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Fairchild Semiconductor Corporation v. Power Integrations, Inc.

United States District Court, D. Delaware

March 20, 2015

FAIRCHILD SEMICONDUCTOR CORPORATION and FAIRCHILD (TAIWAN) CORPORATION, Plaintiffs,
v.
POWER INTEGRATIONS, INC., Defendant.

John G. Day, Lauren E. Maguire, Andrew C. Mayo, ASHBY & GEDDES, Wilmington, DE. Blair M. Jacobs, Christian A. Ondrick, MCDERMOTT WILL & EMERY LLP, Washington, D.C. Attorneys for Plaintiffs.

William J. Marsden, Jr., Joseph B. Warden, Jr., FISH & RICHARDSON P.C., Wilmington, DE. Frank E. Scherkenbach, FISH & RICHARDSON P.C., Boston, MA. Howard G. Pollack, Michael R. Headley, FISH & RICHARDSON P.C., Redwood City, CA. Attorneys for Defendant.

MEMORANDUM OPINION

LEONARD P. STARK, District Judge.

Numerous pretrial motions are pending in this case. The Court heard oral argument on March 3, 2015. ( See transcript ("Tr.")) In this Memorandum Opinion, the Court addresses only the parties' motions to preclude expert witnesses from providing opinions on certain issues. In one or more subsequent opinions or orders, the Court will address the remaining motions.

BACKGROUND

On May 1, 2012, Plaintiffs Fairchild Semiconductor Corporation and Fairchild (Taiwan) Corporation (collectively, "Fairchild" or "Plaintiffs") filed a complaint against Power Integrations, Inc. ("PI" or "Defendant") alleging infringement of U.S. Patent Nos. 7, 525, 259 ("the '259 Patent"), 7, 259, 972 ("the '972 Patent"), 7, 616, 461 ("the '461 Patent"), and 7, 268, 123 ("the '123 Patent"). (D.I. 1) On June 21, 2012, PI filed counterclaims against Fairchild, alleging infringement of U.S. Patent Nos. 6, 229, 366 ("the '366 Patent"), 7, 876, 587 ("the '587 Patent"), 8, 115, 457 ("the '457 Patent"), and 7, 995, 359 ("the '359 Patent").

LEGAL STANDARDS

In Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993), the Supreme Court explained that Federal Rule of Evidence 702 creates "a gatekeeping role for the [trial] judge" in order to "ensur[e] that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand." Rule 702 requires that expert testimony "help the trier of fact to understand the evidence or to determine a fact in issue." Expert testimony is admissible only if"the testimony is based on sufficient facts or data, " "the testimony is the product of reliable principles and methods, " and "the expert has reliably applied the principles and methods to the facts of the case." There are three distinct requirements for admissible expert testimony: (1) the expert must be qualified; (2) the opinion must be reliable; and (3) the expert's opinion must relate to the facts. See Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000).

DISCUSSION

PI's Motion Relating to Fairchild's Claim for Damages for Alleged Inducement with Respect to Fairchild's '972 Patent (D.I. 196)

PI filed a combined motion for summary judgment and Daubert motion relating to Fairchild's claim for damages for alleged inducement with respect to Fairchild's '972 patent. (D.I. 196) At this point the Court is addressing only the Daubert portion of that motion.

PI argues that Fairchild's claim for damages with respect to the '972 patent should be excluded because Fairchild's damages expert, Mr. Malackowski, used the wrong date for his hypothetical negotiation. "[T]he date of the hypothetical negotiation is the date that the infringement began." LaserDynamics, Inc. v. Qanta Computer, Inc., 694 F.3d 51, 75 (Fed. Cir. 2012). "[I]n the context of active inducement of infringement, a hypothetical negotiation is deemed to take place on the date of the first direct infringement traceable to [the defendant's] first instance of inducement conduct. " Id. at 76 (emphasis added).

Mr. Malackowski "looked at the information over this time period [from when infringement began in 2008 through when inducement began in 2012] to determine if there would be intervening events or other reasons to suggest a change in [his] analysis... [and] did not find such intervening events." (D.I. 225, Ex. G at 66:2-8) He failed, however, to consider the April 27, 2012 jury verdict in Fairchild II (C.A. No. 08-309-LPS) finding no inducement of infringement of the '972 patent. ( See D.I. 233 at 20) As PI writes, the "hypothetical negotiators would have known about the Fairchild II verdict, and the verdict certainly constitutes an intervening event that would have changed the negotiation as between 2008 and April 27, 2012 with respect to Fairchild's claim of inducement, " for reasons including that the verdict establishes an "absolute bar on any inducement liability predicated on Power Integrations' activities before April 27, 2012." ( Id. ) While Mr. Malackowski served a new set of damages calculations limiting damages for Power Integrations' purported inducement as of April 27, 2012 after the timing issue was pointed out to him, he adhered in this new analysis to his flawed assumption of a 2008 hypothetical negotiation date. ( See D.I. 197 at 38-39 n.9)

In the briefing (but not in any separate motion), Fairchild contends that PI's expert also used a 2008 date for the hypothetical negotiation. ( See D.I. 224 at 37 ( citing D.I. 200, Ex. E at 144:10-145:8)) PI does not contest this allegation. ( See D.I. 233 at 19-20) That both sides' experts used the same hypothetical negotiation date does not necessarily render this the appropriate date. The Court still has a gate-keeping function to perform. Having done so, the Court concludes that Mr. Malackowski's analysis must be excluded due to his use of the incorrect hypothetical negotiation date. ...


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