[00:00:00] Speaker 03: Before we begin with the cases this morning, I have the pleasure of asking Judge Chen to make a motion for admission of his law clerk, Luke Burton. [00:00:15] Speaker 02: Yes. [00:00:16] Speaker 02: Thank you, Judge Dyke. [00:00:19] Speaker 02: This morning I would like to move the admission of Luke Burton, who is a member of the bar and is in good standing with the highest court of California. [00:00:27] Speaker 02: I have knowledge of his credentials. [00:00:28] Speaker 02: and I'm satisfied that he possesses the necessary qualifications. [00:00:33] Speaker 02: I know these things because Mr. Burton has been my clerk for the past year. [00:00:36] Speaker 02: Like all of my clerks, Mr. Burton has done excellent work. [00:00:42] Speaker 02: He's proven himself to be a very good lawyer. [00:00:45] Speaker 02: He is creative. [00:00:48] Speaker 02: He thinks through the issues well and helps me think through the issues, writes well, has been [00:00:56] Speaker 02: a hard worker and willing to help his colleagues in the chambers. [00:01:02] Speaker 02: He's also someone that marches to his own drum. [00:01:05] Speaker 02: First thing he did when he got out here was get a bright red Vespa, something Judge Clevinger knows well. [00:01:13] Speaker 02: And I wish him well on his return to California. [00:01:18] Speaker 02: So for all these reasons, I respectfully request that my motion to admit my clerk be granted [00:01:28] Speaker 04: I'm delighted to vote in favor of the motion. [00:01:31] Speaker 03: All right. [00:01:32] Speaker 03: Your motion is granted, Judge Schenkel. [00:01:34] Speaker 03: We welcome Mr. Burton to the bar of the court. [00:01:39] Speaker 03: So you should take the oath. [00:01:40] Speaker 03: That's a necessary part of this. [00:01:44] Speaker 06: Thank you, Judge. [00:01:47] Speaker 06: You sound like you're firmly looking for yourself as an attorney and counsel of this court, a right hand according to law, and that you support the Constitution of the United States of America. [00:01:57] Speaker ?: I do. [00:01:57] Speaker ?: Congratulations. [00:02:04] Speaker 03: We have four argued cases this morning. [00:02:07] Speaker 03: The first one is number 16, 2691, Power Integrations Inc. [00:02:12] Speaker 03: versus Fairchild Semiconductor, Ms. [00:02:14] Speaker 03: Sullivan. [00:02:15] Speaker 05: Good morning, Your Honors, and may it please the Court, Kathleen Sullivan for the Fairchild Appellants. [00:02:24] Speaker 05: This appeal involves a $147 million judgment for infringement of two patents related to power supplies [00:02:32] Speaker 05: an amount reflecting a royalty rate that is twice the selling price of the units, and that Power Integration's own damages expert admitted would have bankrupted the defendant at the time of infringement. [00:02:44] Speaker 05: I'd like to focus on why you don't need to reach the damages, because the evidence is legally insufficient to support infringement on either patent. [00:02:52] Speaker 05: But I want to at least remind the court or advise the court that all [00:02:58] Speaker 05: the asserted claims of both patents have been canceled in a final action by the PTAB. [00:03:04] Speaker 05: And those have been docketed as appeals to this court. [00:03:07] Speaker 02: Can you tell us the timing of that appeal? [00:03:10] Speaker 02: What stage is it at? [00:03:11] Speaker 02: Yes, Your Honor. [00:03:12] Speaker 02: When will the briefing be completed? [00:03:13] Speaker 05: It is docketed. [00:03:14] Speaker 05: It's awaiting the certified list coming over from the board. [00:03:19] Speaker 05: And the briefing has not yet begun. [00:03:21] Speaker 05: So they're there. [00:03:23] Speaker 02: Weren't the board decisions issued over half a year ago at this point? [00:03:27] Speaker 05: Yes, Your Honor. [00:03:29] Speaker 05: Well, in September. [00:03:31] Speaker 05: So the final action. [00:03:33] Speaker 05: So Your Honor, that will be before you. [00:03:36] Speaker 05: And there may be motion practice on the timing. [00:03:38] Speaker 05: But I know it doesn't affect the outcome on this appeal. [00:03:40] Speaker 05: So can I go back and cover the infringement issues? [00:03:43] Speaker 05: I'd like to begin with the 079 patent, Your Honors. [00:03:46] Speaker 05: And this is a patent where the asserted claims require a fixed switching frequency for a first range of feedback signal values. [00:03:54] Speaker 05: The district court construed the meaning of fixed switching frequency to be a non-varying number of switching cycles per second. [00:04:03] Speaker 05: And crucially, Your Honors, power integration has not questioned that construction on appeal. [00:04:11] Speaker 05: They have not sought to overturn the construction of fixed as meaning non-varying. [00:04:18] Speaker 05: So it's a simple road to a finding [00:04:22] Speaker 05: of insufficient evidence of infringement, because it's undisputed in the record that all of the accused products have a varying number of switching stocks. [00:04:31] Speaker 03: Do we have a claim construction issue in that respect before us? [00:04:35] Speaker 05: You do not, Your Honor. [00:04:36] Speaker 05: So we argued at claim construction. [00:04:39] Speaker 03: So it's entirely, under Hewlett-Packard, then it's entirely a question of whether the claim construction that was given [00:04:46] Speaker 03: could reasonably be interpreted by the jury to reach these products. [00:04:50] Speaker 05: Exactly, Your Honor. [00:04:51] Speaker 05: And it cannot, because it's undisputed that the accused products have a varying number of switching cycles, even on a per-second time scale. [00:05:01] Speaker 05: So there's a separate issue about the per-second construction. [00:05:04] Speaker 05: You don't need to reach it if you agree with us on this, because we asked the court to construe 50. [00:05:10] Speaker 03: This is the 5% to 15%? [00:05:12] Speaker 05: That's right, Your Honor. [00:05:13] Speaker 05: Temperature variation gives you 5% to 15%. [00:05:15] Speaker 03: But the problem is you seem to admit, or Council for Fairchild seemed to admit, that the claim construction should allow for some variability due to environmental factors. [00:05:30] Speaker 05: We did not, Your Honor. [00:05:31] Speaker 05: We argued that fixed means no variation whatsoever at Markman. [00:05:37] Speaker 05: And we maintain that argument now. [00:05:38] Speaker 05: So we have maintained it. [00:05:39] Speaker 03: Well, how is that possible to have a product that [00:05:42] Speaker 03: isn't responsive to environmental factors. [00:05:45] Speaker 05: Your honor, it may be a problem, but it's not a problem for Fairchild. [00:05:48] Speaker 05: It's a problem for power integrations. [00:05:50] Speaker 05: It may mean that they sought and obtained a claim that is inoperable. [00:05:58] Speaker 04: Why isn't inoperability your problem? [00:06:00] Speaker 05: It's not our problem, your honor, because they have not challenged the claim construction of fixed meaning non-marrying on appeal. [00:06:07] Speaker 05: So for present purposes, [00:06:08] Speaker 05: the claim construction, if it renders it inoperable, they maybe. [00:06:12] Speaker 04: Well, they're relying on Dr. Kelly's interpretation of those words. [00:06:18] Speaker 05: Your Honor, Dr. Kelly can't give extrinsic evidence now to overcome the claim construction. [00:06:24] Speaker 05: The claim construction was fixed means non-varying. [00:06:30] Speaker 05: No amount of extrinsic evidence now can change that claim construction, where power integrations has failed to challenge it on appeal. [00:06:37] Speaker 05: why we're in the world of Chef America and not the world of Ecolab. [00:06:41] Speaker 05: They have not challenged it. [00:06:42] Speaker 04: It's not extrinsic evidence. [00:06:43] Speaker 04: It's his view that the words say fixed means you count the cycles within a second. [00:06:48] Speaker 05: Oh, Your Honor, you're on a separate issue. [00:06:50] Speaker 05: Let me separate two issues. [00:06:52] Speaker 05: We went on 5% to 15% because it's undisputed. [00:06:56] Speaker 04: It's going around in circles. [00:06:58] Speaker 04: If your interpretation of the claim is that fixed means no variation whatsoever, as everybody understood at Markman, you have an inoperable claim. [00:07:08] Speaker 04: That's not correct. [00:07:10] Speaker 04: Yes, it is. [00:07:10] Speaker 04: And your lawyer there threw Chef America onto the bus by proposing an alternative claim construction. [00:07:20] Speaker 05: Your honor, we did not. [00:07:21] Speaker 05: So at Markman, we said fixed means no variation. [00:07:25] Speaker 04: And you had a backup. [00:07:26] Speaker 04: You had a fallback. [00:07:27] Speaker 05: It's a fallback, your honor. [00:07:28] Speaker 05: But the construction is made. [00:07:30] Speaker 05: The construction of fixed as non-bearing is made. [00:07:33] Speaker 05: That is the law that governs here, because power integrations has conceded that that is correct. [00:07:38] Speaker 03: There's no evidence that the 5 to 15 percent is due to anything other than environmental factors, right? [00:07:45] Speaker 05: That's correct, Your Honor, but Dr. Kelly admitted that those frequency changes, 5 to 15 percent, happen even over a per second time scale. [00:07:54] Speaker 05: So he admitted it. [00:07:55] Speaker 05: The admission is at A630. [00:07:58] Speaker 05: He admitted it also in a part of the transcript that's not in the joint appendix, transcript 2939 and 2982. [00:08:03] Speaker 