## United States Court of Appeals for the Federal Circuit

2007-1457

EPISTAR CORPORATION, Appellant,

v.
INTERNATIONAL TRADE COMMISSION, Appellee, and PHILIPS LUMILEDS LIGH TING COMPANY, LLC, Intervenor.

Thomas C. Goldstein , Akin Gump Strauss Hauer & Fe ld LLP, of Washington, DC, argued for appellant. With him on the brief were Colleen M. Coyle , Tobias E. Zimmerman , and Christopher R. Pudelski ; and Yitai Hu and Elizabeth Rader , of Palo Alto, California. Of counsel was Paul F. Brinkman , Alston & Bird LLP, of Washington, DC. Clint A. Gerdine , Attorney, Office of the General Co unsel, United States International Trade Commission, of Washington, DC, argued fo r appellee. With him on the brief were James M. Lyons , General Counsel, and Andrea C. Casson , Assistant General Counsel for Litigation. Michael J. Lyons , Morgan, Lewis & Bockius, LLP, ofPalo Alto, California, argued for intervenor. With him on the brief were Andrew J. Wu , of Palo Alto, California, Daniel Johnson, Jr. , of San Francisco, California, and Carl P. Bretscher , of Washington, DC. Of counsel were Mary J. Boswell , of Washington, DC, and Brett M. Schuman , of San Francisco, California Appealed from: United States International Trade Commission

## United States Court of Appeals for the Federal Circuit

2007–1457 EPISTAR CORPORATION, Appellant,

v. INTERNATIONAL TRADE COMMISSION, Appellee, and PHILIPS LUMILEDS LIGH TING COMPANY, LLC, Intervenor.
Appeal from the United States International Trade Commissi on in Investigation No. 337–TA–556.

___________________________ DECIDED: May 22, 2009

___________________________ Before RADER, ARCHER, and DYK, Circuit Judges

. RADER, Circuit Judge

. The United States International Tr ade Commission (“ITC” or “Commission”) found that Epistar Corporation (“Epistar”) in fringed U.S. Patent No . 5,008,718 (“the ’718 patent”). In reaching this determinat ion, the Commission estopped Epistar from challenging the validity of the ’718 patent. The Commission also construed the claim terms “transparent window laye r” and “substrate” of claims 1 and 6. After finding infringement, the Commission issued a limited ex clusion order (“LEO”) prohibiting theimportation of Epistar’s downstream light em itting diode (“LED”) pr oducts, regardless of the manufacturer or importer of these pr oducts. Because the Commission erred in estopping Epistar from arguing invalidity of the ’718 patent when asserted against its products, but correctly construed the claim te rms, this court affirm s–in–part, reverses– in–part, and remands to the ITC with instructi ons to permit reconsideration of validity arguments. This court also vacates t he LEO and remands to the Commission for reconsideration. I. Intervenor Philips Lumileds Lighting Company (“Lumileds”) owns the ’718 patent, titled “Light–Emitting Diode with an Electrically Conductive Wi ndow.” The patent claims an LED with a special electrically conductive , transparent window layer on top of active LED layers of the semiconductor device. ’718 patent col.5 l.32–col.6 l.45. The transparent window layer enhances current spreading with less light absorpti on, thereby providing a brighter light output and improved efficiency. ’718 patent at col.2 ll.4–8. The invention includes a semiconductor substrat e, an electrical contact to the substrate, active layers of AlGaInP overlying the substrate, a transparent window layer of semiconductor different from AlGaInP overlying the active layers, and an electrical contact on top of the window layer. Id. , col.2 l.48–col.3 l.5. The transparent window layer has a higher electrical conductivityand lower resistivity than AlGaInP. Id. , col.2 ll.11–18, 57–59; col.3 ll.6–10. Prior art surface–emitting LEDs , as depicted by figure 1 of the ’718 patent shown below, generally comprise an absorbing subs trate 10 on which severa l epitaxial layers 11–13 are grown to form the LED. These epitaxial layers may include an n–type

2007–1457 2confining layer 11 of AlGaInP grown on top of the substrate 10, fo llowed by an active layer 12 of the same material, and a p–type confining layer 13 of the same material topping the active layer. This technological field refers to the combination of the p–type confining layer 13, active layer 12, and n–type confining layer 11 as the “p–n junction.” The LED generally provides a front, opaque electrical contact 14 on the front or emitting face of the LED, and a back electric al contact 15 on the substrate. Id. , fig. 1; col.1 ll.17–
32.

For efficient operation, this type of LE D injects current from the front metal contact and spreads it out laterally to t he edges of the LED chip to generate uniform light across the “p–n junction.” However, when the sheet resistance of the upper p–type confining layer is not low enough, the current will not spread. In stead, the current will tend to flow directly down beneath the front contact toward the back contact. This defect results in most of the light bei ng generated under the opaque front contact,

