Opinion
CIVIL ACTION NO. 00-11049-PBS.
January 17, 2002.
MEMORANDUM AND ORDER
The plaintiffs, VLT, Inc. and Vicor Corporation ("Vicor") have moved for an order approving a prejudgment attachment of Lucent's equity in all of its property located at 1600 Osgood Street, North Andover, Massachusetts in the amount of $112.1 million. The defendants, Lucent Technologies, Inc., Tyco Electronics Power Systems, Inc. and Tyco International Ltd. (collectively "Lucent") have opposed the motion on the grounds that the plaintiffs have not shown a reasonable likelihood of success in meeting the challenge to the patent's validity, in demonstrating that the accused devices infringe, and in recovering such a large pot of money.
The initial request was for $205 million. (See Docket No. 31).
The Court held two days of evidentiary hearings on November 19 and November 20, 2001 and received multiple volumes of submissions. Vicor introduced the testimony of Dr. Paul Horowitz, a Harvard physics professor; the inventor, Dr. Patrizio Vinciarelli; and Dr. Christopher Vellturo, an economic analyst on damages. Lucent introduced the testimony of Dr. Mark Jacobs, a Lucent engineer in the Department of Electrical, Engineering and Computer Science; Dr. Steven Leeb, an MIT Associate Professor (with tenure); Alan Rozman, a former Lucent designer of board-mounted power products; Rick Morrison, a Tyco product marketing manager; and Dr. Jerry A. Hausman, an MIT professor in economics. Both sides submitted affidavits as well.
After assessing the voluminous submissions and the testimony of the witnesses, the Court ALLOWS Vicor's motion in the amount of $20 million dollars. Lucent has asked to be given the opportunity to post a bond as an alternative to an attachment which might interfere with certain financing arrangements. Accordingly, the order of attachment shall not be effective if bond is posted by February 4, 2002.
I. DISCUSSION
A. Background
Much of the backdrop for this case can be gleaned from this Court's earlier opinion, VLT Corp. v. Unitrode Corp., 130 F. Supp.2d 178, 180-183 (D.Mass. 2001) ("Unitrode I"). This Court also issued a Markman opinion on claim construction in the instant case, dated October 18, 2001. I will assume a familiarity with these earlier opinions.
B. Legal standard
In federal court, the remedy of prejudgment attachment is available "under the circumstances and in the manner provided by the law of the state in which the district court is held." Fed.R.Civ.P. 64. Massachusetts law, in turn, provides that an order approving attachment "may be entered only after notice to the defendant and hearing upon a finding by the court that there is a reasonable likelihood that the plaintiff will recover judgment, including interest and costs, in an amount equal to or greater than the amount of the attachment. . . ." Mass. R. Civ. P. 4.1(c). "[T]he central question on the motion for approval of attachment is whether plaintiffs are likely to prevail on the merits and obtain damages in the necessary amount." Johnson v. Koplovsky Foods, Inc., 5 F. Supp.2d 48, 51 (D.Mass. 1998) (quoting Anderson Foreign Motors, Inc. v. New England Toyota Distributor, Inc., 475 F. Supp. 973, 978 (D.Mass. 1979)). There is no evidence of any liability insurance available to Lucent for satisfaction of a judgment in this case.
C. Challenges
1. Validity
In order to obtain an attachment, the patentee retains the burden of showing a reasonable likelihood that the attack on its patent's validity will fail. Cf. Schwabel Corp. v. Conair Corp., 122 F. Supp.2d 71, 81 (D.Mass. 2000) (concerning the analogous preliminary injunction standard). "A prior adjudication upholding patent validity after a fully litigated trial, including similar issues of fact and law, contributes strong support to the grant of a preliminary injunction." H.H. Robertson, Co. v. United Steel Deck, Inc., 820 F.2d 384, 388 (Fed. Cir. 1987), overruled on other grounds, Markman v. Westview Instruments, Inc., 52 F.3d 967, 977 (Fed. Cir. 1995). Here, the patentee prevailed in a hotly litigated jury trial in which Unitrode assailed the validity of the patent. While Lucent claims it will introduce different evidence, plaintiffs' earlier victory gives them a reasonable likelihood of success.
2. Infringement
Vicor contends that its testing of the accused devices demonstrates that the defendants' converters exhibit the switch- timing delay claimed by the `098 Patent. Lucent claims it does not infringe for three reasons. First, it criticizes Vicor's testing methods and asserts that under the Court's claim construction, its products do not infringe. Initially, Vicor tested Lucent's products by measuring the relative delays in the gate-to-source voltage of the primary and auxiliary switches. Yet, the inventor, Dr. Vinciarelli, in a statutory declaration filed before the U.S. Patent Office, made the following statements:
The gate is the portion of a MOFSET that permits or blocks the flow of controllable current through the MOFSET. The state of the gate is dictated by an electrical signal that can be measured as the gate-to-source voltage.
In order to follow the teachings of our patent, the skilled man is invited to introduce a deliberate delay not in the signals used to control the switches but in the times when the switches are actually on and off . . . .
• • *
The delay with which the patent . . . is concerned relates to the difference between the times at which changes in the conductivity states of the two switches actually occur.
• • *
[W]hat is needed, as taught by the patent . . . is a delay between when one switch is turned off and the other is turned on (referring here to the conductivity state of the switches) not a `dead time delay' between the times of application of switch control signals.
(Defendants' Demonstrative Exhibits, Exs. 5-7, ¶¶ 24, 42, and 44). Lucent argues that this inconsistency undercuts the validity of Vicor's testing and defeats Vicor's claim that it is likely to succeed in showing the element of infringement.