05: Dr. Kelly admitted that there is the 5% to 15% variation due to environmental factors. [00:08:10] Speaker 05: Now, Your Honor, the reason that's a problem for power integrations and not for Fairchild is if it renders the claims inoperable, there may be an invalidity for lack of enablement. [00:08:20] Speaker 05: But it doesn't change the claim construction that governs the infringement judgment in this case. [00:08:25] Speaker 05: Infringement has to be adjudged under the unchallenged claim construction that fixed means non-vary. [00:08:31] Speaker 02: So Your Honor, I see you're focused on the word fixed. [00:08:36] Speaker 02: But I mean, I'm wondering, why shouldn't we be really thinking more about fixed switching frequency and trying to understand what does that phrase mean? [00:08:46] Speaker 02: And is there anything in the spec that channels us [00:08:50] Speaker 02: to command that fixed switching frequency to one of skill in this art after reading this patent would be compelled to think of it as a completely rigid, non-varying frequency that couldn't be subject to normal variations due to environmental conditions. [00:09:11] Speaker 05: So Your Honor, first of all, [00:09:14] Speaker 05: Markman at Markman the after Markman the claim construction was fixed means non-bearing and that was not challenged So power right, but the entire phrase that's not the limitation. [00:09:24] Speaker 04: That's an issue. [00:09:25] Speaker 04: Yeah, the entire phrase all three works. [00:09:27] Speaker 05: Okay, your honor Fixed switching frequency was construed as non-bearing non-bearing non-bearing number of cycles per second Correct, your honor. [00:09:39] Speaker 05: We just need number if you [00:09:41] Speaker 05: Disagree with us that the temperature variations are not temperature variation was not included in the claim construction power integrations didn't say Look at what power integrations asked for your honor what they asked for was a construction that says it means substantially And everybody understood the substantially such a squirrely world word that nobody wanted to live with that [00:10:04] Speaker 05: Your Honor, if you don't agree with me on temperature variations controlling, then you need to reach the jitter products. [00:10:11] Speaker 05: The jitter products, which are a substantial subset of the products, infringe for the separate reason that the per second addition to the switching frequency limitation was wrong as a matter of law. [00:10:22] Speaker 05: It was wrong as a matter of law. [00:10:24] Speaker 03: I don't see that you argued in the opening brief, and maybe I'm wrong, and you can show me where, [00:10:30] Speaker 03: The error was adding the per second limitation to the claim construction. [00:10:35] Speaker 05: We did, Your Honor. [00:10:36] Speaker 05: We argued it in the opening brief. [00:10:39] Speaker 05: First of all, we're entitled to stick to our construction, which is fixed means non-bearing over any time scale. [00:10:47] Speaker 05: We did argue in the opening brief that adding the per second limitation was legal error, and that's in the blue brief at 31 to 34. [00:10:55] Speaker 05: And Your Honor, the reason we argued that is that this- Hold on, hold on. [00:10:58] Speaker ?: OK. [00:11:02] Speaker 05: I'm going to run out of time to talk about damages, Your Honor. [00:11:04] Speaker 03: We'll give you some time. [00:11:05] Speaker 05: Thank you, Your Honor. [00:11:10] Speaker 05: We argued that the addition of the per second limitation was error. [00:11:15] Speaker 05: And the reason, Your Honor, is that the specification refers to timescales of microseconds. [00:11:20] Speaker 05: The specification, we count it. [00:11:21] Speaker 05: It refers to the microsecond timescale. [00:11:23] Speaker 04: You could have made that argument either to judge where or judge Chesney below when they invited you. [00:11:28] Speaker 05: Your Honor, we weren't required to, because your case law is very clear. [00:11:32] Speaker 05: We cite O2 micron and we cite the Pabst case. [00:11:36] Speaker 05: It's very clear that if we make the same claim construction argument on appeal that we made at Markman, and we do, we are entitled to object to the claim construction and seek its overturning as a matter of law, whether or not we object it to the instructions. [00:11:49] Speaker 05: And Pabst is the identical case, because there [00:11:53] Speaker 05: There was a limitation added at claim construction that was not part of the defendant's proposed claim construction. [00:12:00] Speaker 05: The defendant didn't make further objection, but was able to assert on appeal that the addition of the additional element was wrong. [00:12:07] Speaker 05: That's our case. [00:12:07] Speaker 05: We think addition of per second was self-evidently wrong here, because the spec refers 58 times to microseconds. [00:12:14] Speaker 02: But as I understand the way claim construction was argued below, your position was consistently always [00:12:22] Speaker 02: concept that it should be non-variant. [00:12:26] Speaker 02: Fixed switching frequency. [00:12:28] Speaker 05: That's correct. [00:12:28] Speaker 02: But then when the per second term got introduced into the claim construction, there was never an attempt to do some kind of O2 micro clarification of the construction or construction of the construction in order to get a better understanding of what per second ought to be. [00:12:47] Speaker 02: So perhaps I accept your idea that [00:12:51] Speaker 02: You did not waive the right to appeal the question of whether or not fixed switching frequency ought to be a completely non-variant frequency. [00:12:59] Speaker 02: But I'm not sure that you've in any way preserved an argument over whether per second [00:13:08] Speaker 02: can't be there versus per microsecond or something like that. [00:13:12] Speaker 05: Your Honor, I believe we did under PAPST. [00:13:14] Speaker 05: In other words, the claim construction chart is at 2125 of the Joint Appendix. [00:13:19] Speaker 05: And Power Integrations lost its claim construction. [00:13:22] Speaker 05: And it does not try to revive that on appeal except indirectly. [00:13:26] Speaker 05: It argued for fixed switching frequency, meaning the target switching frequency is intended to be substantially fixed. [00:13:35] Speaker 05: Judge Weir plainly rejected that. [00:13:37] Speaker 05: He chose our meaning of fixed to mean non-varying. [00:13:40] Speaker 05: We proposed fixed switching frequency means the switching frequency does not vary. [00:13:44] Speaker 03: We're getting confused here because there are two different arguments. [00:13:48] Speaker 03: One is the 5% to 15%. [00:13:50] Speaker 03: Let's assume that we reject your position on that. [00:13:54] Speaker 03: But that leaves the jittering issue. [00:13:58] Speaker 03: And what you're arguing there, as I understand it, is that the district court [00:14:04] Speaker 03: improperly included the per second limitation, which allowed them to argue to the jury that within a particular second, any variation didn't count, correct? [00:14:14] Speaker 05: Exactly right, Your Honor. [00:14:15] Speaker 05: And we should prevail, we believe, on the first argument. [00:14:18] Speaker 05: But if you don't agree with us on the first argument, then we should prevail on the frequency hopping or jitter problem. [00:14:25] Speaker 03: But let's assume for a moment that you preserved the idea that the per second limitation should have been eliminated [00:14:33] Speaker 03: from the claim construction. [00:14:34] Speaker 03: What is it in the intrinsic evidence that suggests that that's the correct construction? [00:14:41] Speaker 05: That the elimination of the per second construction. [00:14:43] Speaker 03: Correct. [00:14:43] Speaker 05: And the answer to that is, Your Honor, that jitter occurs on a microsecond scale. [00:14:50] Speaker 05: The number of times the power switch oscillates is happening on the scale of 100,000 or 68,000 times a second, or varying between 62 and 68,000 times a second. [00:15:02] Speaker 05: So it makes no sense. [00:15:03] Speaker 05: It's legally erroneous to construe a claim whose specifications speak in microseconds 58 times as number of switching cycles per second. [00:15:14] Speaker 03: Do they speak of microseconds in terms of the thing being fixed? [00:15:18] Speaker 05: Your Honor, the claim is fixed switching frequency. [00:15:22] Speaker 05: And we think it's legally erroneous to read into that a per second limitation. [00:15:27] Speaker 05: A fixed velocity for a car. [00:15:29] Speaker 05: You know the core analogy. [00:15:32] Speaker 02: I don't need to go over that. [00:15:32] Speaker 02: I'm sorry, are you trying to say that the construction ought to be amended from per second to per microsecond? [00:15:39] Speaker 05: Your Honor, that would be acceptable or the elimination of a time frame, so to simply say fixed switching frequency. [00:15:47] Speaker 02: As I understood it in the specification, they were talking about a given cycle being 10 microseconds, and then maybe if you have a [00:15:59] Speaker 02: 10% duty cycle, it would be the length of one microsecond. [00:16:03] Speaker 02: So you would not have any cycle on a microsecond. [00:16:10] Speaker 02: You would have at best a tenth of a cycle in a microsecond. [00:16:15] Speaker 03: Please don't shake your head. [00:16:18] Speaker 03: That's not helpful. [00:16:19] Speaker 05: I'm sorry? [00:16:21] Speaker 03: Gentlemen in the audience, please don't communicate to the