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Timestamp: 2019-04-24 22:24:31+00:00

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FindACase | Danmark v. CMI USA Inc.
Danmark v. CMI USA Inc.
Appeals from the United States District Court for the Northern District of California in No. 3:13-cv-00457-JST, Judge Jon S. Tigar.
ERIK R. Puknys, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Palo Alto, CA, argued for plaintiff-appellee. Also represented by ROBERT F. McCauley, Jeffrey Daniel Smyth; Arpita Bhattacharyya, Boston, MA.
Kyle Dakai Chen, Cooley LLP, Palo Alto, CA, argued for defendants-appellants. Defendant-appellant CMI USA Inc. also represented by REUBEN Ho-Yen Chen.
Before Prost, Chief Judge, NEWMAN, and TAEANTO, Circuit Judges.
In January 2013, Asetek Danmark A/S sued two parties-Cooler Master USA, Inc., which a month later became CMI USA Inc.; and Cooler Master Co., Ltd., a Taiwanese company-in the Northern District of California, asserting infringement of two of Asetek's patents, U.S. Patent Nos. 8, 240, 362 and 8, 245, 764. All of the accused products are branded "Cooler Master." A few months before trial, by stipulation, Asetek dismissed with prejudice its claims against the Taiwanese company (hereafter "Cooler Master"). Asetek's claims of infringement by CMI USA (hereafter "CMI"), and CMI's invalidity counterclaims, were tried partly to a jury and partly to the court. Asetek prevailed and received a judgment of infringement, and of no invalidity, plus a damages award against CMI of $404, 941, based on a 14.5% royalty rate. The district court also entered an injunction covering the specific "Cooler Master" products found to infringe. The injunction runs not only against CMI but also against Cooler Master-which was not then a party (though it later intervened and became one) and which was not adjudicated liable for infringement.
We affirm the district court's rulings on infringement, invalidity, and damages. We remand as to part of the injunction, i.e., insofar as the injunction reaches conduct by Cooler Master (regarding the covered products) that goes beyond abetting a new violation by CMI. The governing standards for reaching such conduct by persons not adjudicated liable for the underlying wrong, reflected in Federal Rule of Civil Procedure 65(d), are highly fact-specific. In this case, a determination of the propriety of the injunction's reach would benefit from further findings and, if sought and needed, further record development.
The '362 and '764 patents describe and claim systems and methods for cooling the "central processing unit (CPU) or other processing unit of a computer system" using cooling liquid. '362 patent, col. 1, fines 12-14; '764 patent, col. 1, lines 11-13. According to the patents, which have similar specifications, liquid-cooling systems in the prior art consisted of "many components, " which were "coupled together, " increasing "total installation time" and causing "leakage." '362 patent col. 1, lines 34-49; '764 patent, col. 1, lines 32-37. By contrast, the '362 and '764 patents describe systems that combine multiple components-a "heat-exchanging interface, " a "reservoir, " and a "pump"-into a single "integrate element." '362 patent, col. 2, lines 9-11; '764 patent, col. 2 fines 5-6. As recited in the asserted claims, the "reservoir" includes two "vertically" separated chambers, referred to as the "upper chamber" and "lower chamber, " '362 patent, col. 18, lines 56-65, or "pump chamber" and "thermal exchange chamber, " '764 patent, col. 27, lines 49-57.
a heat radiator fluidly coupled to the reservoir and configured to dissipate heat from the cooling liquid.
'764 patent, col. 27, lines 39-65. The asserted claims of the '362 patent are similar, but additionally require the "heat-exchanging interface" to be "removably attached" or "removably coupled" to the "reservoir." '362 patent, col. 20, lines 3-6; id. col. 20, lines 40-44.
"Cooler Master is a Taiwanese supplier of computer components, including cooling devices for heat generating components" of computers. Appellants' Br. 24. Its products include the "Cooler Master"-branded Seidon 120M, Seidon 120XL, Seidon 240M, Seidon 120V, Seidon 120V Plus, Glacer 240L, Nepton 140XL, and Nepton 280L liquid-cooling products at issue in this case. CMI is a U.S. company that-as reflected in its name ("Cooler Master USA, Inc.") until February 2013, a month after this suit began, ECF Nos. 60, 61 (May 2014 change of caption)- collaborates with Cooler Master in designing and selling "Cooler Master"-branded products in the United States. J.A. 3562-63. CMI also "assists" Cooler Master "in setting the manufacturer's suggested retail price of the accused products sold in the United States." J.A. 3563. The evidence, seemingly undisputed, is that, by oral agreement, CMI was Cooler Master's exclusive U.S. distributor of Cooler Master products. J.A. 7848-49; Transcript of Proceedings at 1069, 1106-07, Asetek Dan-mark A/S v. CMI USA, Inc., 00457-JST (N.D. Cal. Dec. 10, 2014), ECF No. 243. Between 2012 and 2013, CMI began selling specified Seidon, Glacer, and Nepton models of "Cooler Master"-branded products in the United States.
