**United States Court of Appeals for the Federal Circuit**

04-1014

INTERNATIONAL RECTIFIER CORPORATION,

> Plaintiff-Appellee,

v\.

IXYS CORPORATION,

> Defendant-Appellant.

[Minh-Hien Nguyen]{.underline}, Vinson & Elkins L.L.P., of Austin,
Texas, argued for plaintiff-appellee. With him on the brief was [David
E. Killough]{.underline}. Of counsel on the brief was [Glenn W.
Trost]{.underline}, Coudert Brothers LLP, of Los Angeles, California.

[Roger L. Cook]{.underline}, Townsend and Townsend and Crew LLP, of San
Francisco, California, argued for defendant-appellant. With him on the
brief were [Nancy L. Tompkins]{.underline} and [Mehrnaz
Boroumand]{.underline}.

Appealed from: United States District Court for the Central District of
California

Judge Manuel L. Real

**United States Court of Appeals for the Federal Circuit**

04-1014

INTERNATIONAL RECTIFIER CORPORATION,

Plaintiff-Appellee,

v\.

IXYS CORPORATION,

Defendant-Appellant.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

DECIDED: September 13, 2004

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Before LOURIE, [Circuit Judge]{.underline}, PLAGER, [Senior Circuit
Judge]{.underline}, and PROST, [Circuit Judge]{.underline}.

PLAGER, [Senior Circuit Judge]{.underline}.

The issue in this case is whether the injunction granted the patentee is
overly broad, and, if so, what is the proper remedy. International
Rectifier Corporation ("IR") is the assignee of U.S. Patent No.
6,476,481 ("the '481 patent"), which relates to semiconductor device
"packages." On the day the patent issued, IR filed a patent infringement
suit against IXYS Corporation ("IXYS") in the United States District
Court for the Central District of California. Within two weeks IXYS
modified the design of its accused semiconductor products. When IR filed
a motion for summary judgment of infringement, IXYS did not oppose the
motion on the merits because IXYS admitted that its original product
design infringed. IXYS did, however, oppose the form of the judgment and
the permanent injunction proposed by IR. The trial court granted IR's
motion for summary judgment, entered final judgment, and granted a
permanent injunction against IXYS with the exact language proposed by
IR.

IXYS appeals the trial court's order of judgment and permanent
injunction. Because the injunction does not satisfy the requirements of
Rule 65(d) of the Federal Rules of Civil Procedure and our controlling
case law, we vacate the injunction and remand for the district court to
issue an injunction of proper scope. Since IXYS had withdrawn its
affirmative defenses relating to the validity and enforceability of the
patent before judgment was entered, we also vacate the portion of the
judgment and injunction regarding those issues. We find no basis for
disturbing the district court's decision to transfer the case from one
judge to another under the court's local rules regarding related cases,
and that part of the court's decision is affirmed.

BACKGROUND

IR filed its complaint in this case on November 5, 2002, the same day
the '481 patent issued. IR concurrently filed a Notice of Related Cases
as required by the Central District's Local Rule 83--1.3.1. The Notice
identified as a related case another lawsuit brought by IR against IXYS
involving previously issued IR patents relating to
metal-oxide-semiconductor field effect transistors ("MOSFETs"). That
case was pending before Judge Real. IR identified nine additional patent
infringement cases brought by IR against other semiconductor
manufacturers; all had been heard by or were pending before Judge Real.

On February 5, 2003, before IXYS was served with the complaint, Judge
Feess, to whom the case was initially assigned, transferred the case to
Judge Real pursuant to the district court's General Order on related
case transfers. IXYS was served with the complaint on February 18, 2003,
and filed its answer on March 10, 2003. In its answer, IXYS denied IR's
allegations of infringement and asserted several affirmative defenses,
including invalidity and unenforceability of the patent. A week later
IXYS filed an opposition to IR's Notice of Related Cases, alleging that
the case did not qualify for a related case transfer and therefore
should not have been transferred to Judge Real. The record indicates no
action by the district court regarding IXYS's challenge to the transfer,
and the case proceeded before Judge Real.

