Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_04-cv-02000/USCOURTS-cand-4_04-cv-02000-105/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MONOLITHIC POWER SYSTEMS, INC., a

Delaware corporation,

Plaintiff,

v.

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Island corporation,

Defendant. /

AND RELATED COUNTERCLAIMS.

 /

O2 MICRO INTERNATIONAL LIMITED, a

Cayman Island corporation,

Plaintiff,

v.

MONOLITHIC POWER SYSTEMS, INC., a

Delaware corporation, et al., 

Defendants. /

AND RELATED COUNTERCLAIMS AND CROSSCLAIMS.

 /

No. C 04-2000 CW

(consolidated with

No. C 06-2929 CW)

FINDINGS OF FACT

AND CONCLUSIONS OF

LAW REGARDING

DEFENDANTS'

INEQUITABLE CONDUCT

DEFENSE 

Defendants in case No. C 06-2929 Monolithic Power Systems,

Inc. and ASUSTeK Computers, Inc. seek a finding of inequitable

conduct, arguing that O2 Micro International Limited's U.S. Patent

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No. 6,396,722 (the '722 patent) is unenforceable because, during

the prosecution of the '722 patent, O2 Micro intentionally withheld

from the United States Patent and Trademark Office (PTO) material

information. O2 Micro denies this accusation. Having considered

all of the papers filed by the parties and the evidence presented,

the Court finds and concludes that O2 Micro did not engage in

inequitable conduct and enters its findings of fact and conclusions

of law with respect to Defendants' inequitable conduct defense.

LEGAL STANDARD

Patent applicants and their legal representatives have a duty

to prosecute applications with candor and good faith. Molins PLC

v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir. 1995); 37 C.F.R.

§ 1.56(a). A breach of this duty occurs when an individual

associated with filing and prosecuting a patent application fails

to disclose material information with an intent to deceive. Union

Pacific Resources Co. v. Chesapeake Energy Corp., 236 F.3d 684, 693

(Fed. Cir. 2001). 

Proof of such inequitable conduct entails a two-step analysis. 

The court must first determine "whether the withheld references

satisfy a threshold level of materiality," and next "whether the

applicant's conduct satisfies a threshold finding of intent to

mislead." Halliburton Co. v. Schlumberger Tech. Corp., 925 F.2d

1435, 1439 (Fed. Cir. 1991). Both materiality and culpable conduct

are questions of fact, and "each must be proved by clear and

convincing evidence." Goodyear Tire & Rubber Co. v. Hercules Tire

& Rubber Co., 162 F.3d 1113, 1122 (Fed. Cir. 1998). Assuming

satisfaction of both thresholds, the court balances materiality and

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intent to determine whether the applicant's conduct is so culpable

that the patent should be held to be unenforceable; the "more

material the omission, the less culpable the intent required, and

vice versa." Halliburton, 925 F.2d at 1439. 

FINDINGS OF FACT

I. Background

In February, 1997, Dr. Yung-Lin Lin, the named inventor of the

'722 patent, joined O2 Micro. The first project he worked on was

for O2 Micro's client Dell Computers. Mathiowetz Dec., Ex. 1 at

551:24-24. Dell used O2 Micro's OZ962 and OZ963 products, which

are inverter controllers, in some of its laptops. Id. at 552. 

These two products and subsequent versions of the OZ962, including

OZ960A, OZ965 and OZ969, are referred to as O2 Micro's two-signal

controllers. Unlike the invention claimed in the '722 patent,

these two-signal controllers are not full-bridge products. Id.;

see also '722 patent at cols. 11-14 (every claim contains a

limitation for a "full-bridge switch configuration," a "full-bridge

circuit" or "switches arranged in a full-bridge configuration"). 

According to Dr. Lin, the OZ962 and OZ963 did not have open

lamp protection. Indeed, Dell noted "during some of the tests of

the inverter that there was a sparking, like a fire arcing on the

inventor board" and "that the inverter module could not turn on the

display every time." Mathiowetz Dec., Ex. 1 at 554-58. Dr. Lin

explained at trial that these two concerns are related to whether

an open lamp protection circuit is built into the inverter. Id.

These concerns also prompted him to begin working on the design of

a new inverter controller. He called this project the "Full House

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1

O2 Micro points out that, at trial, Defendants failed to show

that the OZ962, OZ963 and OZ969 data sheets qualified as prior art

under 35 U.S.C. § 102. See Mathiowetz Dec., Ex. 1 at 1204. And

Dr. Lin testified that he did not believe that the datasheets were

publicly published prior to the § 102(b) critical date. This

4

Project."

