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Power Integrations, Inc. v. Semiconductor Components Industries, LLC

United States Court of Appeals, Federal Circuit

June 13, 2019

POWER INTEGRATIONS, INC., Appellant
v.
SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC, DBA ON SEMICONDUCTOR, Appellee

          Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2016-00809.

          Frank Scherkenbach, Fish & Richardson, PC, Boston, MA, argued for appellant. Also represented by Michael R. Headley, Howard G. Pollack, Neil Warren, Redwood City, CA; John Winston Thornburgh, San Diego, CA.

          Michael Hawes, Baker Botts, LLP, Houston, TX, argued for appellee. Also represented by Roger Fulghum; Brett J. Thompsen, Austin, TX; Lauren J. Dreyer, Washington, DC.

          Before Prost, Chief Judge, Reyna and Stoll, Circuit Judges.

          Prost, Chief Judge.

         Semiconductor Components Industries, LLC, doing business as ON Semiconductor ("ON"), petitioned for inter partes review ("IPR") of several claims of U.S. Patent No. 6, 212, 079 ("the '079 patent"). The Patent Trial and Appeal Board ("Board") determined that the IPR was not time-barred by 35 U.S.C. § 315(b) and that the challenged claims were invalid. ON Semiconductor Corp. v. Power Integrations, Inc., No. IPR2016-00809, Paper 67 (P.T.A.B. Sept. 22, 2017). Power Integrations, Inc. ("Power Integrations") appeals the Board's decision.

         For the reasons explained below, we hold that this IPR is time-barred under § 315(b). We therefore vacate the Board's final written decision and remand with instructions to dismiss IPR2016-00809.

         I

         A

         Power Integrations owns the '079 patent, which relates to switched mode power supplies. '079 patent col. 1 ll. 7, 11-26. These power supplies function to convert high-voltage alternating current into low-voltage direct current to power electronic devices. Id. The '079 patent discloses a "switching regulator" to help conserve power and maintain output regulation at low loads without skipping cycles. Id. col. 1 ln. 65-col. 2 ln. 35.

         B

         In 2005 and 2006, Fairchild Semiconductor Corporation and Fairchild (Taiwan) Corporation (collectively, "Fairchild") challenged several claims of the '079 patent in two ex parte reexaminations, which were consolidated. J.A. 87. On May 5, 2009, the U.S. Patent and Trademark Office ("PTO") confirmed the validity of the challenged claims as amended and 22 new claims. J.A. 86-92.

         Then, on November 4, 2009, Power Integrations sued Fairchild for infringement of the '079 patent and two other patents. J.A. 1103-12. Fairchild was served with the complaint for infringement on November 6, 2009. In March 2014, a jury found claims 31, 34, 38, and 42 of the '079 patent not invalid and infringed. J.A. 1033-35. The jury awarded damages of $105 million. J.A. 1035. Following our decision in VirnetX, Inc. v. Cisco Systems, Inc., 767 F.3d 1308 (Fed. Cir. 2014), the district granted Fairchild's motion for a new trial on damages for infringement of the '079 patent. In the second damages trial in December 2015, a jury applied the entire market value rule and awarded damages of $139.8 million. J.A. 1038-39.

         Fairchild appealed, and we affirmed the jury's verdict of infringement of the '079 patent. Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 904 F.3d 965, 974 (Fed. Cir. 2018), cert. denied, 139 S.Ct. 1265 (2019). We concluded, however, that the entire market value rule could not be used to calculate damages in this case, vacated the damages award, and remanded for further proceedings. Id. at 977-80. On May 6, 2019, the district court granted the parties' joint motion to release and return Fairchild's posted bond of $146, 480, 598 and any accrued interest. To date, there has been no further action in the district court proceeding.

         C

         On November 18, 2015, ON entered into an agreement to merge with Fairchild. J.A. 143-44. But the merger did not close immediately. See J.A. 143. Several months later, while the merger was still pending, ON filed a petition for IPR challenging claims 31, 32, 34, 38, 39, and 42 of the '079 patent.[1] J.A. 137-202. This petition for IPR was filed on March 29, 2016, more than one year after Fairchild was served with the complaint alleging infringement of the '079 patent. The Fairchild-ON merger closed several months later, on September 19, 2016. J.A. 281-82. The Board instituted the IPR four days after that, on September 23, 2016. J.A. 103-31.

         Power Integrations argued in both its Patent Owner Preliminary Response and its Patent Owner Response that this IPR should be time-barred under § 315(b) because ON and Fairchild were in privity at the time of filing and Fairchild had been served with a complaint for infringement more than one year before the petition was filed. J.A. 218-20, 369-72. The Board rejected this argument in its institution decision and again in its final written decision.

