In O2 Micro International Ltd. v. Beyond Innovation Technology Co., Nos. 07-1302, -1303, -1304 (Fed. Cir. Apr. 3, 2008), the Federal Circuit remanded the district court's ruling on the issue of infringement because the district court's failure to construe a term did not resolve the parties' dispute regarding literal infringement. The Court also vacated the jury's verdict because O2 Micro International Limited ("O2 Micro") could not prove that the added limitation to the claim language during prosecution was only tangential to the alleged equivalent and, thus, it was an error to allow the jury to consider infringement under the DOE.
O2 Micro asserted its U.S. Patent Nos. 6,259,615; 6,396,722; and 6,804,129 (the "asserted patents") against Beyond Innovation Technology Company, Ltd. and FSP Group (collectively the "defendants") relating to a converter circuit. During prosecution, O2 Micro had to amend claim 1 to include an "only if" limitation to overcome an obviousness objection. During the Markman proceedings, the defendants argued that the district court should construe "only if," but O2 Micro thought it was unnecessary because "only if" are two simple, plain English words. The district court agreed with O2 Micro. At trial, the parties disputed whether the accused devices satisfied the "only if" limitation both literally and under the DOE. After deliberations, the jury found that defendants had infringed under both theories. Defendants appealed.
On appeal, the Federal Circuit first addressed two issues regarding waiver. First, the Court found that the defendants had not waived a challenge to the construction of "only if" by failing to object to the jury instructions, because in the Fifth Circuit it is not necessary to object to the jury instruction when the issue was fully litigated and decided at the Markman stage, and thus further objection would have been futile. Second, the Court found that the defendants had not waived their claim construction arguments by asserting a new construction on appeal. The Court concluded that the defendants simply employed new arguments to support their previously advocated construction of the term "only if," so the defendants had not waived those arguments on appeal.
The Court next considered defendants' argument that the district court's failure to construe the disputed claim term "only if" was a legal error that infected the literal infringement inquiry. The Court held that "[a] determination that a claim term 'needs no construction' or has the 'plain and ordinary meaning' may be inadequate when a term has more than one 'ordinary' meaning or when reliance on a term's 'ordinary' meaning does not resolve the parties' dispute." Slip op. at 15. Although the Court "recognize[d] that district courts are not (and should not be) required to construe every limitation present in a patent's asserted claims," the Court determined that "[w]hen the parties present a fundamental dispute regarding the scope of a claim term, it is the court's duty to resolve it." Id. at 17-18. Because the Court found that the district court was in the best position to determine the proper construction of the claim term in the first instance, the Court remanded for further proceedings.
Finally, the Court held that prosecution history estoppel prevented application of the DOE for the "only if" limitation. Because both parties agreed that the "only if" limitation was added to overcome a prior art rejection, the Festo presumption applied. The Federal Circuit further rejected O2 Micro's argument that the "only if" amendment was merely tangential to the alleged equivalent, noting that O2 Micro provided little explanation for the amendment in the prosecution history. The Court thus held that the district court erred in allowing the jury to consider infringement under the DOE.
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