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Fairchild Semiconductor
, a leading global supplier of high
performance power and mobile semiconductor solutions, reported that a federal
appeals court vacated almost all of a $12.9 million damages award against the
company in its long-running patent litigation against Power Integrations, Inc.
In a 59-page ruling released March 26, the United States Court of Appeals for
the Federal Circuit accepted many of Fairchild's core arguments, threw out a
lower court's finding that Fairchild willfully infringed Power Integrations'
patents, and reversed lower court rulings on the meaning of some Power
Integrations' patent claims.
“We are gratified that after more than eight years of litigation, the appeals
court has validated positions we have asserted since the lawsuit began,” said
Mark Thompson, Fairchild's chairman and CEO. “We are hopeful that we might
begin a dialog with Power Integrations toward a more effective means of
resolving disagreements over our technologies and Fairchild's intellectual
property rights.”
In 2006, a jury found Fairchild infringed four Power Integrations patents and
awarded $33.9 million in damages, which was subject to tripling because the
infringement was found willful. Damages were later reduced to $12.9 million by
the trial court. In Tuesday's ruling, the Federal Circuit eliminated the lower
damages amount as well, stating that Power Integrations' evidence of damages
was “derived from unreliable data and built on speculation.” In vacating the
damages award, the court found “there was no basis upon which a reasonable
jury could find Fairchild liable for induced infringement.” The court also
threw out the earlier ruling of willful patent infringement by Fairchild. The
ruling validates longstanding arguments made by Fairchild in multiple lawsuits
involving the two companies.
The appeals court instructed the lower court to conduct further proceedings to
determine damages from conduct that Fairchild always agreed occurred, which
consisted of approximately $500,000 to $750,000 worth of sales and imports of
affected products. Fairchild believes Power Integrations would be entitled to
a reasonable royalty on the basis of these direct U.S. sales. Fairchild
suspended sales of affected products in the United States in 2007 and offers
replacement products that were not accused in the lawsuit.
The findings that Fairchild infringed two Power Integrations' patents were
also overturned by the ruling, calling into question the validity of those
patents and whether they cover Fairchild's products. Further proceedings will
be needed to determine the effect of the Federal Circuit's rulings on the
meaning of several Power Integrations patent claims.
Fairchild and Power Integrations are involved in four other patent lawsuits,
including cases in Delaware, California and China. “We will litigate if
necessary to defend our intellectual property, and to defend ourselves when we
disagree with competitors' views,” said Fairchild's CEO Thompson.
“Nevertheless, there are better ways to resolve disputes, and we hope we might
move in that direction for the benefit of both companies and their
stockholders.”
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