Power Integrations, Inc. v. Semiconductor Components Industries, LLC (“Fairchild”)

Docket Nos. 2018-1607 (IPR2016-00809)
PROST, REYNA, STOLL
June 13, 2019

Brief summary: IPR was time barred under §315(b) “because Fairchild was an RPI at the time the IPR was instituted, even though it was not an RPI at the time the petition was filed” (merger closed post-filing), and therefore vacated and remanded the Board’s FWD.

Summary: PI appealed Board IPR decision that SCI’s petition for IPR was not time-barred under 315(b) and finding the challenged claims of PI’s US 6,212,079 relating to “switched mode power supplies” invalid. The FC panel opinion explains that in May 2009 the PTO confirmed the validity of ‘079 claims in two ex parte reexaminations brought by Fairchild. In November 2009, PI sued Fairchild for infringement of three patents including the ‘079 patent, and in 2015 the jury awarded about $140 million in damages under the entire market value rule (VirnetX, FC 2014). In 2018, the FC concluded the entire market value could not be used in this case and vacated and remanded the DC’s damages award (Power Int., FC 2018, cert. denied 2019) (also noting there has been no further action in the DC proceeding). On November 18, 2015 ON entered into an agreement to merge with Fairchild, and on March 26, 2016 ON filed a petition challenging certain claims of the ‘079 patent, and the Board instituted review on September 23, 2016. PI argued the IPR “should be time-barred under § 315(b) because ON and Fairchild were in privity at the time” it was filed (e.g., had a confidentiality agreement stating that they had a “share[d] a common legal and commercial interest” and “are or may become joint defendants in proceedings”), and “Fairchild had been served with a complaint for infringement more than one year before the petition was filed.” The FC panel opinion also explains that “ON disclosed the merger agreement in its IPR petition but noted that the merger was not closed at the time it filed the petition and that [it] was dependent on several uncertain conditions occurring.” The Board concluded “that there was insufficient evidence of record to establish control and therefore…privity”, and the IPR was not therefore time barred. After institution, PI’s request for additional discovery was denied (applying the Garmin factors, IPR2012-00001). PI again argued privity in its Patent Owner Response and the Board again decided there was insufficient evidence “to show Fairchild exercised, or could have exercised, control over the IPR petition.” PI also unsuccessfully argued “that ON was acting as Fairchild’s proxy” and that “Fairchild, a barred party, was an admitted real party in interest (‘RPI’) before institution.” ON argued for issue preclusion because in a different IPR regarding a different patent PI did not appeal the same § 315(b) determination and the FC panel agreed but concluded that PI “established that the lack-of-incentive-to-litigate exception applies here” (“considerably greater incentive…here”; Kroeger, FC 1998 (no collateral estoppel where minimal stakes in first proceeding)). The FC panel also agreed with PI “that the best reading of §315(b) requires consideration of privity and RPI relationships arising after filing but before institution” (Kloster, FC 1986 (finding privity “where, after a suit begins, a nonparty acquires assets of a defendant-in-suit”) (without addressing the impact of a change…occurring after institution” (FN8)). The FC panel also explained that “the ‘is filed’ language” (of §315(b)) “merely marks the end of the one-year window that the petitioner has to file a petition for IPR” (Click-to-Call, FC 2018), “the petitioner is…under a continuing obligation to update the Board within 21 days of any change to the RPI” (§ 42.8(a)(3), (b)(1)), and “there is no agency interpretation deserving of…deference” (Chevron, US 1984). The FC panel therefore held that the IPR was time barred because Fairchild was an RPI at the time the IPR was instituted, even though it was not an RPI at the time the petition was filed”, and therefore vacated and remanded the Board’s FWD.

Patrick Halloran

Pat has a Ph.D. in Microbiology and Immunology from The University of Health Sciences / The Chicago Medical School (now the Rosalind Franklin Institute (North Chicago, IL) (1994)). He also completed post-doctoral studies at The National Cancer Institute (1994-1996) where he developed novel…

Pat has a Ph.D. in Microbiology and Immunology from The University of Health Sciences / The Chicago Medical School (now the Rosalind Franklin Institute (North Chicago, IL) (1994)). He also completed post-doctoral studies at The National Cancer Institute (1994-1996) where he developed novel approaches for gene therapy of melanoma. Pat has been an attorney (IL) since 1999 after graduating from Chicago-Kent College of Law, which was recently ranked as one of the top five law schools for Intellectual Property in the U.S. (U.S. News and World Report link). Pat also has a B.A. in Biology from Augustana College (Rock Island, IL; 1989) where he was on two NCAA Division III National Championship football teams (1985, 1986). He currently resides in Center Valley, PA.