Source: http://openjurist.org/977/f2d/1555/brooktree-corporation-v-advanced-micro-devices-inc
Timestamp: 2015-11-27 14:08:19
Document Index: 584288241

Matched Legal Cases: ['§ 271', '§ 910', '§ 1295', '§ 901', '§ 901', '§ 901', '§ 101', '§ 101', '§ 905', '§ 902', '§ 902', '§ 901', '§ 905', '§ 106', '§ 906', '§ 906']

977 F2d 1555 Brooktree Corporation v. Advanced Micro Devices Inc | OpenJurist
977 F. 2d 1555 - Brooktree Corporation v. Advanced Micro Devices Inc HomeFederal Reporter, Second Series 977 F.2d.
977 F2d 1555 Brooktree Corporation v. Advanced Micro Devices Inc 977 F.2d 1555
1992 Copr.L.Dec. P 26,997, 24 U.S.P.Q.2d 1401
BROOKTREE CORPORATION, Plaintiff/Cross-Appellant,v.ADVANCED MICRO DEVICES, INC., Defendant/Appellant.
Nos. 91-1258, 91-1259.
Oct. 9, 1992.Rehearing Denied; Suggestion forRehearing In Banc DeclinedJan. 4, 1993.
David E. Monahan, Gray, Cary, Ames & Frye, San Diego, Cal., argued, for plaintiff/cross-appellant. With him on the brief were John Allcock and Marcello E. Mihaila. Also on the brief was Ellsworth Roston, Roston & Schwartz, Los Angeles, Cal.
Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., argued, for defendant/appellant. With him on the brief were Allen M. Sokal and E. Robert Yoches. Also on the brief were Kenneth E. Keller, Alexander Brainerd, David Eiseman, IV, and Robert J. Stumpf, Jr., Bronson, Bronson & McKinnon, and Martin C. Fliesler, Fliesler, Dubb, Meyer & Lovejoy, San Francisco, Cal., of counsel.
Brooktree Corporation brought suit against Advanced Micro Devices, Inc. (herein AMD) for patent infringement, 35 U.S.C. § 271, and infringement of mask work registrations, 17 U.S.C. § 910, in connection with certain semiconductor chips used in color video displays. The United States District Court for the Southern District of California entered judgment that the patents were valid and infringed and that the registered mask works were infringed, assessing damages.1
The principal issues on appeal arise under the Patent Act, of which the Federal Circuit has exclusive appellate jurisdiction, 28 U.S.C. § 1295(a)(1), and the Semiconductor Chip Protection Act, of which this court's appellate jurisdiction is pendent. Thus for issues of fact and law under the Semiconductor Chip Protection Act we apply the discernable law of the Ninth Circuit, in accordance with the principles set forth in Atari, Inc. v. JS & A Group, Inc., 747 F.2d 1422, 1438-40, 223 USPQ 1074, 1086-87 (Fed.Cir.1984) (en banc ) (applying copyright law of the circuit in which the case was tried, thus avoiding creating new opportunities for forum shopping). Judicial consideration of the Semiconductor Chip Protection Act has thus far been sparse, and we have given particular attention to the statute and its history, for the parties dispute significant aspects of statutory interpretation.
This case occasioned a lengthy trial over the course of seven weeks before the jury, in consecutive determinations of liability and damages. The jury verdicts were the subject of duly filed motions for judgment notwithstanding the verdict and for a new trial, which motions were denied by the district court. AMD charges error on issues of mask work infringement and damages, and also on issues of patent validity, infringement, and willfulness. Brooktree cross-appeals certain damages rulings, and the denial of attorney fees under both the Patent Act and the Semiconductor Chip Protection Act.
* MASK WORKS
The Semiconductor Chip Protection Act
The Semiconductor Chip Protection Act of 1984, Pub.L. 98-620, Title III, 98 Stat. 3347, codified at 17 U.S.C. §§ 901-914, arose from concerns that existing intellectual property laws did not provide adequate protection of proprietary rights in semiconductor chips that had been designed to perform a particular function. The Act, enacted after extensive congressional consideration and hearings over several years, adopted relevant aspects of existing intellectual property law, but for the most part created a new law, specifically adapted to the protection of design layouts of semiconductor chips.
