Cyntec Company, Ltd. v. Chilisin Electronics Corp., Chilisin America Ltd.

United States Court of Appeals
for the Federal Circuit
______________________
CYNTEC COMPANY, LTD.,
Plaintiff-Appellee
v.
CHILISIN ELECTRONICS CORP., CHILISIN
AMERICA LTD.,
Defendants-Appellants
______________________
2022-1873
______________________
Appeal from the United States District Court for the
Northern District of California in No. 4:18-cv-00939-PJH,
Judge Phyllis J. Hamilton.
______________________
Decided: October 16, 2023
______________________
S TEFFEN N ATHANAEL J OHNSON, Wilson, Sonsini,
Goodrich & Rosati, PC, Washington, DC, argued for plain-
tiff-appellee. Also represented by P AUL HAROLD, J ENNIFER
L IU; CHRISTOPHER D. MAYS , J AMES C. YOON , Palo Alto, CA;
L UCY YEN, New York, NY; G EORGE E. P OWELL , III, Wilmer
Cutler Pickering Hale and Dorr LLP, Washington, DC.
J ONATHAN J. L AMBERSON, White & Case LLP, Palo
Alto, CA, argued for defendants-appellants. Also repre-
sented by HENRY H UANG; HALLIE ELIZABETH K IERNAN,
New York, NY.
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 2
______________________
Before M OORE, Chief Judge, STOLL and CUNNINGHAM ,
Circuit Judges.
STOLL , Circuit Judge.
This patent infringement case raises issues of obvious-
ness, infringement, and damages. Cyntec Company, Ltd.
sued Chilisin Electronics Corp., alleging infringement of
certain claims of Cyntec’s U.S. Patent Nos. 8,922,312 (the
’312 patent) and 9,481,037 (the ’037 patent). Before closing
arguments, the district court granted judgment as a matter
of law (JMOL) that the asserted claims were not invalid as
obvious. The jury then found that Chilisin infringed the
asserted claims and awarded the full amount of damages
requested by Cyntec. Chilisin now appeals the district
court’s grant of JMOL of nonobviousness, the district
court’s denial of Chilisin’s motion for JMOL regarding non-
infringement and damages, and the district court’s denial
of Chilisin’s motion to exclude Cyntec’s damages expert tes-
timony as speculative. For the reasons explained below,
we affirm in part, reverse in part, vacate in part, and re-
mand.
BACKGROUND
I
The ’312 patent is directed to molded chokes and the
’037 patent is directed to a method of manufacturing
molded chokes. A choke is a type of inductor used to elim-
inate undesirable signals in a circuit. Chokes are found in
most modern electronics that use batteries or a power sup-
ply. Molded chokes are formed by placing coiled conducting
wire inside a mold, filling that mold with magnetic pow-
der(s) and a binding adhesive, compressing the mold, and
heating the mold to solidify the adhesive.
The ’312 and ’037 patents teach that mixing magnetic
powders generally requires effective annealing—a heating
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 3
process to reduce a choke’s core loss, reduce strain, and in-
crease permeability. The patents disclose that the high
temperatures required by effective annealing have caused
problems such as melting wire insulation, oxidizing compo-
nents, and risking short circuits.1 ’312 patent col. 13
ll. 46–52; J.A. 9781 (Trial Tr. 399:2–15). The patents pur-
port to solve these problems by improving core loss without
high-temperature annealing by using a first magnetic pow-
der and a second magnetic powder, with the particles of the
first magnetic powder being larger and harder than those
of the second magnetic powder. ’312 patent col. 1 ll. 59–67;
see J.A. 9494–95 (Trial Tr. 187:12–188:6). The specifica-
tion explains that this combination of powders causes the
strain to be transferred to the smaller, softer powder,
which allows formation of the integral magnetic body “at
the temperature lower than the melting point of the insu-
lating encapsulant of the conducting wire.” ’312 patent
col. 2 ll. 14–37; J.A. 9787 (Trial Tr. 405:5–13).
