IR v. IXYS
In International Rectifier Corp. v. IXYS Corp., No. 04-1014 (Fed. Cir. September 13, 2004), the federal circuit vacated and remanded an injunction grant that did not comply with the specificity requirements of Rule 65(d), as well as a portion of the judgment relating to IXYS's affirmative defenses of invalidity and unenforceability.
International Rectifier Corp. ("IR") sued IXYS Corp. ("IXYS") upon issuance of IR's '481 patent directed to semiconductor device "packages." In response, IXYS modified the design of its accused semiconductor products. IR moved for summary judgment of infringement; IXYS acquiesced in the motion and summary judgment was granted. However, IXYS urged the trial court to limit the injunction to products made according to IXYS's original design and any post-injunction products that differed only colorably from the adjudicated products. Such an injunction would exclude IXYS's redesigned products so that IR would be unable to accuse those products of infringement in a contempt proceeding. The trial court rejected IXYS's objections and entered final judgment using the language proposed by IR.
On appeal, the federal circuit vacated the permanent injunction reasoning that "the injunction failed to satisfy Rule 65(d) because it lacked specific terms and a reasonably detailed description of the acts sought to be restrained." Applying its precedent in Additive Controls, the court rejected as overly broad a permanent injunction "that simply prohibits future infringement of a patent." The district court erroneously failed to state which acts constituted infringement or to expressly limit the injunction’s scope to the manufacture, use or sale of the specific device(s) found to infringe. The only acts the injunction may prohibit are infringement of the patent by the adjudicated devices and infringement by devices not more than colorably different from the adjudicated devices. In order to comply with Rule 65(d), the injunction was required to explicitly proscribe those acts.
The federal circuit then rejected IXYS' request to limit the injunction to those products adjudicated to infringe (and those only colorably different), excluding the IXYS redesigned products commercialized after the injunction issued. According to the court, it was improper to exclude pre-judgment devices not accused of infringement in the underlying action, when IR chose not to accuse the redesigned products in the first place.
Finally, the judgments of no invalidity and no unenforceability in favor of IR were vacated because those issues were never adjudicated. IXYS withdrew its affirmative defenses during discovery and prior to the date on which IR filed its motion for summary judgment. Thus, IR was not entitled to adjudication of issues not before the court.
To view the full decision visit http://www.aplf.org/mailer/Issue244IR.doc
Juicy Whip v. Orange Bang
In Juicy Whip Inc., v. Orange Bang, Inc. No. 03-1609 (Fed. Cir. Sept. 3, 2004), the federal circuit held that the district court erred as a matter of law by denying Juicy Whip the opportunity to present evidence supporting its theory of lost profits on lost syrup sales, when there was a functional relationship between its patented dispenser and the unpatented syrup.
Juicy Whip's '405 patent is directed to a beverage dispenser having transparent bowl that creates the visual impression that the bowl is the primary source of the dispensed beverage, a feature used to promote sales. A "post-mix" dispenser stores the syrup concentrate and water separately and mixes them together just before being dispensed. The dispenser disclosed in the '405 patent induces sales of the beverage. The district court found that Orange Bang infringed the '405 patent and awarded Juicy Whip compensatory damages, but denied Juicy Whip's motion to introduce evidence of lost profits on syrup sales, based on its determination that there was no functional relationship between Juicy Whip's dispenser and the syrup.
The federal circuit ruled that the district court incorrectly applied the entire market value rule, which permits recovery of lost profits on unpatented components typically sold with a patented item. Under the rule, physically separate unpatented components, normally sold with the patented components may be included within the damages base, provided that both are considered to be components of a single assembly or parts of a complete machine, or together constitute a functional unit. However, if two items are sold together merely for convenience and business advantage, the damages base will not extend to items that do not function as a single unit with the patented invention.
Because Juicy Whip's dispenser and the syrup were analogous parts of a single assembly and the syrup functions together with the dispenser to produce the visual appearance that is central to the '405 patent, lost syrup sales could be included in the lost profits calculation. It was of no moment that the patented dispenser and the unpatented syrup could each be used independently of each other:
The dispenser needs syrup and the syrup is mixed in a dispenser. Such is indeed a functional relationship, and a functional relationship between a patented device and an unpatented material used with it is not precluded by the fact that the device can be used with other materials or that the unpatented material can be used with other devices.
To view the full decision visit http://www.aplf.org/mailer/Issue244Juicy.doc
To discuss these topics further, please feel free to contact the author Michael R. Dzwonczyk, (firstname.lastname@example.org), at Sughrue Mion, PLLC in Washington DC, USA.
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