Free Letter - District Court of Delaware - Delaware

Case 1 :04-cv-01371-JJF Document 514 Filed O9/O4/2007 Page 1 of 3
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ATTORNEYS AND COUNSELLORS AT LAW ·rE|_;pH¤NE
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P. 0. Box uso agzfijffjs,
WILMINGTON, DeLAwARe 19899
September 4, 2007
The Honorable Joseph J. Faman, Jr. VIA ELECTRONIC FILING
United States District Court
844 King Street
Wilmington, DE 19801
Re: Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., et al.,
C.A. No. 04-1371-JJF
Dear Judge Farnan:
We write in advance of the pretrial conference scheduled for September 12, 2007 in the
above matter to bring to the Court’s attention the Federal Circuit’s recent, unanimous en banc
decision In re Seagate Technology, LLC, Misc. Docket No. 840 (Fed. Cir. August 20, 2007)
(attached at Tab 1). Seagate represents a sea change in willfulness law, validates the arguments
that Fairchild made in opposition to the manner in which the instant case has been bifurcated,
and may render the scheduled September 17, 2007 invalidity trial in this matter a nullity.
In Seagate, the Federal Circuit changed the law related to willful infringement: "We
overrule the standard set out in Underwater Devices and hold that proof of willful infringement
permitting enhanced damages requires at least a showing of objective recklessness." In re
Seagate, Misc. Docket No. 830, slip op. at 12 (Fed. Cir. Aug. 20, 2007). This new, objective
recklessness inquiry is entirely inconsistent with the subjective question presented to the j1u·y
during the infringement trial in this matter — namely, whether "Fairchild had no reasonable, good
faith basis for concluding that it did not inhinge Power Integrations’ patents." Trial Transcript,
p. 1668. The Federal Circuit has unequivocally rejected the subjective standard applied in the
infringement trial in this case, holding that "the state of mind of the accused infringer is not
relevant to this objective inquiry." Seagate, slip op. at 12.
The Federal Circuit also made clear that the issue of willfulness must be tried
together with the issues of infringement and invalidity so that the jury can determine —— in
light of all of the evidence — whether the accused inhinger has acted in an "objectively
reckless" manner:

Case 1 :04-cv-01371-JJF Document 514 Filed O9/O4/2007 Page 2 of 3
The Honorable Joseph J. Farrran, Jr.
September 4, 2007
Page 2
To establish willful infringement a patentee must show by clear and convincing
evidence that the inhinger acted despite an objectively high likelihood that its
actions constituted infringement ofa @1putent. The state of mind of the
accused inhinger is not relevant to this objective inquiry. If this threshold
objective standard is satisfied, the patentee must also demonstrate that this
obj ectively-defined risk (determined by the record developed in the infringement
proceeding) was either known or so obvious that it should have been known to the
accused infringer.
Id., slip op. at 12 (emphasis added). In view of Seagate, it is necessary for the same jury
to consider infringement, invalidity, and willfulness since "a substantial question about
invalidity or infringement is likely sufficient. .. [to avoid] a charge of willfulness based
on post-filing conduct." Seagate, slip op. at 17.
Thus, Seagate confirms that bifurcation ofthe issues of infringement and
willfulness from invalidity (as occurred in this matter) is inappropriate since willfulness
depends on "evidence that the infringer acted despite an objectively high likelihood that
its actions constituted infringement of a valid patent .... " Seagate, slip op. at 12
(emphasis added). Here, however, the Court specifically instructed Fairchild that it could
not argue in the first trial that Power Integrations’ patents were invalid. See Trial
Transcript, p. 1498 ("Court: For purposes of this trial, Fairchild can infringe an invalid
patent, because we’re only talking about infringement at this trial.").l
Consequently, unless the Court were to set aside the jury’s finding of willfulness,
the issue must be retried together with infringement and invalidity.2 Fairchild promptly
infomred Power Integrations of the Seagate decision and requested that Power
Integrations either dismiss its allegations of willfulness or consent to retry the issue of
willfulness together with infringement and invalidity, but Power Integrations refused. To
avoid wasting the Court’s and the parties’ time and resources in preparing for and going
forward with a separate invalidity trial which would be a nullity as to any claim not found
to be invalid, Fairchild respectfully requests that the Court schedule a status conference at
its earliest convenience to address the impact of Seagate on the September 17, 2007
invalidity trial and on the previous jury’s willfulness finding during the infringement trial
in this matter.
I Fairchild was limited to presenting evidence of its subjective good faith and was not permitted to
present the jury with additional objective evidence concerning the invalidity of the asserted claims.
2 Seagate also confirms that it would appropriate for the Court to set aside the finding of willful
infringement. Power Integrations did not mark its products with its patent numbers, notify Fairchild of its
alleged infringement prior to the filing of the complaint, include allegations of willfulness in its original
complaint, or seek a preliminary injunction. As the Federal Circuit noted, "a patentee who does not
attempt to stop an accused infringer’s activities. .. should not be allowed to accrue enhanced damages
based solely on the infringer’s post-filing conduct." Seagate, slip op. at 17.

Case 1 :04-cv-01371-JJF Document 514 Filed O9/O4/2007 Page 3 of 3
The Honorable Joseph J. Faman, Jr.
September 4, 2007
Page 3
Respectfully,
John G. Day
John G. Day
J GD/nml
Attachment
183838.1
c: William J. Marsden, Jr. Esquire (by hand and electronic mail; w/attachment)
Frank E. Scherkenbach, Esquire (via electronic mail; w/attachment)
Howard G. Pollack, Esquire (via electronic mail; w/ attachment)
G. Hopkins Guy, IH, Esquire (via electronic mail; w/attachment)