Phenix Longhorn, LLC v. AU Optronics Corporation et al

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
PHENIX LONGHORN, LLC,
Plaintiff,
v.
AU OPTRONICS CORPORATION and
HISENSE ELECTRONICA MEXICO,
S.A. de C.V., et al.,
Defendants.
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CIVIL ACTION NO. 2:23-CV-477-RWS-RSP
ORDER
The above-captioned action was referred to United States Magistrate Judge Roy S. Payne
pursuant to 28 U.S.C. § 636(b)(1). Now before the Court are (1) Defendant AUO Corporation’s
Objections to Report and Recommendation Regarding AUO’s Motion for Summary Judgment
Under 35 U.S.C. § 271(g) (Docket No. 430); and (2) Defendants Hisense Electronica Mexico, S.A.
de C.V., Hisense USA Corporation, and Hisense Visual Technology Co., Ltd.’s (collectively,
“Hisense”) Objection to Specific Portions of the Report and Recommendation Regarding
Hisense’s Motion for Summary Judgment Under 35 U.S.C. § 271(g) (Docket No. 431).
BACKGROUND
On November 12, 2025, Hisense filed a Motion for Summary Judgment (“Hisense ’788
MSJ”) and AUO filed a Motion for Summary Judgment of No Infringement Under 35 U.S.C.
§ 271(b) and (c), or in the Alternative, No Pre-Suit Damages Under § 271(g) (“AUO ’788 MSJ).
Docket Nos. 253, 255. The motions are fully briefed. Docket Nos. 299, 308, 332, 333, 341, 364.
The Magistrate Judge entered a Report and Recommendation (“R&R”) denying, inter alia, AUO
and Hisense’s ’788 MSJs with respect to § 271(g). Docket No. 413 at 11.
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On January 13, 2026, AUO and Hisense filed objections to the Magistrate Judge’s Report.
Docket Nos. 430, 431. AUO objects that there is a prima facie case of § 271(g) infringement on
three independent bases: (1) the R&R does not reach Phenix’s waiver of the materiality and
essentiality requirements; (2) the R&R incorrectly concludes that the asserted ’788 claim is subject
to § 271(g); and (3) the R&R incorrectly found a dispute of fact that the ’788 process was
performed on imported units. See Docket No. 430. Hisense’s objections are the same as AUO’s
second basis for its objections. Docket No. 431 at 1 (citing Docket No. 413 at 9–11).
LEGAL STANDARDS
Section 271(g) imposes liability for patent infringement on “[w]hoever without authority
imports into the United States or offers to sell, sells, or uses within the United States a product
which is made by a process patented in the United States . . . .” 35 U.S.C. § 271(g). However, there
are constraints as to what qualifies as a product under § 271(g). First, a product must be “made
by” a patented process. Momenta Pharms., Inc. v. Teva Pharms. USA Inc., 809 F.3d 610, 615 (Fed.
Cir. 2015) (explaining that § 271(g) is limited to the actual “making’ of a product, “rather than
[the] methods of testing a final product or intermediate substance to ensure that the intended
product or substance has in fact been made.”). Second, a product must not be materially changed
by a subsequent process or become a trivial and nonessential component of another product. See
35 U.S.C. § 271(g)(1)–(2).
ANALYSIS
I. 	Phenix Did Not Waive Its Arguments on Materiality and Essentiality
AUO argues that Phenix has waived its arguments on the materiality and essentiality
requirements under § 271(g). See Docket No. 430 at 1. Not so. Phenix has at least made specific
arguments in its opposition on this issue. See Docket No. 308 at 12–13. AUO does not dispute that
(1) whether the AUO products have been “materially changed by a subsequent process” and (2)
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whether they are a “trivial and nonessential component of another product” are material fact issues
that should be resolved by a jury. See, e.g., Biotec Biologische Naturverpackungen GmbH & Co.
