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Nichia Corp. v. Everlight Americas Inc.

United States Court of Appeals, Federal Circuit

April 28, 2017

NICHIA CORPORATION, Plaintiff-Appellant
v.
EVERLIGHT AMERICAS, INC., EVERLIGHT ELECTRONICS CO., LTD., Defendants-Cross-Appellants ZENARO LIGHTING, INC., Defendant

         Appeals from the United States District Court for the Eastern District of Texas in No. 2:13-cv-00702-JRG, Judge J. Rodney Gilstrap.

          Robert P. Parker, Rothwell, Figg, Ernst & Manbeck, P.C., Washington, DC, argued for plaintiff-appellant. Also represented by Martin Moss Zoltick, Michael Jones, Daniel McCallum, Steven Paul Weihrouch.

          Jerry Robin Selinger, Patterson & Sheridan LLP, Dallas, TX, argued for defendants-cross-appellants. Also represented by Jayme Partridge, Barden Todd Patterson, Houston, TX; Eric W. Benisek, Jeffrey T. Lindgren, Robert McArthur, Stephen C. Steinberg, Richard C. Vasquez, Vasquez Benisek & Lindgren, LLP, Lafayette, CA.

          Before Reyna, Hughes, and Stoll, Circuit Judges.

          Stoll, Circuit Judge.

         Nichia Corporation sued Everlight Electronics Co., LTD., Everlight Americas, INC., and Zenaro Lighting, Inc. (collectively, "Everlight") for infringement of three of its patents. Following a bench trial, the district court found Everlight infringed all three patents and had not proved them invalid. The court denied, however, Nichia's request for a permanent injunction against Everlight. Nichia appeals the district court's refusal to enter an injunction against Everlight. Everlight cross-appeals the court's judgment that it infringes Nichia's patents and that it failed to prove the patents invalid. We affirm.

         Background

         I.

         Nichia Corporation is an LED company that manufactures and supplies LEDs in markets around the world. Nichia Corp. v. Everlight Elecs. Co., No. 02:13-CV-702, 2016 WL 310142, at *1 (E.D. Tex. Jan. 25, 2016) ("Nichia"). Both parties agree that "Nichia is the world's largest supplier of LEDs." J.A. 2113, ¶ 154. It sells LEDs in America through its subsidiary Nichia America Corp. Nichia also researches and develops LED technology, including the technology disclosed in the three patents Nichia asserted in this case.

         Everlight buys chips from suppliers and packages them into LEDs. Nichia, 2016 WL 310142, at *1. It sells LEDs in the U.S. directly to customers and through its subsidiaries. Id.

         II.

         Nichia accused Everlight of infringing three of Nichia's patents, U.S. Patent Nos. 8, 530, 250, 7, 432, 589, and 7, 462, 870. All three disclose package designs and methods of manufacturing LED devices. All three patents use a shared set of vocabulary known in the art, as shown below on a common configuration of an LED:

         (Image Omitted)

Id. at *4; J.A. 11. The court explained that this LED includes the following parts:

(i) the "leads, " which are used to conduct the electrical current to the LED chip; (ii) the "resin housing, " which is made out of a reflective resin and includes a recess in which the LED chip is placed; (iii) the "LED chip" or "LED die" (about the size of a grain of salt), which is mounted in the recess typically by using an adhesive material in a process known as die bonding; (iv) one or more "bond wires" that connect the LED chip to the leads; and (v) an "encapsulation material" that encapsulates the LED chip and protects it from the environment.

Nichia, 2016 WL 310142, at *4.

         The LEDs in suit are miniscule; they are typically smaller than 1 millimeter in height. Id. They are used in LCD backlights, video displays, automotive applications, and general lighting applications. Id.

         The court found that LED design technology is a complex technological space, where many design considerations pull in different directions simultaneously. It found that "LED package design involves the simultaneous integration and balancing of multiple design considerations, including electrical, optical, thermal, and mechanical design challenges." Id. The court emphasized that:

[m]ultiple challenges must be addressed when designing an LED package: (i) electrical design challenges: We have to conduct a relatively high-current density through the small LED chip and connect the LED chip to the leads; (ii) optical design challenges: The intensities are very high, because the LED chip is very small and the power emitted by the LED is quite high. And, therefore, we need to handle a very high-optical radiation density; (iii) thermal design challenges: The LED chip inevitably creates heat, and this heat needs to be conducted away; and (iv) mechanical design challenges: includes protecting the LED chip from any external effect, such as moisture or mechanical intrusion. These multiple requirements can be contradictory and can pull the design in different directions.

