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22 May 2008


US court rejects Nichia’s $2.5m claim for fees against Seoul

In the design patent infringement litigation between Korea’s Seoul Semiconductor Co Ltd and Japan’s Nichia Corp regarding side-view LEDs, judge Maxine M. Chesney of the US District Court for the Northern District of California has issued an order denying Nichia’s ‘Motion for a Finding of Exceptional Case and an Award of Attorney’s Fees’ filed on 21 February.

Nichia filed the original lawsuit in January 2006 alleging that Seoul Semiconductor’s 902 series side-view LEDs (which are mostly used for liquid-crystal display backlight units in mobile phones etc ) infringed its US design patents D491,538, D490,784, D499,385 and D503,388. Nichia was pursuing a claim for inducement of infringement that could have led to it being awarded damages of more than $4m.

On 8 November 2007, the jury rendered a verdict that Seoul Semiconductor had willfully infringed the Nichia’s design patents. However, the court determined that Nichia lacked evidence to prove its inducement claim, limiting damages to its claim for direct infringement (whereby in 2005 Seoul Semiconductor had made two small sales of the accused products in the USA as samples, resulting in actual damages of $62). Seoul Semiconductor has made no sales of the accused products in the USA since, and no future sales are likely. Consequently, in February Nichia was awarded damages of just $250.

Nevertheless, a court has discretion to award fees to a prevailing party in a patent case, if the case is ‘exceptional’. Therefore, in late December Nichia asserted that it should be awarded $2.5m in attorney’s fees against Seoul.

Chesney has now ruled that the case was not exceptional and that it “would not be appropriate” to award fees to Nichia. She also found that Nichia’s motion against Seoul “imposed a significant burden on the jurors’ time and the court’s resources, not to mention the burden on defendants [Seoul], who expended approximately $2m in fees and costs after obtaining a dismissal of the only claim of real substance” (when Chesney previously granted Seoul’s motion for summary judgment on Nichia’s claim of induced infringement).

Although Nichia asserts that it needed to demonstrate that there is a cost to infringing its patents, and that it had to respond to Seoul’s “attempt to take market share in the side-view LED market”, such concerns, while perhaps pertinent to Nichia’s now-dismissed claim for inducement, are insufficient to explain why the continued prosecution of the remaining claim was a reasonable choice under the circumstances presented, judged Chesney.

Chesney also stated that, to the extent that Nichia, in seeking a jury verdict, may have been attempting to obtain some unstated ancillary advantage over defendants in Asia, Nichia has failed to explain why its use of the US federal court system for a case having nothing of real substance to do with the US is justified, let alone that such an endeavor should be underwritten by Seoul Semiconductor.

See related items:

Nichia files UK lawsuit against Seoul’s Acriche products

Nichia sues Japan Seoul Semiconductor over white LEDs for keypads, indicators

Seoul Semiconductor wins AOT white LED patent lawsuit

ITC investigating Nichia’s short-wavelength lasers

Seoul counter-sues Nichia for defamation

Nichia sues Seoul Semiconductor for defamation

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