Top Defense Results: Power Integrations Inc. v. Fairchild Semiconductor International Inc. et al.

Technology products are rarely the product of one single patented invention, observes Blair M. Jacobs, a partner who splits his time between McDermott Will & Emery's Menlo Park and Washington, D.C. offices.

Jacobs uses smartphones as an example. Rather than regularly invent completely new phones, he said, companies tend to make many small changes over time, and "there are hundreds if not thousands of patents that deal with each one."

This idea was key to Jacobs' November success in persuading U.S. District Judge Maxine M. Chesney to throw out a jury's $105 million damages award against his client, Fairchild Semiconductor International Inc.

In March, the jury had found that System General Corp., a subsidiary of Fairchild, was making semiconductor chips that infringed on two patents belonging to Power Integrations Inc.

Power's damages expert, Dr. Jonathan Putnam, had based the $105 million figure on the entire value of the chips in the case. Power Integrations Inc. v. Fairchild Semiconductor International Inc. et al., 09-CV5235 (N.D. Cal., filed Nov. 4, 2009).

According to Jacobs, "grossly inflated" is a "nice" way of describing Putnam's figure, given that the patented features were only two of "numerous features and functionalities" contained in each chip.

"You're entitled to a patent, but the patent only covers exactly what the invention is," he said.

The judge denied Fairchild's motion for a new trial on damages.

Shortly after the March verdict, however, the U.S. Court of Appeals for the Federal Circuit made a decision that Jacbos said "clarified the law," requiring patentees to apportion value between patented and unpatented features in an accused product.

Jacobs filed a motion for reconsideration, and Chesney tossed the $105 million award, saying the jurors hadn't decided it based solely on the patented features of the product. The judge ordered a new trial on damages, which Jacobs expects to take place toward the end of the year.

"I think this is important because jurisprudence in the last 40 years ... has been refining laws with respect to damages," Jacobs said. "We'd really never seen a case before where it worked down to this level of granularity, but I think this is where the law is heading."

Attorneys with Fish & Richardson PC, which represents Power Integrations in the case, declined to comment.

- Alison Frost