Claim 1 of the ’312 patent is representative and recites:
1. An electronic device, comprising:
a first magnetic powder;
a second magnetic powder, wherein the mean par-
ticle diameter of the first magnetic powder is larger
than the mean particle diameter of the second mag-
netic powder, the Vicker’s Hardness of the first
magnetic powder is greater than the Vicker’s Hard-
ness of the second magnetic powder by a first hard-
ness difference, and the first magnetic powder
mixes with the second magnetic powder; and
1 The ’312 and ’037 patents share a common ances-
tor, but their specifications differ. Consistent with the par-
ties’ briefing, we cite primarily to the ’312 patent.
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 4
a conducting wire buried in the mixture of the first
magnetic powder and the second magnetic powder,
wherein the conducting wire comprises an insulat-
ing encapsulant and a conducting metal encapsu-
lated by the insulating encapsulant;
wherein by means of the first hardness difference of
the first magnetic powder and the second magnetic
powder, the mixture of the first magnetic powder
and the second magnetic powder and the conduct-
ing wire buried therein are combined to form an in-
tegral magnetic body at a temperature lower than
the melting point of the insulating encapsulant.
’312 patent col. 14 ll. 5–26 (emphasis added to the disputed
claim limitation (“by means of” limitation)).
II
Cyntec sued Chilisin for patent infringement, alleging
that Chilisin willfully manufactured and sold infringing
chokes. J.A. 110–12.
The district court initially construed the “by means of”
limitation consistent with its “plain meaning, which does
not require construction.” Cyntec Co. v. Chilisin Elecs.
Corp., No. 18-cv-00939-PJH, 2019 WL 2548191, at *9 (N.D.
Cal. June 20, 2019). At summary judgment, Chilisin ar-
gued that the “by means of” limitation required that the
formation temperature must be “due to the fact that there
is a hardness difference between the two magnetic pow-
ders.” J.A. 2764 (emphasis omitted). The district court de-
termined Chilisin’s argument “add[ed] a limitation to the
plain and ordinary meaning of [the ‘by means of’ limitation]
that does not find support in light of the specification.”
Cyntec Co. v. Chilisin Elecs. Corp., No. 18-cv-00939-PJH,
2020 WL 5366319, at *8 (N.D. Cal. Sept. 8, 2020) (Pretrial
Motions Order). In addition, the district court instructed
the jury to “apply the ordinary meaning of [the ‘by means
of’ limitation] with the understanding that the hardness
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 5
difference has an impact on the temperature, but is not the
only potential cause of the lower temperature.” J.A. 9439
(Trial Tr. 132:9–18).
Prior to trial, Chilisin moved to exclude the testimony
of Cyntec’s damages expert, Bryan Van Uden, alleging that
his proposed importation calculations were speculative and
unreliable. The district court denied Chilisin’s motion be-
cause “[Mr.] Van Uden’s opinions rely on data sources that
are sufficiently reliable that a jury can determine whether
the assumptions made in his calculations were valid.” Pre-
trial Motions Order, 2020 WL 5366319, at *20.
At trial, Chilisin presented evidence to the jury on in-
validity, arguing that the asserted claims would have been
obvious in view of Shafer2 as modified by Nakamura.3 Af-
ter Cyntec’s rebuttal testimony, but before Chilisin could
cross-examine Cyntec’s technical expert, the district court
heard initial motions for JMOL. Cyntec moved for JMOL
of nonobviousness, arguing that Shafer and Nakamura
were missing claim elements, J.A. 10628 (Trial
Tr. 1151:15–17), and that Chilisin “cannot meet [the] clear
and convincing evidence standard as to why [Shafer and
Nakamura] would be combined,” id. (Trial Tr. 1151:17–19).
The district court granted Cyntec’s motion. See J.A. 10636
(Trial Tr. 1159:11–23).
To prove damages, Cyntec presented a market-share
lost profits theory. J.A. 9942 (Trial Tr. 560:18–23). Cyntec
asserted that 27 companies purchased Chilisin’s accused
chokes outside the United States and then placed them into
devices that were then imported into the United States.