IXYS responded to IR's discovery requests on July 15, 2003. IXYS
admitted that several of its MOSFET products, which used its original
ISOPLUS220 package design, satisfied all the limitations of claims 1--5
of the '481 patent. IXYS also stated, however, that it promptly modified
its original ISOPLUS220 design after becoming aware of the patent and
the filing of IR's complaint. IXYS admitted that it shipped products
using the original design between November 5, 2002, and November 19,
2002, and that sales of those products totaled \$507. Asserting that it
had no economic incentive to defend a lawsuit against a discontinued
product with de minimis sales, IXYS expressly withdrew its contentions
of non-infringement, invalidity, and unenforceability in its response to
one of IR's interrogatories.

IXYS designated its redesigned products by the same part numbers as the
original ISOPLUS220 products. IR chose not to supplement its complaint
to allege infringement by the modified products introduced by IXYS after
the date on which IR filed suit. In view of IXYS's withdrawal of its
affirmative defenses and admission that its original ISOPLUS220 products
contained all the limitations of claims 1--5 of IR's patent, IR filed a
motion for summary judgment on July 23, 2003. IR stated it was willing
to forego any claim of willful infringement or money damages based on
the small quantity of infringing products and requested the district
court to enter final judgment on its infringement claim.

Accompanying its motion IR filed a proposed final judgment order which
included a permanent injunction and which read:

> 1\. Each and every affirmative defense by \[IXYS\] is adjudicated in
> favor of \[IR\] and against IXYS. IR's U.S. Patent No. 6,476,481 (the
> "'481 patent") is not invalid and is not unenforceable.
>
> 2\. IXYS has infringed Claims 1 through 5 of IR's '481 patent by
> making, using, offering for sale and/or selling in, and/or importing
> into, the United States during the period November 5--19, 2002 IXYS
> ISOPLUS which at that time were designated by \[part numbers of
> accused devices\].
>
> 3\. IXYS and its officers, agents, servants, employees and attorneys,
> and all persons in active concert or participation with them who
> receive actual notice of this Judgment, are hereby prohibited and
> enjoined from making, using, offering for sale or selling in, or
> importing into, the United States, any device covered by one or more
> of Claims 1 through 5 of U.S. Patent No. 6,476,481.

IXYS filed a "Limited Opposition" to IR's motion in which it agreed with
IR that entry of final judgment and a permanent injunction were
appropriate, but opposed the form of the injunction proposed by IR.
Specifically, IXYS objected to the proposed injunction's prohibition
against any future infringement of IR's patent, alleging that such a
broad injunction would violate Rule 65(d) of the Federal Rules of Civil
Procedure. IXYS urged the trial court to limit the injunction to
products made according to IXYS's original design and any products
introduced after entry of the injunction that differed from the
adjudicated products in a way that was merely colorable. Such an
injunction would exclude products made according to IXYS's modified
design so that IR would be unable to accuse those products of
infringement in a contempt proceeding. IXYS wanted to force IR to file a
separate infringement suit should IR believe the redesigned products
infringed its patent. IXYS also proposed to include language in the
judgment expressly reserving its right to assert non-infringement,
invalidity, and unenforceability defenses should IR assert the '481
patent against the modified design.

The trial court rejected IXYS's objections and entered final judgment
using the language proposed by IR.