2007–1457 3referred to as “current crowding.” When cu rrent crowding occurs, “much of the light generated in this region is blocked and absorbed within the LED chip, thereby severely limiting the efficiency of the dev ice.” ’718 patent col.1 ll.33–46. According to the ’718 patent specification, the prior ar t did not effectively solve this current crowding problem because the metal patterns that spread the current continued to block light emission. Transparent front contacts comprised of indium–tin oxide (“ITO”) were also unsatisfactory because they did not adequately spread the
current. Id. , col.1 l.57–col.2 l.3. To solve these prior art difficulties of current crowding and high resistivity, the claimed invention teaches a transparent window layer with a higher electrical conductivity, and lower resistivity, than Al GaInP. This transparent window layer overlays the active AlGaInP LED layers and di stributes current from the front contact to the active layers. The invention thus generates more uniform emission of light throughout the p–n junction and improves the efficiency of the device. Id. , col.2 ll.4–30. The specification describes and illustrates two exemplary embodiments of an LED, constructed according to the prin ciples of the claimed invention. Id. , col.2 ll.48– 50, 60; col.4 ll.36–56. Particularly, as shown in figure 2 below, the specification describes an LED “having active p–n junction layers [21–23] of AlGaInP overlain by a transparent window layer [24] of semiconductor different from AlGaInP, with a low resistivity and a bandgap greaterthan the active layers, so that the overlying layer is transparent to light emitted by the p–n junction.” Id. , col.2 ll.11–19. The specification describes this first embodiment as “[ a]n exemplary light emitting diode (LED) constructed according to principles of this invention [that has] an n–type substrate” 20

2007–1457 4with overlying active layers 21–23 and a transparent window layer 24 overlying the active layers. Id. , col.2 l.48–col.3 l.5.

The alternative embodiment in figure 3 bel ow fabricates an LED by “epitaxially growing active AlGaInP layers [32–34] on a GaAs temporary substrate [31], epitaxially growing on the active layers a layer of se miconductor [35] having a crystal mismatch with GaAs and a bandgap greater than the bandgap of the active layers, and selectively removing the GaAs temporary substrate.” Id. , col.2 ll.21–26. The s pecification states, “this leaves a layer of transparent semiconducto r [35] adjacent to the active layers [32– 34] which has sufficient thickness to pr ovide the strength of a substrate.” Id. , col.2 ll.26– 30.

2007–1457 5A. Epistar merged with United Epitaxy Co mpany (“UEC”) sometime before this litigation. Before that mer ger, both companies had a history of litigation with Lumileds over the ’718 patent. In 1999, Lumileds brought suit against UEC in the Northern District of California, alle ging that UEC’s products in fringed the ’718 patent. See United Epitaxy Co. v. Hewlett–Packard Co. , No. C–00–2518–CW (N.D. Cal. Sept. 7, 1999). In response, UEC challenged the pat ent’s validity. In June 20 01, District Judge Claudia Wilken granted Lumileds’ motion for summary judgment that the ’718 patent claims were not indefinite, anti cipated, or unenforceable due to inequitable conduct. Id. , No.

2007–1457 6C–00–2518–CW, slip op. at 18 -19, 23-24. The district court further denied UEC’s cross–motion for summary determination of non–infringement, indefiniteness, obviousness invalidity, and mi sjoinder of an inventor. Id. , No. C–00–2518–CW, slip op. at 6–23, 25. On August 30, 2001, Lumileds and UEC settled the liti gation by negotiating and executing a Settlement Agreement and Mutual Release, Stipulat ed Consent Judgment, and License Agreement. Lumileds granted UEC a license to use the ’718 patent for the manufacture, sale, and importation of LEDs with absorbing substr ates, in exchange for an up–front fee and royalty payments. UEC also covenanted, on behalf of itself and its successors, not to challenge the ’718 patent’s validity. Later, from January 2003 thr ough July 2004, Lumileds a sserted the ’718 patent against Epistar in district court. See Lumileds Lighting U.X., LLC v. Epistar Corp. , No. C–03–1130–CW (N.D. Cal. Jan. 10, 2003). Settling the litigati on, Lumileds granted Epistar a license to use the ’718 patent in the manufacture of absorbing–substrate LEDs in exchange for a substantial lump–sum payment (nearly twice that in the UEC agreement), but no ongoing royalty requirement. With respect to the licensed products, Epistar promised not to challe nge the validity of the ’718 patent, but retained the right to challenge its validity if Lumil eds sued Epistar for infringement in the future. The agreement was silent with respect to non– licensed products, preserving Epistar’s statutory right to contest validity of the ’718 patent when asserted against those products.

2007–1457 7B. Lumileds filed suit under 19 U.S.C. § 1337 in the ITC on November 4, 2005, to prevent the importation into the United States, the sale fo r importation, and the sale within the United States afte r importation of certain hig h–brightness LEDs and products due to infringement of claims 1 and 6 of the ’718 patent. The Commission instituted an investigation on De cember 8, 2005. See Certain High–Brightnes s Light Emitting Diodes and Products Containing Same, 70 Fed. Reg. 73,026 (Int’l Tr ade Comm’n Dec. 8, 2005) (Inv. No. 337–TA–556). The complaint originally named two respondents, UEC and Epistar. On December 30, 2005, UEC merged into Epistar, with UEC ceasing to exist as a separate entity. As part of the me rger agreement, Epistar, as the surviving company, agreed that: all the assets, debts, rights, and obligat ions (including, but not limited to the patent right, copyright, trademark ri ght and contract, etc.), which are still valid up to the merger benchmar k date, of the company to expire [UEC] shall be borne by the company to exist as a whole [E pistar]. All the lawsuits, non–lawsuit cases, arbitrations, and other procedures, which continue to be valid, of t he company to expire at the merger benchmark date shall be borne by the company to exist as the party concerned. As such, Epistar assumed all of UEC’s as sets, liabilities, contractual and patent– related rights and obligations, and UEC’s status as a party to the Commission investigation. Since the merger, Epistar has continued to manufacture UEC’s MB and GB products, as well as the OMA product s that Epistar manufactured before the merger. Epistar has also developed new products: MB II, GB II, and OMA II. “OMA” refers generally to Epistar’s AlGaInP LED products that use an active LED layer of at least AlGaInP. An AlGaIn P LED refers to an LED that uses an active