See Appellant’s Br. 55 (citing J.A. 9926–28 (Trial
Tr. 544:25–546:20); and J.A. 15819). Cyntec’s expert
2 U.S. Patent No. 6,460,244.
3 Japanese Unexamined Patent Application
No. 2005-294458.
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 6
opined that Cyntec was entitled to a total damages award
of $1,872,956, with $1,552,493 in lost profits and $320,463
in reasonable royalties.4 J.A. 9997 (Trial Tr. 604:15–23).
The jury returned a verdict in favor of Cyntec, awarded the
full amount requested by Cyntec, and found that Chilisin
willfully infringed the claims. J.A. 10780–81, 10783; see
Cyntec Co. v. Chilisin Elecs. Corp., No. 18-cv-00939-PJH,
2022 WL 1443232, at *15 (N.D. Cal. May 6, 2022) (Post-
Trial Order).
Following the verdict, Chilisin moved for JMOL and a
new trial on the issues of invalidity, infringement, and
damages, but the district court denied these motions. See
generally Post-Trial Order, 2022 WL 1443232, at *1–11.
The district court granted Cyntec’s motion for enhanced
damages, “result[ing] in a total lost profits damages award
of $4,602,671 and a total reasonable royalties award of
$950,573, for a total damages award of $5,553,244.” Id.
at *16.
Chilisin appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(1).
D ISCUSSION
We review a district court’s grant or denial of JMOL
under the standard of the regional circuit, here the Ninth
Circuit. Apple Inc. v. Samsung Elecs. Co., 839 F.3d 1034,
1040 (Fed. Cir. 2016) (en banc). The Ninth Circuit reviews
JMOL rulings de novo, applying the same standard for
JMOL as the district court. Dees v. County of San Diego,
960 F.3d 1145, 1151 (9th Cir. 2020). Like the standard for
summary judgment, JMOL requires that we “view the evi-
dence in the light most favorable to the nonmoving party
. . . and draw all reasonable inferences in that party’s
4 The reasonable royalties award is not at issue on
appeal.
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 7
favor.” Id. (quoting EEOC v. Go Daddy Software, Inc.,
581 F.3d 951, 961 (9th Cir. 2009)).
I
Chilisin contends that the district court erred in grant-
ing JMOL that the asserted claims are not invalid as obvi-
ous because of factual disputes that should have been given
to the jury. We agree.
Obviousness presents an ultimate legal question with
numerous underlying factual findings. MobileMedia Ideas
LLC v. Apple Inc., 780 F.3d 1159, 1167 (Fed. Cir. 2015) (cit-
ing Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 17
(1966)). These underlying findings of fact set the founda-
tion for the ultimate determination of obviousness. Gra-
ham, 383 U.S. at 17–18. These factual questions
include: “(1) the scope and content of the prior art, (2) dif-
ferences between the prior art and the claims at issue,
(3) the level of ordinary skill in the pertinent art, and
(4) the presence of objective indicia of nonobviousness such
as commercial success, long felt but unsolved needs, failure
of others, and unexpected results.” Elbit Sys. of Am., LLC
v. Thales Visionix, Inc., 881 F.3d 1354, 1357 (Fed. Cir.
2018). “[I]t is error to reach a conclusion of obviousness
until all th[e Graham] factors are considered.” Apple Inc.,
839 F.3d at 1048. Whether a skilled artisan would have
been motivated to combine references is also a fact question
that would ordinarily be reserved for a jury. See id.
at 1051.
We hold that the district court erred in granting JMOL
to Cyntec on the issue of nonobviousness. Chilisin pre-
sented the jury with evidence that would have allowed it to
reasonably find the asserted claims obvious in view of
Shafer and Nakamura. For example, the jury heard expert
testimony that Nakamura discloses embodiments of elec-
tronic devices having two magnetic powders in which the
mean particle diameter of the first magnetic powder is
larger than the mean particle diameter of the second
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 8
magnetic powder, and the hardness of the first magnetic
powder is harder than that of the second magnetic powder.