court that way. [00:16:26] Speaker 05: I'm sorry, Your Honor. [00:16:28] Speaker 05: I just want to make sure you weren't addressing me. [00:16:32] Speaker 05: So here's the argument. [00:16:34] Speaker 05: There's no question that the switching cycle frequency in the jitter patents varies and is not fixed on the microsecond level. [00:16:47] Speaker 05: If you eliminate the gratuitous claim construction, and we believe erroneous claim construction, [00:16:55] Speaker 05: We just asked for a construction of fixed switching frequency. [00:17:00] Speaker 05: The court went on to define switching frequency as the number of cycle switches per second. [00:17:07] Speaker 04: And to be clear, you never objected to the per second until here. [00:17:12] Speaker 05: Your Honor, we didn't object to it. [00:17:15] Speaker 05: That's the answer to my question. [00:17:17] Speaker 05: Yes. [00:17:17] Speaker 05: And I'm asking you to just allow us to argue that our claim construction, which didn't have that limitation, is the one we can assert now under PAPST. [00:17:26] Speaker 03: You're saying you preserved it by asking for a construction which wasn't adopted. [00:17:30] Speaker 05: That's correct, Your Honor. [00:17:31] Speaker 05: Exactly what happened in PAPST. [00:17:33] Speaker 05: I'm concerned I need to get to damages. [00:17:35] Speaker 05: May I simply leave you with the argument, I want to be clear, we should win on all products because of the 5% to 15%, which the other side admitted exists. [00:17:45] Speaker 05: If anyone wanted to say that the claim should be amended to include that as natural variation, they have waived their opportunity to do that because they haven't challenged the claim construction on appeal. [00:17:57] Speaker 05: And we know that the judge at Markman was construing fixed to mean non-varying by reference to a dictionary where he said it's not subject to change or variation. [00:18:05] Speaker 05: So to answer your question, Judge Chen, [00:18:08] Speaker 05: We believe either you would replace per second with per microsecond or eliminate the time element and simply construe it as fixed across every time. [00:18:15] Speaker 03: We never asked for the microsecond construction, right? [00:18:18] Speaker 05: I'm sorry, Your Honor? [00:18:18] Speaker 03: You never asked for a microsecond. [00:18:20] Speaker 03: That's correct, Your Honor. [00:18:21] Speaker 05: That's correct. [00:18:21] Speaker 05: We're relying on the argument that we can stick with error. [00:18:25] Speaker 05: Initial proposal, which is fixed, means not subject to variation. [00:18:29] Speaker 05: And the addition of elements was error. [00:18:31] Speaker 05: But if you disagree with us on the infringement, [00:18:35] Speaker 05: absence of legally sufficient evidence for the infringement of either patent. [00:18:40] Speaker 05: 908, I'll leave to the briefs, unless there are questions. [00:18:42] Speaker 05: It's a straight argument that I'm DOE. [00:18:45] Speaker 03: You cannot. [00:18:46] Speaker 03: Judge, why don't you go ahead. [00:18:47] Speaker 05: Damages. [00:18:47] Speaker 05: Yes, sir. [00:18:49] Speaker 05: I want to simplify the damages argument into two. [00:18:53] Speaker 05: First, we have an argument that the evidence is legally insufficient to support an entire market value rule royalty base, where [00:19:03] Speaker 05: The evidence doesn't come close to satisfying the requirements this court set forth in Laser Dynamics. [00:19:10] Speaker 05: The evidence doesn't show that the patented feature, the 079 feature, constituted the basis for consumer demand. [00:19:17] Speaker 05: We have no quarrel with the jury instruction. [00:19:20] Speaker 05: The jury instruction at Appendix 1954 is correct. [00:19:22] Speaker 03: What did our expert testify about this, the one watt feature, whatever you want to call it? [00:19:29] Speaker 03: Your Honor, the one watt. [00:19:32] Speaker 03: was responsible for the demand, that it drove the demand? [00:19:38] Speaker 05: There was a lot of testimony about the one watt feature. [00:19:41] Speaker 05: And yes, there was testimony, both lay and expert, that it drove demand. [00:19:45] Speaker 05: But here's why that is not legally sufficient. [00:19:48] Speaker 05: First, the one watt requirement applied only to government-purchased products. [00:19:55] Speaker 05: And I can't think of any example of the entire market value rule in which [00:20:00] Speaker 05: a major, a sub-market, a sub-market's requirement for a product governs the rest of the market. [00:20:07] Speaker 05: So that's the first problem. [00:20:08] Speaker 05: But the second problem is, think of the implausibility of the argument under your later dynamics reasoning. [00:20:14] Speaker 03: What did their expert witness say about these other features, which were characterized and apparently agreed by both parties, characterized by the judge, as valuable features, right? [00:20:27] Speaker 03: What did their expert witness say about that? [00:20:29] Speaker 05: that the expert claimed in conclusory fashion that the 079 feature, the power switching regulator feature, drove demand. [00:20:39] Speaker 05: Notwithstanding that, number one, on jitter features, power integrations, as this court well knows because these cases came to you before, on the jitter features, they've sued us saying the same products infringe jitter features. [00:20:52] Speaker 03: It's inconsistent to say that- Could their witness say that the [00:20:56] Speaker 03: that the other features, including the jitter feature, was irrelevant to demand? [00:21:04] Speaker 05: No, they're witness to the contrary. [00:21:06] Speaker 05: Their CEO at Page Appendix, page 1603, admits that other features, he specifies jitter, and he specifies soft start, which helps prevent overheating at startup. [00:21:17] Speaker 05: He specifies both of those at 1603, the CEO, as valuable to consumers. [00:21:23] Speaker 02: How long were we supposed to think about the law [00:21:26] Speaker 02: entire market value rule, which maybe ought to be called an entire market value exception to the rule of apportionment, in the sense that we are always going to be in the context of a multi-component product and there is a patented feature inside that larger product. [00:21:42] Speaker 02: It is only logical that every other component of that multi-component product has some value, some utility, some contribution and some [00:21:52] Speaker 02: thing in there that consumers are going to want. [00:21:55] Speaker 02: And yet, nevertheless, we have this rule that says there are times when the patented feature can be deemed legally to be the basis for the consumer demand. [00:22:08] Speaker 02: So there has to be some room for allowance of fact patterns in which the entire market value rule will apply, even if [00:22:19] Speaker 02: Other components, the non-patented components, are regarded as useful, important, etc. [00:22:25] Speaker 02: So can you help me think through what are the instances where a patented feature will qualify as serving as the basis for consumer demand? [00:22:36] Speaker 05: Yes, Your Honor. [00:22:37] Speaker 05: It's certainly something that you visited on the injection standard with causal nexus. [00:22:42] Speaker 05: And let me try to answer your question here. [00:22:44] Speaker 05: There will sometimes be features that are the driver of consumer demand and warrant the application of the entire market value. [00:22:52] Speaker 05: Think of the pharmaceutical context. [00:22:54] Speaker 05: If there's a new patented feature which provides all the therapeutic value of a new drug, that will drive demand apart from the form factor or the digest and tolerability of the casing. [00:23:06] Speaker 05: So I think there are certainly in the pharmaceutical instances, many instances in which you might find entire market value derived or attributable to the new patented feature. [00:23:15] Speaker 05: In multi-component products, it's going to be harder. [00:23:18] Speaker 05: But we think here, as in Lucent, you should reverse the denial of Jmall because here there was plain evidence of other features driving consumer demand. [00:23:27] Speaker 05: We've talked about two of them. [00:23:28] Speaker 05: There's evidence of jitter. [00:23:31] Speaker 05: They sued us on the jitter patents for the same products. [00:23:34] Speaker 05: That seems like a constructive admission that the 079 patent doesn't drive all of demand, or else they wouldn't be suing us on the jitter patents for damages. [00:23:42] Speaker 05: And second, Softstart conceded by the CEO to be an additional feature. [00:23:46] Speaker 05: So here there's evidence in the record of additional features. [00:23:50] Speaker 02: I'm still stuck with trying to figure out, yes, there are other features in this multi-component product, just as there are in every multi-component product. [00:23:58] Speaker 02: And yes, those features are going to be important. [00:24:01] Speaker 02: And any time somebody says that a non-patent feature is important, that defeats entire market value rule? [00:24:12] Speaker 05: No, Your Honor. [00:24:13] Speaker 05: Let's look at it the other way around. [00:24:14] Speaker 05: I think that the problem here, and let's go back to the one watt efficiency standard. [00:24:19] Speaker 05: The problem here is that it's simply not legally sufficient to say, oh, there's a government regulation that wanted more efficiency in government products. [00:24:29] Speaker 05: And that made the 079 the driver of the demand for