2007–1457 8layer of semiconductor comprised of at l east a combination of aluminum, gallium, indium, and phosphorus. An ITO LED refers to an LED that uses a current–spreading layer of indium–tin oxide to enhance LED efficiency with higher light output. The designation “OMA II” refers to the second generation of OMA products that Epistar is developing. “MB” and “GB” refer generally to Epista r’s “metal bond” and “glue bond” LEDs that use an active LED layer of at least AlGaInP. The designations “MB II” and “GB II” refer to a second–generation of MB and GB products, respectively, that Epistar is developing. For simplicity, the terms “MB I, ” “GB I,” and “OMA I” are referred to as the first–generation of MB, GB, and OMA LED products as distinct from the second– generation of products. Also, the terms “MB LEDs” or “MB LE D products” refer generally to both the MB I and MB II LED pr oducts; the terms “GB LEDs” or “GB LED products” refer generally to both the GB I a nd GB II LED products; and the terms “OMA LEDs” or “OMA LED products” refer genera lly to both the OMA I and OMA II LED products. C. Lumileds moved in early 2006 for a summarydetermination that Epistar could not assert the invalidity of t he ’718 patent in defense of its Epistar–UEC LED products. Lumileds argued that the UE C merger bound Epistar to the UEC agreement with Lumileds, prohibiting a challenge of invalidity of the ’718 patent against UEC products. Lumileds also claimed that Epistar’s mergerwith UEC prevented a va lidity challenge on Epistar’s own products as well.

2007–1457 9On April 13, 2006, in Order No. 14, Admi nistrative Law Judge Sidney Harris ruled that the UEC–Lumileds agreement precluded Epistar from cont esting the validity of the ’718 patent with respect to any UEC or Epista r product: “Epistar, like UEC, is barred from raising an invalidity def ense to the assertion of in fringement of the ’718 patent against anyproduct” because “Epistar, like UEC, would be contractually estopped from raising an invalidity defens e to the ’718 patent.” Initial Determination Granting Complainant Lumileds’ Motion for Partial Summary Determination to Dismiss Epistar’s Affirmative Defense that the ’718 Patent Claims are Invalid , No. 337–TA–556, Order No. 14, at 17 (Int’l Trade Comm’n Ap r. 13, 2006). This ruling did not acknowledge the separate Epistar–Lumileds settlement agreement that pres erved Epistar’s right to challenge validity with respect to Epistar products. On April 28, 2006, Lumileds amended its complaint to accuse the Epistar OMA products of infringing the ’ 718 patent. The Commission declined to review Order No. 14, which became final on May 15, 2006. See Notice of Commission Determination Not to Review an Initial Determination Granting Complainant’s Motion For Partial Summary Determination to Dismiss an Affirmative Defense , No. 337–TA–556 (Int’l Trade Comm’n May 15, 2006). The Administrative Law Judge (“ALJ”) later recognized that two separate agreements were at issue in this case: (1 ) the UEC–Lumileds agreement and (2) the distinct Epistar–Lumileds settl ement that preserved Epista r’s right to challenge the validity of the ’718 patent in subsequent litigations. At t he August 2, 2006, pre–trial conference, the ALJ explained: I just reread my ruling under Order Nu mber 14, and it was based primarily on the [UEC] consent judgment, so the [UEC] consent judgment was

2007–1457 10broader than Epistar’s license. It didn’t take account of the qualification in the Epistar license . . . I never took in to account the fact that the Epistar license was different than the UEC license . . . The consent judgment in that case doesn’t take into account t he qualification whic h is included in the Epistar license. Pre–Hr’g Conference Tr. 60-63, Aug. 2, 2006 (Inv. No. 337–TA–556). Epistar explained that it briefed to the Commission the existenc e of the two different licenses, a fact that Lumileds acknowledged. Id. at 61, 64. Epistar then sought to contest the validityof the ’718 patent as to its products at the hearing. Nonetheless, the ALJ determined that it was too late because Order No. 14 became final when the Commission declined review. Id. at 67–68 (ALJ: “Well, I can’t reconsider it right now becaus e it’s a Commission decision, so I’m not going to consider it again during the hearing . . . .” Ms. Coyl e: “Could we have permi ssion then to put on an invalidity case for the ’718 patent?” ALJ: “No.”).
D. Litigation proceeded separately on claim construction. The claim construction issues on appeal, adopted by the Commission, cover the terms “transparent window layer” and “substrate” in claims 1 and 6 of t he ’718 patent. Claim 1, from which claim 6 depends, states:
1. A light emitting diode comprising: a semiconductor substrate ; an electrical contact to the substrate; active p–n junction layers for AIGalnP over the substrate for emitting light;

a transparent window layerof semiconductor different from A IGalnP over the active layers and having a bandgap gr eater than the bandgap of the active layers and a resistivity lower than the active layers; and