See J.A. 10491 (Trial Tr. 1018:10–18); see also J.A. 11353
¶ 32. The jury also heard expert testimony that a skilled
artisan would have been motivated to “improve the perfor-
mance” of Shafer—a prior art reference that discloses an
inductor with a wound coil buried in a mixture of “a first
powdered iron” and “a second powdered iron”—by using a
larger and harder magnetic powder with a smaller and
softer magnetic powder as taught by Nakamura because
when smaller objects are placed between larger objects in
the same space, the overall density increases, which would
“improve the performance of the device.” J.A. 10493 (Trial
Tr. 1020:19–22); see J.A. 11411–13. The expert further ex-
plained that “[b]y mixing and pressure-molding compara-
tively soft and extremely hard powders,” a skilled artisan
can achieve “better permeability and core losses,” as well
as improvement in “anti-drop characteristics.” J.A. 10496–
97 (Trial Tr. 1023:23–1024:20). Taken together and draw-
ing all reasonable inferences in Chilisin’s favor, this evi-
dence is enough for a reasonable jury to have found that
the asserted claims would have been obvious.
The district court reasoned that JMOL was appropri-
ate because (1) “Shafer . . . doesn’t disclose the hardness or
the size” of the claimed magnetic powders, J.A. 10636
(Trial Tr. 1159:11–16); and (2) “even [Shafer] in combina-
tion with Nakamura” does not render the patent obvious
because Chilisin’s evidence was “neither clear nor convinc-
ing,” id. (Trial Tr. 1159:17–23). But these conclusions are
either insufficient to support JMOL or unsupported by the
record. First, Chilisin did not rely on Shafer to teach the
hardness or size limitations. Rather, as explained above,
the jury heard testimony that while Shafer did not disclose
the hardness and size limitations, a person of ordinary skill
in the art would look to Nakamura for guidance on desired
characteristics of the first and second powders to improve
performance, including embodiments in which the mean
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 9
particle diameter of the first magnetic powder is larger
than the mean particle diameter of the second magnetic
powder and the hardness of the first magnetic powder is
harder than that of the second magnetic powder.
Second, even under a clear and convincing evidence
standard, we are not convinced that Chilisin’s evidence was
so meritless as to warrant judgment as a matter of law. In-
deed, we conclude that, given the evidence identified above,
a reasonable jury could have found the asserted claims ob-
vious in view of Shafer as modified by Nakamura. There-
fore, we reverse the district court’s JMOL of
nonobviousness and remand.
II
We next turn to the issue of infringement. Chilisin
challenges the jury verdict, alleging that it rests on an er-
roneous construction of the “by means of” limitation. Al-
ternatively, Chilisin asserts that, even under the district
court’s claim construction, the jury’s finding of infringe-
ment is not supported by substantial evidence. We address
each argument in turn.
A
Chilisin challenges the district court’s construction of
the “by means of” limitation and its jury instruction regard-
ing that limitation. Chilisin specifically argues that a
proper construction requires that hardness is the pri-
mary—or “but for”—cause of the claimed reduced for-
mation temperature. Appellant’s Br. 28–32. The district
court rejected this narrow construction, instructing the
jury that the claim only requires that the hardness differ-
ence “have an impact on” the reduced formation tempera-
ture. J.A. 9439 (Trial Tr. 132:9–18). The “by means of”
limitation recites:
wherein by means of the first hardness difference
of the first magnetic powder and the second mag-
netic powder, the mixture of the first magnetic
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 10
powder and the second magnetic powder and the
conducting wire buried therein are combined to
form an integral magnetic body at a temperature
lower than the melting point of the insulating en-
capsulant.
’312 patent col. 14 ll. 20–26.
Claim construction based on the intrinsic evidence—
e.g., the claim language and the specification—“is a ques-
tion of law that this court reviews de novo.” Bayer
Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 973
(Fed. Cir. 2021). Based on our review of the claim language
and specification, we conclude that the district court did
not err in construing the “by means of” claim term.