v. Biocorp, Inc., 249 F.3d 1341, 1352 (Fed. Cir. 2001) (with respect to claims of infringement
under § 271(g), “[w]hether a change in a product is material is a factual determination, and is
properly for the trier of fact.”); Millennium Cryogenic Techs., Ltd. v. Weatherford Artificial Lift
Sys., Inc., 2012 WL 12894799, at *2 (S.D. Tex. Sept. 5, 2012). AUO merely submits that Phenix
has not presented evidence to create a genuine dispute of material fact. See Docket No. 430 at 1–
2. The Court disagrees. In its response, Phenix referred the Court to evidence that, viewed in the
light most favorable to it, creates a genuine dispute of material fact. See, e.g., Docket No. 308-10
(Ex. H: Tang Dep.) at 31:20–36:24 (describing, inter alia, the “Golden Sample” process and
subsequent 	processes 	included 	in 	the 	manufacturing 	of 	end 	products); 	Docket 	No. 	308
(McAlexander Dep.) at 63:18–76:9 (same).
II. 	The Asserted ’788 Claim is Subject to § 271(g)
Next, AUO argues that the asserted ’788 claim is not one by which a product is “made”
under § 271(g). Docket No. 430 at 2. AUO claims that this is because § 271(g) does not cover
claims directed to “production of information.” Id. It further contends that the R&R incorrectly
characterizes that the asserted ’788 claim is directed to an “integrated circuit,” and argues that the
claims are actually directed to “testing a display with an external optical sensor, varying data the
display uses to adjust gamma to optimize values, and storing the optimized values into the same
display.” Id. at 3 (emphasis in original). Hisense’s arguments are the same. See Docket No. 431.
Defendants’ objections retread the same ground as their original briefing on their motions
for summary judgment. In fact, at least part of the objections appears to be copy-pasted from their
opening brief. Compare Docket No. 430 at 2–3 with Docket No. 255 at 8. Defendants cite no new
cases over its original briefing (Docket Nos. 255, 333), and the Magistrate Judge has already
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considered and distinguished the primary cases that Defendants cite (Docket No. 413 at 10). To
reiterate, the asserted ’788 claim is not directed to post-manufacture quality control testing,
certification testing, or sending information messages. See Momenta Pharms., Inc. v. Teva Pharms.
USA Inc., 809 F.3d 610, 615–618 (Fed. Cir. 2015); Phillip M. Adams & Assocs., LLC v. Dell
Computer Corp., 519 F. App’x 998, 1004–1005 (Fed. Cir. 2013); Dental Monitoring SAS v. Align
Tech., Inc., No. C 22-07335 WHA, 2023 WL 4297570, at *3 (N.D. Cal. June 30, 2023). And it is
not directed to mere production of information or the storage of data. See Bayer AG v. Housey
Pharms., Inc., 340 F.3d 1367, 1377 (Fed. Cir. 2003); Yangaroo Inc. v. Destiny Media Techs. Inc.,
720 F. Supp. 2d 1034, 1035 (E.D. Wis. 2010), aff’d, 412 F. App’x 305 (Fed. Cir. 2011).
The Court agrees with the Magistrate Judge that the ’788 Patent is instead directed to “a
programmable buffer integrated circuit” that is incorporated into a finished “Liquid Crystal
Display (LCD)” with a “voltage value” for “gamma correction” “stored in non-volatile,
programmable memory,” such that “the desired gamma correction is achieved” in the LCD. ’788
Patent at 1:66–2:28. The end product is either the gamma-adjusted IC or the LCD panel. See
Docket No. 413 at 10. Specifically, asserted claim 1 teaches a process of modifying a gamma
reference voltage in a chip to ensure the desired gamma correction. ’788 Patent at 7:24–42. Phenix
presented sufficient evidence to create a genuine dispute of material fact as to whether modifying
the gamma voltage is part of fabricating the chip or LCD panel. See, e.g., Docket No. 308-10 (Ex.
H: Tang Dep.) at 32:11–12 (describing work at a fabrication plant “responsible for the initial
fabrication of the LCD panels”); 34:15–19 (“These fab parameters are controlled and measured to
ensure that the resulting LCD panels meet the desired performance standards.”); 38:7–10
(explaining that “AUO’s Electrical Engineering department [] develops a gamma correction code
including one set of gamma correction voltages to be used for that product” in relation to work at
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the plant). Therefore, the claims may “entail the manufacturing of a physical product.” NTP, Inc.
v. Rsch. In Motion, Ltd., 418 F.3d 1282, 1323 (Fed. Cir. 2005). It is thus improper to grant summary
judgment that the asserted ’788 claim is not subject to § 271(g).