In designing his new and improved inverter controller, the

invention at issue, Dr. Lin chose the four signal, full-bridge

configuration, concluding that this configuration provided greater

efficiency than O2 Micro's two-signal controllers. Indeed, in the

'722 patent, Dr. Lin identified O2 Micro's U.S. Patent

No. 5,619,402 (the '402 patent) issued to Dr. Kwang Liu as related,

but inferior, prior art having undesirable qualitites that he

sought to avoid with his own invention. See '722 patent. Dr. Lin

stated that he understood O2 Micro's two-signal controllers to be

the "commercial embodiments" of the '402 patent. Mathiowetz Dec.,

Ex. 3 at 119. Dr. Lin sought to create an inverter controller that

had open lamp protection, symmetrical wave forms, a full bridge

circuit architecture and soft start functionality.

The parties dispute whether O2 Micro's two-signal controllers

had open-lamp protection and other benefits claimed in the '722

patent. O2 Micro's OZ969 data sheet, dated February 10, 1998,

provides that the OZ969 contains open lamp protection:

To prevent output voltage in an open lamp situation, OZ969

comes with a built-in open lamp protection (OLP). This is

done by an internal comparator, which compare[s] error

amplifier output with a reference voltage of 2.5 V. When an

open lamp situation occurs, there is no feedback signal at the

negative input of error amplifier and error amplifier will

swing to more than 2.5 V. This will trigger OLP and shut down

the OZ969.

Armon Dec., Ex. E at 9.1 Dr. Lin states this is actually "overCase 4:04-cv-02000-CW Document 1168 Filed 09/28/07 Page 4 of 13
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testimony is supported by the testimony of an O2 Micro employee

that it was not O2 Micro's policy to publish its data sheets. 

2

Dr. Lin is also the named inventor of the '615 patent. The

'722 patent is a continuation of the '615 patent: it claims the

benefit of the same filing date as the '615 patent application and

contains the same specification as the '615 patent. Dr. Lin filed

a provisional application for what later issued as the '615 patent

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voltage protection," which he claims is different than the "true

open lamp protection" claimed in the '722 patent. Mathiowetz Dec.,

Ex. 2 at 169. At trial he testified that the "open-lamp

protection" discussed in O2 Micro's data sheets for its two-signal

controllers was "almost totally different" than that built into his

invention. Mathiowetz Dec., Ex. 1 at 733. 

In addition, according to the OZ969 data sheet, O2 Micro's

two-signal controllers generated symmetrical wave forms and

included a "soft start circuit." Armon Dec., Ex. E. Dr. Lin

explained, however, that O2 Micro's two-signal controllers could

produce symmetrical waveforms only under certain operating

conditions; his invention produces symmetrical waveforms under all

conditions. Armon Dec., Ex. G at ¶ 5. The data sheet also provides

that O2 Micro's two-signal controllers support both "grounded

secondary and floating secondary designs." Armon Dec., Ex. E. 

Two-signal controllers also have the ability to drive a four

switch, or full-bridge, power stage. As O2 Micro points out,

however, Defendants have produced no evidence to suggest that O2

Micro's two-signal controllers were actually used to drive a fullbridge. 

During the prosecution of the '722 patent and its parent U.S.

Patent No. 6,259,615 (the '615 patent),2 neither Dr. Lin nor anyone

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on July 22, 1999. He filed a utility application on November 9,

1999.

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else submitted any data sheets or any other information concerning

the technical design or functionality of O2 Micro's two-signal

controllers. Nor did Dr. Lin or anyone at O2 Micro disclose sales

data showing that O2 Micro offered for sale and sold its two-signal

controllers in this country prior to July 22, 1998, the critical

date under 35 U.S.C. § 102(b). See Armon Dec., Ex. I at 704-05,

711. 

During the prosecution of the '722 and '615 patents, O2 Micro

identified to the PTO its '402 patent as prior art, along with over

eighty other prior art patents and publications. Among the

identified prior art patents were the Henry '129 patent and the

Payne '779 patent, two of the key references Defendants rely upon

in their renewed motion for judgment as a matter of law. Dr. Lin

stated that he believes that he gave O2 Micro's patent attorney

copies of the OZ962, OZ960A and OZ969 data sheets. Id. at 118. 

The patent attorney, however, testified that, prior to November,

1999, he did not recall seeing any O2 Micro prototypes. Second

Armon Dec., Ex. E at 142. 

Dr. Lin further testified that his invention was developed to

overcome the deficiencies in O2 Micro's two-signal controllers, not

to build upon them. In particular, he explained that the

simulation circuit diagram that he created in February, 1998, is

much better than any of O2 Micro's existing products, including the

OZ960. Mathiowetz Dec., Ex. 1 at 624. At trial, Dr. Lin

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acknowledged that he asked C.C. Kuo, an O2 Micro employee, to

implement his open-lamp protection invention using an existing

OZ962 part.

 Defendants accuse Dr. Lin, and O2 Micro, of knowingly,

intentionally and deceptively withholding from the PTO material

information, i.e., O2 Micro's data sheets and sales records for its

two-signal controllers. 