First, the plain language of the claim recites only that
two magnetic powders and a conducting wire are “com-
bined to form an integral magnetic body at a temperature
lower than the melting point of the insulating encapsulant”
“by means of the first hardness difference of the first mag-
netic powder and the second magnetic powder.” The key
phrase “by means of” is certainly broad enough to include
but for causation. But the phrase is also broad enough to
capture mere contribution. Had the patent drafter in-
tended to limit the claims to but for causation, narrower
language could have been used in the claim. For example,
instead of “by means of,” the patent drafter could have re-
cited “by exclusive (or primary) means of” or wherein the
hardness difference is the “sole” or “primary” means of low-
ering the formation temperature.
Second, nothing in the specification requires that the
hardness difference have the primary or “but for” impact
on the formation temperature. We acknowledge that the
specification discloses a preferred embodiment where “the
hardness difference of the first magnetic powder and the
second magnetic powder can determine the smaller core
loss of the electronic device; in other words, the ratio of the
hardness of the first magnetic powder to the hardness of
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 11
the second magnetic powder has a higher priority than the
ratio of the mean particle diameter of the first magnetic
powder to the mean particle diameter of the second mag-
netic powder.” ’312 patent col. 2 ll. 21–28. The specifica-
tion also describes an objective “to lower the temperature
for annealing more than two mixed magnetic powders of
different sizes to form an integral magnetic body by using
the hardness differences between the magnetic powders.”
Id. at col. 1 ll. 54–58. The specification, however, does not
require that the hardness differences be the primary or
only cause of the reduced formation temperature. Rather,
the specification’s statements show that both hardness dif-
ferences and size differences contribute to influence the for-
mation temperature. See, e.g., id. at col. 2 ll. 13–21
(“Specifically, optimization of the ratio of the hardness of
the first magnetic powder to the hardness of the second
magnetic powder and the ratio of the mean particle diam-
eter of the first magnetic powder to the mean particle di-
ameter of the second magnetic powder largely reduces the
strains of the mixture . . . , and thus the core loss of the
electronic device is reduced.” (emphasis added)). Further-
more, Chilisin conceded in its renewed motion for JMOL
that the “testimony at trial confirmed that both size and
hardness differences may impact formation temperature.”
J.A. 10852; see J.A. 9776 (Trial Tr. 394:5–8), J.A. 9786–87
(Trial Tr. 404:14–17, 405:5–13).
Accordingly, we agree with the district court that the
plain language of the claims, read in view of the specifica-
tion, requires only that “the hardness difference has an im-
pact on the [formation] temperature but is not the only
potential cause of a lower [formation] temperature.” Pre-
trial Motions Order, 2020 WL 5366319, at *7. We similarly
find no reversible error in the district court’s jury instruc-
tion, as it was consistent with its construction.
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B
Having adopted the district court’s construction, we
turn to Chilisin’s challenge to the jury’s infringement find-
ing under that construction. Whether an accused device
reads on a properly construed claim presents a question of
fact that we review for substantial evidence. Lucent Techs.,
Inc. v. Gateway, Inc., 580 F.3d 1301, 1309 (Fed. Cir. 2009).
“We presume the jury resolved all underlying factual dis-
putes in favor of the verdict.” Apple Inc., 839 F.3d at 1040
(citing SSL Servs., LLC v. Citrix Sys., Inc., 769 F.3d 1073,
1082 (Fed. Cir. 2014)).
Chilisin argues that there is not substantial evidence
to support the jury’s finding of infringement. Chilisin spe-
cifically contends that the proffered evidence did not an-
swer the question of whether particle size or hardness
differences of the magnetic powders in the accused prod-
ucts impacted the formation temperature.
