DCT

2:23-cv-00477

Phenix Longhorn LLC v. Au Optronics Corp

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:23-cv-00477, E.D. Tex., 12/03/2024
  • Venue Allegations: Plaintiff alleges venue is proper because Defendants are foreign entities that may be sued in any judicial district. It further alleges Defendants are subject to personal jurisdiction in the district through business activities, including making, using, selling, or importing infringing products into the district, and maintaining a place of business (for Hisense USA).
  • Core Dispute: Plaintiff alleges that Defendants’ LCD panel modules and the television sets that incorporate them infringe two patents related to generating and programming gamma reference voltages for display calibration.
  • Technical Context: The technology concerns integrated circuits that provide adjustable gamma correction for LCD panels, a process essential for ensuring consistent image quality and color accuracy by compensating for manufacturing variations.
  • Key Procedural History: The complaint notes that the '305 Patent previously survived an Inter Partes Review (IPR) challenge at the Patent Trial and Appeal Board (PTAB), where the Board denied institution. The complaint also alleges extensive pre-suit interactions between Plaintiff’s predecessor-in-interest (Alta Analog, Inc.) and Defendant AUO regarding the patented technology, including meetings and the exchange of technical datasheets identifying the patents-in-suit.

Case Timeline

Date Event
2002-03-01 Plaintiff's predecessor, Alta Analog, Inc., is founded.
2003-06-11 Priority Date for '305 and '788 Patents.
2007-06-19 U.S. Patent No. 7,233,305 is issued.
2007-11-01 Alta allegedly meets with AUO, identifying the '305 Patent.
2009-07-07 U.S. Patent No. 7,557,788 is issued.
2012-06-12 AUO allegedly receives product data sheets including asserted patents.
2015-07-01 Hisense acquires Sharp Mexico manufacturing facility.
2019-01-24 PTAB denies institution of IPR against the '305 Patent.
2024-12-03 Plaintiff files Third Amended Complaint.

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 7,233,305 - "Gamma Reference Voltage Generator," issued June 19, 2007

The Invention Explained

  • Problem Addressed: The patent addresses the problem of manufacturing variations in Thin Film Transistor (TFT) flat panel displays, where each display responds differently to gamma correction voltages, leading to inconsistent picture quality (Compl. ¶31; ’305 Patent, col. 1:19-29). The traditional solution involved manually selecting and soldering "Select-On-Test Resistors" for each individual display panel, a costly, labor-intensive process that prohibits automated assembly and testing (’305 Patent, col. 1:30-45).
  • The Patented Solution: The invention is an integrated circuit that automates this process by using non-volatile, programmable memory to store and output a set of gamma correction reference voltages (’305 Patent, Abstract). Because the values are stored in non-volatile memory, the calibration is retained even when power is removed. The circuit architecture allows for multiple "banks" of gamma values to be stored and selected, providing optimized correction curves for different applications or user requirements (’305 Patent, col. 2:25-29).
  • Technical Importance: This integrated-circuit approach sought to replace discrete, manually-tuned components with a programmable, solid-state solution, thereby enabling automated testing and calibration, reducing manufacturing costs, and improving consistency in LCD panel production (Compl. ¶34).

Key Claims at a Glance

  • The complaint asserts infringement of at least Claims 1, 2, and 5, with a focus on independent Claim 1 (Compl. ¶85).
  • Independent Claim 1 recites an integrated circuit with the following key elements:
    • a plurality of non-volatile storage cells;
    • circuits for programming coupled to a multiplexer for addressing and programming the storage cells;
    • drivers connected to the storage cells and outputs;
    • the storage cells are organized into two or more banks, each containing a predetermined gamma reference voltage signal display condition; and
    • means to switch between the banks based on one or more external signals.
  • The complaint reserves the right to assert other claims, including dependent claims (Compl. ¶85).

U.S. Patent No. 7,557,788 - "Gamma Reference Voltage Generator," issued July 7, 2009

The Invention Explained

  • Problem Addressed: The ’788 Patent, a continuation of the ’305 Patent, addresses the same underlying problem of compensating for panel-to-panel manufacturing variations in LCDs (’788 Patent, col. 1:21-48).
  • The Patented Solution: Rather than claiming the circuit itself, this patent claims a method for calibrating an LCD. The method involves providing a display that has an electrically reprogrammable and non-volatile gamma control capability (like the one described in the ’305 patent), and then using an external system to perfect the calibration (’788 Patent, Abstract). This external system uses a sensor (separate from the display) to measure the display's optical output, varies the gamma voltage levels via a separate control circuit, optimizes those levels using a predetermined algorithm, and then stores the final, optimized values into the display's non-volatile memory (’788 Patent, col. 7:25-44).
  • Technical Importance: This patented method provides a framework for automating the factory calibration process, using a closed-loop feedback system (sensor and algorithm) to tune each panel to a desired standard, a significant advance over manual tuning (Compl. ¶97; ’788 Patent, col. 7:20-25).