power switching circuits. [00:24:35] Speaker 05: Think of an analogy. [00:24:36] Speaker 04: Suppose the government... So if this were the only market, if the only market for these things had been in the government for some strange reason, then you would not be objecting, right? [00:24:46] Speaker 05: No, Your Honor. [00:24:47] Speaker 05: We would still object, and here's why. [00:24:48] Speaker 05: A government regulation that says miles per gallon for fuel efficiency needs to go up from 20 to 21. [00:24:55] Speaker 05: Suppose that leads to a new generation of cars that have 21 miles per gallon efficiency. [00:25:00] Speaker 04: You can use a car for a lot of other things. [00:25:04] Speaker 04: I'm sorry, Your Honor. [00:25:06] Speaker 04: You can use a car for a lot of other things. [00:25:07] Speaker 04: What I'm trying to get at is if the only person that was buying them was the government. [00:25:12] Speaker 05: And the answer is no, Your Honor, because the government regulation could be satisfied by other methods, other approaches than the patented [00:25:23] Speaker 05: at the 079 patent, it's admitted. [00:25:25] Speaker 04: We don't need to go that far. [00:25:26] Speaker 04: I mean, your argument is that proof of driving demand in a submarket is insufficient for an entire market. [00:25:34] Speaker 05: That is our argument, Your Honor. [00:25:35] Speaker 05: We do argue that. [00:25:36] Speaker 05: But we argue that additionally here, even if the entire market were the government, the 079 wasn't proved to drive demand because you could reach the government regulations requirement through other methods, burst mode. [00:25:49] Speaker 03: But in terms of the, if you've got a valuable feature that's valuable to consumers, isn't that going to affect demand automatically? [00:25:59] Speaker 03: Why is it necessary to show something more than their other valuable features to it, which are perhaps unique to this particular product? [00:26:12] Speaker 03: If they're valuable to consumers, doesn't that mean that they affect consumer choices? [00:26:18] Speaker 05: The other features. [00:26:19] Speaker 03: Yeah. [00:26:20] Speaker 05: We think the fact that the other features drive consumer choices defeats entire market value. [00:26:24] Speaker 03: Yes, I understand. [00:26:25] Speaker 03: But what I'm saying is, if the district judge here said that you have shown that there are other valuable features to the Fairchild products, and I don't understand that to be disputed, I'll ask about that. [00:26:41] Speaker 06: Correct, Your Honor. [00:26:41] Speaker 03: I don't understand that to be disputed. [00:26:44] Speaker 03: But why isn't the fact that there are other features which are valuable to consumers [00:26:49] Speaker 03: in and of itself be sufficient to defeat the entire market value rule? [00:26:54] Speaker 05: I believe that it would and does. [00:26:57] Speaker 05: There's just one more point. [00:27:00] Speaker 05: It's not that the other features exist. [00:27:02] Speaker 05: It's that it's conceded by power integrations that the other features like jitter and soft start drive consumer demand. [00:27:10] Speaker 05: That means that power integrations has failed to show that the 079 is the driver of consumer demand. [00:27:16] Speaker 02: What if that wasn't the exact testimony? [00:27:19] Speaker 02: that there are other features that drive consumer demand? [00:27:23] Speaker 02: What if it's just that there are other features that consumers would regard as important? [00:27:30] Speaker 02: Any power supply controller chip has to have certain components in order to serve its basic function. [00:27:39] Speaker 02: And so those would always be in any controller chip. [00:27:44] Speaker 02: And then now there's this patented feature that's introduced into [00:27:49] Speaker 02: into their controller chips that, safe for the sake of argument, there was a paradigm shift in the marketplace. [00:27:58] Speaker 02: Everybody needed these one watt energy efficient controller chips. [00:28:03] Speaker 02: And that was just the new world everyone was living in. [00:28:06] Speaker 02: And then every controller chip has standard, routine, conventional, well understood features. [00:28:13] Speaker 02: And now their chip has the standard, well conventional [00:28:18] Speaker 02: conventional features plus this patented feature that everybody wants and needs now. [00:28:23] Speaker 02: Would that be enough for the entire market value rule? [00:28:27] Speaker 05: No, Your Honor. [00:28:28] Speaker 05: And not without changing the laws that was announced in laser dynamics because laser dynamics of course said valuable, important and essential is not enough and crucially said even if practicing the disc discrimination method would be commercially unviable, it's not enough. [00:28:43] Speaker 05: So it doesn't matter if [00:28:45] Speaker 05: Let me just go back briefly to the car example. [00:28:47] Speaker 05: If miles per gallon in a government regulation goes up from 20 to 21, and everybody buys the new more fuel-efficient cars, it still doesn't show that the mileage efficiency feature drove the purchase of the car. [00:28:59] Speaker 02: No, but the cars are $30,000, $50,000. [00:29:03] Speaker 02: We're talking about chips that, as I understand it, are less than $1, like $0.90 or $0.50. [00:29:10] Speaker 05: Correct, Your Honor, but where there were... The scale is way off. [00:29:15] Speaker 05: There were not infringing substitutes. [00:29:16] Speaker 05: It's admitted by the CEO, by the articles that they cited. [00:29:20] Speaker 03: It seems to me that there are three different boxes here. [00:29:25] Speaker 03: One is you've got a feature which is important to consumers and affects purchasing choices. [00:29:32] Speaker 03: And that's in the context of other features which may be valuable but are, as Judge Chen said, routine and conventional, this kind of device or chip or whatever. [00:29:43] Speaker 03: And under those circumstances, as I understand it, you admit that the entire market value rule would be appropriate. [00:29:50] Speaker 03: The other end of the spectrum is where consumer choices are directly affected by other features. [00:30:01] Speaker 03: But it seems to me there's a middle ground where you have a device where there are other important features which are unique to that device. [00:30:09] Speaker 03: In other words, that they aren't routine and conventional. [00:30:12] Speaker 03: They don't affect [00:30:13] Speaker 03: They don't appear in every chip or every device of this sort. [00:30:18] Speaker 03: And that seems to be perhaps what we're struggling with here is that middle box as to whether that is a situation where the entire market value rule is appropriate. [00:30:29] Speaker 03: And what's your position on that? [00:30:31] Speaker 05: Well, if you're asking whether the 079 feature is unique. [00:30:35] Speaker 03: No, I'm asking a hypothetical. [00:30:39] Speaker 03: You've got a feature which is important to consumers, which is the patented feature, but you've got other features which are valuable. [00:30:46] Speaker 03: But there aren't just routine and conventional features that you would find in any embodiment of this device that's on the market. [00:30:55] Speaker 03: They're unique to the particular product that's being accused of infringement. [00:31:02] Speaker 03: And under those circumstances, is it appropriate to use the entire market value? [00:31:07] Speaker 05: No. [00:31:08] Speaker 05: because the other features defeat the notion that the patented feature is what's driving consumer demand. [00:31:14] Speaker 04: Here, for example, the... You're seeking really an exclusive test, right? [00:31:21] Speaker 04: Basically, the patented feature has to be the sole reason for the purchase. [00:31:25] Speaker 05: Yes, Your Honor, and I'm just relying on laser dynamics that said there has to be proof that any one of those features alone drives the market. [00:31:32] Speaker 04: That's a sole test, and any evidence of a [00:31:36] Speaker 04: another feature. [00:31:40] Speaker 04: You can't overcome it. [00:31:41] Speaker 04: You say, well, if you have to show you can't get entire market value unless you show the only reason why anybody could have possibly bought this product was for the patented feature. [00:31:51] Speaker 05: Well, Your Honor, I think that is correct because... There are other features in the patent. [00:31:55] Speaker 04: You're never going to be able to make that showing, right? [00:31:57] Speaker 05: Well, Your Honor, I think there are times... Is that right? [00:32:00] Speaker 04: Is that right? [00:32:00] Speaker 04: You're never going to be able to make the showing under your test. [00:32:03] Speaker 05: No, I think you can make a showing, as I gave you the pharmaceutical example, where the therapeutic value of the patent is the driver of consumer demand, and nobody would credit trivial advantages about the casing for the pill as driving consumer demand. [00:32:16] Speaker 05: But that's quite different. [00:32:17] Speaker 04: What happens if you had some evidence that somebody did? [00:32:20] Speaker 04: Somebody said, I switched to this one because it was sweeter. [00:32:23] Speaker 04: And that little bit of evidence is going to destroy the entire market value. [00:32:27] Speaker 05: Well, I do want to go back to... Right? [00:32:29] Speaker 04: I mean, I'm just trying to get to... It seemed to me that your position is extremely rigid. [00:32:34] Speaker 05: Well, Your Honor, don't