Friday, December 11, 2020

Federal Circuit Affirms Injunction, Denial of Fees

On Monday, the Federal Circuit issued a precedential decision in SiOnyx LLC v. Hamamatsu Photonics K.K., opinion by Judge Lourie, joined by Judges Reyna and Wallach.  This is a factually complex case, but basically the plaintiffs sued the defendants for breach of an NDA, patent infringement, and for correction of inventorship, all relating to a technology that involves irradiating silicon with short-burst laser pulses to create "black silicon" (which has different properties from ordinary silicon).  The jury returned a verdict for the plaintiffs.  On appeal, the Federal Circuit affirms, with one modification:  contrary to the district court’s view that it lacked the authority to assign the corresponding Japanese patents, as well as the U.S. patents, to SiOnyx, the Federal Circuit concludes that all of them should be assigned to SiOnyx. Among the issues on appeal, besides this last one, are whether the contract and unjust enrichment claims were time-barred, the propriety of the award of prejudgment interest on the damages and profits awarded on these claims, and (relevant to our purposes here) the district court's award of injunctive relief for patent infringement and its denial of a request for attorneys' fees under Patent Act § 285.


On the issue of injunctive relief, the court affirms, rejecting the defendants’ argument that SiOnyx was not likely to suffer irreparable harm and could be adequately compensated by money damages:


Hamamatsu argues that the district court erred in granting SiOnyx’s motion for a permanent injunction prohibiting Hamamatsu from “making, using, offering for sale, selling, or importing” the products held to infringe the ’467 patent. . . . Hamamatsu argues primarily that SiOnyx failed to demonstrate irreparable harm and an inadequate remedy at law. Specifically, Hamamatsu argues that SiOnyx cannot show irreparable harm because SiOnyx’s products do not compete with the accused products. And because the parties do not directly compete, according to Hamamatsu, money damages could provide adequate compensation for Hamamatsu’s continued sales of the accused products. Hamamatsu has not argued the balance of harms and public interest factors, so we need not address them.

SiOnyx responds that its products do in fact compete with the accused products. SiOnyx argues that it will suffer irreparable harm from Hamamatsu’s continued sales of the accused products because SiOnyx would be the only supplier of products practicing the technology disclosed in the ’467 patent but for Hamamatsu’s misuse of SiOnyx’s confidential information. Absent Hamamatsu’s reliance on SiOnyx’s confidential information, SiOnyx argues, Hamamatsu never could have entered the market, or at a minimum its entry would have been delayed, and therefore the court did not abuse its discretion in determining that damages at law would be impossible to quantify and inadequate.

We agree with SiOnyx. . . . In granting the injunction, the district court found that SiOnyx’s laser-processed CMOS sensors are competitive products with Hamamatsu’s accused CCD sensors. . . . The court relied on the trial testimony of SiOnyx’s expert, Dr. Ezekiel Kruglick, that CMOS sensors or CCD sensors could be used for some applications. J.A. 1438. Hamamatsu counters with the testimony of SiOnyx’s CEO, Steve Saylor, that Hamamatsu’s products “would not really get in the way of SiOnyx’s core business dramatically.” J.A. 876. But the existence of contrary testimony alone does not make the district court’s finding clearly erroneous. . . .


Further, we conclude that the district court did not abuse its discretion in finding that money damages would be inadequate to compensate SiOnyx. The jury found that Hamamatsu breached its NDA with SiOnyx by using SiOnyx’s confidential information and that the accused products infringe the ’467 patent. Hamamatsu does not appeal those findings, and it is therefore evident that Hamamatsu’s development of the accused products and entry into the relevant markets were aided and accelerated by its improper use of SiOnyx’s confidential information. Because SiOnyx would have otherwise had those markets to itself, at least for some period of time, we agree with SiOnyx that it was not an abuse of discretion for the court to determine that it was difficult to quantify the harm to SiOnyx due to Hamamatsu’s premature entry in those markets.


The defendants also appealed the jury's finding of willfulness. Because the jury awarded $0 for patent infringement, however, and in the district court’s view it was "reasonable to interpret the jury’s verdict as a rational attempt to award damages for both breach of contract and patent infringement while avoiding an award of duplicative damages,” the Federal Circuit declined to review the willfulness determination, on the ground that this would amount to an advisory opinion.  


The court also affirms the denial of attorneys' fees, observing among other matters that "despite the jury’s finding of willful infringement, the district court concluded that Hamamatsu’s noninfringement and invalidity defenses were not so weak as to be exceptional, in particular noting that SiOnyx failed even to move for summary judgment on those issues." 


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In other news, on Wednesday the Federal Circuit published a nonprecedential decision in WPEM, LLC v. SOTI Inc.  The decision affirms an award of attorneys' fees against a plaintiff that had voluntarily dismissed claims against a defendant that marketed a product, the accused features of which pre-dated the patent in suit. According to the court, "because the Accused Technology is prior art to the ’762 patent, 'if WPEM prevailed on its assertion that the Accused Technology is covered by the Asserted Patent, it would have had the effect of invalidating, rather than infringing, the Asserted Patent.' . . . Because it is undisputed that the Accused Technology is prior art to the ’762 patent . . . WPEM could not bring a successful infringement suit."  Moreover, "a reasonable plaintiff conducting a minimally diligent infringement analysis would have become aware of [prior art] version 10 after reviewing the version 11 manual. . . . As the [district] court found, such knowledge would have tipped off a reasonable plaintiff to evaluate whether the product accused of infringement predates, and therefore potentially anticipates, the asserted patent claims."

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