Key Claims at a Glance

  • The complaint asserts infringement of at least Claim 1 (Compl. ¶106).
  • Independent Claim 1 recites a method of calibrating a liquid crystal display with the following key steps:
    • providing the display with a gamma reference control capability that is electrically reprogrammable and non-volatile;
    • testing the display with at least one sensor with optical input, where the sensor is separate from the display;
    • varying gamma reference voltage levels on the display's columns using a control circuit that is separate from the display;
    • optimizing the voltage levels using means for executing a predetermined algorithm based on data from the sensor; and
    • storing the optimized voltage levels in the gamma reference control capability.
  • The complaint reserves the right to assert other claims (Compl. ¶106).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are LCD panel modules ("Infringing Panel Modules") designed and sold by Defendant AUO, and the finished television sets ("Infringing TV Products") that incorporate these modules (Compl. ¶54-55). Specific accused AUO components include the AUO-G201, AUO-G301, and AUO-G1422 "Pgamma chips" (Compl. ¶55, ¶78). Finished products include numerous television models from Hisense, Samsung, Vizio, TCL, and others (Compl. ¶56-58).

Functionality and Market Context

The complaint alleges that the accused AUO panel modules include a timing and control board (TCON board) with a programmable gamma integrated circuit ("Pgamma chip") that has at least two banks of memory for storing gamma correction values (Compl. ¶55). This Pgamma chip allegedly performs the function of calibrating the LCD to compensate for manufacturing variations, as described in the patents-in-suit (Compl. ¶76, ¶97). The complaint alleges these components are incorporated into popular consumer televisions sold through major US retailers (Compl. ¶49, ¶62). An image in the complaint illustrates how different gamma correction values can alter the curvature, color, and contrast of a displayed picture (Compl. ¶33).

IV. Analysis of Infringement Allegations

'305 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
An integrated circuit for producing Voltage signals on a plurality of outputs comprising: a plurality of non-volatile storage cells; The accused products contain an integrated circuit, the Pgamma chip, which includes non-volatile storage cells to produce gamma reference voltage signals. ¶78, ¶89 col. 2:20-23
circuits for programming coupled to a multiplexer for addressing and programming said storage cells, wherein the addressing is based on a plurality of inputs; The Pgamma chip allegedly includes circuits for programming coupled to a multiplexer to address and program the storage cells based on inputs. ¶78, ¶89 col. 3:50-55
drivers connected to said storage cells and to the plurality of outputs; and the plurality of inputs connected to said multiplexer for addressing said storage cells, The Pgamma chip allegedly contains drivers that connect to the storage cells and outputs, and inputs that connect to the multiplexer for addressing. ¶78, ¶89 col. 4:13-18
wherein said non-volatile storage cells are organized into two or more banks of cells wherein each bank contains a predetermined gamma reference Voltage signal display condition; The accused Pgamma chip allegedly has at least two banks of cells, with each bank containing a predetermined gamma reference voltage display condition. ¶78, ¶89 col. 6:50-54
and means to switch between the banks based on one or more external signals is provided on said integrated circuit. The accused Pgamma chip allegedly includes the ability to switch between the banks using external signals on the integrated circuit. ¶78, ¶89 col. 6:54-58
  • Identified Points of Contention:
    • Scope Questions: A central question may be whether the accused "Pgamma chip" constitutes a single "integrated circuit" that contains all the elements recited in Claim 1, as the claim language suggests. The defense may argue that the claimed functionality is distributed across multiple components on the TCON board, not contained within a single IC.
    • Technical Questions: Does the accused device's bank-switching functionality operate via a structure that is the same as or equivalent to the "internal damping circuit" disclosed in the patent as the corresponding structure for the "means to switch" limitation ('305 Patent, col. 6:61-63)? The complaint does not provide specific evidence on the structure of the accused switching mechanism.