take it from me. [00:32:36] Speaker 05: Take it from your decision in laser dynamics, which I think correctly states the law that goes back to Gerritsen versus Clark. [00:32:45] Speaker 05: Remember, there is an obvious legal error here, which is the court [00:32:48] Speaker 05: the district court thought that. [00:32:49] Speaker 04: Well, Gerritsen against Clark didn't give us a lot of analysis, right? [00:32:52] Speaker 05: It didn't, Your Honor, but I think you cashed it out correctly in laser dynamics. [00:32:55] Speaker 05: Remember, the district court erred by saying that some intervening cases between, obviously, Gerritsen in 1884 and Wright Height in 1995, they say that Bose and Fonar and Tech Air show that laser dynamics is not the law. [00:33:08] Speaker 05: Let's just clear that out of the way. [00:33:10] Speaker 05: The application of the standard was the same. [00:33:12] Speaker 04: You can throw that out of the way, but we can't. [00:33:14] Speaker 05: You can, Your Honor, because the legal standard is absolutely the same in garretson, right height, bows, photo. [00:33:20] Speaker 04: So bows was a prologue in detour. [00:33:22] Speaker 05: It wasn't. [00:33:22] Speaker 04: Well, Your Honor, it was an act. [00:33:24] Speaker 04: We throw bows under the bus because of garretson? [00:33:27] Speaker 05: No, you don't throw bows under the bus. [00:33:29] Speaker 05: It was on different facts. [00:33:30] Speaker 05: There was not evidence, as there is here, that other features were important drivers of consumer demand. [00:33:35] Speaker 05: Remember, we were sued on jitter features. [00:33:39] Speaker 05: for the same products. [00:33:41] Speaker 05: How can you come in and say, hello, I'm in this case saying the 079 feature is the entire driver of consumer demand. [00:33:47] Speaker 05: Pay no attention to that other lawsuit where we sued you on the jitter features in the same products. [00:33:52] Speaker 05: That is not a case for an entire market value rule. [00:33:55] Speaker 05: There may be another case where there isn't such an obvious competing feature that the patentee views as valuable because they're suing you on their other family of patents. [00:34:04] Speaker 03: OK, I think we're about [00:34:06] Speaker 03: I'm sorry, Your Honor. [00:34:08] Speaker 05: There's one last damages argument. [00:34:09] Speaker 02: Well, you can do that on the reply. [00:34:12] Speaker 02: We'll give you two minutes. [00:34:13] Speaker 02: Can you just flag what your other damages argument is going to be? [00:34:15] Speaker 02: Yes, Your Honor. [00:34:16] Speaker 02: Is it going to be the double counting one? [00:34:17] Speaker 02: Double counting. [00:34:18] Speaker 05: It's going to be double counting, Your Honor. [00:34:19] Speaker 05: That's fine. [00:34:19] Speaker 05: Thank you. [00:34:20] Speaker 05: Thank you for letting me speak to that on rebuttal. [00:34:22] Speaker 05: Thank you. [00:34:26] Speaker 00: Thank you. [00:34:28] Speaker 00: Good morning, Your Honors. [00:34:29] Speaker 00: May it please the Court? [00:34:31] Speaker 00: I understand there's a lot of questions this morning. [00:34:33] Speaker 00: I actually intended to cover [00:34:35] Speaker 00: The claim construction issue per second, I think that's an important issue to talk about. [00:34:39] Speaker 00: And then I'm happy to talk about EMVR in as much detail as I can. [00:34:42] Speaker 03: Let's begin with the 5% to 15%, which everybody seems to agree is due to environmental factors. [00:34:48] Speaker 00: Yes. [00:34:49] Speaker 03: And they say that they didn't agree that there was any room in the claim construction that district court gave for a 5% to 15%. [00:34:59] Speaker 03: variance based on environmental factors. [00:35:01] Speaker 03: What's your answer to that? [00:35:03] Speaker 00: Well, everyone below, the parties and the district court, understood that the issue was applying the claims as construed to the parts and whether people of skill and the art understood applying the claim construction, whether there was a fixed switching frequency or not. [00:35:22] Speaker 00: So I think this is a new argument on appeal that they're making. [00:35:25] Speaker 00: If you look at the transcript of the claim construction hearing, [00:35:28] Speaker 00: The judge actually tried to make very plain in his questioning of Fairchild Council. [00:35:33] Speaker 00: It was different counsel. [00:35:35] Speaker 00: He said, well, you're not saying that normal environmental variation would take something outside the scope of the claim, are you? [00:35:42] Speaker 00: And so it's very clear what the district court understood. [00:35:45] Speaker 00: And then, in fact, the district court then invited, construed the claims, invited counsel. [00:35:51] Speaker 00: If anyone had any issues with the claim construction, wanted clarification. [00:35:55] Speaker 00: Tell me. [00:35:56] Speaker 00: That's the way, in fact, that Judge Ware conducted claim construction and said, I want to know. [00:36:00] Speaker 00: This is a process. [00:36:01] Speaker 00: If you think I got something wrong, talk to me. [00:36:03] Speaker 00: Nobody did. [00:36:05] Speaker 00: And then during trial, again, this issue came up. [00:36:09] Speaker 00: And at that point, it had become Judge Chesney. [00:36:11] Speaker 00: And Judge Chesney was in pains to say, look, no one's asked me to change this. [00:36:17] Speaker 00: You can't question a witness on the basis of some different claim construction. [00:36:21] Speaker 00: So the construction is what the construction is. [00:36:24] Speaker 00: And it's a question of application. [00:36:26] Speaker 00: of the construction. [00:36:27] Speaker 02: And the last point on that is actually... I guess it's fair to say that the two expert witnesses had competing conceptions of what the construction really meant. [00:36:37] Speaker 02: Is that fair to say? [00:36:39] Speaker 02: And then they hinged their analysis based on their alternate constructions of the construction. [00:36:46] Speaker 00: They did, I think, with one important addition or footnote, if I might. [00:36:51] Speaker 00: Our expert, Dr. Kelly, explicitly applied the court's construction [00:36:55] Speaker 00: of a fixed number of cycles per second. [00:36:58] Speaker 00: And he explained in great detail all of the parts infringed under that construction. [00:37:02] Speaker 00: Dr. Wee. [00:37:03] Speaker 03: What did he say about the fog to 15%? [00:37:07] Speaker 00: He said that two things. [00:37:10] Speaker 00: Number one, these are, if you look at the data sheets, these are extreme ranges. [00:37:17] Speaker 00: So is there temperature variation? [00:37:19] Speaker 00: Yes. [00:37:19] Speaker 00: Maybe if you go from minus 30 C to 150 C, there might be some variation. [00:37:24] Speaker 00: Theoretically, and the same thing with the input voltage varying wildly, you might get some variation. [00:37:32] Speaker 00: But what Dr. Kelly said is two things. [00:37:34] Speaker 00: Number one, you're still not going to have a varying number of cycles per second, according to the construction. [00:37:42] Speaker 03: I think it's very confusing if we conflate these two separate arguments. [00:37:49] Speaker 03: One is the 5% to 15%, and the other one is the per second. [00:37:53] Speaker 03: And I'm just focusing now on the 5% to 15%. [00:37:56] Speaker 03: And did your experts say that 5% to 15% is within the normal variation due to environmental factors? [00:38:06] Speaker 00: Yes. [00:38:07] Speaker 00: Yes. [00:38:08] Speaker 00: And in addition on that point, if I may, there was no showing below by Fairchild that in fact, in the real world, any of these parts is subjected to such temperature variation or [00:38:22] Speaker 00: such variation of the voltage on the input that there would in fact be a varying number of switching cycles per second. [00:38:31] Speaker 00: This is an entirely sort of theoretical argument by Fairchild without any evidence in the record to support it on this 5 to 15 percent issue. [00:38:40] Speaker 03: Let's turn to the per second. [00:38:42] Speaker 03: Do you agree that by asking for a claim construction that didn't include the per second limitation, [00:38:48] Speaker 03: that they preserved their right to object to that. [00:38:50] Speaker 03: Not at all, Your Honor. [00:38:51] Speaker 00: And I think it's really important to look at what actually happened here at A2125. [00:38:56] Speaker 03: No, but first tell me why they don't preserve that by asking for a claim of construction that didn't include the per second limitation. [00:39:04] Speaker 03: Because some of our cases seem to say that if you ask for a claim of construction that is rejected by the district court, that you preserved it and you don't have to go the extra step. [00:39:15] Speaker 03: for example, at the jury charge conference to objection the instruction. [00:39:19] Speaker 00: Right. [00:39:19] Speaker 00: So let me take those in reverse order. [00:39:21] Speaker 00: That's the Pabst case, which is, of course, they're trying to embrace this Pabst case. [00:39:24] Speaker 00: The problem is the premise doesn't exist in this case. [00:39:28] Speaker 00: In Pabst, the party, in fact, asked for a construction without a particular limitation, made clear they objected to the inclusion of that limitation, and the judge put it in. [00:39:40] Speaker 00: And the question was then, well, is there a waiver if that party then doesn't subsequently renew the same position either when the jury instructions are read or