II. Materiality

In determining materiality, courts "have consistently referred

to the definition provided in 37 C.F.R. § 1.56." Bruno Indep.

Living Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d 1348,

1352 (Fed. Cir. 2005). Title 37 C.F.R. section 1.56 provides that: 

information is material to patentability when it is not

cumulative to information already of record or being

made of record in the application, and

(1) It establishes, by itself or in combination with 

other information, a prima facie case of 

unpatentability of a claim; or

(2) It refutes, or is inconsistent with, a position the 

 applicant takes in:

(i) Opposing an argument of unpatentability relied 

 on by the Office, or

(ii) Asserting an argument of patentability.

In addition, the Federal Circuit has concluded, "Information is

material if there is 'substantial likelihood that a reasonable

examiner would consider it important in deciding whether to allow

the application to issue as a patent.'” Halliburton, 925 F.2d at

1440 (quoting 37 C.F.R. § 1.56).

Materiality of a reference is analyzed, not in a vacuum, but

upon the overall degree of similarity between the omitted reference

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and the claimed invention in light of other prior art before the

examiner. Baxter Int'l, Inc. v. McGaw, Inc., 149 F.3d 1321, 1328

(Fed. Cir. 1998). A patent applicant must disclose any material

information to the PTO; the applicant's duty to disclose is not

limited to disclosing prior art. Critikon, Inc. v. Becton

Dickinson Vascular Access, Inc., 120 F.3d 1253, 1258 (Fed. Cir.

1997). Indeed, the Federal Circuit instructs, "Information

concealed from the PTO may be material even though it would not

invalidate the patent." Li Second Family Ltd. P'ship v. Toshiba

Corp., 231 F.3d 1373, 1380 (Fed. Cir. 2000). The Federal Circuit

"has emphasized, when a question of materiality is close, a patent

applicant should err on the side of disclosure." LNP Eng'g

Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361

(Fed. Cir. 2001).

Defendants argue that, like the undisclosed information in

Baxter, O2 Micro's two-signal controllers are highly material. 

Their reliance on Baxter, however, is misplaced. The facts here

are not, as Defendants claim, very similar to those in Baxter,

where the Federal Circuit affirmed the district court's finding

that a prior art device was highly material to patentability. In

Baxter, the patentee developed and patented a device used to

administer medication in an IV system after it studied and

experimented with a prior art device by Borla; indeed, the Borla

device "formed the basis of the claimed invention." 149 F.3d at

1325, 1329. Although the Borla device "was the only item in the

prior art that combined every claimed element of the '234 and '648

patent save for the pre-slit rubber septum and blunt cannula," the

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patentee did not disclose it to the PTO. Instead, the patentee

disclosed "multitudes of prior art," but not "the single most

relevant piece of prior art that was used extensively in the

development of the invention." Id. at 1330. 

O2 Micro's two-signal controllers are not the single most

relevant piece of prior art. As noted above, Defendants failed to

establish at trial that these controllers are prior art. And, in

their renewed motions for judgment as a matter of law, Defendants

primarily rely on the Henry '129 patent and the Payne '779 patent. 

Nor do O2 Micro's two-signal controllers contain "every element" of

the prior art in single device. Unlike in Baxter, here there is

evidence suggesting that O2 Micro's two-signal controllers are

cumulative and less material than other information provided to the

PTO. Further, although Dr. Lin was inspired, in part, by the

weaknesses of O2 Micro's two-signal controllers to create his

invention, there is no evidence that he based his invention on the

two-signal controllers. Dr. Lin asked Mr. Kuo to test his

invention on the OZ962 months after he had already conceived of his

invention. 

In addition, although the '722 patent covers certain

implementations of soft start and open-lamp protection, its claims

do not cover any and all inverter circuits that have a soft start

feature or an open-lamp protection feature. Rather, the '722

patent relates to inverter circuits that meet the particular

limitations set forth in its claims, including a full-bridge drive

network, a feedback signal indicative of power to the load, a

predetermined minimum overlap/predetermined minimum power state,

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and circuitry meeting the "only if" limitation. 

Defendants fail to provide clear and convincing evidence that

O2 Micro's two-signal controllers are highly material. 

Nonetheless, they do provide some clear and convincing evidence

that there is a substantial likelihood that a reasonable examiner

would consider O2 Micro's two-signal controllers important in

deciding whether to allow the application to issue as a patent. 

Materiality is a matter of degree. Defendants establish that

whether O2 Micro's two-signal controllers are at least somewhat

material is close; thus, those controllers should have been

disclosed to the PTO. See LNP Eng'g Plastics, Inc., 275 F.3d at

1361 ("when a question of materiality is close, a patent applicant

should err on the side of disclosure").