In its January 2013 suit against CMI and Cooler Master, Asetek asserted that they were infringing claims 14- 15 and 17-19 of the '362 patent and claims 1-15 and 17-18 of the '764 patent by selling, offering to sell, and importing the Seidon, Glacer, and Nepton products. Discovery proceeded, and infringement and invalidity contentions were filed. By September 5, 2014, the litigation was far enough along that CMI moved for summary judgment of invalidity. Cooler Master did not join that motion, however, because, the day before, it and Asetek stipulated to Cooler Master's dismissal with prejudice-a dismissal entered on September 5, 2014. Asetek agreed to that dismissal after CMI and Cooler Master witnesses testified, in discovery, to Cooler Master's exclusive-distribution arrangement with CMI for the accused products in the United States.
The case went to trial a few months later, in December 2014. At trial, CMI argued that the '362 patent was not infringed, that the '764 patent was anticipated by U.S. Patent No. 7, 544, 049 (Koga), and that the '362 and '764 patents were obvious over Koga and Korean Utility Model No. 20-0314041 (Ryu). The district court granted Asetek's motion for judgment as a matter of law that Koga did not anticipate claim 4 of the '764 patent, and the jury returned a verdict for Asetek on the remaining issues. The jury found that CMI infringed, directly and contributorily, the asserted claims of the '362 patent and rejected CMI's Koga-based anticipation challenge to the remaining claims of the '764 patent. Additionally, the jury made specific findings, related to obviousness, about the level of ordinary skill in the relevant art, the scope and content of the prior art, differences between the prior art and the inventions claimed by the '362 and '764 patents, and objective indicia of non-obviousness. For example, the jury found that the claimed liquid-cooling systems differ from the prior art because they combine a "pump" and a "reservoir" "into a single unit" and because the "reservoir" is a "single receptacle that is divided into an upper chamber and a lower chamber." The jury also found six objective indicia of non-obviousness. The jury found Asetek entitled to a 14.5% reasonable-royalty rate and awarded $404, 941 in damages.
In April 2015, the district court entered its findings of fact and conclusions of law on various matters the parties had reserved to it. Asetek Danmark A/S v. CMI USA, Inc., 100 F.Supp.3d 871 (N.D. Cal. 2015). The court concluded that CMI failed to prove that the '362 and '764 patents were invalid for obviousness, lack of written description, or indefiniteness. In September 2015, the district court denied CMI's motions for judgment as a matter of law or a new trial on infringement and damages as well as for a new trial on obviousness. Asetek Dan-mark A/S v. CMI USA, Inc., No. 3:13-cv-00457-JST, 2015 WL 5568360, at *3-12 (N.D. Cal. Sept. 22, 2015).
(2) CMI USA, Inc. and its subsidiaries and affiliated companies (collectively defined as "CMI"), as well as CMI's successors, assigns, officers, directors, agents, servants, employees, representatives and attorneys, and those persons in active concert or participation with them who receive notice of the order are hereby immediately and permanently restrained and enjoined, pursuant to 35 U.S.C. § 283 and Fed.R.Civ.P. 65(d), from making, using, offering for sale or selling in the United States, or importing into the United States, or causing to be made, used, offered for sale, or sold in the United States, or imported into the United States, the Infringing Products.
(3) Cooler Master Co., Ltd. and its subsidiaries and affiliated companies (collectively defined as "Cooler Master"), as well as Cooler Master's successors, assigns, officers, directors, agents, servants, employees, representatives and attorneys, and those persons in active concert or participation with them who receive notice of the order are hereby immediately and permanently restrained and enjoined, pursuant to 35 U.S.C. § 283 and Fed.R.Civ.P. 65(d), from making, using, offering for sale or selling in the United States, or import- ing into the United States, or causing to be made, used, offered for sale, or sold in the United States, or imported into the United States, the Infringing Products.
(4) Within 14 days of issuance of this order, CMI and Cooler Master shall provide written notice of this judgment and order, and the injunction ordered herein, to: their officers, directors, agents, servants, representatives, attorneys, employees, subsidiaries and affiliates, and those persons in active concert or participation with them. CMI and Cooler Master shall take whatever means are necessary or appropriate to ensure that this order is properly complied with.
(5) CMI and Cooler Master shall include a copy of this Order and the written notice in paragraph (6) below [stating that the product is affected by a permanent injunction, infringes the '362 and '764 patents, and "may not be sold, offered for sale, " "used, " or "imported into the United States"] along with every bill of sale for the Infringing Products and in the boxes in which the Infringing Products are shipped or sold, regardless of where they are sold, indicating that they infringe the patents-in-suit, are subject to an injunction in the United States, and thus cannot be sold, offered for sale, imported, or used in the United States.
Id. at *20. The injunction lasts until the '362 and '764 patents expire, except that either party may seek modification if either patent is finally adjudged invalid in another proceeding. Id. at *21.
In January 2016, Cooler Master appealed the injunction, paragraphs (3)-(5) of which impose obligations on it. Cooler Master then intervened, becoming a party again, even though in similar circumstances non-parties have been permitted to appeal. See, e.g., Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1277 (9th Cir. 1992) ("a nonparty who is enjoined or otherwise directly aggrieved by a judgment has standing to appeal the judgment without having intervened in the district court"). The district court subsequently denied Cooler Master's motion to stay the injunction.
CMI and Cooler Master appeal. CMI and Cooler Master present challenges to the district court's post-trial rulings on infringement and obviousness and to the injunction. CMI also presents challenges to the district court's post-trial rulings on damages. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

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