otherwise? [00:39:50] Speaker 00: And the answer is no. [00:39:52] Speaker 00: No problem with that. [00:39:53] Speaker 00: But that principle doesn't apply here, because Fairchild never asked for a construction without per second. [00:40:00] Speaker 03: This is a little bit of a... I don't understand how you can say that, because they did ask for a construction without per second. [00:40:07] Speaker 03: The question is whether they had to do something more to preserve that later on. [00:40:12] Speaker 00: What they asked for was that they argued about that fixed meant non-variant, but they never engaged on switching frequency. [00:40:19] Speaker 03: Their proposed construction did not include the per second limitation, right? [00:40:24] Speaker 00: True, but it just didn't address the issue one way or the other. [00:40:27] Speaker 03: Well, the question is whether proposing a claim construction that didn't include the per second limitation entitles them to argue later on that their construction should have been adopted [00:40:37] Speaker 03: and the per second limitation should have been omitted. [00:40:40] Speaker 00: But again, the relevant part of the construction they're challenging now is in the construct, it has to do with what switching frequency means. [00:40:48] Speaker 03: No, they seem to be able, they seem to be arguing also that it was error to include the per second limitation in the claim construction. [00:40:56] Speaker 00: They are, correct. [00:40:57] Speaker 00: But the district court actually gave two constructions below with per second. [00:41:02] Speaker 00: One was just switching frequency and one was fixed switching frequency. [00:41:06] Speaker 00: They both had [00:41:08] Speaker 00: They both had this per second term. [00:41:10] Speaker 00: And Fairchild did not propose a construction of the switching frequency part that omitted per second. [00:41:18] Speaker 00: And indeed, they embraced. [00:41:19] Speaker 04: Well, perhaps implicitly they did by saying that claim construction should be no variation at all. [00:41:27] Speaker 00: With respect, I would say that only goes to the fixed versus non-varying part of the construction. [00:41:32] Speaker 00: It doesn't say anything at all. [00:41:33] Speaker 00: about what switching frequency means, which is you have to construe the entire term. [00:41:38] Speaker 00: But we have a lot more than that here. [00:41:40] Speaker 02: Is it possible that maybe what is really on appeal that's preserved for us to consider on the claim construction question is just the basic argument that fixed switching frequency has to be non-varying frequency, a very absolute fixed frequency. [00:42:04] Speaker 02: Any other more detailed arguments and criticisms about the introduction of the phrase per second is off the table because that wasn't ever specifically raised or explored down below. [00:42:18] Speaker 02: And so what is in front of us right now, whether it is the 5 to 15 percent or the per second language, is just the single thrust of whether the claim term [00:42:32] Speaker 02: requires absolute no variance at all. [00:42:35] Speaker 00: I think at a minimum what you said is correct. [00:42:37] Speaker 00: That certainly the most they could do is contend for absolute fixing this without any variation at all. [00:42:44] Speaker 00: But there is, if I could just finish this waiver point, because I think it is important. [00:42:48] Speaker 00: It's important because this issue never got vetted below. [00:42:52] Speaker 00: And the reason it never got vetted below is Fairchild not only didn't object, they embraced this claim construction. [00:42:59] Speaker 00: You look at the summary judgment briefing they filed. [00:43:01] Speaker 00: This is all on the record. [00:43:02] Speaker 00: You look at the summary judgment hearing transcript. [00:43:04] Speaker 00: You look at the JMAW brief they filed. [00:43:06] Speaker 00: You look at their JMAW argument. [00:43:08] Speaker 00: They said, we love this construction. [00:43:10] Speaker 03: This is a great construction. [00:43:12] Speaker 03: Wait. [00:43:14] Speaker 03: If somebody says the way this ought to be construed is X, and the district court rejects that, my understanding of the cases is that you can then assume later on that you preserved your objection [00:43:28] Speaker 03: and that you can argue the case under the claim construction, which you think is wrong. [00:43:33] Speaker 03: And where did they say, where did they give up the objection that they earlier made by proposing a claim construction that didn't include per second? [00:43:45] Speaker 03: Where did they give that up? [00:43:47] Speaker 00: They gave it up when they embraced the per second construction [00:43:54] Speaker 00: Subsequently could you show it show me a page and sure absolutely? [00:44:01] Speaker 00: The in their summary judgment motion I'll give you a few two sites or three on each one is summary judgment motion a 39 54 39 50 And then also at the hearing wait wait wait [00:44:21] Speaker 06: 3954 line what? [00:44:24] Speaker 00: 3954. [00:44:31] Speaker 00: Well, you can begin. [00:44:32] Speaker 00: It's actually in three or four spots, beginning at lines five and six. [00:44:37] Speaker 00: No accused product includes a fixed switching frequency as that term was construed by the court. [00:44:44] Speaker 03: Well, that hardly says that they agree with the construction from the court. [00:44:47] Speaker 03: Where do they say they agree with the court's construction? [00:44:50] Speaker 00: Their argument is premised on the fact the court's construction is correct. [00:44:55] Speaker 03: But that's what happens all the time. [00:44:58] Speaker 03: You make a claim construction argument at Markman, you lose it, and you've got to live with it, and you've got to brief the case based on that. [00:45:04] Speaker 03: What I thought you were saying is they said they loved the construction, and they approved it. [00:45:08] Speaker 03: Where do they approve the construction? [00:45:10] Speaker 00: They say that as well at the bottom of the page, beginning at line 25. [00:45:15] Speaker 00: It was a sentence. [00:45:16] Speaker 00: Instead, the court agreed with Fairchild and construed the term switching frequency to be the number of switching cycles of the power switch per second and so forth. [00:45:28] Speaker 00: I mean, they're saying, we were right. [00:45:31] Speaker 00: Power integrations was wrong. [00:45:32] Speaker 00: The district court agreed with us. [00:45:34] Speaker 00: And I can give you five or six more spots where they did the same thing in arguing it orally and where they did it on jail. [00:45:42] Speaker 00: It's the same issue. [00:45:43] Speaker 00: So this is not like, it's not at all like the Pabst case or any other waiver cases they rely on. [00:45:50] Speaker 04: There was a different understanding as to what where words meant, right? [00:45:56] Speaker 00: There was a dispute. [00:45:57] Speaker 00: Exactly. [00:45:58] Speaker 00: And the case was tried on the basis of an agreed construction. [00:46:03] Speaker 00: Nobody challenged the construction, and the experts disagreed over what that meant and how it applied, which is a garden variety. [00:46:09] Speaker 04: And the other side was saying, right when you're going to the jury, this is a conference that was held [00:46:13] Speaker 04: on the 19th of February in front of Chesney right before Dr. Way testified. [00:46:19] Speaker 04: There was a colloquy back and forth. [00:46:20] Speaker 04: The other side is saying, we absolutely are sticking to the claim construction. [00:46:24] Speaker 00: Without doubt, yes. [00:46:27] Speaker 00: They did. [00:46:27] Speaker 00: They embraced the claim construction, which is why Judge Chesney said on more than one occasion, nobody's asking me to change it. [00:46:34] Speaker 00: So that's the construction. [00:46:36] Speaker 00: And it's a question of how the experts apply it. [00:46:38] Speaker 00: And in fact, that's one of the reasons the district court denied J-Mall [00:46:43] Speaker 00: was because everyone agreed that it was a dispute among the experts. [00:46:47] Speaker 03: Let's assume, I understand the argument, that they didn't preserve the issue. [00:46:51] Speaker 03: Suppose they did preserve the issue. [00:46:54] Speaker 03: Why is the claim construction correct that would ignore variability within each second? [00:47:01] Speaker 00: Well, it's correct because, as the district court observed when reaching the construction, you look at the specification. [00:47:11] Speaker 00: And all over the place, there are references to switching cycles per second, either in hertz or kilohertz. [00:47:18] Speaker 00: We actually collected these in the brief in 40 in the district court, catalogued several of them, and said, this is the plain and ordinary meaning of the term. [00:47:28] Speaker 03: There was actually a little- Yeah, but that's not the same thing as saying what your expert said, which is that it can still be fixed as long as it doesn't vary outside of an individual second. [00:47:41] Speaker 03: Why would it be a correct construction here to say that all sorts of unlimited variations within a second are permitted? [00:47:51] Speaker 00: Well, I guess you have to be careful with unlimited. [00:47:54] Speaker 00: The way the experts explain how this works is you can have some... Let me ask you about the claim construction. [00:48:01] Speaker 03: Why is it that it's a correct construction of the claim to say that variations within a second