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Danmark v. CMI USA Inc.

United States Court of Appeals, Federal Circuit

April 3, 2017

ASETEK DANMARK A/S, Plaintiff-Appellee
v.
CMI USA INC., FKA COOLER MASTER USA, INC., COOLER MASTER CO., LTD., Defendants-Appellants

         Appeals from the United States District Court for the Northern District of California in No. 3:13-cv-00457-JST, Judge Jon S. Tigar.

          Erik R. Puknys, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Palo Alto, CA, argued for plaintiff-appellee. Also represented by Robert F. McCauley, Jeffrey Daniel Smyth; Arpita Bhattacharyya, Boston, MA.

          Kyle Dakai Chen, Cooley LLP, Palo Alto, CA, argued for defendants-appellants. Defendant-appellant CMI USA Inc. also represented by Reuben Ho-Yen Chen.

          Before Prost, Chief Judge, Newman, and Taranto, Circuit Judges.

          Taranto, Circuit Judge.

         In January 2013, Asetek Danmark A/S sued two parties-Cooler Master USA, Inc., which a month later became CMI USA Inc.; and Cooler Master Co., Ltd., a Taiwanese company-in the Northern District of California, asserting infringement of two of Asetek's patents, U.S. Patent Nos. 8, 240, 362 and 8, 245, 764. All of the accused products are branded "Cooler Master." A few months before trial, by stipulation, Asetek dismissed with prejudice its claims against the Taiwanese company (hereafter "Cooler Master"). Asetek's claims of infringement by CMI USA (hereafter "CMI"), and CMI's invalidity counterclaims, were tried partly to a jury and partly to the court. Asetek prevailed and received a judgment of infringement, and of no invalidity, plus a damages award against CMI of $404, 941, based on a 14.5% royalty rate. The district court also entered an injunction covering the specific "Cooler Master" products found to infringe. The injunction runs not only against CMI but also against Cooler Master-which was not then a party (though it later intervened and became one) and which was not adjudicated liable for infringement.

         We affirm the district court's rulings on infringement, invalidity, and damages. We remand as to part of the injunction, i.e., insofar as the injunction reaches conduct by Cooler Master (regarding the covered products) that goes beyond abetting a new violation by CMI. The governing standards for reaching such conduct by persons not adjudicated liable for the underlying wrong, reflected in Federal Rule of Civil Procedure 65(d), are highly fact-specific. In this case, a determination of the propriety of the injunction's reach would benefit from further findings and, if sought and needed, further record development.

         I

         The '362 and '764 patents describe and claim systems and methods for cooling the "central processing unit (CPU) or other processing unit of a computer system" using cooling liquid. '362 patent, col. 1, lines 12-14; '764 patent, col. 1, lines 11-13. According to the patents, which have similar specifications, liquid-cooling systems in the prior art consisted of "many components, " which were "coupled together, " increasing "total installation time" and causing "leakage." '362 patent col. 1, lines 34- 49; '764 patent, col. 1, lines 32-37. By contrast, the '362 and '764 patents describe systems that combine multiple components-a "heat-exchanging interface, " a "reservoir, " and a "pump"-into a single "integrate element." '362 patent, col. 2, lines 9-11; '764 patent, col. 2 lines 5-6. As recited in the asserted claims, the "reservoir" includes two "vertically" separated chambers, referred to as the "upper chamber" and "lower chamber, " '362 patent, col. 18, lines 56-65, or "pump chamber" and "thermal exchange chamber, " '764 patent, col. 27, lines 49-57.

         Claim 1 of the '764 patent is representative:

         1. A cooling system for a heat-generating component, comprising:

a double-sided chassis adapted to mount a pump configured to circulate a cooling liquid, the pump comprising a stator and an impeller, the impeller being positioned on the underside of the chassis and the stator being positioned on the upper side of the chassis and isolated from the cooling liquid;
a reservoir adapted to pass the cooling liquid therethrough, the reservoir including:
a pump chamber including the impeller and formed below the chassis, the pump chamber being defined by at least an impeller cover having one or more passages for the cooling liquid to pass through;
a thermal exchange chamber formed below the pump chamber and vertically spaced apart from the pump chamber, the pump chamber and the thermal exchange chamber being separate chambers that are fluidly coupled together by the one or more passages; and
a heat-exchanging interface, the heat-exchanging interface forming a boundary wall of the thermal exchange chamber, and configured to be placed in thermal contact with a surface of the heat-generating component; and
a heat radiator fluidly coupled to the reservoir and configured to dissipate heat from the cooling liquid.

         '764 patent, col. 27, lines 39-65. The asserted claims of the '362 patent are similar, but additionally require the "heat-exchanging interface" to be "removably attached" or "removably coupled" to the "reservoir." '362 patent, col. 20, lines 3-6; id. col. 20, lines 40-44.