As Defendants point out, to be material, information need not

operate in exactly the same manner, provide the same performance,

or disclose every single element that is disclosed in the asserted

claims. Thus, the fact that O2 Micro's two-signal controllers did

not contain full-bridge topology does not render those controllers

immaterial. Prior art need not fully anticipate to be material. 

Regardless of whether there is evidence to show that O2 Micro's

two-signal controllers were ever actually used to drive a fullbridge, it was known in the art at the time of Dr. Lin's invention

that a two-signal controller could drive a half-bridge or a fullbridge. In addition, O2 Micro's two-signal controllers are not

completely cumulative of evidence presented to the examiner because

sales of the early two-signal controllers raised an on-sale bar

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3

Defendants raise this argument in their reply. "It is well

settled that new arguments cannot be made for the first time in

reply." Contratto v. Ethicon, Inc., 227 F.R.D. 304, 309 (N.D. Cal.

2005). Nonetheless, because this argument does not affect the

final outcome of the Court's findings and conclusions, the Court

will consider it.

11

issue that was not disclosed to the PTO.3 Other clear and

convincing evidence is the testimony of Professor Enrico Santi, an

independent witness retained by the parties jointly at the Court's

direction, who concluded that claim 12 of the '722 patent was

obvious in light of the combination of the Henry '129 patent and

the OZ969 controller.

III. Intent

The Federal Circuit instructs, "In a case involving an

omission of a material reference to the PTO, there must be clear

and convincing evidence that the applicant made a deliberate

decision to withhold a known material reference." Baxter, 149 F.3d

at 1329. Defendants do not provide such evidence. It is true that

"a patentee facing a high level of materiality and clear proof that

it knew or should have known of that materiality, can expect to

find it difficult to establish 'subjective good faith' sufficient

to prevent the drawing of an inference of intent to mislead." 

Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d

1253, 1257 (Fed. Cir. 1997) (quoting FMC Corp. v. Manitowoc Co.,

835 F.2d 1411, 1415 (Fed. Cir. 1987)). Here, however, as discussed

above, the level of materiality is not high. Indeed, as noted

above, the question of whether O2 Micro's two-switch controllers

are material is close. Not surprisingly, because it is a close

question, there is no clear proof that Dr. Lin knew, or even should

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have known, that O2 Micro's two-switch controllers were material.

It is also true that intent need not be proven by direct

evidence. Merck & Co., Inc. v. Danbury Pharmacal, Inc., 873 F.2d

1418, 1422 (Fed. Cir. 1989). Because intent can rarely be proven

by direct evidence, "intent to deceive is generally inferred from

the facts and circumstances surrounding a knowing failure to

disclose material information." Bruno Indep. Living, 394 F.3d at

1354. But a finding of deceptive intent cannot be based on mere

negligence, even gross negligence. Halliburton, 925 F.2d at 1442. 

And "a mere showing that references having some degree of

materiality were not disclosed does not establish inequitable

conduct." Id. Instead, a finding of intent to deceive requires

that there be conduct that, when viewed in light of all the

evidence, including evidence indicative of good faith, indicates

sufficient culpability. Hebert v. Lisle Corp., 99 F.3d 1109, 1116

(Fed. Cir. 1996).

Defendants ask the Court to infer culpability based, in part,

on Dr. Lin's detailed knowledge of O2 Micro's two-signal

controllers. They point again to O2 Micro's data sheets

establishing that the two-signal controllers have open lamp

protection. Dr. Lin, however, credibly testified that the open

lamp protection provided in those controllers was different than

that provided in his invention. Contrary to Defendants'

accusations, the Court does not find that any alleged misleading

statements made by Dr. Lin and O2 Micro are sufficient to create an

inference that they engaged in a sophisticated and ongoing campaign

to hide the materiality of O2 Micro's two-signal controllers from

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the PTO. The Court finds that, in light of all the evidence,

Defendants have failed to present clear and convincing evidence

that Dr. Lin or O2 Micro formed a culpable intent to withhold O2

Micro's two-signal controllers from the patent examiner.

CONCLUSIONS OF LAW

The Court concludes that Defendants have failed to meet their

burden of proof to provide clear and convincing evidence that O2

Micro's two-signal controllers were material and that O2 Micro

acted with an intent to deceive by not providing information about

those controllers to the PTO. Because the Court finds that both

these threshold matters have not been satisfied, there is no need

to balance materiality and intent. The '722 patent is not

unenforceable.

This order should resolve all outstanding claims in both cases

of the consolidated action. Within ten days, the parties shall

submit a stipulated proposed judgment reflecting the jury verdict

and any other dispositions of their claims. If the parties cannot

agree on a joint proposed judgment, they shall each file a proposed

judgment to be considered by the Court.

IT IS SO ORDERED.

Dated: 9/28/07 

CLAUDIA WILKEN

United States District Judge

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