MENTOR GRAPHICS CORPORATION, AN OREGON CORPORATION, Plaintiff- Cross-Appellant
EVE-USA, INC., A DELAWARE CORPORATION, SYNOPSYS EMULATION AND VERIFICATIONS.A.S., FORMED UNDER THE LAWS OF FRANCE, SYNOPSYS, INC., A DELAWARE CORPORATION, Defendants-Appellants
from the United States District Court for the District of
Oregon in Nos. 3:10-cv-00954-MO, 3:12-cv-01500-MO,
3:13-cv-00579-MO, Judge Michael W. Mosman.
E. Miller, O'Melveny & Myers LLP, San Francisco, CA,
argued for plaintiff-cross-appellant. Also represented by
Anne E. Huffsmith, Luann Loraine Simmons.
Joshua Rosenkranz, Orrick, Herrington & Sut-cliffe LLP,
New York, NY, argued for defendants-appellants. Also
represented by Daniel A. Rubens,
D. Silverman; Robert M. Loeb, Eric Shumsky, Washington, DC;
Indra Neel Chatterjee, Vicki L. Feeman, Travis Jensen, Scott
T. Lonardo, Menlo Park, CA; William H. Wright, Los Angeles,
C. Cunningham, DLA Piper LLP (US), San Diego, CA, for amici
curiae Hewlett-Packard Company, Aruba Networks, Inc.,
NETGEAR, Inc., Newegg Inc., Oracle America, Inc., Ruckus
Wireless, Inc., Safeway Inc., SAS Institute Inc., Varian
Medical Systems, Inc., Veri-Fone, Inc., VIZIO, Inc.
Lourie, Moore, and Chen, Circuit Judges.
present appeal arises from litigation in the District of
Oregon between Mentor Graphics Corp. ("Mentor") and
Synopsys, Inc., Synopsys Emulation and Verification S.A.S.,
and EVE-USA, Inc. ("EVE") (collectively,
"Synop-sys"). Mentor asserted several patents against
Synopsys, including U.S. Patent Nos. 6, 240, 376 ("the
'376 patent"), 6, 947, 882 ("the '882
patent"), 6, 009, 531 ("the '531 patent"),
and 5, 649, 176 ("the '176 patent"). Synopsys
asserted two patents against Mentor-U.S. Patent Nos. 6, 132,
109 ("the '109 patent") and 7, 069, 526
("the '526 patent").
'376 patent was the only patent tried to the jury. Prior
to trial, the district court granted summary judgment barring
Synopsys from challenging the '376 patent's validity
because of assignor estoppel. It also granted Synopsys'
motion in limine precluding Mentor from introducing evidence
of willful infringement. The jury found in favor of Mentor
and found damages of approximately $36, 000, 000. Synopsys
appeals the infringement verdict, the damages award, and the
summary judgment of assignor estoppel. Mentor cross-appeals
the motion in limine regarding willfulness.
district court granted summary judgment on the remaining
patents prior to trial. It held that Synopsys' '109
patent was indefinite and Synopsys' '526 patent
lacked patent-eligible subject matter. Synopsys appeals both
decisions. The district court also held that the claims of
Mentor's '882 patent lacked written description
support and its infringement allegations relating to the
'531 and '176 patents were barred by claim
preclusion. Mentor cross-appeals both decisions.
there was substantial evidence to support the jury's
infringement verdict regarding the '376 patent and affirm
the district court's denial of judgment as a matter of
law. We affirm the damages award. We affirm the summary
judgment that assignor estoppel bars Synopsys from
challenging the validity of the '376 patent. We reverse
the summary judgment that Synopsys' '109 patent is
indefinite. We affirm the summary judgment that Synopsys'
'526 patent lacks patent-eligible subject matter. We
vacate the motion in limine precluding Mentor from presenting
evidence of willful infringement. We reverse the summary
judgment that Mentor's '882 patent lacks written
description support. Finally, we reverse the summary judgment
that Mentor's infringement allegations regarding the
'531 and '176 patents are barred by claim preclusion.
patent in this case involves simulation/emulation technology.
