## Facts

- Crystal Semiconductor Corporation owned patents covering single-chip audio technology used in computer sound products (U.S. Patent Nos. 4,746,899; 5,220,483; 4,851,841).
- TriTech Microelectronics International and a related entity (TriTech) manufactured audio chips accused of infringing Crystal’s patents; OPTi, Inc. was also a defendant but did not participate in the appeal.
- In the district court, Crystal obtained partial summary judgment that the accused devices literally infringed the ’899 and ’483 patents.
- After the close of evidence, the district court granted judgment as a matter of law (JMOL) that the ’841 patent was not invalid under the on-sale bar.
- A jury found willful infringement of all three patents and returned a damages verdict exceeding $48 million based on lost profits and price erosion.
- Post-trial, the district court granted TriTech’s JMOL that Crystal had not proven lost profits or price-erosion damages, remitted the award to a $10 million reasonable royalty, doubled damages to $20 million for willfulness, awarded attorney’s fees, and denied prejudgment interest.
- Crystal’s price-erosion theory relied on an expert’s “but-for” reconstruction that used pricing and margins in an Apple-oriented market as a benchmark for what Crystal allegedly could have charged in the more competitive PC market where TriTech sold the accused chips.

## Issues

1. Whether summary judgment of literal infringement of the ’899 and ’483 patents was proper.
2. Whether the district court properly removed the ’841 patent’s on-sale bar defense from the jury by granting JMOL of no invalidity under 35 U.S.C. § 102(b).
3. Whether Crystal presented legally sufficient evidence to support lost-profits and price-erosion damages, or whether damages were properly limited to a reasonable royalty.
4. Whether the evidence supported willful infringement and the resulting enhanced damages and attorney’s fees.
5. Whether the denial of prejudgment interest was an abuse of discretion.

## Decision

- Affirmed summary judgment that the accused devices literally infringed the ’899 and ’483 patents.
- Vacated the JMOL rejecting the on-sale bar defense as to the ’841 patent and remanded for further proceedings because substantial evidence could support invalidity under § 102(b).
- Affirmed the JMOL rejecting lost profits and price-erosion damages and affirmed limiting damages to a $10 million reasonable royalty on the trial record.
- Affirmed the willfulness finding, the doubling of damages to $20 million, and the attorney’s fee award under 35 U.S.C. § 285.
- Affirmed the denial of prejudgment interest as within the district court’s equitable discretion.

## Legal Principles

- Literal infringement may be resolved on summary judgment when the accused product meets each claim limitation and no genuine issue of material fact exists.
- The on-sale bar applies when, before the critical date, (1) the invention was the subject of a commercial offer for sale and (2) the invention was ready for patenting; if substantial evidence supports those elements, the issue should not be taken from the jury by JMOL.
- Price-erosion damages require a rigorous reconstruction of the “but-for” market showing the patentee could have charged higher prices without a demand-reducing effect, supported by evidence of market conditions, demand elasticity, and likely competitive responses; speculative assumptions about customer willingness to pay are insufficient.
- Lost-profits recovery requires proof of causation and non-speculative economic support; absent such proof, a reasonable royalty is an appropriate measure.
- Willfulness may be supported where, after notice of patents, an accused infringer fails to exercise due care (including obtaining competent advice and taking meaningful non-infringing steps); litigation preparations alone do not establish due care.
- Enhanced damages and attorney’s fees are reviewed for abuse of discretion and may be upheld where willful infringement renders the case exceptional under § 285.
- Prejudgment interest is generally discretionary; denial may be sustained when the district court gives reasoned equitable grounds.

## Conclusion

The Federal Circuit upheld findings of literal infringement, willfulness, enhanced damages, and attorney’s fees, and it agreed that Crystal failed to prove non-speculative lost-profits and price-erosion damages, limiting recovery to a reasonable royalty; however, it remanded the ’841 patent’s validity because evidence could support an on-sale bar defense that should be decided by a jury.


Crystal Semiconductor Corp. v. TriTech Microelectronics Int'l, Inc., 246 F.3d 1336 (Fed. Cir. 2001)