Id. (internal emphases, citations, and quotations omitted).

         The district court held a bench trial and found that Everlight infringed all three patents and had failed to prove by clear and convincing evidence that the asserted claims of the three patents are invalid.[1] Id. at *1. Despite finding the patents valid and infringed, the court refused Nichia's request for prospective relief in the form of a permanent injunction. Id. The court explained that "Nichia has not demonstrated that Defendants' past and continuing infringement of Nichia's Patents has caused, and will continue to cause, irreparable harm to Nichia." Id. It also reasoned that monetary damages could adequately compensate Nichia for Everlight's infringement. The court thus concluded that Nichia was not entitled to injunctive relief. Id.

         Nichia timely appealed, and Everlight cross-appealed. Nichia appeals the district court's refusal to grant the injunction. Everlight cross-appeals the district court's judgment that Everlight infringes and that it failed to prove the patents invalid with respect to all of the asserted claims of Nichia's three asserted patents. We have jurisdiction under 28 U.S.C. § 1292(c)(2).

         Discussion

         I.

         We begin with Everlight's appeal of the district court's finding that Everlight infringed the asserted claims of Nichia's three patents and its conclusion that Everlight failed to prove those claims invalid by clear and convincing evidence.

         We review the court's findings of fact for clear error and its legal conclusions de novo. Allergan, Inc. v. Apotex Inc., 754 F.3d 952, 961 (Fed. Cir. 2014). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). "Where the district court's claim construction relies only on intrinsic evidence, the construction is a legal determination reviewed de novo." Ruckus Wireless, Inc. v. Innovative Wireless Sols., LLC, 824 F.3d 999, 1002 (Fed. Cir. 2016) (citing Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831, 841 (2015)). Infringement is a question of fact. Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1361 (Fed. Cir. 2006). "Obviousness is a question of law based on underlying questions of fact." Daiichi Sankyo Co. v. Apotex, Inc., 501 F.3d 1254, 1256 (Fed. Cir. 2007).

         A.

         We begin with the '250 patent. The district court found claims 1, 7, 17, 19, and 21 of the patent infringed and not proven invalid. Everlight first challenges the court's construction of the claim term "lead" and its finding of infringement under its proposed construction. Second, it challenges the court's construction of "planar" and the court's finding of infringement under either its proposed construction or the court's. Finally, Everlight challenges the court's conclusion that it failed to prove the patent obvious.

         1.

         The '250 patent is directed to a process for manufacturing LEDs that purportedly improves production efficiency. The patent describes making a continuous sheet of LEDs and separating, or "singulating, " them to make the final product. '250 patent col. 2 ll. 49-53. During singulation, LEDs often break. So to reduce breakage, the patent suggests manufacturing LEDs by fitting a lead frame between an upper and lower mold, filling the molds with resin, and then singulating the LEDs. This, the patent suggests, is a "simple and low-cost method for manufacturing, in a short time, multiple light emitting devices which ha[ve] high adhesion between a lead frame and a thermosetting resin composition." Id. The district court noted that, "[b]etween 2010 and 2013, Nichia's sales of the products that practice the '250 patent increased from three percent of Nichia's total sales volume, to 27 percent." Nichia, 2016 WL 310142, at *24. The court also explained that, "[i]n 2013, Nichia sold over 13.9 billion units, with revenues of $1.7 billion." Id.

         The '250 patent's first claim is reproduced below:

1. A method of manufacturing a light emitting device, the method comprising:
providing a lead frame comprising at least one notch;
plating the lead frame;
after plating the lead frame, providing an upper mold on a first surface of the plated lead frame and a lower mold on a second surface of the plated lead frame, and transfer-molding a thermosetting resin containing a light reflecting material in a space between the upper mold and the lower mold to form a resin-molded body; and
cutting the resin-molded body and the plated lead frame along the at least one notch to form a resin package, the resin package comprising a resin part and at least one lead, and the cutting step being performed such that an outer surface of the resin part and an outer surface of the at least ...

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