The parties have a complicated litigation history, and only
the relevant portions thereof are addressed here. In 1998,
Mentor filed the application that would become the '376
patent. The two inventors, Dr. Alain Raynaud and Dr. Luc
Burgun, were Mentor employees and assigned the invention to
Mentor. Dr. Raynaud and Dr. Burgun subsequently left Mentor
and founded EVE, with Dr. Burgun serving as president and CEO
and Dr. Raynaud serving as a Technology Center Director. In
2006, Mentor sued EVE for infringement of the '376,
'531, and '176 patents, alleging EVE's
"ZeBu" emulation and verification system infringed
the patents. Mentor and EVE settled prior to trial, and EVE
obtained a license to the three patents. The license
contained a provision terminating the license if EVE were
acquired by another company in the emulation industry.
2012, Mentor learned Synopsys was in discussions to acquire
EVE. Mentor's CEO contacted his counterpart at Synopsys
and offered to waive the confidentiality provision of the
Mentor-EVE license to inform Synopsys that the license would
terminate if Synopsys acquired EVE. Synopsys and EVE
subsequently filed a declaratory judgment action, seeking a
declaration that the '531, '176, and '376 patents
were invalid and not infringed. One week later, Synopsys
acquired EVE. Mentor answered the declaratory judgment
complaint, adding counterclaims of willful infringement of
the '531, '176, and '376 patents. Synopsys then
amended its complaint to assert claims of infringement of the
'526 and '109 patents against Mentor. The district
court consolidated the suit with another involving
Mentor's '882 patent.
parties appeal the various summary judgment and post-trial
rulings. We have jurisdiction pursuant to 28 U.S.C. §
Infringement of Mentor's '376 Patent
jury found Synopsys infringed claims 1, 24, and 26-28 of the
'376 patent and awarded damages. Synopsys moved for JMOL
that its products did not infringe. The district court denied
the motion, and Synopsys appeals. We affirm the denial of
apply the law of the regional circuit when reviewing a denial
of JMOL after a jury verdict. In the Ninth Circuit, JMOL is
appropriate only "if the evidence, construed in the
light most favorable to the nonmoving party, permits only one
reasonable conclusion, and that conclusion is contrary to the
jury's verdict." Pavao v. Pagay, 307 F.3d
915, 918 (9th Cir. 2002).
'376 patent relates to debugging source code after
synthesis. Synthesis is the process of transforming Hardware
Description Language ("HDL") into gate-level
"netlists." '376 patent at 1:26-27. Much of the
patent's disclosure addresses Register Transfer Level
("RTL") source code, which is a subset of HDL.
See id. at 1:27-31. The patent teaches that prior
art HDL simulators were limited because a developer could
only view the input and ultimate output of a netlist; there
was no way to "step through" the intermediate
gates. Id. at 2:1-17. Without the ability to measure
intermediate values, "the ability to debug the design at
the gate level [was] severely limited." Id. at
2:20-23. Additionally, to the extent intermediate signals
could be measured, there was no way to map a value within a
netlist to its corresponding RTL logic within the source
code. Id. at 2:13-17.
'376 patent seeks to solve these problems by allowing
developers to insert test probes at various stages of a
netlist to monitor intermediate values. Id. at
2:30-39; Figs. 1, 2. The probe results are referred to as
"instrumentation signals." Id. at 6:32-34.
The system correlates instrumentation signals with
corresponding portions of the RTL code and displays the
results to a user. Id. at 2:30-34. Asserted claim 1
1. A method comprising the steps of:
a) identifying at least one statement within a register
transfer level (RTL) synthesizable source code; and
b) synthesizing the source code into a gate-level netlist
including at least one instrumentation signal, wherein the
instrumentation signal is indicative of an execution
status of the at least one statement.
Id. at 15:1-8 (emphasis added).
accused Synopsys' ZeBu emulators of infringing. The ZeBu
emulators allow developers to insert "flexible
probes" and "value-change probes" into a
netlist. These probes measure values at various intermediate
stages of a netlist. The ZeBu emulators output the test
results to a waveform viewer. Mentor's expert Dr.