don't count? [00:48:10] Speaker 00: Because that's the plain and ordinary meaning of the term. [00:48:14] Speaker 00: This is on a per second basis. [00:48:17] Speaker 03: Other than the plain and ordinary meaning, do you have any argument as to why it's the correct construction? [00:48:23] Speaker 00: Yes, because again, the specification repeatedly refers to frequency in terms of cycles per second, not microsecond. [00:48:32] Speaker 03: Yeah, but that's a definition of frequency measurement. [00:48:34] Speaker 03: It's not a definition of the variability that's permitted here. [00:48:39] Speaker 00: Well, but you have to have some unit of time. [00:48:45] Speaker 00: You can't define frequency. [00:48:47] Speaker 00: I mean, I think it was suggested here this morning. [00:48:49] Speaker 00: You could define frequency without reference to any particular time frame. [00:48:53] Speaker 00: That's a new argument, never raised below, and doesn't make any sense. [00:48:58] Speaker 00: Technically, it's not consistent with what the patent shows. [00:49:01] Speaker 00: The patent shows per second. [00:49:03] Speaker 00: And this is the way there was a mountain of extrinsic evidence on this. [00:49:07] Speaker 00: that's uncontested, that everyone in the field uses it in the same way. [00:49:13] Speaker 00: You pick up anybody's data sheet or application note, and that is the way the term is used. [00:49:17] Speaker 00: It is cycles per second. [00:49:20] Speaker 00: And so it would be incredible to construe the claim now to exclude that. [00:49:24] Speaker 00: I mean, you might say, well, it can include other things too. [00:49:28] Speaker 00: But it certainly, I think, on the basis of the intrinsic evidence, would have to include at least that cycles per second. [00:49:36] Speaker 04: Ms. [00:49:36] Speaker 04: Sullivan says their original position at Markman, their preferred position was no variation period. [00:49:43] Speaker 04: That seemed to be correct. [00:49:44] Speaker 04: That was their preferred position. [00:49:46] Speaker 00: Yes. [00:49:47] Speaker 04: And she's now maintaining that their position now equates to the same thing, no variation period. [00:49:54] Speaker 04: Because she said we're making the same argument, using different words at page 32 to describe no variation. [00:50:00] Speaker 04: So is the patent inoperable? [00:50:04] Speaker 00: Don't, Your Honor, because here again, the issue comes down to what fixed or non-varying means to somebody of skill in the arc. [00:50:12] Speaker 04: I mean, Chef America is- Well, say, for example, we agreed with her that the claim should mean fixed, no variation whatsoever. [00:50:23] Speaker 04: Right. [00:50:24] Speaker 04: Not even natural variation, no variations at all. [00:50:27] Speaker 00: But it's the whole term. [00:50:28] Speaker 00: And I believe there was a question here earlier this morning to make that clear. [00:50:31] Speaker 00: It's not just fixed. [00:50:32] Speaker 00: fixed switching frequency, and the construction of that whole term is non-bearing number of switching cycles per second. [00:50:40] Speaker 00: And so we get into a question of applying that to the accused products, an issue that never was reached in Chef America. [00:50:48] Speaker 04: It didn't have to be because... Well, what I was trying to say is her interpretation would result in an operability. [00:50:53] Speaker 00: That's true. [00:50:54] Speaker 04: And so, therefore, it doesn't fly. [00:50:58] Speaker 00: That's a pretty good reason not to adopt the construction. [00:51:00] Speaker 00: That's for sure. [00:51:01] Speaker 00: I mean, as Chef America laid out in some detail, it is certainly a last resort. [00:51:06] Speaker 00: I mean, if there is any plausible construction that avoids that ability. [00:51:11] Speaker 04: Well, their own lawyers suggested an alternative. [00:51:15] Speaker 04: So clearly, there's an alternative construction to what was there. [00:51:18] Speaker 00: Clearly, clearly. [00:51:19] Speaker 00: And in fact, there was really no dispute about that until this appeal, frankly. [00:51:25] Speaker 00: Nobody thought for a minute that at least the environmental variation, put it that way, was excluded by this claim instruction until they filed their opening brief. [00:51:34] Speaker 00: So it's one of the many reasons we have a problem with the way this is being. [00:51:39] Speaker 01: I thought Dr. Wei, is it Dr. Wei or Dr. Wee? [00:51:42] Speaker 01: It's Wee. [00:51:43] Speaker 01: Is it Wee? [00:51:45] Speaker 01: Yeah. [00:51:45] Speaker 01: Wee. [00:51:45] Speaker 01: All right, if you say so. [00:51:47] Speaker 01: All right, Dr. Wee. [00:51:48] Speaker 01: We've spent some time with Dr. Wee. [00:51:50] Speaker 02: Dr. Wee. [00:51:51] Speaker 02: Yes. [00:51:53] Speaker 02: His argument was you don't ever count cycles in a second. [00:51:58] Speaker 02: That's not how you understand either the claim construction or the term fixed switching frequency. [00:52:06] Speaker 02: Full stop. [00:52:07] Speaker 02: So therefore, that was his argument. [00:52:09] Speaker 02: It wasn't some acknowledgment of, hey, I understand and appreciate and am bound by a construction that allows for some natural variance. [00:52:21] Speaker 00: A guy correct with a footnote, he actually never applied the court's construction. [00:52:27] Speaker 00: He was asked about this. [00:52:28] Speaker 00: And he said, it's not important, given the way he viewed the claim. [00:52:33] Speaker 00: That's at A950. [00:52:34] Speaker 00: It's not important. [00:52:36] Speaker 00: He instead kept trying to come back to this driving analogy, which counsel tried again. [00:52:42] Speaker 02: I guess my point is that in this trial, there wasn't any argument over what per second [00:52:50] Speaker 02: meant as a claim construction question. [00:52:53] Speaker 02: It was always dealt with on trial factual level of how to understand and apply the court's construction. [00:53:01] Speaker 00: Absolutely. [00:53:02] Speaker 00: That's right. [00:53:03] Speaker 00: And that was a dispute between the experts. [00:53:04] Speaker 00: And of course, the jury found in power integrations favor on that. [00:53:09] Speaker 00: Shall I go on to, I see him a little over time, go on to EMVR? [00:53:12] Speaker 03: Yeah. [00:53:13] Speaker 03: And the court here at 1764 said, [00:53:20] Speaker 03: there's evidence in the record that other features are important and are highlighted by the respective parties. [00:53:27] Speaker 03: So we have a starting point here. [00:53:29] Speaker 03: You don't disagree that the evidence was that there were other features in the Fairchild product which were valuable. [00:53:37] Speaker 00: Don't dispute that at all. [00:53:39] Speaker 00: Just like every other EMVR case that this court has faced, you don't even get to EMVR, of course, unless it is a multi-feature product. [00:53:48] Speaker 03: And those features here were unique to the Fairchild product? [00:53:52] Speaker 00: No, they weren't. [00:53:53] Speaker 00: They were not? [00:53:54] Speaker 00: No. [00:53:54] Speaker 00: Actually, the two they point to regularly are jitter and soft start. [00:53:59] Speaker 00: Not unique. [00:54:00] Speaker 00: In fact, those were both prior power integrations features. [00:54:03] Speaker 00: They were in the prior part, the FX. [00:54:05] Speaker 02: So getting to Ms. [00:54:07] Speaker 02: Sullivan's earlier argument about frequency jitter is something they've already had to pay for in an earlier patent infringement action. [00:54:16] Speaker 02: Yes. [00:54:17] Speaker 02: obviously suggests that the frequency jitter feature of these controller chips are pretty darn important and valuable because they had to pay several million dollars on those for that particular feature. [00:54:32] Speaker 00: It had some value, yes. [00:54:34] Speaker 02: How much do you recall what the judgment was for? [00:54:37] Speaker 00: Well, the unfortunate reality is they haven't paid anything for any feature so far. [00:54:43] Speaker 02: Well, what was the damages verdict on that one? [00:54:46] Speaker 00: Well, in the first case, the damage was 32 million, premised not entirely on jitter, largely on the basis of the jitter features, the 876 and the 851 patents. [00:54:57] Speaker 00: But that was also premised on a third patent having to do with device structure. [00:55:01] Speaker 00: So you can't really tease out a specific number. [00:55:04] Speaker 02: I guess the point is that they are liable, apparently, for several million dollars on the frequency jitter feature of these [00:55:15] Speaker 02: Fairchild controller chips. [00:55:17] Speaker 02: So why isn't that some, create some doubt, maybe considerable doubt about whether we can really hold that all of the value of these controller chips are legally attributable to the 079 patented technology? [00:55:34] Speaker 00: So this I think is the fall in our case, right? [00:55:36] Speaker 00: So an oldie but a goodie where there was multiple patents in that case. [00:55:41] Speaker 00: One of the patents in particular was found to have created the basis of customer demand, EMVR applied. [00:55:48] Speaker 00: One of the other patents had value. [00:55:51] Speaker 00: There was a separate damages award for that other patent. [00:55:54] Speaker 00: And the two coexisted. [00:55:55] Speaker 00: And I think it's a logical conclusion of what EMVR means. [00:56:02] Speaker 03: But that creates a situation where you could have overlapping damages between two cases, one feature