         In its institution decision, the Board focused its § 315(b) analysis on whether ON and Fairchild were in privity when Fairchild filed its petition. Power Integrations argued that the existence of a merger agreement and a confidentiality agreement stating that ON and Fairchild "share[d] a common legal and commercial interest" and "are or may become joint defendants in proceedings" showed that they had a common interest in annulling the jury's $139.8 million damages award against Fairchild for infringing the '079 patent. J.A. 218-19. ON had 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 the merger was dependent on several uncertain conditions occurring. J.A. 143. ON also asserted that Fairchild had no role in the decision to file the IPR petition, had no control over the content of the IPR petition, and did not pay for the IPR petition. J.A. 143-44. The Board determined that there was insufficient evidence of record to establish control and therefore insufficient evidence to establish privity between Fairchild and ON at the time the petition was filed. J.A. 113-14. The Board thus held that the IPR was not time-barred by § 315(b) and instituted the IPR. J.A. 115, 130.

         After institution, Power Integrations requested authorization to file a motion under 37 C.F.R. § 42.51(b)(2) for additional discovery on the relationship between ON and Fairchild. J.A. 289-90. ON objected to providing the additional discovery. J.A. 1903. The Board applied the factors enumerated in Garmin International, Inc. v. Cuozzo Speed Technologies LLC, No. IPR2012-00001, Paper 26 at 6-7 (P.T.A.B. Mar. 5, 2013), which govern requests for additional discovery, and denied Power Integrations' request for authorization to file a motion for additional discovery. J.A. 290-92. In denying the request, the Board determined that "Patent Owner has expressed no more than a suspicion (mere speculation) that such evidence exists and would be uncovered by additional discovery" and therefore had not met the first Garmin factor. J.A. 292. The Board also concluded that even if Power Integrations had established the first Garmin factor, it would not grant the request for additional discovery because the requests were overly broad. Id.

         In its Patent Owner Response, Power Integrations again argued that ON was in privity with Fairchild (an undisputedly time-barred party) at the time ON filed the petition. J.A. 369-72. The Board rejected this argument for the same reasons it had rejected it in its institution decision. J.A. 10-13. It again focused on the issue of control and held that there was insufficient evidence of record to show that Fairchild exercised, or could have exercised, control over the IPR petition. Id.

         Power Integrations next asserted that ON was acting as Fairchild's proxy in filing the IPR petition. J.A. 369-72. The Board rejected this argument as well, finding that Power Integrations offered mere speculation, not evidence, that ON filed the petition as Fairchild's proxy. J.A. 15-17. The Board determined that ON had its own interest in the IPR proceeding because it had a multi-billion-dollar merger with Fairchild pending at the time it filed the petition. J.A. 17.

         Finally, Power Integrations argued that the IPR was time-barred by § 315(b) because Fairchild, a barred party, was an admitted real party in interest ("RPI") before institution. J.A. 364-69. Fairchild became an RPI at least by the time its merger with ON closed-four days before institution. J.A. 364-66. Two other panels of the Board had previously issued nonprecedential decisions holding that only privity relationships up until the time an IPR petition is filed are relevant for purposes of the § 315(b) time-bar. See ARRIS Grp., Inc. v. TQ Delta LLC, No. IPR2016-00430, Paper 9 at 6 (P.T.A.B. July 1, 2016); Synopsys, Inc. v. Mentor Graphics Corp., No. IPR2012-00042, Paper 60 at 12 (P.T.A.B. Feb. 19, 2014). The Board in this case similarly held that RPI and privity relationships for purposes of the § 315(b) time-bar are only relevant up to the date the petition is filed. J.A. 14-15; see also J.A. 11-12 ("Panels of the Board have interpreted [§] 315(b) (and our associated rule 37 C.F.R. § 42.101(b)) to mean that 'it is only privity relationships up until the time a petition is filed that matter.'" (quoting Synopsys, No. IPR2012-00042, Paper 60 at 12)). Because the Board determined that Fairchild was not an RPI at the time the petition was filed and rejected Power Integrations' privity and proxy arguments, it concluded that the IPR was not time-barred.

         Having found the IPR not time-barred, the Board proceeded to address the merits of the challenged claims and found them unpatentable as obvious over the combination of Japanese Unexamined Patent Application Publication No. JP H10-323028 ("Oda") and Japanese Unexamined Patent Application Publication No. JP S59-144366 ("Nakamura").

         Power Integrations timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(4)(A).

         II

         On appeal, Power Integrations argues that this IPR was time-barred under § 315(b). As our court has previously held, when the PTO institutes an IPR, its rejection of a time-bar challenge under § 315(b) is reviewable. Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364, 1374 (Fed. Cir. 2018) (en banc). Power Integrations argues that privity and RPI relationships arising after filing but before institution should be considered for purposes of the § 315(b) time-bar. Under Power Integrations' interpretation of § 315(b), this IPR would be time-barred because Fairchild, a time-barred party, became an RPI after ON filed this petition but before institution. ON contends that privity and RPI relationships for purposes of § 315(b) should be assessed only at the time the IPR petition is filed and that this IPR is not time-barred.

         Making things even more intersting, in a motion filed after the principal briefing in this appeal was completed, ON contended that Power Integrations is precluded from challenging the Board's § 315(b) determination because it did not appeal the Board's final written decision reaching the same § 315(b) determination in another IPR. Power Integrations ...


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