2007–1457 11a metal electrical contact over a portion of the transparent layer. ’718 patent col.5 ll.33–44 (emphases added).
1. “transparent window layer” The ALJ construed “transparent window la yer” as “a transparent layer that spreads current, composed of semiconductor mate rial different from AlGaInP, where the material has a bandgap greater than the bandgap of t he active layers and a resistivity lower than the active layers.” Order Construing the Terms ofthe Asserted Claims of the Patents at Issue , No. 337–TA–556, Order No. 27, at16–19 (Int’l Trade Comm’n July 31, 2006) (“ Claim Construction Order ”). During the Commission proceedings, Epis tar argued that the specification disavowed the use of ITO in the window la yer. Epistar further argued that the “transparent window layer” f eature cannot use ITO because such a construction would render the claim anticipated or obvious in view of the prior art. Specifically, Epistar cited U.S. Patent No. 4,495,514 (“Lawrence”) a nd a 1980 Japanese Patent Application No. JP57111076A to Yamagoshi, et al. (“Yamagos hi”), to support its argument and attempt to contest the validit y of the ’718 patent. Claim Construction Order , slip op. at 16–19. After examining the relevant intrinsic evidence, the ALJ rejected Epistar’s proposed interpretation. The ALJ found that the specification did not “expressly disavow the use of ITO.” Id. at 29. He explained that “refe rences in the specification to ITO discuss drawbacks to the use of ITO as a front contact , not as a transparent window layer.” Id. The ALJ also declined to find that a “statement in the background section that the use of ITO was not ‘completely satisfactory’ as a front contact is a disclaimer that ITO does not fall within th e scope of the claimed ‘transparent window

2007–1457 12layer.’” Initial Determination , No. 337–TA–556, slip op. at 39–40 (Int’l Trade Comm’n Jan. 8, 2007). The ALJ also rejected Epis tar’s argument that the specification’s verbiage “‘by promoting curr ent spreading without blocking the light generated or increasing series resistance’ serves as a limitation on the clai med ‘transparent window layer.’” Id. at 40. Accordingly, the ALJ cons trued the scope of “transparent window layer” to include ITO. 2. “substrate” The Commission on review construed the te rm “substrate” differently from the ALJ. Commission Opinion on Violation, Rem edy, The Public Interest, and Bonding , No. 337–TA–556, slip op. at 8–12 (Int ’l Trade Comm’n May 9, 2007) (“ Commission Opinion ”). The ALJ construed “substrate” as “the supporting material in an LED upon which the other layers of an LED are grown or to which those layers are attached.” Id. at 8. Based on the intrinsi c evidence, the Commission modified that construction to include the case in which “the supporting materi al functioning as the substrate is grown on top of, or attached to, the other layers.” Id. at 12. In construing the term, the Commission re jected Epistar’s contention that the substrate is limited to a single layer. The Commission found no support in the specification for Epistar’s proposed interp retation. Particul arly, the Commission explained that the “single layer” interpretation of “[substrate] is too limiti ng because we find that this term may include mu ltiple layers (elements).” Id. In this regard, the Commission noted that the specification d oes not “contain any disclaimer limiting a ‘substrate’ to a single layer,” but ratherthat “the LED structure depicted [in the specification] is described as exemplary, and therefore we view the [substrate] helping

2007–1457 13to form the LED structure as exemplary as well.” Id. Accordingly, the Commission construed “substrate” to include additi onal layers beyond a single layer. E. On May 9, 2007, the ITC issued a LEO based on its final determination that Epistar infringed claims 1 and 6 of the ’718 patent. Limited Exclusion Order , No. 337– TA–556 (Int’l Trade Comm’n May 9, 2007). T he LEO excluded from entry into the United States Epistar’s infringing LED products. Id. at 2. This exclusion included downstream “packaged LEDs c ontaining the infringing LE Ds and boards primarily consisting of arrays of such packaged LEDs ,” regardless of the manufacturer or importer of these products. Id. Epistar filed a Motion for Temporary Remand and Order to Modify Limited Exclusion Order in this court on April 6, 2009. Epistar moved this court to temporarily remand this case to the ITC with instructions that the ITC modify its LEO to comport with this court’s decision in Kyocera Wireless Corp. v. International Trade Commission , 545 F.3d 1340 (Fed. Cir. 2008). This court in Kyocera Wireless held that the ITC lacks statutory authority to iss ue a LEO that excludes imported products by entities not named as respondents before the ITC. 545 F. 3d at 1345, 1357–58. Epistar did not raise this issue in its briefs, nor did the court hear argument on this issue at the June 6, 2008, hearing. On October 28, 2008, shortly after this court released Kyocera Wireless , Epistar petitioned the Commission to modify or resci nd the LEO. The ITC Office of Unfair Import Investigation responded, supporting t he requested modification. Lumileds opposed the motion and instead sought a General Exclusio n Order under 19 U.S.C.

