Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.

Power Integrations, Inc. (PI) (plaintiff) and Fairchild Semiconductor International, Inc. (Fairchild) (defendant) manufactured power-supply-controller chips used in chargers for electronic devices to transform alternating-current electricity into direct-current electricity and tell the circuit when to turn on and off. PI held two patents. One patent covered switching regulators that reduced the frequency of on/off cycles when a device needed less power. The other patent covered a power-supply controller with a multifunction circuit that adjusted the limit of a power switch. When PI sued Fairchild for infringing both patents, the district-court jury held that Fairchild directly infringed the first patent and infringed the second under the doctrine of equivalents. The jury awarded PI $105 million in reasonable-royalty damages. Before the case was finalized, the Federal Circuit issued a decision in another case holding that a patent holder seeking infringement damages related to a product with both patented and unpatented features must apportion damages to only the patented features. Considering that new precedent, the district court ordered a new trial regarding damages. PI’s expert testified based on the entire-market-value rule, a rule that allows a patent holder to recover royalties based on a product’s entire market value, rather than merely the value of the infringed component, in certain situations. The jury awarded PI $139.8 million in damages. Fairchild appealed, arguing that application of the entire-market-value rule was improper because PI’s infringed products had multiple valuable features, including jittering, which intentionally varied frequency to reduce electromagnetic interference.