         "Cooler Master is a Taiwanese supplier of computer components, including cooling devices for heat generating components" of computers. Appellants' Br. 24. Its products include the "Cooler Master"-branded Seidon 120M, Seidon 120XL, Seidon 240M, Seidon 120V, Seidon 120V Plus, Glacer 240L, Nepton 140XL, and Nepton 280L liquid-cooling products at issue in this case. CMI is a U.S. company that-as reflected in its name ("Cooler Master USA, Inc.") until February 2013, a month after this suit began, ECF Nos. 60, 61 (May 2014 change of caption)- collaborates with Cooler Master in designing and selling "Cooler Master"-branded products in the United States. J.A. 3562-63. CMI also "assists" Cooler Master "in setting the manufacturer's suggested retail price of the accused products sold in the United States." J.A. 3563. The evidence, seemingly undisputed, is that, by oral agreement, CMI was Cooler Master's exclusive U.S. distributor of Cooler Master products. J.A. 7848-49; Transcript of Proceedings at 1069, 1106-07, Asetek Dan-mark A/S v. CMI USA, Inc., 00457-JST (N.D. Cal. Dec. 10, 2014), ECF No. 243. Between 2012 and 2013, CMI began selling specified Seidon, Glacer, and Nepton models of "Cooler Master"-branded products in the United States.

         In its January 2013 suit against CMI and Cooler Master, Asetek asserted that they were infringing claims 14- 15 and 17-19 of the '362 patent and claims 1-15 and 17- 18 of the '764 patent by selling, offering to sell, and importing the Seidon, Glacer, and Nepton products.[1] Discovery proceeded, and infringement and invalidity contentions were filed. By September 5, 2014, the litigation was far enough along that CMI moved for summary judgment of invalidity. Cooler Master did not join that motion, however, because, the day before, it and Asetek stipulated to Cooler Master's dismissal with prejudice-a dismissal entered on September 5, 2014. Asetek agreed to that dismissal after CMI and Cooler Master witnesses testified, in discovery, to Cooler Master's exclusive- distribution arrangement with CMI for the accused products in the United States.

         The case went to trial a few months later, in December 2014. At trial, CMI argued that the '362 patent was not infringed, that the '764 patent was anticipated by U.S. Patent No. 7, 544, 049 (Koga), and that the '362 and '764 patents were obvious over Koga and Korean Utility Model No. 20-0314041 (Ryu). The district court granted Asetek's motion for judgment as a matter of law that Koga did not anticipate claim 4 of the '764 patent, and the jury returned a verdict for Asetek on the remaining issues. The jury found that CMI infringed, directly and contributorily, the asserted claims of the '362 patent and rejected CMI's Koga-based anticipation challenge to the remaining claims of the '764 patent. Additionally, the jury made specific findings, related to obviousness, about the level of ordinary skill in the relevant art, the scope and content of the prior art, differences between the prior art and the inventions claimed by the '362 and '764 patents, and objective indicia of non-obviousness. For example, the jury found that the claimed liquid-cooling systems differ from the prior art because they combine a "pump" and a "reservoir" "into a single unit" and because the "reservoir" is a "single receptacle that is divided into an upper chamber and a lower chamber." The jury also found six objective indicia of non-obviousness. The jury found Asetek entitled to a 14.5% reasonable-royalty rate and awarded $404, 941 in damages.

         In April 2015, the district court entered its findings of fact and conclusions of law on various matters the parties had reserved to it. Asetek Danmark A/S v. CMI USA, Inc., 100 F.Supp.3d 871 (N.D. Cal. 2015). The court concluded that CMI failed to prove that the '362 and '764 patents were invalid for obviousness, lack of written description, or indefiniteness. In September 2015, the district court denied CMI's motions for judgment as a matter of law or a new trial on infringement and damages as well as for a new trial on obviousness. Asetek Dan-mark A/S v. CMI USA, Inc., No. 3:13-cv-00457-JST, 2015 WL 5568360, at *3-12 (N.D. Cal. Sept. 22, 2015).

         At the same time, the district court granted Asetek's motion for an injunction against both CMI and Cooler Master, the latter not then a party. Id. at *12-21. After identifying the "Infringing Products" covered (specified Seiden, Nepton, and Glacer models), the injunction states:

(2) CMI USA, Inc. and its subsidiaries and affiliated companies (collectively defined as "CMI"), as well as CMI's successors, assigns, officers, directors, agents, servants, employees, representatives and attorneys, and those persons in active concert or participation with them who receive notice of the order are hereby immediately and permanently restrained and enjoined, pursuant to 35 U.S.C. § 283 and Fed.R.Civ.P. 65(d), from making, using, offering for sale or selling in the United States, or importing into the United States, or causing to be made, used, offered for sale, or sold in the United States, or imported into the United States, the Infringing Products.
(3) Cooler Master Co., Ltd. and its subsidiaries and affiliated companies (collectively defined as "Cooler Master"), as well as Cooler Master's successors, assigns, officers, directors, agents, servants, employees, representatives and attorneys, and those persons in active concert or participation with them who receive notice of the order are hereby immediately and permanently restrained and enjoined, pursuant to 35 U.S.C. ยง 283 and Fed.R.Civ.P. 65(d), from making, using, offering for sale or selling in the United States, or importing into the United States, or ...

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