2007–1457 14§ 1337(d)(2). The Commission has not ruled on this motion due to the pending appeal in this case. Accordingly, this court must address the validity estoppel order, the claim construction issues, and the enforceability of the LEO. Epistar does not challenge the infringement determination under the Commission ’s claim construction. This court has jurisdiction over this appeal under 19 U.S. C. § 1337(c) and 28 U.S.C. § 1295(a)(6).
II. This court reviews the Commission’s su mmary determinations without deference as a question of law. Hazani v. Int’l Trade Comm’n , 126 F.3d 1473, 1476 (Fed. Cir. 1997). This court also reviews the Commissi on’s interpretation of the UEC and Epistar settlement agreements as a question of state law. Semitool, Inc. v. Dynamic Micro Sys. Semiconductor Equip. GmbH , 444 F.3d 1337, 1341 (Fed. Cir. 2006); Tex. Instruments, lnc. v. Tessera, Inc. , 231 F.3d 1325, 1329 (Fed. Cir. 2000). In their settlement agreements, the parties agreed that the terms of the agreements shall be “construed under the laws of the Stat e of California.” Under California state law, c ontracts are interpreted wit hout deference on appeal. Plaza Freeway Ltd. v. First Mountain Bank , 96 Cal. Rptr. 2d 865, 868 (Cal. Ct. App. 2000). The California Civil Code supplies basic rules for contract interpretation: (1) “clear and explicit” language that does not produce an absurdity will govern, Cal. Civ. Code § 1638 (1872); (2) ambiguous terms receive the meaning “which the promisor believed, at the time of making it, that t he promisee understood, ” Cal. Civ. Code § 1649 (1872); and (3) ambiguity persisting beyond the application of t he previous rule will be resolved against “the party who caused the uncertainty to exis t,” Cal. Civ. Code § 1654 (1982). In sum,

2007–1457 15contract interpretation is governed by the ob jective intent of the parties as embodied in the words of the contract. Beck v. Am. Health Group Int’l, Inc. , 260 Cal. Rptr. 237, 241– 42 (Cal. Ct. App. 1989). This court also reviews the Commission’s claim construction without deference. Cybor Corp. v. FAS Techs., Inc. , 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc). Generally, this court gives claim terms their ordinary and customary meanings, according to the customary understanding of a person of ordinary skill in the art who reads them in the context of the intrinsic record. See Phillips v. AWH Corp. , 415 F.3d 1303, 1312–13 (Fed. Cir. 2005) (en banc ). The specification “is the single best guide to the meaning of a disputed term.” Vitronics Corp. v. Conceptronic, Inc. , 90 F.3d 1576, 1582 (Fed. Cir. 1996). This court recognizes, however, “there is sometimes a fine line between reading a claim in light of the specif ication, and reading a limitation into the claim from the specification.” Comark Commc’ns, Inc. v. Harris Corp. , 156 F.3d 1182, 1186 (Fed. Cir. 1998). Finally, this court reviews the Commission’s LEOs for actions that are arbitrary, capricious, an abuse of discr etion, or otherwise not in accordance with law. Hyundai Elecs. Indus. Co. v. Int’l Trade Comm’n , 899 F.2d 1204, 1207–08 (Fed. Cir. 1990).
A. Before the ITC, Lumileds argued that UEC agreed it would not contest the validity of the ’718 patent and that the settlement woul d apply to its successors. Lumileds contended that the merger should notpermit UEC to escape its agreement not to contest the validity of t he ’718 patent. Lumileds did not contest the language of the

2007–1457 16individual settlement agreement s, but stressed that UEC’s merger with Epistar bound Epistar to UEC’s settlement agreement. This court finds that Epistar’s right to contest validity of the ’718 patent with respect to its products is governed by it s own separate agreement with Lumileds. Epistar (as successor to UEC) may not cont est the validity of the ’718 patent with respect to the UEC products t hat it inherited in the merger . Black letter contract law states that the assign ment of a contract to an assignee, such as from UEC to Epistar, only changes the obligat ed party, not the scope ofthe obligation. See, e.g. , Arthur L. Corbin, Corbin on Contracts § 884, at 488 n.13 (1993) (A n “assignor has no power, by assignment or otherwise, to change in any ma terial way the performance to be rendered by the obligor.”). Preserving the rights that Epistar separatel y secured by contract does not in any respect permit UEC to escape its obligations. When Lumileds settled with Epistar, the settlement agreement addressed only the licensed products and thereby preserved Epistar’s unrestricted right to contest the valid ity of the patent in other contexts. This court cannot allow Lumileds to escape its agreements due to a merger that does not disturb its contract with Epista r. In other words, Lumileds cannot fortuitously gain rights against Epistar that it could not secure pre–merger. Thus, the settlement agreement binds the parties, as underst ood and intended by them, accordin g to its ordinary terms. See Beck , 260 Cal. Rptr. at 241–42; see also Restatement (Second) of Contracts § 201(1) (1981); id. , § 202(5) (“Wherever reas onable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade.”).

