IP Law Daily Nichia proves Everlight’s infringement, but not entitled to injunction
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Tuesday, January 26, 2016

Nichia proves Everlight’s infringement, but not entitled to injunction

By Peter Reap, J.D., LL.M.

Nichia demonstrated by a preponderance of the evidence that Everlight Electronics’ (and its subsidiary Everlight Americas’) accused light-emitting diode (“LED”) products and manufacturing process infringe the asserted claims of two patents held by Nichia, the federal district court in Marshall, Texas, has decided (Nichia Corporation v. Everlight Electronics Co., Ltd., January 25, 2016, Gilstrap, R.). Further, the defendants failed to prove by clear and convincing evidence that any of the asserted claims of Nichia’s Patents are invalid.

However, because Nichia failed to show irreparable harm and because monetary damages are adequate to compensate for the harm of Everlight’s infringement of the patents-in-suit, Nichia failed to show that it is entitled to the extraordinary remedy of a permanent injunction, the court held.

Nichia asserted that the defendants infringe the asserted claims of United States Patent No. 7,432,589 (“the ’589 patent”), No. 7,462,870 (“the ’870 patent”), and No. 8,530,250 (“the ’250 patent”) (collectively, the “patents-in-suit”). The defendants asserted counterclaims seeking declarations that the asserted claims of the patents-in-suit are invalid and not infringed.

The LEDs at issue in this dispute are used in a wide variety of applications, including LCD backlighting applications, such as cell phones, laptop computers, and televisions, the court noted. The patents-in-suit involve the LED “package,” which includes the following individual parts: (i) the “leads,” which are used to conduct the electrical current to the LED chip; (ii) the “resin housing,” which is made out of a reflective resin and includes a recess in which the LED chip is placed; (iii) the “LED chip” or “LED die” (about the size of a grain of salt), which is mounted in the recess typically by using an adhesive material in a process known as die bonding; (iv) one or more “bond wires” that connect the LED chip to the leads; and (v) an “encapsulation material” that encapsulates the LED chip and protects it from the environment.

Infringement. Everlight’s and Everlight Americas’ importation, sale, and /or offer for sale of the accused XI3030 and XI3535 series products constitutes infringement of claims 17 and 21 of the ’250 patent, the court determined. The accused XI3030 and XI3535 series products contain every limitation of claims 17 and 21 of the ’250 patent. The preponderance of the evidence at trial proved that the accused XI3030 and XI3535 series products literally infringe claims 17 and 21 of the ’250 patent.

Similarly, the court concluded that Everlight’s and Everlight Americas’ importation, sale, and /or offer for sale of the accused: (1) 62-217D, 62-257D, and 45-21S series products constitutes infringement of claims 17, 19, and 21 of the ’250 patent; (2) XI3030 and XI3535 series products constitutes infringement of claims 1 and 7 of the ’250 patent; (3) 61-238 series products constitutes infringement of claim 1 of the ’589 patent; (4) 67-11 and 67-21 series products constitutes infringement of claim 2 of the ’589 patent; (5) 61-238 series products constitutes infringement of claims 2, 3, 10, and 11 of the ’870 patent; (6) 67-11 series products constitute infringement of claims 2, 3, 9, 10, and 11 of the ’870 patent; (7) 67-21 series products constitute infringement of claims 2, 3, 10, and 11 of the ’870 patent; (8) 62-217B and 62-227B series products constitute infringement of claims 2, 3, 10, and 11 of the ’870 patent; and (9) EHP-A09K series products constitute infringement of claim 9 of the ’870 patent.

Obviousness. The defendants failed to demonstrate by clear and convincing evidence that asserted claims 1, 7, 17, 19, and 21 of the ’250 patent would have been obvious to a person of ordinary skill in the art in light of Hitachi, in combination with Sanyo or Glenn, at the time of the claimed inventions, according to the court. Therefore, the asserted claims are not invalid as obvious in light of Hitachi, in combination with Sanyo or Glenn. Moreover, Glenn and Sanyo teach away from the inventions claimed in the asserted claims of the ’250 patent, which are directed to the design and manufacture of light-emitting devices in which only a portion of the resin molding material is disposed over the plating on the top surface of the substrate, the court observed.

The defendants failed to demonstrate by clear and convincing evidence that the asserted claims of the ’589 patent would have been obvious to a person of ordinary skill in the art in light of Nakashima and Kim at the time of the claimed inventions. Neither Nakashima nor Kim includes the combination of elements set forth in the asserted ’589 patent claims, including a wall separating the wire and die bonding areas, a through hole or notch under the wall, with the through hole or notch connecting the wall to the bottom portion of the housing.

Finally, the defendants failed to demonstrate by clear and convincing evidence that the asserted claims of the ’870 patent would have been obvious to a person of ordinary skill in the art in light of Waitl and Nitta at the time of the claimed inventions.

Injunctive relief. The record showed an absence of meaningful competition between the parties, the court reasoned. Nichia does not view Everlight as a meaningful competitor in the United States, and Nichia America’s internal assessment of sales opportunities in all of North America only identifies Everlight as to three out of 516 sales opportunities for a total sales amount of less than $50,000. This is the proverbial “drop in the bucket,” the court commented. Everlight had no accused sales to Nichia’s top twenty U.S. customers.

While the absence of actual competition between the parties related to the accused products conclusively showed that Nichia will not be irreparably harmed in the absence of an injunction, a very small area of possible competition (as existed here) showed that any justification for an injunction was remote indeed, and weighed against such the grant of injunctive relief by the court. Similarly, Nichia failed to establish past irreparable harm or the likelihood of irreparable harm in the future based on price erosion, the court decided. Nichia’s one claimed instance of price erosion involving GE could not be attributed to competition from Everlight.

Moreover, Nichia’s licensing of the patents-in-suit to the suppliers of 41% of the global LED market also precluded a finding of irreparable harm, the court held. Several of these licensees are significant competitors and considered “major threats” to Nichia’s flagship 757 LED product. Because Nichia Corporation has licensed the patents-in-suit to many competitors and because there are multiple low-priced non-infringing alternatives from competitors available to replace the accused Everlight products if such products were not available, Nichia failed to establish the amount of any additional supposed sales, if any, in the absence of competition from Everlight.

Nichia’s damages expert did not attempt to calculate a reasonable royalty or lost profits, and therefore Nichia’s contention that a reasonable royalty and/or lost profits are too uncertain to calculate was unavailing, the court said. Further, Nichia failed to present any evidence suggesting that a reasonable royalty and/or lost profits would not be adequate to compensate Nichia for the harm caused by the defendants’ limited U.S. competition.

The case is No. 2:13-cv-00702-JRG.

Attorneys: Chen Li (Rothwell Figg Ernst & Manbeck) for Nichia Corp. Richard C Vasquez (Vasquez Benisek & Lindgren, LLP) for Everlight Electronics Co., Ltd., Everlight Americas, Inc., and Zenaro Lighting, Inc.

Companies: Everlight Electronics Co., Ltd., Everlight Americas, Inc., and Zenaro Lighting, Inc.

MainStory: TopStory Patent TexasNews

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