We conclude that there is substantial evidence to sup-
port the jury’s finding of infringement. For example,
Cyntec’s expert Dr. Paul Kohl, citing experimental data,
explained how the differences in hardness impacted the ac-
cused chokes’ formation temperature. Specifically,
Dr. Kohl testified that the hardness difference between the
alloy and iron powder in the accused chokes has a “direct
impact” on the manufacturing temperature of the Chilisin
molded chokes. J.A. 9787 (Trial Tr. 405:5–8). He ex-
plained to the jury that the hardness difference made it so
“the strain was not induced in the large particle,” and
“[t]hey did not have to go to a high temperature, above the
melting point of the insulator on the wires.” Id. (Trial
Tr. 405:8–11). He further explained that “[i]t was directly
because of this hardness difference [that] they could avoid
that high-temperature step.” Id. (Trial Tr. 405:11–13); see
also J.A. 9792–93 (Trial Tr. 410:8–411:18); J.A. 10623–25
(Trial Tr. 1146:8–1148:1); J.A. 9578–82 (Trial Tr. 253:17–
254:9, 255:9–257:23). The jury also heard testimony from
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 13
Cyntec’s vice-president that, from a business perspective,
“mixing different powders of different sizes and hardnesses
[was] important” and that high-temperature annealing re-
duces reliability. J.A. 9493–95 (Trial Tr. 186:25–188:6).
Given the proffered evidence and the jury instructions, the
jury was entitled to reasonably reach its factual finding.
See Bayer Healthcare, 989 F.3d at 980 (explaining that “the
jury was in the best position to determine” the persuasive-
ness of expert testimony). Therefore, the district court did
not err in denying Chilisin’s motion for JMOL of nonin-
fringement.
III
We now turn to the damages issue. Chilisin argues
that the district court erred in denying its Daubert motion
to exclude testimony from Cyntec’s expert, Mr. Van Uden.
Appellant’s Br. 49–54. Because we find that the district
court abused its discretion in denying Chilisin’s Daubert
motion, we reverse the district court’s denial and vacate
the damages award.5
“When reviewing damages in patent cases, we apply re-
gional circuit law to procedural issues and Federal Circuit
law to substantive and procedural issues pertaining to pa-
tent law.” MLC Intell. Prop., LLC v. Micron Tech., Inc.,
10 F.4th 1358, 1367 (Fed. Cir. 2021) (quoting Whitserve,
LLC v. Comput. Packages, Inc., 694 F.3d 10, 26 (Fed. Cir.
2012)). The Ninth Circuit reviews evidentiary rulings,
such as decisions on Daubert motions, “for abuse of discre-
tion and reverse[s] if the exercise of discretion is both erro-
neous and prejudicial.” Wagner v. County of Maricopa,
747 F.3d 1048, 1052 (9th Cir. 2013).
5 Chilisin also challenges the district court’s denial
of its motion for JMOL regarding lost profits. Appellant’s
Br. 54–61. Because we vacate the damages award, we need
not reach this issue.
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The district court serves as a gatekeeper to “ensure
that any and all scientific testimony or evidence admitted
is not only relevant, but reliable.” Daubert v. Merrell Dow
Pharms., Inc., 509 U.S. 579, 589 (1993). Indeed, the Fed-
eral Rules of Evidence “leave in place the ‘gatekeeper’ role
of the trial judge in screening such evidence.” Gen. Elec.
Co. v. Joiner, 522 U.S. 136, 142 (1997).
A review of our precedent regarding exclusion of unre-
liable damages expert testimony is instructive. In Power
Integrations v. Fairchild Semiconductor International,
Inc., the patentee accused Fairchild of infringing claims di-
rected to power supplies in electronic devices. 711 F.3d
1348, 1357 (Fed. Cir. 2013). At trial, the patentee’s dam-
ages expert used “worldwide sales data for Samsung’s mo-
bile phones to estimate sales of the accused power circuits,
which Samsung incorporated into its mobile phone
chargers.” Id. at 1372. In vacating the damages award, we
held that the district court abused its discretion in admit-
ting the damages expert’s testimony because it was unreli-
able. We explained that the damages expert “made two
speculative leaps.” Id. at 1373. First, he had relied on doc-
uments pertaining to worldwide shipments of mobile
phones, but the infringing power circuits were found in
chargers, not the phones themselves. Thus, the damages
expert “assumed that each . . . phone[] shipped with a
charger,” an assumption not supported by the evidence. Id.
Second, in relying on these documents, the damages expert
assumed “not only that each . . . shipment[] included a
charger, but that each of these chargers incorporated an
infringing power circuit.” Id. at 1374. The panel explained
that the relied-upon documents gave no “indicia from
which [the damages expert] could reasonably infer that
chargers assumed to be included incorporated Fairchild’s
infringing power circuits.” Id.