III. 	There is a Genuine Dispute of Material Fact Concerning Whether the ’788 Process
Was Performed on Imported Units
AUO claims that Phenix did not advance any evidence that imported products were “made
by” the patented process. Docket No. 430 at 4. It contends that the patented process was only
performed, if at all, on pilot-stage units, not on units mass-produced and imported. Id.
On the other hand, Phenix, its expert, and AUO’s own employees confirmed that the
finished physical products imported into the United States contain AUO’s branded Pgamma ICs
that are each programmed by following the claimed process of the ’788 Patent. See, e.g., Docket
No. 308-3 (Ex. A: Syong Tr.) at 44:20-47:11 (“The P-Gamma software will generate information
which will burn on to the P-Gamma IC.”), 50:19-25, 80:14-17; Docket No. 308-4 (Ex. B:
McAlexander Tr.) at 50:14-54:25, 74:9-75:7, 188:2-190:2 (“The method is also practiced as they
continue to update and upgrade or store the pgamma codes in the for-sale product.”); Docket No.
308-11 (Ex. I: McAlexander Op. Rpt.), Attachment B at 7–8; Docket No. 308-6 (Ex. D: Phenix
Infringement Contentions Ex. B-2) at 3-11 (showing AUO chips attached to TCON board); Docket
No. 308-8 (Ex. F: Lin Tr.) at 59:10-61:1 (confirming that “AUO provides [] customers, [including
Hisense,] with certain products that incorporate the G201, G301, and G1422” chips); Docket No.
308-10 (Ex. H: Tang Dep.) at 32:11–12; 38:7–10; Docket No. 308-5 (Ex. C: AUO Third Supp.
Obj. to Phenix Second Rogs) at 11–14; Docket No. 308-7 (Ex. E: Fourth Supp. Obj. to Phenix
First Rogs) at 30–35. Therefore, there exists a genuine dispute of material fact as to whether the
claimed gamma adjustment process is performed by AUO as part of the mass production of each
unit.
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For the reasons above, the Court hereby OVERRULES AUO and Hisense’s objections
(Docket Nos. 430, 431) to the Magistrate Judge’s R&R (Docket No. 413). The Court declines to
reach the additional ground for summary judgment as to AUO under §§ 271(b)–(c), given the
Court’s findings on § 271(g).
CONCLUSION
The Court has conducted a careful de novo review of those portions of the Magistrate
Judge’s proposed findings and recommendations to which Phenix objected. See 28 U.S.C.
§ 636(b)(1)(C) (District Judge shall “make a de novo determination of those portions of the report
or specified proposed findings or recommendations to which objection is made.”). Upon such de
novo review, the Court has determined that the Report of the Magistrate Judge is correct and
Phenix’s objections are without merit. Accordingly, it is
ORDERED that AUO’s objections (Docket No. 430) are OVERRULED. It is further
ORDERED that Defendants Hisense Mexico, Hisense USA, and Hisense Visual’s
objections (Docket No. 431) are OVERRULED. It is further
ORDERED that the Report and Recommendation of the Magistrate Judge (Docket No.
413) is ADOPTED as the opinion of the District Court, in light of this Order overruling
Defendants’ objections and the Court’s separate order (Docket No. 425) overruling Phenix’s
objections to the same R&R. It is further
ORDERED that the Hisense ’788 MSJ (Docket No. 253) is GRANTED-IN-PART and
otherwise DENIED. It is further
ORDERED that the AUO ’788 MSJ (Docket No. 255) is DENIED. It is further
ORDERED that the AUO Willfulness MSJ (Docket No. 250) is GRANTED-IN-PART
and otherwise DENIED.
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____________________________________
ROBERT W. SCHROEDER III
UNITED STATES DISTRICT JUDGE
So ORDERED and SIGNED this 15th day of January, 2026.
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