Sar-rafzadeh testified that each probe signal shown in the
waveform viewer identifies a portion of RTL by name, and the
RTL name can be used to locate the corresponding source code.
argues it does not infringe because its ZeBu emulators do not
"indicate" an RTL statement but rather merely
provide the name of a block of RTL that a developer can use
to locate corresponding code. It argues "you don't
'indicate' information by providing other
data that might help you indirectly figure out the needed
information." Synopsys Br. 32. We note at the outset
that neither party asked the district court to construe
"indica- tive, " and the parties agreed the plain
and ordinary meaning of the term governs. The question
presented on appeal is whether there is substantial evidence
for the jury verdict that the ZeBu infringed.
there was substantial evidence to support the jury's
infringement verdict. A developer using the ZeBu emulator can
create a test file called a "Tcl" file and input
test probes into a netlist using the "probe
signals" command. J.A. 43212. Dr. Sarrafzadeh testified
that the probe signal command creates instrumentation signals
when the simulation is run. J.A. 41127:12-41129:14. He then
explained how a developer could use the simulation results to
locate a particular line of RTL code corresponding to an
instrumentation signal. He explained that the Tcl file
identifies a particular line of RTL code by identifying the
name of a block of code, and then a developer can use that
name to locate the specific lines of corresponding RTL code.
J.A. 41130:7-21. He testified that "you look at the name
of the signal, on flexible probes, for example, and you
associate that back to the RTL source." J.A. 42417:3-5;
see J.A. 42423:10-18 ("Q: How do you know if
you have tens of thousands of instrumentation signals, which
signal corresponds to the RTL that you are looking at? A:
Fantastic question. I look at the name of the signal. If the
name is S, I go and look for it. If the name is S5, I will go
and look for it. So based on the name of the signal, I will
know, among millions of lines of code, which ones I'm
talking about."); J.A. 42426:7-10 ("Q: How would
you find a particular process? A: Same thing, by looking at,
for example, the sensitivity list and using its name
identifier, you know which process you are talking
about."). This is substantial evidence to support the
jury's finding that the instrumentation signal indicates
at least one RTL statement.
affirm the district court's denial of JMOL.
Assignor Estoppel of Mentor's '376 Patent
briefly challenges the district court's grant of summary
judgment that it was barred from challenging the validity of
the '376 patent because of assignor estoppel. Synopsys
does not dispute that assignor estoppel applies to the facts
of this case, but it argues the Supreme Court
"demolished the doctrinal underpinnings of assignor
estoppel in the decision that abolished the comparable
licensee estoppel in Lear, Inc. v. Adkins, 395 U.S.
653 (1969)." Synopsys Br. 42. We disagree. In
Diamond Scientific, we emphasized the continued
vitality of the doctrine of assignor estoppel after
Lear. Diamond Sci. Co. v. Ambico, Inc., 848
F.2d 1220, 1222-26 (Fed. Cir. 1988); see also MAG
Aerospace Indus., Inc. v. B/E Aerospace, Inc., 816 F.3d
1374, 1380-81 (Fed. Cir. 2016). The district court's
grant of summary judgment that assignor estoppel applies is
Damages for Synopsys' Infringement of Mentor's
trial, Mentor argued it was entitled to obtain lost profit
damages for lost sales of its Veloce emulators resulting from
Synopsys' infringing sales of its ZeBu emulators because
Mentor would have made additional Veloce sales but for
Synopsys' infringing ZeBu sales. The district court gave
detailed instructions to the jury about the standard for
awarding lost profits, including extensive discussion of each
of the four Panduit factors. J.A. 164- 75. The jury
ultimately awarded Mentor $36, 417, 661 in lost profits and
another $242, 110.45 in reasonable royalties. J.A. 187.
Synopsys appeals arguing that the damage award should be
vacated because the district court failed to apportion the
lost profits. We do not agree.
Patent Act provides: "the court shall award [the patent
owner] damages adequate to compensate for the infringement
but in no event less than a reasonable royalty for the use
made of the invention by the infring-er." 35 U.S.C.
§ 284. Under the statute, "damages adequate to
compensate" means "full compensation for any
'any damages' [the patent owner] suffered as a result
of the infringement." Gen. Motors Corp. v. Devex
Corp., 461 U.S. 648, 654-55 (1983). As the Supreme Court
explained in Aro Mfg. Co. v. Convertible Top Replacement
Co., 377 U.S 476, 507 (1964) (plurality opinion), the
statutory measure of damages is "the difference between
[the patent owner's] pecuniary condition after the
infringement, and what his condition would have been if the
infringement had not occurred." The Court went on to
distinguish between disgorgement of defendant's profits,
which had been allowed prior to the 1946 statutory amendment,
and the compensatory damages of § 284, which are defined
as "compensation for pecuniary loss he (the patentee)
has suffered from the infringement, without regard to the
question whether the defendant has gained or lost by his
unlawful acts." Id. (quoting Coupe v.