More recently, in Niazi Licensing Corporation v. St.
Jude Medical S.C., Inc., the patentee Niazi accused St.
Jude of infringing an apparatus claim for a double catheter
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 15
and a method claim of placing an electrical lead in a specific
vein using a double catheter. 30 F.4th 1339, 1343–44
(Fed. Cir. 2022). Niazi’s damages expert calculated a dam-
ages estimate that included the sales of four components
used to practice the claimed method because these compo-
nents were purportedly “the smallest saleable compo-
nent[s].” Id. at 1357. The district court found that the
expert improperly “included in his damages calculations
sales of all of St. Jude’s outer catheters, inner catheters,
guide wires, and leads, even though it was undisputed that
not all of those sold devices had been used to practice the
claimed method.” Id. (emphases added). We agreed that
the damages expert’s “failure to account for noninfringing
uses of the sold devices was legally improper” and affirmed
the district court’s exclusion of the expert’s opinion. Id.
at 1357–58.
In the present case, Cyntec’s damages expert, Mr. Van
Uden, estimated the amount of Chilisin’s sales of accused
products imported into the United States (“importation cal-
culations”) using U.S. Securities and Exchange Commis-
sion (SEC) filings or annual reports of customers who
purchased or acquired any of the alleged infringing prod-
ucts, as well as third-party data from Gartner Research.
J.A. 3963 ¶ 111; J.A. 9927–29 (Trial Tr. 545:2–7, 546:8–14,
546:21–547:9) (using Apple as an example to “estimate
what portion of Apple’s sales are actually made to the
U.S.”). Mr. Van Uden determined each customer’s impor-
tation rate by dividing the customer’s U.S. revenue by its
total worldwide revenue. J.A. 3963 ¶ 112; see Appellee’s
Br. 53 (“Comparing sales made to the United States with
sales made elsewhere, [Mr. Van Uden] was able to deter-
mine a U.S. importation rate for each company.”). By
“[m]ultiplying Chilisin’s accused revenues made outside of
the U.S. by the U.S. importation rates for each identified
customer,” Mr. Van Uden estimated the “infringement rev-
enue subject to . . . damages.” J.A. 3963 ¶ 113. Mr. Van
Uden determined that Chilisin’s indirect sales to the
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 16
United States was approximately $ 9.8 million.
J.A. 9931–32 (Trial Tr. 549:24–550:7). Mr. Van Uden also
estimated that Cyntec’s market share ranged from 31.2
percent to 39.4 percent. J.A. 9970 (Trial Tr. 577:21–25).
Then, “us[ing] this market share number, [he] applied it to
the sales subject to damages, [yielding an estimate of]
Cyntec’s lost sales of approximately $3.8 million.”
J.A. 9971 (Trial Tr. 578:16–18).
The district court denied Chilisin’s motion to exclude
Mr. Van Uden’s importation calculations, finding that
Mr. Van Uden’s “opinions rel[ied] on data sources that are
sufficiently reliable that a jury can determine whether the
assumptions made in his calculations were valid.” Pretrial
Motions Order, 2020 WL 5366319, at *20.
This was error. The revenue reported in the customers’
annual reports cited by Mr. Van Uden included sales of ir-
relevant products and services, and he failed to account for
these irrelevant products and services. For example,
Mr. Van Uden’s importation calculations for Apple Inc. use
the reported revenue for 2016–2019 from Apple’s Form
10-K. See J.A. 4091; J.A. 11099–100. But Apple’s 10-K re-
ported revenue includes revenue received from services
and products that do not even contain chokes. See
J.A. 11045–46 (Apple’s 2020 Form 10-K, defining its “Ser-
vices” as advertising, warranty services, cloud services,
digital content, and payment services); Apple Inc., Annual
Rep. (Form 10-K), at 21 (Oct. 29, 2020) (stating that the
“total net sales” consisted of sales of iPhones, Macs, iPads,
Wearables, Home and Accessories, and Services).6
6 As the parties did not include all relevant pages in
the appendix, we take judicial notice of Apple’s 2020 Form
10-K. An appellate court “may take judicial notice of court
filings and other matters of public record.” Reyn’s Pasta
Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6
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CYNTEC COMPANY , LTD. v. CHILISIN ELECTRONICS CORP . 17
Mr. Van Uden’s use of the reported revenue did not differ-
entiate between what products would or would not incor-
porate the accused chokes. Mr. Van Uden therefore
assumed all of Apple’s products imported into the United
States contained the accused chokes, a mistake he repeated
for other customers. J.A. 10021–25 (Trial Tr. 628:19–
632:21); J.A. 10370–71 (Trial Tr. 897:4–898:4).
