In a previous post, I wrote about Nichia‘s false advertising claims against Seoul Semiconductor after Seoul was found liable for infringing Nichia’s patented LED designs. In February, Judge Maxine Chesney of the U.S. District Court in San Francisco denied Nichia’s motion for a permanent injunction, refusing to order Seoul to stop production and sale of the infringing LEDs.
The court layed out the four-factor test for a permanent injunction (irreparable injury suffered by the patentee, whether monetary damages would adequately compensate for the injury, the balance of hardships of an injunction, and whether an injunction would harm the public interest) but found the first factor effectively dispositive because the lack of harm tipped the other factors against an injunction. She rejected Nichia’s arguments that its reputation and brand were irreparably harmed and that it lost market share as a result of the infringing activity, noting that Seoul made only two infringing sales in the U.S., and those were made nearly three years ago. The court found that the purpose of an injunction – to prevent future infringements – would not be served here because the evidence showed that Seoul has no U.S. customers for the infringing LEDS and has ceased production of the products, which are essentially obsolete.
Seoul also filed a motion for judgment as a matter of law, which asks the court to reverse the jury’s infringement verdict, and has requested a new trial. Because a design patent only protects the ornamental features of a device, the protected features must be primarily ornamental to be patentable, and the patentee has to show that the ornamental (as opposed to functional) aspects of the patented design are infringed. Seoul is arguing that Nichia did not prove infringement because it failed to demonstrate which features of its LED design were ornamental. According to Seoul, the features of Nichia’s LEDs are primarily functional – window shape affects light output and the overall shape is dictated by the need to maximize light going into the waveguide - and any similarities with its products are based on those functional aspects, not ornamental features.
Seoul also asserts that Nichia’s patents are invalid because the LEDs are too small to see and concealed from the consumer throughout the life of the products so that any ornamental features they may have are of no concern to consumers. According to Seoul, the LEDs are “smaller than a rice grain” and travel from the factory in reels of thousands of units, get installed on a circuit board, and ultimately get buried in a back light unit deep inside a cell phone.
Although we don’t know what kind of payments Nichia got from two defendants who previously settled or how much it stood to gain from two other LED manufacturers who won on summary judgment, the stark punchline of this case nevertheless points up the futility of patent litigation: after what must have been an expensive fight, at the end of the day Seoul was ordered to pay Nichia a mere $250 in damages for making just two sales of a now-obsolete product.