Royer, 155 U.S. 565, 582 (1895)). Section 284
damages "have been said to constitute 'the
difference between his pecuniary condition after the
infringement, and what his condition would have been if the
infringement had not occurred.'" Id.
(quoting Yale Lock Mfg. Co. v. Sargent, 117 U.S.
536, 552 (1886)). Put simply, "[t]he question to be
asked in determining damages is 'how much had the Patent
Holder and Licensee suffered by the infringement. And that
question (is) primarily: had the Infringer not infringed,
what would Patent Holder-Licensee have made?'"
damages are a staple across most every area of law. And
compensatory damages under the patent statute, which calls
for damages adequate to compensate the plaintiff for its loss
due to the defendant's infringement, should be treated no
differently than the compensatory damages in other fields of
law. See Livesay Window Co. v. Livesay Indus., Inc.,
251 F.2d 469, 471 (5th Cir. 1958) ("To allow a patent
owner to recover lost profits from an infringer is no unique
treatment of this one type of wrongdoing, and [it] is
essentially the same problem which inheres in other instances
of an interference with a valuable business right.").
Their form is fairly standard; "but for" some
harmful act by a defendant, a plaintiff would be in a certain
position. When a plaintiff proves it would have been in a
certain position but for a defendant's harmful act, it is
entitled to damages to put it in the same position it would
have occupied had the harmful act never occurred. In breach
of contract disputes, injured parties are awarded expectancy
damages designed to replicate full performance of the
contract. The goal of expectancy damages is to put the
non-breaching party in the position it would have occupied
but for the breach. See, e.g., Fifth Third Bank
v. United States, 518 F.3d 1368, 1374 (Fed. Cir. 2008);
California Fed. Bank v. United States, 395 F.3d
1263, 1267 (Fed. Cir. 2005); Glendale Fed. Bank, FSB v.
United States, 239 F.3d 1374, 1380 (Fed. Cir. 2001).
Similarly, under tort law, injured parties receive damages
sufficient to put them in the same position they would have
occupied had the injury never occurred. See, e.g.,
Cooper Indus., Inc. v. Leather-man Tool Grp., Inc.,
532 U.S. 424, 432 (2001) ("[Compensatory damages] are
intended to redress the concrete loss that the plaintiff has
suffered by reason of the defendant's wrongful
conduct."); Kansas v. Colorado, 533 U.S. 1, 13
(2001) (state against state tort); New York, L.E. &
W.R. Co. v. Estill, 147 U.S. 591, 616-17 (1893)
(business tort). The "but for" damages the patentee
must establish in patent law, as the Supreme Court explained,
are an answer to a simply stated question: "[H]ad the
Infringer not infringed, what would the Patent
Holder-Licensee have made?" Aro Mfg. Co., 377
U.S. at 507.
is no particular required method to prove but for causation.
One "useful, but non-exclusive" method to establish
the patentee's entitlement to lost profits is the
Panduit test first articulated by the Sixth Circuit.
Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545
(Fed. Cir. 1995) (en banc) (citing Panduit Corp. v.
Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir.
1978)). When a patentee proves it would have made additional
sales but for a defendant's infringement, the patentee is
entitled to be made whole for the profits it proves it lost.
See, e.g., Asetek Danmark A/S v. CMI USA
Inc., 842 F.3d 1350, 1361 (Fed. Cir. 2016); Versata
Software, Inc. v. SAP Am., Inc., 717 F.3d 1255, 1263-64
(Fed. Cir. 2013); Grain Processing Corp. v. Am.
Maize-Prods. Co., 185 F.3d 1341, 1352-53 (Fed. Cir.
1999); Photo Elecs. Corp. v. England, 581 F.2d 772,
784 (9th Cir. 1978); Livesay Window, 251 F.2d at
471. The goal of lost profit damages is to place the patentee
in the same position it would have occupied had there been no
infringement. In this regard, lost profit patent damages
are no different than breach of contract or general tort
damages. Thus, the fact finder's job is to determine what
would the patent holder have made (what would his profits
have been) if the infringer had not infringed.
the Panduit test, a patentee is entitled to lost
profit damages if it can establish four things:
(1) demand for the patented product;
(2) absence of acceptable non-infringing alternatives;
(3) manufacturing and marketing capability to exploit the