2007–1457 17In Medtronic AVE, Inc. v. Advanc ed Cardiovascular Systems, Inc. , C.R. Bard, Inc. (“Bard”) and American Cardiovascular S ystems (“ACS”) entered into an agreement to arbitrate any dispute over the licensed pa tents in the case. 247 F.3d 44, 49 (3d Cir. 2001). Medtronic/Arterial Vascular Engi neering, Inc. (“AVE”) acquired Bard and assumed its obligations. Id. at 48 n.1. AVE t hen sued ACS for patent infringement. AVE’s claims related to its own products, not Bard’s. The Third Circuit rejected ACS’s argument that its agree ment with Bard requir ed AVE to arbitrate: [A]ssignment of a contract will result in the assignee stepping into the shoes of the assignor with regard to t he rights that the assignor held and not in an expansion of those rights to include those held by the assignee

. “An assignment does not modify the terms of the underlying contract . It is a separate agreement between the assignor and the assignee which merely transfers the assignor’s contract rights, leaving them in full force and effect as to the party charged .” Id. at 60 (quoting Citibank, N.A. v. Tele/Resources, Inc. , 724 F.2d 266, 269 (2d Cir. 1983)) (emphases added). A “straightforward principle” allowed the court to reject ACS’s assumed– obligation argument: “[W]hile it is true that when AVE acc epted the assignment of the 1992 agreement from Bard it ‘step[ped] into [Bard’s] s hoes,’ . . . the agreement to arbitrate cannot be applied to AVE’s separate interests that Bard never owned.” Medtronic , 247 F.3d at 56 (cit ations omitted); see also Spindelfabrik Suessen–Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer Maschin enfabrik Aktiengesellschaft , 829 F.2d 1075, 1081–82 (Fed. Cir. 1987) (company that purchased patent, and was thereby bound by patent seller’s agreement not to sue patent licensee for infringement with respect to that patent, was not barred from suing the licensee for infringement on

2007–1457 18another patent it held prior to th e purchase). This case fits well into that reasoning and result. UEC’s settlement agreement has preclusive effect upon Epistar only “to the same extent as upon [UEC it]self.” Restat ement (Second) of Judgments § 43 (1982). The preclusive effect of that agreement, if any, is limited to UEC’s pre–Epistar product lines. To paraphrase this court in International Nutrition Co. v. Horphag Research, Ltd. , Epistar’s acquisition of UEC does not have the e ffect of limiting Epistar’s rights that are unrelated to the product lines it acquired from UEC. 220 F.3d 1325, 1329 (Fed. Cir. 2000). Accordingly, this court overturn s the Commission’s final determination that Epistar is estopped from challenging validityof the ’718 pat ent when asserted against its own products, separat e from the UEC–Lumileds settlement agreement. B. The ALJ construed “transparent window la yer” as “a transparent layer that spreads current, composed of semiconductor mate rial different from AlGaInP, where the material has a bandgap greater than the bandgap of t he active layers and a resistivity lower than the active layers.” Claim Construction Order , slip op. at 16–19. Epistar does not challenge or propose an alternative to th is construction. It ar gues instead that the inventors disclaimed the use of ITO in the window layer. To prevail, Epistar must establish the inventors “demonstrat e[d] an intent to deviate from the ordinary and accustomed meaning of a claim term by including in the specification expressions of manifest exclusion or restri ction, representing a clear disavowal of claim scope.” Teleflex, Inc. v. Ficosa N. Am. Corp. , 299 F.3d 1313, 1325 (Fed. Cir. 2002). With respect to Epistar’s arguments that the inv entors disavowed the

2007–1457 19use of ITO during the prosecution history, Epistar must also overcome a heavy presumption that claim terms carry their fu ll ordinary and customary meaning, unless it can show the patentee expressly relinquished claim scope. Omega Eng’g v. Raytek Corp. , 334 F.3d 1314, 1323 (Fed. Cir. 2003). For the following reasons, Epistar’s arguments fall short ofthese standards. Epistar argues that the Commission e rred in permitting “transparent window layer” to encompass a current spreading window layer of ITO because “the very purpose of the ’718 patent was to address problems with . . . the use of lTO.” The specification of the ’718 patent states: The techniques proposed for minimizing the current crowding problem in AlGaInP LEDs have not been completely satisfactory. . . . Another technique is to use a transparent front electrical contact such as an indium–tin oxide instead of metal. Such transparent electrical contacts have high resistivity and lead to high series resistance in the device. Because of such shortcomings, it is desirable to provide a technique for distributing current from t he front contact to the acti ve p–n junction so that light is emitted more uniformly throughout the junction and device efficiency is enhanced. ’718 patent col.1 ll.57–59; co l.1 l.67–col.2 l.8 (emphasis added). Although “transparent front electrical contact” and “transparent window laye r” are separate structures, nowhere does the ’718 patent s pecification or prosecution hi story state or suggest that ITO should not be used as a transparent window layer. The ALJ correctly determined that the ’718 patent does not disclaim the use of ITO as a window layer: The Administrative Law Judge confi rms that he does not find a clear disavowal of the use of lTO as a transparent window layer in the specification of the ’718 patent. The specification does describe two unsatisfactory techniques proposed for minimizing the current crowding solution which include the modification of the front contact. One of those techniques involved the replacement of a metal front electrical contact with