In response, Vicor has performed additional testing on the accused devices, directly measuring the currents themselves. (Tr. 43). Based on these later tests, Dr. Horowitz testified credibly that the family of Lucent and Tyco power converters infringe.
Even so, Lucent insists that Vicor is not likely to succeed in proving infringement for another reason: Lucent's own testing demonstrated there was such minimal delay between the switches as to amount to simultaneous switching. Lucent's strongest rebuttal came from Dr. Leeb, an MIT professor, who rendered the opinion that Lucent's DC-DC power converters don't infringe. (Tr. 101). That opinion is based in part on a graph submitted by Vicor in the German Lambda patent litigation that described as "No Delay" a delay in the time for sending the gate-control signals of 40 to 50 nanoseconds. (Tr. 92). (Att. Hrg. Exs., Tab 42, V01597, Figure 7). That document was submitted to the United States Patent Office as part of the reissue proceedings. According to Dr. Leeb, Lucent's products have the same 50-nanosecond gap in gate switching signals. When the delay between the control signals is in this 40- to 50-nanosecond range, according to Dr. Leeb, the controllable current is inferentially still flowing. (Tr. 96). In other words, "having a 40-nanosecond or a 50-nanosecond spacing in the control signals, according to the manufacturer of these valves, constitutes coincident current flow." (Tr. 96). Dr. Horowitz disagreed, stating that 60 nanoseconds of delay occurred in between the gate control signals, and that the data demonstrated 6 nanoseconds for extinguishing current. (Tr. 126). He testified that testing of Lucent products demonstrated delay with generous margins, far from anything approaching simultaneity. (Tr. 29). He also felt the German document involved erroneous labelling.
Most recently, Vicor submitted a letter stating that the wrong document had erroneously been submitted to the United States Patent Office and that a different document had been used in the German Lambda litigation (Docket No. 87). That contention is not given weight here because there has been no discovery.
While Figure Seven does give me pause, on balance I find a reasonable likelihood of success based on Lucent's own documents which support Vicor's infringement claim. See, e.g., Internal Memorandum authored by Dr. Jacobs (stating that "[a] brief dead- time is interposed between the conduction intervals to achieve zero-voltage switching.") (Att. Hrg. Exs., Tab 10); a calculation for a Lucent converter which states, "The fixed time is the delay between turning the ZVS switch off and the main switch on." (Att. Hrg. Exs., Tab 27, p. LT 046763); and the "Boylan" U.S. Patent 5,327,333, Col. 1, ll. 56-58 ("A brief dead-time may be interposed between the conduction intervals to achieve zero- voltage switching.") (Att. Hrg. Exs., Tab 25, p. LT044579) At the hearing, Dr. Jacobs admitted that Lucent provides "a deliberate delay in these signals to account for the uncertainty of response time of the switches" so that there is dead-time when no current is being conducted in both the auxiliary and the primary switches. (Tr. 57). While he states the purposeful delay was to avoid cross-conduction (Tr. 67), which is a different goal than Vicor's objective of avoiding the dissipative discharge of parasitic capacitance, that difference in motivation does not undermine the claim of infringement. Moreover, it is inconsistent with Lucent's own document which demonstrates that parasitic power loss was a concern. (See Att. Hrg. Exs., Tab 8, p. LT048392).
Lastly, Lucent's expert, Dr. Leeb, asserts that its accused devices are not "single-ended forward converters" covered by the `098 Patent. (Tr. 102). Explaining why Lucent's converters are indeed covered by the '095 patent, Dr. Horowitz retorts, "Balderdash." (Tr. 130-31). Again, Lucent's own documents refute Dr. Leeb's new-found contention. Indeed, Lucent concedes in its brief that actual sales of dc-dc single-ended forward converters were $380 million. (Docket No. 45, p. 17). See also Jacobs Dep. Tr., Def. Ex. 64, pp. 95-96, 117 (conceding that a switch circuit is a forward single-ended converter).
For these reasons, I find that Vicor's testing is adequate to demonstrate a likelihood of proving infringement at trial by showing that the accused products contain the patented switch timing architecture.
3. Damages
The experts battled over a reasonable amount of damages. Using both lost profit and reasonable royalty methodologies, Vicor's expert estimated a recovery of $112.1 million. (Tr. 2- 59). Lucent's expert, Dr. Hausman, disparages this figure as based on "doo-doo" economics. He points out there are substantial disputed factual issues with respect to lost market share, lost profits, reasonable royalty rates, related sales, and sales to affiliated companies, to name a few. Finally, Lucent contests Vicor's entitlement to lost profits and challenges its royalty rates. While Lucent contends that a 1 = — 3% royalty rate would have been reasonable in a hypothetical negotiation in 1992 when the alleged infringement first began, Vicor contends that royalty rates should be 15-20%.
For the purposes of this attachment request only, I have adopted the conservative damage estimate of $20 million dollars based on a reasonable royalty rate of five percent, which is the lowest royalty rate Vicor negotiated. (Tr. 2-50). This rate is consistent with Dr. Hausman's figure as well. (Def. Ex. 66; Hausman Aff., Docket No. 68, p. 10).
4. Patent misuse
Lucent argues that Vicor has committed misuse of its patent, rendering it unenforceable. There is insufficient evidence in the record at the point to support this claim.
II. CONCLUSION AND ORDER
I allow the motion for an attachment (Docket No. 31) in the amount of $20 million dollars effective February 4, 2002.