in one case, one feature in another case. [00:56:11] Speaker 03: In one case, you apply EMVR and you recover on the entire market value theory, a value that is attributable to another feature where there should have been apportionment. [00:56:23] Speaker 02: And if I could just tag along on that, isn't this a royalty stacking problem? [00:56:27] Speaker 02: You've got a lot of different patents on a given multi-component product and now manufacturers are having to pay out [00:56:38] Speaker 02: royalty on this, royalty on that, royalty on the other thing, and oh, now we've got to pay entire market value rule for this particular patent. [00:56:45] Speaker 02: Is there some kind of problem there, a disconnect? [00:56:50] Speaker 00: Certainly not in this case and on this record, right? [00:56:53] Speaker 00: I mean, this was never raised. [00:56:54] Speaker 00: This is another argument, this whole reference to the jitter verdict and the fact they lost this other case and may have to pay for that. [00:57:02] Speaker 00: Never raised below, never vetted, no discussion about it. [00:57:05] Speaker 00: So there's nothing zero in the record on that. [00:57:08] Speaker 00: But just hypothetically, speaking hypothetically, could there be a case where there'd be a royalty stacking issue? [00:57:14] Speaker 00: Sure, maybe. [00:57:15] Speaker 00: And in a case where that's a real issue, the party who thinks it's an issue raises it, and it gets vetted, and the experts take it into account to ensure it doesn't happen. [00:57:25] Speaker 00: That was not the situation here. [00:57:27] Speaker 00: And one of the reasons, with respect, I think it was not the situation here, is because of the uniqueness of the facts of this case. [00:57:34] Speaker 00: This is not sort of some runaway train on EMVR. [00:57:38] Speaker 00: You have a patent in front of you. [00:57:39] Speaker 03: Was one of the other features that was identified as valuable here the jittering feature? [00:57:45] Speaker 00: Yes, it was. [00:57:48] Speaker 00: It was in the parts, and it had some value, and we don't dispute that. [00:57:52] Speaker 02: There's soft start, frequency jitter. [00:57:55] Speaker 02: Soft start and frequency jitter are the... Miliwatt, saver, safety features. [00:58:01] Speaker 00: That's a sort of an umbrella term, miliwatt, that refers to a sort of a collection of features in the chip. [00:58:07] Speaker 00: But this goes back to, I think, some of the earlier questions. [00:58:10] Speaker 00: You have to have a lot of parts to have a car or any particular device. [00:58:15] Speaker 00: But if one of those features is so important, it's the reason people buy the device in the first place, that's an application of EMVR that's totally appropriate. [00:58:26] Speaker 00: And in this case, we had unique facts that indicated that was the case. [00:58:32] Speaker 00: One point I think I got lost in the questioning. [00:58:34] Speaker 00: I just wanted to emphasize, I know I'm way over time. [00:58:37] Speaker 00: It's not just a question of the government standards, because that came up. [00:58:40] Speaker 00: The government standard was critical. [00:58:42] Speaker 00: It drove not just government purchases, but there was undisputed testimony. [00:58:46] Speaker 00: It drove the whole market. [00:58:48] Speaker 00: And here's the kicker. [00:58:50] Speaker 00: There was undisputed testimony from our expert, Dr. Kelly, that one could not meet those standards without using this patented feature. [00:58:58] Speaker 00: You had to have this patent to meet those standards. [00:59:02] Speaker 02: First mode could have done it. [00:59:03] Speaker 02: It just would have been noisy. [00:59:07] Speaker 00: Right, and the evidence is that no one would use burst mode after the 079 came along. [00:59:13] Speaker 00: Nobody used it. [00:59:14] Speaker 00: Fairchild never used it again or any other alternative. [00:59:17] Speaker 00: Power Integrations never used it again. [00:59:19] Speaker 00: And as far as we know, no. [00:59:21] Speaker 02: We were still making sales on the FX, right? [00:59:25] Speaker 02: It wasn't zeroed out on the graph. [00:59:27] Speaker 00: In applications where it was already designed in, right? [00:59:30] Speaker 00: I mean, this was an issue that Judge Chesney wrestled with. [00:59:33] Speaker 00: She really wanted to understand the facts around that. [00:59:36] Speaker 00: And so you had a large customer who designed in the FX before GX came along, Motorola. [00:59:43] Speaker 00: And it was a big cell phone charger program. [00:59:45] Speaker 00: And you buy those chargers as long as those phones are supported. [00:59:49] Speaker 00: It can be a long time. [00:59:50] Speaker 00: So sales don't go to zero. [00:59:52] Speaker 00: But the critical consideration is, what is driving purchases of the new parts for the new design-ins? [00:59:58] Speaker 00: And on this record, it's undisputed that once GX came out, there was not a single design-in for the FX part. [01:00:05] Speaker 00: It absolutely disappeared overnight, like the Bose case. [01:00:13] Speaker 02: We could go on forever. [01:00:16] Speaker 03: This is fine. [01:00:16] Speaker 03: I think we won't go on forever. [01:00:18] Speaker 03: Thank you. [01:00:18] Speaker 00: I want to make sure, though, the question is going to be answered. [01:00:20] Speaker 03: Thank you. [01:00:24] Speaker 03: All right. [01:00:24] Speaker 03: Ms. [01:00:24] Speaker 03: Sullivan, you have two minutes. [01:00:27] Speaker 05: Two points only, Your Honor. [01:00:28] Speaker 05: I have one word to leave you with on the seemingly inoperable claim construction of no variation whatsoever. [01:00:35] Speaker 05: Zao. [01:00:36] Speaker 05: The Zao prior art reference was the problem here. [01:00:39] Speaker 05: And I would just refer your honors to the pages where the Zao reference appears. [01:00:44] Speaker 05: That's at appendix 3746. [01:00:51] Speaker 05: And there you'll see the problem. [01:00:52] Speaker 05: The problem is Zao had not a fixed line, a horizontal line, but a rising line for the frequency variation in the first range. [01:01:02] Speaker 05: To overcome it, if you look at appendix 3260, the power integrations had to make the argument, no, no, we're fixed, meaning non-burying. [01:01:12] Speaker 05: So we overcomes that. [01:01:14] Speaker 05: That's the reason why they made what sounds perhaps like an inoperable claim construction. [01:01:18] Speaker 05: But second, Your Honor, they waived any objection to our claim construction on non-burying. [01:01:23] Speaker 05: They waived it because they haven't challenged it on appeal. [01:01:25] Speaker 05: So you don't have a Chef America Ecolab problem here. [01:01:28] Speaker 05: The construction to circumvent Zao is their problem, not ours. [01:01:33] Speaker 05: If it renders the patent invalid for lack of enablement, that's their problem, not ours. [01:01:36] Speaker 02: Did you argue Zao below? [01:01:38] Speaker 05: Absolutely, Your Honor. [01:01:39] Speaker 05: We did. [01:01:40] Speaker 02: Where? [01:01:43] Speaker 05: While I'm seeking that page, Your Honor, can I just finish on double counting so I don't lose all my time with you? [01:01:48] Speaker 05: Because I promised to come back to you on double counting. [01:01:50] Speaker 05: The argument is simple. [01:01:52] Speaker 05: If you take Dr. Putnam, the damage is experts three buckets. [01:01:55] Speaker 05: They appear in his demonstrative reproduced on page 20 of the blue brief. [01:02:00] Speaker 05: He did count in violation of Azutech and Lucent lost profits and royalty on the same infringing acts. [01:02:09] Speaker 05: He double counted lost profits and additional royalty on the same infringing acts. [01:02:14] Speaker 05: If you look at the price erosion bucket that's depicted here on the left, price erosion on [01:02:19] Speaker 05: power integration sales is a result of all sales of Fairchild's infringing products. [01:02:25] Speaker 05: So he's counted a price erosion loss profits damages measure based on all our sales. [01:02:30] Speaker 05: He then, on the right-hand bucket, the $47.1 million for the supposed license fee on the additional Fairchild units that power integrations wouldn't have sold, he counts it again. [01:02:40] Speaker 05: He says, they infringed, and you get a license. [01:02:43] Speaker 05: That's the double counting, Your Honor. [01:02:45] Speaker 03: OK, I think we're about out of time. [01:02:47] Speaker 03: Do you have the reference? [01:02:49] Speaker 05: Do you want them to submit it? [01:02:56] Speaker 05: Your Honor, I don't have the reference. [01:02:58] Speaker 05: I can't answer your question affirmatively right now. [01:03:01] Speaker 02: I don't recall you answering the waiver argument the red brief made in your gray brief, which is why I was wondering, did Wiseau ever actually brought it up? [01:03:08] Speaker 05: Well, Your Honor, we think it's there in the patent history. [01:03:11] Speaker 05: We're not relying on it. [01:03:13] Speaker 05: It's explanatory of why there may be a seemingly inoperable construction. [01:03:16] Speaker 05: Thank you for giving us all the extra time on the argument. [01:03:18] Speaker 05: I respectfully suggest that you reverse. [01:03:21] Speaker 05: But certainly, this is not a case to amend entire market value rule law. [01:03:24] Speaker 05: This was a case for apportionment. [01:03:26] Speaker 03: I think we're out of time. [01:03:27] Speaker 03: Thank you. [01:03:28] Speaker 03: Thank both counsel, the case is submitted.