No evidence of lost sales or price erosion means no irreparable harm and no permanent injunction

Nichia Corp. v. Everlight Ams., Inc., (Fed. Cir. Apr. 28, 2017) (Before Reyna, Hughes, and Stoll, J.) (Opinion for the court, Stoll, J.)

Nichia Corporation (“Nichia”) sued Everlight Americas, Inc., Everlight Electronics Co., Ltd. and Zenaro Lighting (collectively, “Everlight”) for infringement of three of Nichia’s patents disclosing packaging designs and methods of manufacturing LED devices. Following a bench trial, the district court found that Everlight infringed all three patents and failed to prove the patents invalid. The district court denied Nichia’s request for a permanent injunction. Nichia appealed the district court’s refusal to enter a permanent injunction, and Everlight cross-appealed the district court’s infringement and validity findings. The Court affirmed on all grounds.

Regarding the first patent, Everlight challenged the district court’s construction of the terms “lead” and “planar” and its resulting finding of infringement. Everlight argued that “lead” does not mean “the portion of the device that conducts electricity,” and instead should be construed to require that the lead electrically connects to a structure outside of the device. The Federal Circuit rejected Everlight’s construction because it had no support in the intrinsic evidence. Everlight also argued that “planar” does not mean “in a substantially same plane.” Everlight pointed to the patent’s specification, which uses “in a substantially same plane,” and the claims, which use “planar,” as evidence that the two terms should be given different meanings. The Court disagreed, noting that there is no hard-and-fast rule that if different words are used in the claim and in the specification, the Court must imply a different meaning. Some inventors use terms in the specification to inform the meaning of terms in the claims without intending different meanings. Reading the claims in light of the specification, the Court found that “planer” was consistent with the specification’s discussion of “in a substantially same plane” and it affirmed the district court’s construction. The Court summarily affirmed infringement under both constructions.

The Court also affirmed that Nichia’s patent claims were not obvious because the references did not disclose all elements of the invention and there was no motivation to combine them. A person of ordinary skill would not look to the asserted references, which disclosed semiconductor devices when designing LED devices because the two involve different design and manufacturing considerations.

Regarding the second patent, the Court affirmed the infringement holding, finding that the accused products disclosed all elements of the claimed invention. There was furthermore no motivation to combine the two references asserted by Everlight to prove the claims obvious and the patent invalid.  While the claims required an electrode with two exposed portions separated by a wall, the references taught an electrode with a single exposed area and a wall.  Because the references disclosed different structures, addressed different problems, and proposed different solutions, the district court’s motivation to combine finding was not clearly erroneous.

Regarding the third patent, the Court summarily affirmed infringement for the same reasons as the second patent. The Court rejected Everlight’s obviousness argument because the references did not disclose all elements of the claimed invention and there was no motivation to combine them. While one of the asserted references was designed to reduce the flow of resin, the other was designed to enhance the flow of resin.  Again, the references disclosed different structures, addressed different problems, and proposed different solutions.

Finally, Nichia challenged the district court’s finding that it was not entitled to a permanent injunction because it had failed to show irreparable harm. The Court agreed with the district court that there was no irreparable harm because Nichia failed to put forth evidence showing that it lost sales or suffered price erosion because of the infringement—a fact that Nichia’s expert conceded during trial. Additionally, the district court disregarded the parties’ stipulation that they were competitors in the same market. To the extent there was a small amount of competition, the court found that Nichia failed to prove this competition was meaningful. The Federal Circuit did not consider the stipulation a sufficient bases to reverse these factual findings. Finally, the Court found that Nichia’s licensing practices suggested that any harm from Everlight’s infringement was not irreparable because Nichia routinely licensed its products to major competitors at low prices. Thus, multiple low-priced, non-infringing alternatives were available to replace the accused Everlight products.

Whether a claim term has a different meaning from another term in the specification or is synonymous, depends on the circumstances, such as when a term in the specification is used to inform the meaning of claim terms. To prove irreparable harm for a permanent injunction, the moving party must show that competition between the parties is meaningful, i.e. the infringement causes lost sales or price erosion. A stipulation between parties is not binding on the court, and a stipulation that parties are competitors is only part of the evidence considered for irreparable harm.

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