IXYS appeals from the district court's final judgment and injunction,
alleging that the injunction does not satisfy the requirements of Rule
65(d). IXYS also contends that the district court should have explicitly
excluded the redesigned products from the scope of the injunction. IXYS
further objects to the trial court's finding of invalidity and
unenforceability on the ground that it had withdrawn those affirmative
defenses. Finally, IXYS challenges the district court's transfer of the
case under the court's local "related case" rule. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

A. Compliance with Rule 65(d)

Rule 65(d) of the Federal Rules of Civil Procedure specifies the proper
form and scope of an injunction issued by a district court:

> \(d\) Form and Scope of Injunction or Restraining Order. Every order
> granting an injunction and every restraining order shall set forth the
> reasons for its issuance; shall be specific in terms; shall describe
> in reasonable detail, and not by reference to the complaint or other
> document, the act or acts sought to be restrained; and is binding only
> upon the parties to the action, their officers, agents, servants,
> employees, and attorneys, and upon those persons in active concert or
> participation with them who receive actual notice of the order by
> personal service or otherwise.

Although we review a district court's decision to grant an injunction
for abuse of discretion, whether the terms of an injunction fulfill the
mandates of Rule 65(d) is a question of law that we review without
deference. [See]{.underline} [Signtech USA, Ltd. v. Vutek,
Inc.]{.underline}, 174 F.3d 1352, 1356 (Fed. Cir. 1999); [Premier
Communications Network, Inc. v. Fuentes]{.underline}, 880 F.2d 1096,
1100 (9th Cir. 1989).

In accord with the policy of Rule 65(d), the Supreme Court has denounced
broad injunctions that merely instruct the enjoined party not to violate
a statute. [NLRB v. Express Publ'g Co.]{.underline}, 312 U.S. 426,
435-36 (1941); [see]{.underline} [KSM Fastening Sys., Inc. v. H.A. Jones
Co.]{.underline}, 776 F.2d 1522, 1526 (Fed. Cir. 1985). Such injunctions
increase the likelihood of unwarranted contempt proceedings for acts
unlike or unrelated to those originally judged unlawful.
[See]{.underline} [Express Publ'g Co.]{.underline}, 312 U.S. at 435-36;
[Additive Controls & Measurement Sys., Inc. v. Flowdata,
Inc.]{.underline}, 986 F.2d 476, 479 (Fed. Cir. 1993).

In the patent infringement context, this court has rejected as overly
broad a permanent injunction that simply prohibits future infringement
of a patent. In [Additive Controls]{.underline}, we vacated an
injunction that "forever barred" the adjudged infringer from infringing
the patent at issue. 986 F.2d at 479-80. That injunction failed to
satisfy the requirements of Rule 65(d) because it lacked specific terms
and a reasonably detailed description of the acts sought to be
restrained. [Id.]{.underline} at 479. Furthermore, the order failed to
state which acts constituted infringement or to expressly limit its
prohibition to the manufacture, use, or sale of the specific device
found to infringe, or devices no more than colorably different from the
infringing device. [Id.]{.underline} at 479-80 (citing
[KSM]{.underline}, 776 F.2d at 1526).

As in [Additive Controls]{.underline}, the trial court's injunction in
this case does not meet the specificity requirements of Rule 65(d). The
injunctive language set forth in the trial court's judgment prohibits
infringement by "any device covered by one or more of Claims 1 through
5" of the '481 patent. On its face the injunction applies to many more
devices than those actually adjudicated. Indeed, by its terms the
injunction applies to "any device" made or sold by IXYS that is within
the scope of the patent claims. The actual scope of the injunction
cannot be that expansive, however, because this court has held that
"contempt proceedings . . . are available only with respect to devices
previously admitted or adjudged to infringe, and to other devices which
are no more than colorably different therefrom and which clearly are
infringements of the patent." [KSM]{.underline}, 776 F.2d at 1526.
Therefore, the only acts the injunction may prohibit are infringement of
the patent by the adjudicated devices and infringement by devices not
more than colorably different from the adjudicated devices. In order to
comply with Rule 65(d), the injunction should explicitly proscribe only
those specific acts.

IR asserts that it is unnecessary to expressly limit an injunction to
devices found to infringe and those not more than colorably different
therefrom because, regardless of the precise language used, a district
court, applying Federal Circuit law, will interpret an injunction to be
so limited in a contempt proceeding. That argument misses the point. The
question before us is not how to deal with enforcement of an overly
broad injunction that has previously issued, but how to insure that
overly broad injunctions do not issue in the first instance.

