United States: An Accused Device That Infringes Sometimes, But Not Always, Nonetheless Infringes

This article was written by Joseph M.Schaffner*

In Broadcom Corp. v. Emulex Corp., No. 12-1309 (Fed. Cir. Oct. 7, 2013), the Federal Circuit affirmed the district court's findings of infringement, nonobviousness, and granting of a permanent injunction with accompanying sunset provision.

Broadcom Corporation ("Broadcom") owns U.S. Patent No. 7,058,150 ("the '150 patent"), generally relating to systems and methods of signal sampling.  The '150 patent discloses a signal receiver equipped with a phase interpolator to perform clock and data recovery.  Crucially, the '150 patent claims using multiple phase interpolators, each operating at a fraction of the rate of an incoming signal, to facilitate high-speed sampling.

In 2009, Broadcom brought suit against Emulex Corporation ("Emulex") alleging infringement of the '150 patent.  Broadcom averred that Emulex sold a device employing multiple data paths, reducing the frequency offset of the incoming signal "at least some of the time."  Slip op. at 7 (citation omitted).  At the close of evidence, both parties moved for JMOL on the issue of infringement.  The district court granted Broadcom's motion, ruling that Emulex infringed the '150 patent as a matter of law.  The district court rejected Emulex's claim that the accused device infringed the '150 patent "only some of the time," instead reasoning that "part-time infringement . . . is sufficient to establish infringement."  Id. (citations omitted).

After trial, both parties moved for JMOL on the issue of obviousness.  Emulex argued that the '150 patent was obvious in light of European Patent No. EP0909035 ("Pickering"), which teaches clock recovery but not data recovery.  The district court again ruled in favor of Broadcom, finding Emulex's prior art failed to teach both clock recovery and data recovery.  Lastly, the district court entered an injunction against Emulex prohibiting the sale of infringing devices.  Using the analytical framework of eBay, Inc. v. MercExchange LLC, 547 U.S. 388, 391 (2006), the district court reasoned that an eighteen-month sunset period satisfied the interests of both parties and protected Emulex's customers from supply disruptions.  Emulex appealed the district court's finding of infringement and nonobviousness.

"It is well settled that an accused device that 'sometimes, but not always, embodies a claim[] nonetheless infringes.'"  Slip op. at 12 (alteration in original) (quoting Bell Commc'n Research, Inc. v. Vitalink Commc'n Corp., 55 F.3d 615, 622-23 (Fed. Cir. 1995)).

On appeal, the Federal Circuit upheld each of the district court's rulings.  On the issue of infringement, the Court rejected Emulex's contention that the '150 patent failed to claim the use of multiple data paths in its receiver.  Turning to the specification, the Court observed that the '150 patent specifically teaches an embodiment with four data paths, each sampling at a quarter of the incoming signal rate.  The Court held, "[A]n interpretation [of a claim] which 'excludes a [disclosed] embodiment from the scope of the claim is rarely, if ever, correct.'"  Slip op. at 11 (second alteration in original) (quoting Accent Packaging, Inc. v. Leggett & Platt, Inc., 707 F.3d 1318, 1326 (Fed. Cir. 2013)).

Emulex attempted to overcome this ruling by arguing that the accused device reduced the frequency offset only some of the time, and not all of the time.  The Federal Circuit dismissed this argument, noting that "[i]t is well settled that an accused device that 'sometimes, but not always, embodies a claim[] nonetheless infringes.'"  Id. at 12 (alteration in original) (quoting Bell Commc'n Research, Inc. v. Vitalink Commc'n Corp., 55 F.3d 615, 622-23 (Fed. Cir. 1995)).  Finding the '150 patent claimed multiple data paths and the accused device sometimes practiced such an embodiment, the Court affirmed the district court's granting of JMOL in favor of Broadcom.

The Court next turned to the issue of obviousness, holding that the '150 patent would not have been obvious to one skilled in the art in light of Pickering.  The Court clarified that "prior art references that address different problems may not, depending on the art and circumstances, support an inference that the skilled artisan would consult both of them simultaneously."  Id. at 14.  To the Court, Pickering addressed a different problem than the '150 patent.  Pickering contemplated only clock recovery, not both clock and data recovery together.

The Court further concluded that, even if there might have been some motivation to add data recovery to Pickering, trial evidence suggested such a combination would not have worked for its intended purpose.  It is not enough to show "all of the elements that comprise the invention were known in the prior art," the Court explained, but rather, a finding of obviousness "requires a 'plausible rational [sic] as to why the prior art references would have worked together.'"  Id. at 15 (alteration in original) (quoting Power-One, Inc. v. Artesyn Techs., Inc., 599 F.3d 1343, 1351 (Fed. Cir. 2010)).  Finally, the Court found substantial evidence indicating objective indicia of nonobviousness, including commercial success of the products embodying the '150 patent, as well as a nexus between the claimed technology and the success of the products.  The Court accordingly affirmed the district court's denial of Emulex's JMOL calling for the invalidity of the '150 patent on obviousness grounds.

The Court lastly reviewed the district court's granting of a permanent injunction with eighteen-month sunset period.  The Court began its analysis by highlighting features of "design win" markets for original equipment manufacturers ("OEMs"), in which Broadcom and Emulex are directly competing suppliers for the OEMs.  Suppliers prevailing in such "design win" systems enjoy two additional benefits apart from sales:  temporary immunization from competition, and an increased likelihood of winning subsequent design competitions due to the OEM's familiarity with the winning supplier.  Based on these market characteristics, the Court found Broadcom's loss of market share to Emulex irreparable and stemming directly from the adjudicated infringement.

Emulex argued that there was no evidence that the features claimed in the '150 patent were in demand, and that the patent feature is only a small component of the infringing product, relying on Apple, Inc. v. Samsung Electronics Co., 678 F.3d 1314 (Fed. Cir. 2012), where it was held that the patented feature was not a determinative factor in sales, and therefore there was no nexus between infringement and the alleged harm.  The Court rejected this argument, indicating that the evidence showed that the infringement did cause harm.  As the Court observed, "Broadcom has shown—not that it is likely to succeed on the merits and likely to suffer irreparable harm—but that it in fact has succeeded on the merits and has suffered irreparable harm."  Slip op. at 20.  The Court similarly approved of the district court's sunset period for Emulex's continued sales of the infringing products.  Consistent with these holdings, the Federal Circuit affirmed the district court's permanent injunction decree and sunset provisions.

Accordingly, the Federal Circuit affirmed the district court's rulings on infringement, nonobviousness, and granting of a permanent injunction with eighteen-month sunset period.

Judges: Rader (author), Lourie, Wallach

[Appealed from C.D. Cal., Judge Selna]

This article previously appeared in Last Month at the Federal Circuit, November 2013.

* Joseph M. Schaffner is a Law Clerk at Finnegan.

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