Chip design layouts embody the selection and configuration of electrical components and connections in order to achieve the desired electronic functions. The electrical elements are configured in three dimensions, and are built up in layers by means of a series of "masks" whereby, using photographic depositing and etching techniques, layers of metallic, insulating, and semiconductor material are deposited in the desired pattern on a wafer of silicon. This set of masks is called a "mask work", and is part of the semiconductor chip product. The statute defines a mask work as:
a series of related images, however fixed or encoded
(A) having or representing the predetermined, three dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of a semiconductor chip product; and
(B) in which series the relation of the images to one another is that each image has the pattern of the surface of one form of a semiconductor chip product.
17 U.S.C. § 901(a)(2). The semiconductor chip product in turn is defined as:
the final or intermediate form of any product--
(B) intended to perform electronic circuitry functions.
17 U.S.C. § 901(a)(1).
The design of a satisfactory chip layout may require extensive effort and be extremely time consuming, particularly as new and improved electronic capabilities are sought to be created. A new semiconductor chip may incur large research and development costs, yet after the layout is imprinted in the mask work and the chip is available in commerce, it can be copied at a fraction of the cost to the originator. Thus there was concern that widespread copying of new chip layouts would have adverse effects on innovative advances in semiconductor technology, as stated in the Senate Report:
In the semiconductor industry, innovation is indispensable; research breakthroughs are essential to the life and health of the industry. But research and innovation in the design of semiconductor chips are threatened by the inadequacies of existing legal protection against piracy and unauthorized copying. This problem, which is so critical to this essential sector of the American economy, is addressed by the Semiconductor Chip Protection Act of 1984.
The Semiconductor Chip Protection Act of 1984, ... would prohibit "chip piracy"--the unauthorized copying and distribution of semiconductor chip products copied from the original creators of such works.
S.Rep. No. 425, 98th Cong., 2d Sess., 1 (1984) (hereinafter Senate Report ).
In the evolution of the Semiconductor Chip Protection Act it was first proposed simply to amend the Copyright Act, 17 U.S.C. § 101 et seq., to include semiconductor chip products and mask works as subject of copyright. See H.R. 1028, 98th Cong., 1st Sess. (1983). However, although some courts had interpreted copyright law as applicable to computer software imbedded in a semiconductor chip, see Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1249, 219 USPQ 113, 121 (3d Cir.1983), cert. dismissed, 464 U.S. 1033, 104 S.Ct. 690, 79 L.Ed.2d 158 (1984), it was uncertain whether the copyright law could protect against copying of the pattern on the chip itself, if the pattern was deemed inseparable from the utilitarian function of the chip. Indeed, the Copyright Office had refused to register patterns on printed circuit boards and semiconductor chips because no separate artistic aspects had been demonstrated. Copyright Protection for Semiconductor Chips: Hearings on H.R. 1028 Before the Subcomm. on Courts, Civil Liberties, and the Administration of Justice of the House Comm. on the Judiciary, 98th Cong., 1st Sess., 77 (1983) (hereinafter 1983 House Hearings ) (statement of Dorothy Schrader, Associate Register of Copyrights for Legal Affairs). Concern was also expressed that extension of the copyright law to accommodate the problems of mask works would distort certain settled copyright doctrines, such as fair use. 1983 House Hearings at 16-17 (statement of Jon A. Baumgarten, Copyright Counsel, Association of American Publishers, Inc.)
The patent system alone was deemed not to provide the desired scope of protection of mask works. Although electronic circuitry and electronic components are within the statutory subject matter of patentable invention, see 35 U.S.C. § 101, and some original circuitry may be patentable if it also meets the requirements of the Patent Act, as is illustrated in this case, Congress sought more expeditious protection against copying of original circuit layouts, whether or not they met the criteria of patentable invention. Senate Report at 8.
