Federal Judiciary

Judgment vacated & remanded for additional construction in O2 Micro v. Bitek

By Michael Smith

O2 Micro Intern. Ltd. v. Beyond Innovation Technology Co., Ltd.,--- F.3d ----, 2008 WL 878924, C.A.Fed. (Tex.), April 03, 2008 (NO. 2007-1302, 2007-1303, 2007-1304).
Yesterday the Federal Circuit vacated the judgment in this case and remanded for the district court to construe the term "only if".  As the background of the case is of interest, I'll run through that quickly.
In January 2004, O2 Micro filed suit against BiTEK, SPI/FSP, and Lien Chang in the Judge Ward's court in Marshall. O2 Micro alleged that BiTEK's inverter controllers infringe several claims of three patents.
Judge Ward held a Markman hearing in August 2005. The parties agreed, for the most part, that a previously issued claim construction order in O2 Micro Int'l Ltd. v. Sumida Corp., 2:03-CV-07 controlled in the case.  (The Sumida case also went to trial, incidentally, resulting in a verdict for the plaintiff in 2005, with judgment entered late that year.   O2 Micro also started trial against Roehm in February of this year after a partial summary judgment was granted, but the case settled during trial.  I am assuming that all three cases involved the same patents - if not, hopefully some reader will point that out).  However, the parties presented a handful of additional terms for the court to construe. The claim term ?only if? (one of the additional terms disputed by the parties) is the only term whose construction was appealed to the Federal Circuit.
At the Markman hearing, Defendants-Appellants argued that the district court should construe the claim term ?only if,? but disagreed regarding what specific meaning should be ascribed to it. O2 Micro, on the other hand, maintained that no construction was necessary because the claim term ?only if? consists of ?two simple, plain English words.? During the hearing, the district court "astutely" as the Federal Circuit put it one more than one occasion, summarized the dispute as concerning whether or not ?there can be an exception? to the ?only if? language. (Pay attention - this will become important later).  However, in its Markman order, the district court ruled that this term ?needs no construction? because it ?has a well-understood definition, capable of application by both the jury and this court in considering the evidence submitted in support of an infringement or invalidity case."
At trial, the ?only if? limitation was a key issue disputed by the parties. O2 Micro presented evidence that the accused devices satisfied the ?only if? limitation both literally and under the doctrine of equivalents. Defendants-Appellants presented evidence to the contrary, and both sides presented arguments regarding whether or not the ?only if? claim language allowed exceptions.
After deliberations, the jury found that each Defendant-Appellant had induced infringement of each asserted claim of each patent. The jury also found that Lien Chang contributorily infringed and all three Defendants-Appellants willfully infringed.  Judge Ward had previously granted judgment as a matter of law with respect to direct and contributory infringement, and the parties did not submit damages to the jury (incidentally damages were not submitted in Sumida either).
The issue on appeal was whether the district court's failure to construe the claim term ?only if? in this case was legal error.  O2 Micro argued that Defendants-Appellants waived any challenge to the construction of ?only if? by: (1) failing to object to the jury instructions as lacking a construction of that claim term and (2) offering a different construction of the claim term on appeal than was presented to the district court. As to the first point, the Federal Circuit held that failure to object to a construction's absence in the charge did not waive the claimed error where the issue had been fully litigated at the Markman stage.  On the second point, the court noted that while the defendant did assert new grounds for the proposed construction on appeal, the construction itself did not change, thus there was no waiver.  The arguments were just more focused by the time the case got to trial and on appeal than they had been at the Markman stage.
The Federal Circuit acknowledged that while courts are not required to construe claim terms that have a well-understood meaning, and it seemed to agree "only if" had a well-understood definition, that did not resolve the issue in this case.  "In deciding that ? ?only if? needs no construction? because the term has a ?well-understood definition,?" it wrote "the district court failed to resolve the parties' dispute because the parties disputed not the meaning of the words themselves, but the scope that should be encompassed by this claim language." 
Now it seems like I've had an analogous argument with my kids, when I tell them "do not come out of this room until you've cleaned it up."  Grayson always makes some smart-aleck comment about "but what if the house catches on fire.  Can I come out then?  Or do you just want me to burn up?  Huh, Dad?  Huh?"  Seems to me that the defendants here were claiming that they needed some clarification because they smelled smoke. Judge Ward apparently agreed with my resolution (walk out and slam the door), but the Federal Circuit sided with the eight year old and said that an additional instruction on what to do if the house catches on fire was necessary.  "When the district court failed to adjudicate the parties' dispute regarding the proper scope of ?only if,?" it held, "the parties presented their arguments to the jury. By failing to construe this term, the district court left the jury free to consider these arguments."  (Ed. note - in patent cases, that's apparently a bad thing).  Accordingly, the case was remanded for construction of the term "only if."  (This is actually kind of funny when you think of all the controversy over a claim that something depending on what the meaning of "is" is.  Here the court vacated and remanded because it wasn't sure whether "only if" means "only if."  Note to self: I should have this panel review my wedding vows and figure out what the scope is on a few of those puppies).
The Federal Circuit also held that there was no infringement under the doctrine of equivalents, so on remand the case should not be submitted under that theory.

Full post as published by Eastern District of Texas Federal Court Practice on April 04, 2008 (boomark / email).