Power Integrations Wins ITC Case against System General

May 15, 2006 by Jeff Shepard

Power Integrations Inc.(Nasdaq: POWI) announced that it has won a favorable decision in its patent-infringement case against System General Corp. (SG), filed last year with the U.S. International Trade Commission (ITC). The administrative law judge hearing the case has ruled that certain of SG's power-supply controllers infringe Power Integrations U.S. Patent Nos. 6,351,398 and 6,538,908, and that SG is therefore in violation of section 337 of the Tariff Act of 1930. All claims of the two Power Integrations patents asserted at trial were upheld by the judge.

In conjunction with his decision, the judge has recommended that the ITC issue an exclusion order against SG's infringing products, and against LCD monitors and AC printer adapters containing the infringing parts. The exclusion order would prohibit the importation of these products into the United States. If the ITC adopts the judge's decision, SG must pay a bond of 38 cents for each imported infringing chip and each imported product containing an infringing chip during the subsequent period of Presidential review. Power Integrations believes that the infringing chips, which include the SG6840, SG6841, SG6841x3, SG6842, SG6842J and SG6843, represent a significant percentage of SG's sales.

"Intellectual property is the lifeblood of our business, and we are gratified that our patents have been upheld in this investigation," said Balu Balakrishnan, president and CEO of Power Integrations. "This decision is an unmitigated victory for Power Integrations, one that will help remove the burden of unfair competition from the marketplace. Because the ruling so fully confirms the merits of our position, we believe that any appeal by SG would have very little chance of success."

Power Integrations filed its complaint with the ITC in May 2005. Earlier, in June 2004, the company had filed a patent-infringement lawsuit against SG in the Federal District Court in San Francisco. In that lawsuit, which has been stayed pending the final decision of the ITC, the company will seek an injunction against all SG products that infringe Power Integrations patents, including SG 6848 and SG 6849, as well as newer parts not subject to the ITC decision. Power Integrations is also seeking financial damages in the San Francisco case.

As recently as May 12, System General had issued the following statement: "System General strongly refutes the accusation of patent infringement. All of its products are developed using its own patented technologies and independent with Power Integrations' accusing patents. Throughout the years, System General has received more than 50 patents worldwide including 34 US patents."