The Semiconductor Chip Protection Act of 1984 was an innovative solution to this new problem of technology-based industry. While some copyright principles underlie the law, as do some attributes of patent law, the Act was uniquely adapted to semiconductor mask works, in order to achieve appropriate protection for original designs while meeting the competitive needs of the industry and serving the public interest.
The Semiconductor Chip Protection Act provides for the grant of certain exclusive rights to owners of registered mask works, including the exclusive right "to reproduce the mask work by optical, electronic, or any other means", and the exclusive right "to import or distribute a semiconductor chip product in which the mask work is embodied". 17 U.S.C. § 905. Mask works that are not "original", or that consist of "designs that are staple, commonplace, or familiar in the semiconductor industry, or variations of such designs, combined in a way that, considered as a whole, is not original", are excluded from protection. 17 U.S.C. § 902(b). Protection is also not extended to any "idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated or embodied" in the mask work. 17 U.S.C. § 902(c).
The sponsors and supporters of this legislation foresaw that there would be areas of uncertainty in application of this new law to particular situations, and referred to "gray areas" wherein factual situations could arise that would not have easy answers. Those areas are emphasized by both parties in the assignments of error on this appeal.
Brooktree's Mask Work Registrations
Brooktree was granted mask work registration MW 2873 on August 6, 1987, and registration MW 3838 on July 6, 1988, for its chips identified as Bt451 and Bt458. These Brooktree chips embody a circuit design that combines the functions of a static random access memory (SRAM) and a digital to analog converter (DAC). This circuitry, sometimes referred to as RAMDAC, acts as a "color palette", producing the colors in color video displays having high speed and enhanced picture resolution. A Brooktree witness described these chips as a technological breakthrough, exceeding limits in speed and performance that had been believed impossible to exceed. Brooktree stated that a single Bt458 chip replaced a previously used set of 36 chips (an AMD product) and offered many advantages. A Brooktree witness testified that these chips were extremely successful commercially, and were soon incorporated into new designs for video display systems made by several large manufacturers.
A critical component of the Brooktree chips is the core cell, a ten-transistor SRAM cell which is repeated over six thousand times in an array covering about eighty percent of the chip area. Each core cell consists of ten transistors and metal conductors electrically connecting the transistors throughout the three dimensions of the multilayered cell. Brooktree charged that this core cell was copied by AMD, thus infringing Brooktree's mask work registrations.
AMD does not challenge the validity of these mask work registrations, or dispute Brooktree's position that its chips are protected under the Semiconductor Chip Protection Act. AMD does, however, assert that its accused chips are not infringements, for reasons we shall discuss.
The Semiconductor Chip Protection Act defines an "infringing semiconductor chip product" as one which is "made, imported, or distributed in violation of the exclusive rights" of the mask work owner. 17 U.S.C. § 901(a)(9). The text of the Semiconductor Chip Protection Act sets forth the subject matter of protection in terms of certain exclusive rights, including, inter alia, the exclusive right to "reproduce the mask work", 17 U.S.C. § 905. This usage mirrors the words of the Copyright Act, which states the exclusive rights of copyright owners "to reproduce the copyrighted work". 17 U.S.C. § 106. Although the Semiconductor Chip Protection Act does not use the word "copy" to describe infringement, the parallel language reflects the incorporation of the well-explicated copyright principle of substantial similarity into the Semiconductor Chip Protection Act, as discussed infra.
The jury instruction on the criteria for establishing infringement included the instruction that infringement requires substantial similarity to a material portion of the registered mask work:
To establish infringement, Brooktree must show that A.M.D.'s mask works are substantially similar to a material portion of the mask works in Brooktree's chips covered by Brooktree's mask work registration. No hard and fast rule or percentage governs what constitutes a, quote, "substantial similarity." Substantial similarity may exist where an important part of the mask work is copied, even though the percentage of the entire chip which is copied may be relatively small. It is not required that A.M.D. make a copy of the entire mask work embodied in the Brooktree chip.