Cyntec argues Mr. Van Uden “did not . . . assume that
every [third party] product contained an accused choke,”
and argues that he instead “estimated the portion of ac-
cused chokes that are imported by starting with Chilisin’s
actual sales data, and then applying reliable data showing
importation rates for products sold by Chilisin’s customers
incorporating the infringing chokes.” Appellee’s Br. 57–58.
But as we explained above, this data for calculating impor-
tation rates contains the sales of products and services that
cannot or do not contain the accused chokes. Like the er-
roneous assumptions in Power Integrations and Niazi,
Mr. Van Uden assumed that (1) the sales revenue reported
in the customers’ Form 10-K reflected sales of products
with molded chokes; and (2) each third-party product
shipped into the United States contained an infringing
choke. Further, Mr. Van Uden’s importation calculations
assumed that all 310 third-party products across all 27 cus-
tomers infringed. J.A. 10028 (Trial Tr. 635:11–21);
J.A. 10370–71 (Trial Tr. 897:4–898:4); see also J.A. 15385–
404 (Chilisin products application guide). Yet no party
knew whether the third-party products contained the ac-
cused chokes or how many accused chokes were in these
products. See J.A. 10022–24 (Trial Tr. 629:4–630:17,
631:3–13). Indeed, no third-party discovery or testing from
a technical expert was performed to see if the third-party
products contained the accused chokes. Oral Arg.
(9th Cir. 2006). Apple’s 2020 Form 10-K is readily verifia-
ble and thus the proper subject of judicial notice.
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at 23:40–24:12, https://oralarguments.cafc.uscourts.gov/
default.aspx?fl=22-1873_06062023.mp3; J.A. 10025 (Trial.
Tr. 32:12–21); see also Appellant’s Br. 22.
We are not persuaded by Cyntec’s argument that “cor-
roboration” with third party data saves Mr. Van Uden’s im-
portation calculations. He applied the Gartner Research
data to corroborate only six of the 27 customers. Oral Arg.
at 21:58–22:28; see also Appellee’s Br. 14; J.A. 4090. Nor
are we persuaded by Cyntec’s attempts to distinguish the
current case from Power Integrations. See Appellee’s
Br. 57–58. Indeed, Mr. Van Uden’s testimony is similar to
the testimony we found improper in Power Integrations.
Accordingly, “[i]n the end, we are left with an expert opin-
ion derived from unreliable data and built on speculation.”
Power Integrations, 711 F.3d at 1374.
For the reasons articulated above, we find that the dis-
trict court abused its discretion in admitting Mr. Van
Uden’s importation calculations, which are both unreliable
and speculative. Because Mr. Van Uden’s lost profits cal-
culation stemmed from his importation calculations, we va-
cate the jury’s damages award for lost profits.
CONCLUSION
We have considered the parties’ other arguments, but
we do not find them persuasive. For the foregoing reasons,
we affirm the judgment of infringement. In addition, we
reverse the district court’s judgment as a matter of law for
nonobviousness and the district court’s denial of Chilisin’s
motion to exclude Mr. Van Uden’s damages expert testi-
mony. Accordingly, we vacate the lost profits award and
remand for proceedings consistent with this opinion.
AFFIRMED-IN-PART, REVERSED-IN-PART, VA-
CATED-IN-PART, AND REMANDED
COSTS
No costs.
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