Fairchild Says Jury’s 278% Royalty to Power Integrations Is Legally Flawed

December 17, 2015 by Jeff Shepard

Fairchild Semiconductor announced today that a recent damages award against the company is legally flawed, and it expects the award to be overturned or significantly reduced in further proceedings and appeals. The announcement follows a verdict Thursday in the United States District Court for the Northern District of California, in which a jury awarded $139 million in damages against Fairchild for approximately $50 million of infringing sales.

The only issue for the jury was to measure damages based on a reasonable royalty determined under applicable patent law, based on a prior jury verdict finding that some Fairchild parts infringed two patents owned by Power Integrations, Inc. (PI).

The verdict has no impact on Fairchild’s business or operations. The company has been offering replacements for the products accused in the case since mid-2014, and voluntarily withdrew the accused parts from the U.S. market in September 2014.

An earlier $105 million damages award in the same case was thrown out in 2014 because PI failed to measure damages properly. Fairchild said Thursday’s verdict suffers from similar legal flaws. The jury’s award reflects a royalty of 278% of revenues and 695% of profits earned by Fairchild from accused parts it sold through March 2014.

Fairchild plans to appeal the prior verdict finding that PI’s patents were both infringed and valid, and if the current damages award is not thrown out or significantly reduced in post-trial proceedings, it believes the current damages award will be thrown out on appeal.

The two companies are involved in five patent lawsuits dating bac to 2004. Earlier this year, PI was found to infringe a Fairchild patent and ordered to pay Fairchild $2.4 million in damages. Fairchild was found to infringe one PI patent in that case, and ordered to pay PI $100,000 in damages.