AMD states that it does not on appeal challenge this jury instruction. Instead, AMD argues that because the non-SRAM portion of its accused chip was not copied, the chips are not "substantially similar", whatever the materiality of the SRAM cell to the total mask work. It was undisputed that there was not duplication of the entire chip. AMD states that the Semiconductor Chip Protection Act requires copying of the entire chip, and therefore that it was entitled to judgment in its favor as a matter of law, or at least to a new trial on the issue.
The principle of substantial similarity recognizes that the existence of differences between an accused and copyrighted work may not negate infringement if a material portion of the copyrighted work is appropriated. Shaw v. Lindheim, 919 F.2d 1353, 1362, 15 USPQ2d 1516, 1523 (9th Cir.1990). If the copied portion is qualitatively important, the finder of fact may properly find substantial similarity under copyright law, Baxter v. MCA, Inc., 812 F.2d 421, 425, 2 USPQ2d 1059, 1063 (9th Cir.), cert. denied, 484 U.S. 954, 108 S.Ct. 346, 98 L.Ed.2d 372 (1987), and under the Semiconductor Chip Protection Act.
Brooktree agrees that the SRAM portion of the accused chips covers only eighty percent of the chip area, and that the remaining circuitry was not copied by AMD. Infringement under the statute does not require that all parts of the accused chip be copied. The district court's explanation to the jury was in full accord with the statutory grant of exclusive rights to reproduce the mask work. The statutory interpretation now pressed by AMD, viz., that the entire chip must have been copied, is unsupported. Indeed, the House Report states that it was contemplated that the cell layout alone could be misappropriated:
Mask works sometimes contain substantial areas of (so-called "cells") whose layouts involve creativity and are commercially valuable. In appropriate fact settings, the misappropriation of such a cell--assuming it meets the original standards of this chapter--could be the basis for an infringement action under this chapter.
H.R.Rep. No. 781, 98th Cong., 2d Sess., 26, 27 (1984), reprinted in 1984 U.S.Code Cong. & Admin.News 5708, 5750, 5775, 5776 (hereinafter House Report ) (footnote omitted). As explained in the Explanatory Memorandum--Mathias-Leahy Amendment to S. 1201, 130 Cong.Rec. S12,916 (daily ed. Oct. 3, 1984) (hereinafter Mathias-Leahy Memorandum ), written to explain the House and Senate bills as they were enacted, id. at S12,923, the Congressional intention was to protect against "piecemeal copying" and "copying of a material portion" of a chip:
... the amendment, like both bills, incorporates the familiar copyright principle of substantial similarity. Although as a practical matter, copying of an insubstantial portion of a chip and independent design of the remainder is not likely, copying of a material portion nevertheless constitutes infringement. This concept is particularly important in the semiconductor industry, where it may be economical, for example, to copy 75% of a mask work from one chip and combine that with 25% of another mask work, if the copies are transferable modules, such as units from a cell library.
As the Senate report notes, no hard and fast percentages govern what constitutes a "substantial" copying because substantial similarity may exist where an important part of a mask work is copied even though the percentage copied may be relatively small. Nonetheless, mask work owners are protected not only from wholesale copying but also against piecemeal copying of substantial or material portions of one or more mask works.
Mathias-Leahy Memorandum at S12,917.
Whether an appropriation of a cell layout constitutes infringement in a particular case is for the trier of fact, and can not be decided as a matter of law. See Sid & Marty Krofft Television Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1164, 196 USPQ 97, 102-03 (9th Cir.1977) (question of substantial similarity under copyright law is for the trier of fact). We shall discuss this question post, for it was litigated in the context of AMD's defense of reverse engineering.
The Reverse Engineering Defense
AMD's position at trial, and on appeal, was that its core cell was the product of reverse engineering of the Brooktree chip, and therefore does not constitute infringement under the Semiconductor Chip Protection Act. Reverse engineering is a statutory defense, included in the Act upon extensive congressional attention to the workings of the semiconductor chip industry.
