          Before Dyk, Moore, and Taranto, Circuit Judges.

          DYK, CIRCUIT JUDGE.

         Presidio filed suit against American Technical Ceramics Corp. ("ATC") for patent infringement in the District Court for the Southern District of California. After separate jury and bench trials, the district court held the asserted claims were infringed and not invalid, and granted a permanent injunction. The district court limited damages due to intervening rights.

         We affirm the district court's holdings that the claims are not indefinite and that ATC is entitled to absolute intervening rights because a substantive amendment was made during reexamination. We conclude that the evidence does not support an award of lost profits and, therefore, reverse the award of lost profits and remand for determination of a reasonable royalty. We conclude that the district court did not abuse its discretion in declining to award enhanced damages. We vacate the permanent injunction, and remand for further proceedings with respect to the injunction.

         Background

         Presidio's suit against ATC, filed on September 2, 2014, alleged infringement of U.S. Patent No. 6, 816, 356 ("the '356 patent"). The '356 patent claims a multilayer capacitor design and teaches a multilayer integrated network of capacitors electrically connected in series and in parallel.

         A capacitor is a passive electrical component that stores and releases energy. Generally, a capacitor comprises two parallel metal plates separated by a non-conductive material, known as a dielectric. When a capacitor is connected to a power source, electricity passes through the metal plates, but not through the dielectric material. This causes a positive charge to accumulate on one plate and a negative charge to accumulate on the other plate. The capacitor will then release the stored energy when the two plates are connected to a conductive path that closes the circuit. The amount of energy that a capacitor can store is called its "capacitance."

         Multiple capacitors can be combined to form a multilayer capacitor. The claimed multilayer capacitor creates capacitance in the dielectric material between the parallel plate combinations. Moreover, when the electrodes of a multilayer capacitor are positioned in an edge-to-edge relationship, they form "fringe-effect" capacitance between the external contacts. "Fringe-effect" capacitance is the energy stored in between external contacts of the multilayer capacitor.

         While the district court infringement suit was pending, in 2015, ATC sought an ex parte reexamination of the claims of the '356 patent in light of new prior art. The examiner rejected the claims as anticipated and obvious. Presidio amended the claims. The Patent and Trademark Office issued a reexamination certificate for the '356 patent.[1] Amended claim 1 of the '356 patent, the only independent claim asserted by Presidio in this action, is as follows, with the language added during reexamination underscored:

         1. A capacitor comprising:

a substantially monolithic dielectric body;
a conductive first plate disposed within the dielectric body;
a conductive second plate disposed within the dielectric body and forming a capacitor with the first plate;
a conductive first contact disposed externally on the dielectric body and electrically connected to the first plate; and
a conductive second contact disposed externally on the dielectric body and electrically connected to the second plate, and the second contact being located sufficiently close to the first contact in an edge to edge relationship in such proximity as to form a first fringe-effect capacitance with the first contact that is capable of being determined by measurement in terms of a standard unit.

U.S. Patent No. 6, 816, 356 C2, col. 1, ll. 23-36 (Reex-amination Certificate filed Dec. 8, 2015).

         On December 22, 2015, Presidio amended its district court complaint, alleging infringement of the '356 patent claims 1, 3, 5, 16, 18, and 19 as amended by the reexamination certificate. Presidio alleged that ATC's 550 line of capacitors infringed the asserted claims.

         ATC defended, as is relevant for present purposes, that the claims were indefinite; that the reexamination amendment entitled it to intervening rights, limiting damages; and that Presidio was not entitled to lost profits or enhanced damages. The district court granted ATC's motion for summary judgment on the affirmative defense of absolute intervening rights. The district court then held a jury trial. The jury returned a verdict finding direct infringement and induced infringement of claims 1, 3, 5, 16, 18, and 19 of the '356 patent by all of the accused products-ATC's 550 line of capacitors. In addition, the jury found that Presidio had proven by clear and convincing evidence that ATC's infringement of the asserted claims was willful. The jury awarded Presidio $2, 166, 654 in lost profit damages. It did not reach Presidio's claim for a reasonable royalty. The jury also issued an advisory verdict as to indefiniteness, finding that ATC failed to prove by clear and convincing evidence that claim 1 of the '356 patent is indefinite.[2]

         The district court thereafter rejected ATC's contention that the asserted claims of the '356 patent are invalid due to indefiniteness and denied ATC's motion that Presidio had failed as a matter of law to prove lost profits. The district court also denied Presidio's motion for enhanced damages, determining that enhanced damages were not warranted despite a jury finding of willful infringement. The district court then entered a permanent injunction against ATC.

         ATC appealed, challenging the district court's determination that the claims were not indefinite, the award of lost profits, and the award of a permanent injunction. Presidio cross-appealed, challenging the district court's determination as to absolute intervening rights and the denial of enhanced damages. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

         On October 21, 2016, we granted a partial stay of the injunction until March 17, 2017 with respect to ATC's customers that purchased infringing capacitors before June 17, 2016.

          ...


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