Free Reply Brief - District Court of Delaware - Delaware

Case 1:07-cv-00633-JJF-LPS

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE POWER INTEGRATIONS, INC., Plaintiff, v. BCD SEMICONDUCTOR CORP, et al., Defendants. POWER INTEGRATIONS, INC.'S SUPPLEMENTAL REPLY BRIEF IN SUPPORT OF ITS MOTION FOR ENTRY OF PRELIMINARY INJUNCTION FISH & RICHARDSON P.C. William J. Marsden, Jr. (#2247) ([email protected]) Kyle Wagner Compton (#4693) ([email protected]) 919 N. Market Street, Suite 1100 P.O. Box 1114 Wilmington, DE 19801 Telephone: (302) 652-5070 Facsimile: (302) 652-0607 Frank E. Scherkenbach FISH & RICHARDSON P.C. 225 Franklin Street Boston, MA 02110-2804 Telephone: (617) 542-5070 Facsimile: (617) 542-8906 Howard G. Pollack Michael R. Headley Scott A. Penner FISH & RICHARDSON P.C. 500 Arguello Street, Suite 500 Redwood City, CA 94063 Telephone: (650) 839-5070 Facsimile: (650) 839-5071 ATTORNEYS FOR PLAINTIFF POWER INTEGRATIONS, INC. Dated: May 28, 2008 C.A. No. 07-633 JJF-LPS

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BCD's supplemental brief opposing Power Integrations' motion for entry of a preliminary injunction [D.I. 100] fails to cite a single authority that interim PTO actions in reexamination have any bearing on pending litigation, including during the preliminary injunction stage. Instead, BCD cites a number of cases for the correct but irrelevant proposition that claims which are ultimately invalidated during reexamination are, thereafter, invalid for all purposes. These cases have nothing to do with the question at hand--whether the Court can and should enter a preliminary injunction to prevent BCD from continuing to infringe, and further irreparably harming Power Integrations. It can, and it should. The statutory presumption of validity under 35 U.S.C. § 282 is not diminished by ex parte reexamination proceedings unless and until a final non-appealable determination of invalidity has been reached, and BCD has no authority suggesting otherwise. There is simply nothing in the reexamination statute altering the statutory presumption. See 35 U.S.C. § 301 et seq. Nor is there any case law saying the presumption changes once reexamination proceedings commence. To the contrary, the Federal Circuit has indicated that the institution of reexamination proceedings has no effect on patentability. Hoechst Celanese Corp v. BP Chems. Ltd., 78 F.3d 1575, 1584 (Fed. Cir. 1996) (noting that "89% of the reexamination requests were granted that year, but only 5.6% of the reexamined patents were completely rejected with no claims remaining after reexamination").1 The Federal Circuit has also noted that infringers cannot rely on interim PTO rejections during reexam proceedings as a defense to willful infringement and treble damages when the claims are later confirmed, noting that such an interim PTO rejection "hardly justifies a good faith belief in the invalidity of the claims." See Acoustical Design, Inc.

1

The PTO's current statistics show that, for 3rd party requested ex parte reexamination, more than twice as many patents emerge with no claims changed at all (29%) than those for which all claims are cancelled (12%). See Ex. 1 at 2.

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v. Control Elecs. Co., 932 F.2d 939, 942 (Fed. Cir. 1991). As such, the reexamination should be given no weight here, particularly in view of the contrary jury verdicts rendered after consideration of a far more complete record than the one available to the Patent Office. BCD' s own cited case law does nothing to support its suggestion that the interim office action compels denial of a preliminary injunction, as the cases do not address the presumption of validity applied by the Court, nor do they address preliminary injunctions at all. Instead, BCD' s case law addresses the unrelated question of whether to stay district court action pending the final outcome in the Patent Office. Nothing in Gould v. Control Laser Corp., 705 F.2d 1340, 1340 (Fed. Cir. 1983) diminishes the presumption of validity or the likelihood that Power Integrations will succeed on the merits in this case, especially in view of Judge Farnan' s claim construction and the jury' s verdict of validity in the Fairchild case. Bausch & Lomb and Broadcast Innovation similarly say nothing about the presumption of validity or the likelihood of success.2 Here, the Court has already construed the claims, and a jury has already considered and affirmed the validity of the patent at issue in view of the same prior art being considered by the PTO. BCD provides no reason or authority for diminishing the import of these actions or the presumption that Power Integrations' patent is valid. For all the foregoing reasons, as well as those set forth in Power Integrations' moving and reply papers, Power Integrations requests that the Court enter a preliminary injunction to prevent BCD' s further harm to Power Integrations.
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Power Integrations has not yet had a chance to respond to the Office Action in the pending reexamination, but because the action is facially inconsistent with Judge Farnan' s claim construction and the jury verdict in the Fairchild case, there is no reason to expect the outcome of the PTO proceedings ultimately to differ from that reached in the Fairchild case. Although the PTO is required to give the claims the " broadest reasonable construction," see, e.g., In re Hyatt, 211 F.3d 1367, 1372 (Fed. Cir. 2000), the construction applied in the interim office action was, in fact, rejected by this Court as unreasonable in view of the patent specification, and Power Integrations believes the claims will ultimately be sustained by the Patent Office. 2

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Dated: May 28, 2008

FISH & RICHARDSON P.C. By: William J. Marsden, Jr. William J. Marsden, Jr. (#2247) Kyle Wagner Compton (#4693) 919 N. Market Street, Suite 1100 P.O. Box 1114 Wilmington, DE 19801 Telephone: (302) 652-5070 Facsimile: (302) 652-0607 Email: [email protected] Email: [email protected] Frank E. Scherkenbach FISH & RICHARDSON P.C. 225 Franklin Street Boston, MA 02110-2804 Telephone: (617) 542-5070 Facsimile: (617) 542-8906 Howard G. Pollack Michael R. Headley Scott A. Penner FISH & RICHARDSON P.C. 500 Arguello Street, Suite 500 Redwood City, CA 94063 Telephone: (650) 839-5070 Facsimile: (650) 839-5071 ATTORNEYS FOR PLAINTIFF POWER INTEGRATIONS, INC.