2007–1457 20ITO. The Administrative Law Judge does not find, however, that a statement in the backg round section that the use of ITO was not “completely satisfactory” as a front contact is a disclaimer that ITO does not fall within the scope of the claime d “transparent window layer,” which serves a distinct function in an LED. Initial Determination , slip op. at 39–40. The ’718 patent’s discussion of ITO addresses the “current crowding” problem, by using a transparent contact that permits more light to escape than an opaque metal contact. ’718 patent col.1 l.67–col.2 l.3. A transparent contact does not block the light generated under the contact. Al though current crowding st ill occurs, the use of a transparent contact, such as ITO, dimini shes the problems of a metal contact. In any event, this technique is not rele vant to the ’718 patent, which does not modify the front contact to solve the current crowding problem. Instead, the invention keeps the opaque “metal electrical contact” 25 but adds a “transparent window layer” 24 beneath it. Id. The claims and specification of t he ’718 patent consistently treat these two structures as separat e and distinct elements. See, e.g. , id. , col.2 l.66–col.3 l.13 (claims 1 and 6 discussing metal electrical contact 25 and transpar ent window layer 24 in Figure 2).
In LizardTech, lnc. v. Earth Resource Mapping, lnc. , this court held that where two steps (or structures) are “entirely differ ent concepts and procedures” and identified as separate steps in the claims, no skilled artisan could reasonably construe them as a single element. 424 F.3d 1336, 1342–43 (Fed. Cir . 2005) (excluding the “altogether distinct process of taking a DWT [discrete wavelet transform]” from the scope of the claim term “maintaining updated sums of DWT coefficients”). As in LizardTech , the

2007–1457 21transparent front electrical contact is “ent irely different” from the transparent window layer. Id. Even if the patent specific ation did disparage the use of ITO as a window layer, this criticism does not rise to the level of a disavowal. Disavowal requires “expressions of manifest exclusion or restriction, repr esenting a clear disavowa l of claim scope.” Teleflex , 299 F.3d at 1325. A patent ee’s discussion of the sh ortcomings of certain techniques is not a disavowal of the use of those techniques in a manner consistent with the claimed invention. For example, in Micro Chemical, Inc. v. Gr eat Plains Chemical Co. , the patentee explained in the background sect ion of the patent that a prior art device using the “weigh dump method” was too slow and too inaccurate. 194 F.3d 1250, 1260 (Fed. Cir. 1999). The patent did not assert that the “weigh dump method” itself was the reason for the inaccuracies or slowness. Id. This court ruled that t he patentee did not disavow the use of the “weigh dump method,” even if t he claim were construed as a step–plus– function claim under 35 U. S.C. § 112, ¶ 6. Micro Chem. , 194 F.3d at 1259–60. Moreover, this case does not present an instance where an inventor distinguishes an invention over the prior art in an unmistaka ble disavowal of those prior art features. In Phillips , this court recognized that in certain cases, “the specification may reveal an intentional disclaimer, or disavo wal, of claim scope by the inventor.” 415 F.3d at 1316. In such cases, this court in terprets the claim mo re narrowly than it otherwise would to give effect to the inventor’s intent to disavow a broader claim scope. Id. ; Honeywell Int’l, Inc. v. ITT Indus., Inc. , 452 F.3d 1312, 1319–20 (Fed. Cir. 2006); SciMed Life Sys., Inc. v. Ad vanced Cardiovascular Sys., Inc. , 242 F.3d 1337, 1342–44

2007–1457 22(Fed. Cir. 2001). By the same token, this court also recognizes that disparaging comments alone do not necessarily show a manifest or express disavowal of the criticized subject matter. See, e.g. , Ventana Med. Sys., Inc. v. Biogenex Labs., Inc. , 473 F.3d 1173, 1180–81 (Fed. Cir . 2006) (finding that gener al comments distinguishing the prior art were not sufficient to limit t he term “dispensing” to “direct dispensing”); In re Am. Acad. of Sci. Tech. Ctr. , 367 F.3d 1359, 1365–67 (Fed . Cir. 2004) (finding descriptions of the defici encies of using mainframe computers did not exclude mainframes from the term “user computer” bec ause the specification as a whole did not express a clear disavowal of that subject matter). In th is case, the single, passing reference to ITO as a relatively unsatisfa ctory transparent electrical contact in the specification does not disa vow the use of ITO as a transparent window layer. Epistar argues that the ’718 patent “cannot be construed to encompass ITO [because] the patent does not actually disclose a means of using it,” i.e., the use of ITO in the transparent window layer is not enabled in the ’718 patent specification. See,
e.g. , Genentech, Inc. v. Novo Nordisk A/S , 108 F.3d 1361, 1365 (F ed. Cir. 1997) (“To be enabling, the specificat ion of a patent must teach those skilled in the art how to make and use the full scope of the claimed inv ention without undue experimentation.” (internal citations omitted)). This court has also held that “[a]n applicant is not required to describe in the specification every concei vable and possible futu re embodiment of his invention.” Cordis Corp. v. MedtronicAve Inc. , 339 F.3d 1352, 1365 (Fed. Cir. 2003); see also Spectra–Physics, Inc. v. Coherent, Inc. , 827 F.2d 1524, 1534 (Fed. Cir. 1987) (“If an invention pertains to an art where the results are predictable, . . . a broad claim can be enabled by disclosure of a single embodiment . . . and is not invalid for lack of

