In Int’l Rectifier Corp. v. Samsung Elecs. Co., Ltd., Samsung Semiconductor, Inc., and IXYS Corp., Nos. 02-1324, -1334, -1370, -1428 (Fed. Cir. March 18, 2004), the federal circuit reversed a district court’s contempt order, the denial of IXYS’s motion to clarify, vacate, or modify an injunction, and vacated a district court’s findings of fact upon which the denial and contempt orders were based.
International Rectifier (“IR”) sued Samsung for infringement of U.S. Patent No. 4,959,699 (“’699 patent”) relating to transistors. The suit was subsequently settled and a consent judgment including a permanent injunction was entered. The permanent injunction prohibited Samsung “from making, using, offering for sale or selling in or importing into the U.S. the components, devices or products infringing any claim of [the ‘699 patent].” After the settlement, Samsung sold uncut, unpackaged wafers that were precursors of the IXYS-designed transistor (MOSFET) devices to a German subsidiary of IXYS. The wafers were fabricated at Samsung’s foundry in South Korea with IXYS designs. Some of the completed transistor devices were sold by IXYS in the U.S. IR initiated contempt proceedings against Samsung and IXYS for violating the permanent injunction. IXYS’s motion to clarify, vacate, or modify the permanent injunction was denied and the district court entered a contempt order.
Noting that the language of the preliminary injunction tracked 35 U.S.C. § 271(a), the federal circuit held that the express language of the preliminary injunction and § 271(a) did not apply to conduct outside the U.S., relying on, e.g., both supreme court and federal circuit precedent. Reversing the finding of contempt, the federal circuit held that the “district court’s ‘subversion by agreement’ theory was tantamount to a conspiracy” between Samsung and IXYS “to infringe a patent, a theory which [had] no basis in law.” The federal circuit noted that “Samsung and IXYS are separate, unaffiliated companies, and that IXYS acts independently of Samsung.”
Because Samsung conducted no activity in the U.S. in violation of the agreement and no evidence supported an agreement to subvert the injunction, the determination that Samsung’s extraterritorial acts violated the injunction were held to be an abuse of discretion. Thus, the federal circuit reversed the district court’s denial of IXYS’s motion to clarify, vacate, or modify the injunction and reversed the contempt order.
Additionally, the federal circuit held that the permanent injunction bound only Samsung ‘and/or those persons in active concert or participation with [Samsung] who received actual notice’ of the injunction. Here, there was no evidence that Samsung exercised any control over IXYS, nor was IXYS legally identified or related in any way with Samsung. Faced with a lack of evidence that IXYS was in “active concert or participation” with Samsung to further any United States sales or that IXYS was an “aider or abettor, the court concluded that IXYS, as a non-party, could not be bound by the permanent injunction.
To view the full decision visit http://www.aplf.org/mailer/Issue205.doc
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