Our Litigator of the Week is Frank Scherkenbach of Fish & Richardson, who after a 15-year IP fight netted a $175 million settlement for client Power Integrations.

Paving the way for the deal, Scherkenbach in the past year won two jury verdicts and a precedential decision from the Federal Circuit—all part of Power Integrations' multi-front battle against Fairchild Semiconductor and ON Semiconductor, which acquired Fairchild in 2016. 

Scherkenbach discussed the case with Lit Daily.

Lit Daily: Take us back to the beginning: Who is your client and how did you get involved in the case?

Frank Scherkenbach : Our client, Power Integrations (PI), is a fabless semiconductor company based in San Jose, California. They initially hired Fish in the late '90s to pursue a patent infringement case against Motorola. I led that case and won a $30 million plus jury verdict in 1999 for PI. 

After that victory, my team and I successfully handled some additional cases against other competitors, so PI naturally turned to our winning team here at Fish to enforce their patents against Fairchild Semiconductor in 2004.

Tell us about the underlying technology at issue—what does it do and why is it worth fighting over?

PI created—and is the leader in—the market for semiconductor chips used in switching power supplies, which are used in everything from cell phone chargers to laptop adapters. The "brains" of those power supplies are chips made by PI (or one of its competitors). PI's patented technology makes the chargers smaller, lighter and much more energy efficient than prior technologies.

What was your overriding strategy or objective in the litigation?

The goal was never about the dollar damages we could obtain through litigation—it was always to prevent Fairchild, and ON Semiconductor (which acquired Fairchild in 2016) from using PI's patented technologies against it in the marketplace. 

Fairchild/ON are many times larger than PI, so getting injunctions to prevent the infringement—we secured permanent injunctions against hundreds of infringing Fairchild products—and, ultimately, resolving the cases without providing licenses to PI's intellectual property were the overriding strategic objectives.  

While the big dollar verdicts and precedential appellate decisions throughout these 15 years of litigation garnered most of the headlines, keeping Fairchild/ON's infringing products off the market was the foundation of these cases. To achieve that, we focused on asserting the most important patents, covering the most important features, to ensure the defendants could not design around. Everything else, including the $175 million cash settlement, was the icing on the cake.

What were some of the unique challenges presented by this case?

There were a lot of challenges. A big one was the strategic coordination of so many ongoing cases. We had cases in district courts throughout the U.S., a number of appeals at the Federal Circuit, investigations at the International Trade Commission, many inter partes review (IPR) proceedings, and suits in various foreign jurisdictions such as China and Taiwan. 

It was critical that we take fundamentally consistent positions across the board, which required a lot of strategic front-end thinking about the implications in all of the parallel proceedings. Every step of the way, we had to stay focused on winning the ultimate war, not necessarily doing what was most expedient for the particular skirmish we were confronted with in a given matter.

I gather opposing counsel changed throughout the matter. Who were you up against at different times?

It's hard to keep track: Orrick, McDermott, Paul Hastings, MoFo, Baker Botts, Quinn Emanuel, and Finnegan Henderson were all heavily involved on the other side at one time or another.

Who were the members of your team and what individual strengths did they bring to the representation?

I had an impressive team backing me up throughout this long-running litigation. Howard Pollack was the technical whiz who was the mastermind behind our noninfringement and invalidity positions, and he worked most closely with the fact and expert witnesses to tell that story. 

Michael Headley managed the cases day-to-day and ensured strategic coordination between the whole team. He also handled damages issues in most of the cases. 

John Thornburgh is a brilliant legal analyst, strategist and writer who took the lead on many of the most challenging briefs and also drove our damages strategies. 

Neil Warren partnered with Howard Pollack on technical issues and handled the lion's share of the IPRs, both offensive and defensive. 

Joseph Warden, who is a fantastic stand-up lawyer, tried one of the cases as lead and also handled damages issues.

In 2013, the Federal Circuit ruled that lost profits for overseas sales weren't recoverable. How did that play out—and what happened after the U.S. Supreme Court issued its WesternGeco decision?

We were obviously disappointed in that decision and tried to get it fixed en banc at the time, without success. We were heartened when the Supreme Court called for a response to our cert petition, but in the end they decided not to take up the issue in that case, at that time. 

But the Supreme Court ultimately did take up a closely analogous issue in WesternGeco, where the Federal Circuit had relied almost entirely on the 2013 Power Integrations decision in once again foreclosing foreign damages. When the Supreme Court said that was wrong, and criticized the rationale of the 2013 Power Integrations case in doing so, we knew we had a good chance of righting the ship in the original case, which was still pending in the district court. 

We asked Judge Stark to look at the issue and to decide whether WesternGeco implicitly overruled the 2013 PI case, and he said yes it did—and then certified the question for interlocutory appeal, to boot. That appeal was to be argued on November 5, 2019. 

While we will now not have that chance to be vindicated (due to the settlement), we feel the wheels are in motion to restore damages law to the place we always thought it was, or should have been.

You won a precedential appeal that made new law regarding the relationships that govern the time bar in inter partes review. What's the key takeaway?

A barred party cannot have someone else do its bidding, regardless of how good the camouflage is, and the PTAB (1) needs to take seriously allegations of collusion between a barred party and its business partners, and (2) does not have carte blanche to decide the limits on its own authority – for example, deciding to institute an IPR it never should have, and then evading judicial review of that decision.

The case involved multiple venues—district courts, appellate courts, the Patent Trial and Appeal Board, the International Trade Commission plus courts in China and Taiwan. What was your approach to juggling so many jurisdictions?

As I said earlier, close strategic coordination and consistency was key. One of our core strengths in these cases was we had a relatively small team of four to five lawyers who were heavily involved in everything, more or less, for the entire 15 year pendency of the war. The other side, by contrast, had a revolving door of lawyers, and thus strategies. It was very hard for that many law firms and lawyers over that many years to keep their stories straight.

What were some of the primary factors that led to the settlement?

The prospect of enormous cumulative damages in the various cases, with no real expectation of being saved any longer by the Federal Circuit. The crumbling of ON's strategy to defeat all the relevant PI patents in IPRs filed on behalf of Fairchild. The reality of multiple, expensive ongoing trials which PI was committed to win, whatever it took. 

What's your philosophy when it comes to settling a case? What have you found works? And what doesn't?

My philosophy is don't settle; just win. But settlement can make sense when the business people can work things out directly, which is what we were able to do here. A lawyer's job is not to settle cases; it's to achieve the client's objectives through an appropriate use of the legal process. When the client tells us we have achieved their goal and they are in a strong position to settle their case, then that is what we do. 

What message do you hope this settlement sends?

If you're a small innovator company like PI, and your intellectual property is your lifeblood, you can and should go to the mat to defend what is yours. And, conversely, if a competitor tries to take your intellectual property and/or bullies you into allowing them to do so, they will fail and pay a heavy price for trying.