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CERTIFICATE OF SERVICE I hereby certify that on May 28, 2008, I electronically filed POWER INTEGRATIONS, INC.'S SUPPLEMENTAL REPLY BRIEF IN SUPPORT OF ITS MOTION FOR ENTRY OF PRELIMINARY INJUNCTION with the Clerk of Court using CM/ECF, which will send electronic notification of such filing(s) to the following counsel. In addition, the filing will also be sent via the method indicated below: BY HAND AND EMAIL Steven J. Balick John G. Day Tiffany Geyer Lydon Ashby & Geddes 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, DE 19899 BY EMAIL AND FIRST CLASS MAIL Erik R. Puknys Finnegan, Henderson, Farabow, Garrett & Dunner LLP Stanford Research Park 3300 Hillview Avenue Palo Alto, CA 94304-1203

I also certify that on May 28, 2008, I sent the document to the following individuals via electronic and first class mail: BY EMAIL AND FIRST CLASS MAIL E. Robert Yoches, Esq. Finnegan, Henderson, Farabow, Garrett & Dunner LLP 901 New York Avenue, NW Washington, DC 20001-4413 BY EMAIL AND FIRST CLASS MAIL Robert L. Burns Finnegan, Henderson, Farabow, Garrett & Dunner LLP Two Freedom Square 11955 Freedom Drive Reston, VA 20190-5675

/s/ William J. Marsden, Jr. William J. Marsden, Jr.
50488017.doc

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UNITED STATES PATENT AND TRADEM ARK OFFICE
Commissioner for Patents United States Patent and Trademark Office P.O. Box 1450 Alexandria, VA 22313-1450

www.uspto.gov

Ex Parte Reexamination Filing Data - December 31, 2007 1. Total requests filed since start of ex parte reexam on 07/01/81 . . . . . . . . . . . . . . . . . . 90601 a. By patent owner b. By other member of public c. By order of Commissioner 2. Number of filings by discipline a. Chemical Operation b. Electrical Operation c. Mechanical Operation 3. Annual Ex Parte Reexam Filings Fiscal Yr. 1981 1982 1983 1984 1985 1986 1987 1988 4. 5. No. 78 (3 mos.) 187 186 189 230 232 240 268 Fiscal Yr. 1989 1990 1991 1992 1993 1994 1995 1996 No. 243 297 307 392 359 379 392 418 Fiscal Yr. 1997 1998 1999 2000 2001 2002 2003 2004 No. 376 350 385 318 296 272 392 441 Fiscal Yr. 2005 2006 2007 2008 No. 524 511 643 165 2703 3023 3334 30% 33% 37% 3495 5400 165 39% 59% 2%

Number known to be in litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2398

26%

Determinations on requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8714 a. No. granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7998 . . . . . . . . . 92% (1) By examiner (2) By Director (on petition) 7885 113

b. No. denied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716 . . . . . . . . . . 8% (1) By examiner (2) Order vacated
1

681 35

Of the requests received in FY 2008, 23 requests have not yet been accorded a filing date, and preprocessing of 3 requests was terminated for failure to comply with the requirements of 37 CFR 1.510. See Clarification of Filing Date Requirements for Ex Parte and Inter Partes Reexamination Proceedings, Final Rule, 71 Fed. Reg. 44219 (August 4, 2006).

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6.

Total examiner denials (includes denials reversed by Director) . . . . . . . . . . . . . . . . . . . 794 a. Patent owner requester b. Third party requester 439 355 55% 45%

7.

Overall reexamination pendency (Filing date to certificate issue date) a. Average pendency b. Median pendency 24.0 (mos.) 18.6 (mos.)

8. Reexam certificate claim analysis: a. All claims confirmed b. All claims cancelled c. Claims changes

Owner Requester 23% 7% 70%

3rd Party Requester 29% 12% 59%

Comm'r Initiated 12% 21% 67%

Overall 26% 10% 64%

9.

Total ex parte reexamination certificates issued (1981 - present) . . . . . . . . . . . . . . . . . 6066 a. Certificates with all claims confirmed b. Certificates with all claims canceled c. Certificates with claims changes 1556 636 3874 26% 10% 64%

10. Reexam claim analysis - requester is patent owner or 3rd party; or Comm'r initiated. a. Certificates - PATENT OWNER REQUESTER . . . . . . . . . . . . . . . . . . . . . . . . . . . 2607 (1) All claims confirmed (2) All claims canceled (3) Claim changes 592 194 1821 23% 7% 70%

b. Certificates - 3rd PARTY REQUESTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3313 (1) All claims confirmed (2) All claims canceled (3) Claim changes 946 413 1954 29% 12% 59%

c. Certificates - COMM'R INITIATED REEXAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 (1) All claims confirmed (2) All claims canceled (3) Claim changes 18 30 98 12% 21% 67%

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