If a trial court is faced with an overly broad injunction during a
contempt proceeding, the court should interpret it according to the rule
of law quoted from [KSM]{.underline} above. Although this court stated
in [KSM]{.underline} that such a rule alleviates the unreasonableness of
broad prohibitions against "infringement" of a "patent," 776 F.2d at
1526, the court in [KSM]{.underline} was not reviewing the propriety of
an injunction under Rule 65(d). [Additive Controls]{.underline}, 986
F.2d at 480. Here, as in [Additive Controls]{.underline}, this court has
been asked to enforce Rule 65(d). This rule, by requiring specificity in
the wording of injunctions, protects enjoined parties from unwarranted
contempt proceedings. [Id.]{.underline}

This court has indicated that as a general proposition district courts
should have wide latitude in framing injunctions to meet particular
circumstances. [KSM]{.underline}, 776 F.2d at 1527. That, however, is
not license to fashion injunctions that fall outside the dictates of
Rule 65(d). [Id.]{.underline} The rule requires an injunction to
prohibit only those acts sought to be restrained, which in this case are
infringement of the patent by the devices adjudged to infringe and
infringement by devices no more than colorably different therefrom.

IR argues that the sentence immediately preceding the injunctive
language in the judgment cures the Rule 65(d) violation in this case.
Not so. That sentence, which lists the devices found to infringe during
the initial two-week period after the patent issued, is not incorporated
into the injunction against future infringing activities. Accordingly,
it cannot convert a defective injunction into one that fulfills the
requirements of Rule 65(d).

We also reject IR's contention that this court's decision in
[Signtech]{.underline} compels a different result. In that case, the
court held that a permanent injunction against Signtech for any future
infringement of the patent-in-suit did not run afoul of Rule 65(d). 174
F.3d at 1359. The danger, the court explained, of unwarranted contempt
actions was minimal because of the "detailed record" on which the
injunction was entered. [Id.]{.underline} The record here could not be
considered so "detailed" as to obviate compliance with Rule 65(d), and
in any case, to the extent [Signtech]{.underline} is inconsistent with
the rule pronounced in [Additive Controls]{.underline}, the latter,
being the earlier-issued decision, controls. [See]{.underline} [Newell
Cos. v. Kenney Mfg. Co.]{.underline}, 864 F.2d 757, 765 (Fed. Cir. 1988)
("This court has adopted the rule that prior decisions of a panel of the
court are binding precedent on subsequent panels unless and until
overturned in banc.").

Although we are vacating the injunction and remanding to the district
court, we are unable to grant IXYS all the relief it has requested with
respect to the injunction. IXYS has tried repeatedly, and
unsuccessfully, to bring its redesigned products into the case. First,
IXYS notified IR of its modified design, but IR declined to file a
supplemental pleading to allege infringement of the redesigned devices,
which were introduced after IR filed its complaint. Then, in opposition
to IR's motion for summary judgment, IXYS asserted that the redesigned
products should not be the subject of contempt proceedings because, in
IXYS's view, there is a "substantial open issue" as to whether they
infringe. [See]{.underline} [KSM]{.underline}, 776 F.2d at 1532 (holding
that the test for whether contempt proceedings are appropriate is
whether there are substantial open issues with respect to infringement).
Consequently, IXYS urged the district court to limit the injunction to
the adjudicated products and any products introduced after the effective
date of the judgment that are no more than colorably different from the
adjudicated products. IXYS's proposed judgment would have effectively
excluded from the scope of the injunction devices made according to
IXYS's modified design.

The district court properly denied IXYS's request to so limit the
injunction. Supplemental pleadings are optional, [see]{.underline} Fed.
R. Civ. P. 15(d), and thus neither IXYS nor the district court had the
authority to force IR to supplement its complaint to allege infringement
by the redesigned products. IR chose not to accuse the redesigned
products in this action, and therefore it would have been inappropriate
for the district court to enter what would amount to a non-infringement
judgment with respect to those products.