2007–1457 23enablement simply because it r eads on another embodiment of the invention which is inadequately disclosed.” (inter nal citations omitted)). Because ITO as a transparent conductive layer was already known to those of skill in the art, the ’718 patent specification did not need to make further enabling disclosures about its prior art uses. See, e.g. , Spectra–Physics , 827 F.2d at 1534 (“A patent need not teach, and preferably omits, what is well known in the art.”). Epistar acknowledges that methods of fabricating tr ansparent ITO layers were known in the art with its discussion of the Lawrence patent that discloses an ITO current spreading layer, i.e., “transparent electrode.” Accordingly, th is court finds that the ALJ did not err in construing “transparent window layer.” C. The Commission construed “substrate” as “t he supporting material in an LED upon which the other layers of an LED are grown or to whic h those layers are attached” and included the case in which “the supporting material functi oning as the substrate is grown on top of, or attached to, the other layers.” Commission Opinion , slip op. at 8– 12. Epistar disputes the Commission’s rulin g that a “substrate” need not, by itself, provide adequate mechanical support for the LED. It argues a substrate can only be “a layer which is present as the supporting mate rial that makes the device large and sturdy enough to manipulate, and which provides a su rface upon which the other layers can be attached to, grown, or deposited.” Claim 1 of the ’718 patent requires only “a semiconductor substrate” and does not impose any limitation on its thickness oramount of mechanical support. ’718 patent col.5 ll.33–44. Epistar does not cite to any statement in the specification or file history

2007–1457 24suggesting that the substrate, by itself, must make the LE D “large and sturdy enough to manipulate.” While the ’718 pa tent describes a thicker layer as a “substrate,” the Commission followed this court’s precedent in declining to limit the construction of “substrate” to that embodiment. See, e.g. , Phillips , 415 F.3d at 1323 (“[A]lthough the specification often describes very specific embodiments of the invention, we have repeatedly warned against c onfining the claims to those embodiments.”). Commission Opinion , slip op. at 10–11. Mor eover, the specification expl ains that the thickness identified for the substrate is merely “exemplary.” ’718 patent col.5 ll.3–4. Epistar also would limit “substrate” to a single layer. Although Epistar urges this court to apply the ALJ’s construction, wh ich was modified by the Commission, Epistar does not point to any intrinsic evidence to justify this limitation on the broad term “substrate.” The Commission correctly declined to limit “substrate” to the preferred embodiments in the specification. Moreover, the Commission’s construction is consistent with this court’s precedent that the disclosure of a pref erred or exemplary embodim ent encompassing a singular element does not, without more, disclaim a plural embodiment. See KCJ Corp. v. Kinetic Concepts, Inc. , 223 F.3d 1351, 1356 (Fed. Cir. 2000); see also AbTox, Inc. v. Exitron Corp. , 122 F.3d 1019, 1023 (Fed. Cir. 1997). Therefore, consistent with established precedent, the term “substrate” may include one or more layers of “supporting material” for the active LED layers. Epistar argues that the ITC’s constr uction renders the term “substrate” meaningless because “every layer below the active layers,” such as confining layers, would qualify as a substrate. To the contrary, claim 1 and the specification prevent the

2007–1457 25substrate from encompassing these other layers. For example, even without the “adequate mechanical support” limitation, the confining layers cannot qualify as a substrate because they are part of the “active p–n junction layers,” defined by claim 1 and the specification as “on top of” and “over the substrate.” Id. , col.2 ll.50–57; col.5 ll.36–37. Indeed, as disclosed in the embodiment of figure 2, the only layer below the active layers 21–23 is substrate 20, wh ich meets the “semiconductor substrate” limitation of claim 1. See id. , fig. 2; col.2 ll.48–59; col.5 ll.34–37. Acco rdingly, this court finds that the Commission did not err in construing the term “substrate.”
D. The parties did not provide arguments at the June 6, 2008, hearing regarding Epistar’s Motion for Temporary Remand and Or der to Modify Limited Exclusion Order (“LEO”). Nor did Epistar raise this issue in its briefs prior to the hearing. The issue, however, was not ripe until after this court released its opinion in Kyocera Wireless

. Moreover, without this appeal, Ep istar would be entitled to a modification of the LEO under 19 C.F.R. § 210. 76(a)(1). Therefore, this court de cides this issue in the interests of judicial efficiency and economy and the preventi on of any further delays in this case. This court in Kyocera Wireless held that the ITC lacks st atutory authority to issue a LEO that excludes imported products by entities not named as respondents before the ITC. Kyocera Wireless , 545 F.3d at 1345, 1357–58. The Commission’s LEO improperly excludes downstream “packaged LEDs containing the infringing LEDs and boards primarily consisting of arrays of such packaged LEDs,” regardless of the manufacturer or importer of these products. Limited Exclusion Order , slip op. at 2. The Commission ordered this relief despite a cknowledging that “Epist ar does not itself

2007–1457 262007–1457 27 manufacture downstream products,” and “almos t all of Epistar’s LED sales are to foreign entities who then incorporate the infringing LE Ds into packaged LED and LED boards for importation into the U.S.” Commission Opinion , slip op. at 28. This court, therefore, vacates the current LEO and remands to the Commissi on for reconsideration. III. For the reasons stated above, the Comm ission erred as a matter of law in estopping Epistar from arguing in validity of the ’718 patent as to its products. The Commission correctly construed the claim terms “transparent window layer” and “substrate.” Finally, the Commission erred in extending the LEO to downstream products manufactured by third parties not named in this case.

AFFIRMED–IN–PART, REVERSED–IN–PART , and REMANDED

COSTS Each party shall bear its own costs.