The statute provides that it is not an infringement of a registered mask work for
17 U.S.C. § 906(a). The statute thus provides that one engaged in reverse engineering shall not be liable for infringement when the end product is itself original. In performing reverse engineering a person may disassemble, study, and analyze an existing chip in order to understand it. This knowledge may be used to create an original chip having a different design layout, but which performs the same or equivalent function as the existing chip, without penalty or prohibition. Congress was told by industry representatives that reverse engineering was an accepted and fair practice, and leads to improved chips having "form, fit, and function" compatibility with the existing chip, thereby serving competition while advancing the state of technology. Senate Report at 21.
Much attention was given by Congress and by witnesses to the question of how to determine whether a chip layout was born of legitimate reverse engineering or of copying. It was foreseen that there would be a "gray area" wherein the rights of the parties, on the facts of a particular chip design, would require resolution on a fact-dependent, case-by-case basis. The following colloquy illustrates concerns raised at the hearings:
Rep. EDWARDS: ... Is the chief reservation here the idea that reverse engineering, which all the witnesses agree is appropriate, might be confused with pirating and that any kind of reverse engineering might be interpreted under this law as pirating?
Mr. MacPHERSON (of Fairchild Camera & Instrument Corp.): I think that's one of the very strong concerns that we have, yes. There is a very gray area here in the very nature of reverse engineering, which would leave an individual engaged in that practice uncertain what his ultimate rights would be should he use that particular result in another product.
Copyright Protection for Imprinted Design Patterns on Semiconductor Chips: Hearings Before the Subcomm. on Courts, Civil Liberties, and the Administration of Justice of the House Comm. on the Judiciary, 96th Cong., 1st Sess., 66 (1979).
This aspect was explored over the several years of legislative gestation. The reverse engineering procedure was described by witnesses, and distinguished in purpose and mechanism from the copying against which the Semiconductor Chip Protection Act was intended to guard. It was explained that a person engaged in reverse engineering seeks to understand the design of the original chip with the object of improving the circuitry, the chip layout, or both. The presence of innovation and improvement was stressed as the hallmark of an original layout. A witness explained the difference as determining "was anything innovative done in the process or was it simply a reproduction of what was already there?" The Semiconductor Chip Protection Act of 1983: Hearings on S. 1201 Before the Subcomm. on Patents, Copyrights, and Trademarks of the Senate Comm. on the Judiciary, 98th Cong., 1st Sess., 84 (1983) (testimony of Stanley C. Corwin). Another witness explained that reverse engineering generally produces a "paper trail" recording the engineer's efforts to understand the original chip and to design a different version after reverse engineering:
"Whenever there is a true case of reverse engineering, the second firm will have prepared a great deal of paper--logic and circuit diagrams, trial layouts, computer simulations of the chip, and the like; it will also have invested thousands of hours of work. All of these can be documented by reference to the firm's ordinary business records. A pirate has no such papers, for the pirate does none of this work. Therefore, whether there has been a true reverse engineering job or just a job of copying can be shown by looking at the defendant's records. The paper trail of a chip tells a discerning observer whether the chip is a copy or embodies the effort of reverse engineering."
Senate Report at 22 (quoting statement of Leslie L. Valdasz, Senior Vice President, Intel Corporation). The Committee reports and the statements of the Semiconductor Chip Protection Act's supporters show the belief that evidence of the presence or absence of such a paper trail would significantly reduce the gray area between legitimate and illegitimate behavior. See Mathias-Leahy Memorandum at S12,917; House Report at 21.
Senators Mathias and Leahy explained that § 906(a) includes a provision
to clarify the intent of both chambers that competitors are permitted not only to study the protected mask works, but also to use the results of that study to design, distribute and import semiconductor chip products embodying their own original mask works.
The end product of the reverse engineering process is not an infringement, and itself qualifies for protection under the Act, if it is an original mask work as contrasted with a substantial copy. If the resulting semiconductor chip product is not substantially identical to the original, and its design involved significant toil and investment, so that it is not mere plagiarism, it does not infringe the original chip, even if the la