IXYS contends that as a matter of fairness contempt proceedings should
be unavailable with respect to pre-judgment devices not accused of
infringement in the underlying action, and thus such devices should be
affirmatively excluded from the scope of an injunction. This court has
never so held, and we decline to do so now. If in the future IR chooses
to bring a contempt action against IXYS's modified products, the
district court at that time must determine whether contempt proceedings
are appropriate by applying the standard established by this court in
[KSM]{.underline}. 776 F.2d at 1532; [see]{.underline} [Arbek Mfg., Inc.
v. Moazzam]{.underline}, 55 F.3d 1567, 1569-70 (Fed. Cir. 1995)
(affirming trial court's denial of a contempt motion when there were
substantial open infringement issues to be litigated). It would have
been improper for the district court to address that issue until or
unless it was properly before the court.

B. Invalidity Judgment

The trial court's final judgment states that all affirmative defenses
have been adjudicated in favor of IR and declares IR's patent not
invalid and not unenforceable. IXYS is correct that this portion of the
judgment and injunction must be vacated because the issues of validity
and enforceability have not been adjudicated in this case.

IXYS withdrew its affirmative defenses, including invalidity and
unenforceability of the patent, during discovery and prior to the date
on which IR filed its motion for summary judgment. The effect of this
action was the same as if IXYS had never asserted the defenses at all,
i.e., the issues of validity and enforceability were not part of the
case. IR alleges it is entitled to judgment on those issues because it
raised them in its motion for summary judgment on liability, and in
response IXYS produced no evidence at all that the patent was invalid or
unenforceable. But IR ignores the fact that by the time it filed its
motion for summary judgment, validity and enforceability were no longer
issues in the case. IR was not entitled to adjudication of issues not
before the court.

IXYS alleges that it has the right to assert all affirmative defenses
should IR assert its patent against IXYS's modified devices. Whether
that position is correct will depend on the preclusive effect accorded
the judgment in this case in a future proceeding, an issue that is not
before us. Once the portion of the judgment relating to invalidity and
unenforceability is removed on remand, the judgment correctly will be
silent as to IXYS's non-adjudicated defenses. Whether IXYS will be
precluded from raising an affirmative defense in a later proceeding,
either a contempt action or another infringement suit, will be decided
at that time by applying the normal rules of claim preclusion and issue
preclusion. [See, e.g.]{.underline}, [Foster v. Hallco Mfg.
Co.]{.underline}, 947 F.2d 469, 478-81 (Fed. Cir. 1991); [see
also]{.underline} [Hallco Mfg. Co. v. Foster]{.underline}, 256 F.3d
1290, 1294-98 (Fed. Cir. 2001) (discussing application of claim
preclusion to invalidity defense).

C. Transfer

Finally, IXYS accuses IR of manipulating the district court's local
rules on transfer of related cases and alleges that the court improperly
transferred the case to Judge Real. First of all, IXYS has not
identified any actual violation of the court's rules by IR. With regard
to the trial court's transfer decision, IXYS goes to great lengths to
explain why in its view this case does not meet any of the trial court's
related case criteria. Nevertheless, a district court has broad
discretion to determine whether transfer is appropriate, particularly
when the court's local rules are involved. We cannot say that the
transfer in this case was inconsistent with the local rules or that the
trial court abused its discretion when it transferred the case to Judge
Real.

CONCLUSION

The injunction entered by the trial court is vacated, and the cause
remanded with instructions to issue an injunction that meets the
specificity requirements of Rule 65(d). The portion of the judgment
relating to IXYS's affirmative defenses also is vacated. The district
court's transfer of the case under its local related case rule is
affirmed.

COSTS

Costs are awarded to IXYS.

[AFFIRMED-IN-PART, VACATED-IN-PART, and REMANDED]{.underline}