'788 Patent Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A method of calibrating a liquid crystal display... comprising the steps: providing said display with gamma reference control capability which is electrically reprogrammable and non-volatile; The accused Infringing Panel Modules are allegedly made using a method that starts with a display having a reprogrammable, non-volatile gamma reference control capability. ¶99, ¶110 col. 7:27-30
testing said display with at least one sensor with optical input, wherein said sensor is separate from said display; The method allegedly includes testing the display with a separate optical sensor. ¶99, ¶110 col. 7:30-32
varying gamma reference voltage levels on columns of said display by a control circuit, where said control circuit is separate from said display; The method allegedly includes varying the gamma voltage levels using a separate control circuit. ¶99, ¶110 col. 7:33-35
optimizing said gamma reference voltage levels using means for executing a predetermined algorithm... wherein said means for executing said predetermined algorithm is separate from said display; The method allegedly uses a separate means for executing a predetermined algorithm to optimize the voltage levels based on sensor data. ¶99, ¶110 col. 7:36-41
and storing said gamma reference voltage levels in said gamma reference control capability. The method allegedly concludes by storing the optimized gamma reference voltage levels. ¶99, ¶110 col. 7:42-44
  • Identified Points of Contention:
    • Evidentiary Questions: The complaint alleges on "information and belief" that Defendants use the claimed method (Compl. ¶61, ¶99). A primary point of contention will be whether Plaintiff can produce evidence that Defendants' manufacturing and calibration processes actually perform all the claimed steps, particularly the use of a separate optical sensor and a separate "means for executing a predetermined algorithm."
    • Scope Questions: The claim requires a "means for executing a predetermined algorithm." This means-plus-function term will be construed as limited to the corresponding structure in the specification, which appears to be a "PC based programming interface" (’788 Patent, col. 7:13-19). The infringement analysis will turn on whether Defendants use a PC-based system or a legally equivalent structure for optimization.

V. Key Claim Terms for Construction

  • Term: "means to switch between the banks" ('305 Patent, Claim 1)

    • Context and Importance: This is a means-plus-function limitation. Its construction is critical because infringement will require the accused Pgamma chips to perform the switching function using a structure that is identical or equivalent to the specific structure disclosed in the patent.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The parties may dispute what constitutes an "equivalent" structure under 35 U.S.C. § 112, para. 6.
      • Evidence for a Narrower Interpretation: The specification explicitly discloses an "internal damping circuit" that "creates a slow transition, about 10 msec., between banks to prevent disruptive display artifacts" as the structure performing this function (’305 Patent, col. 6:61-65). This language suggests the scope is tied to a circuit that specifically creates a slow, damped transition.

  • Term: "means for executing a predetermined algorithm" ('788 Patent, Claim 1)

    • Context and Importance: This is another means-plus-function limitation central to the method claim. Infringement requires showing that the accused calibration process uses a structure equivalent to what is disclosed in the patent for performing the optimization step.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: A party might argue that any computerized controller running optimization software is an equivalent.
      • Evidence for a Narrower Interpretation: The specification discloses that a "PC based programming interface is available for prototyping and gamma optimization" and that "Display optimization algorithms may be located in such a PC" (’788 Patent, col. 7:13-19). This may limit the scope of the "means" to a personal computer or an equivalent general-purpose computer running the algorithm, as opposed to a more specialized, embedded hardware controller.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges inducement against multiple defendants (Compl. Counts I, III, IX, X). The theory against AUO is that it supplies the "Infringing Panel Modules" to television manufacturers like Hisense with the knowledge and intent that they will be incorporated into infringing final products imported into and sold in the U.S. (Compl. ¶74, ¶95). The Hisense entities are accused of inducing each other and their downstream customers by assembling, importing, and selling the infringing televisions (Compl. ¶91, ¶138).
  • Willful Infringement: The complaint alleges willful infringement against all defendants. The allegations against AUO are particularly detailed, claiming pre-suit knowledge dating back to at least November 2007, based on meetings and technical disclosures between AUO and Plaintiff's predecessor, Alta (Compl. ¶41, ¶82). Willfulness allegations against the Hisense defendants are primarily based on knowledge acquired since the filing of the original complaint (Compl. ¶93, ¶140, ¶159).

VII. Analyst’s Conclusion: Key Questions for the Case

  1. A question of proof for the method patent: Can Phenix obtain and present sufficient evidence from discovery to prove that Defendants’ confidential manufacturing processes actually perform the specific steps of the '788 patent's calibration method, particularly the use of a separate optical sensor and an algorithmic optimization system that is structurally equivalent to the "PC based" system disclosed in the patent?
  2. A question of structural scope for the apparatus patent: Does the accused "Pgamma chip" constitute a single "integrated circuit" containing all the components of claim 1 of the '305 patent, and does its bank-switching function rely on a structure equivalent to the "internal damping circuit" disclosed in the specification?
  3. A question of willfulness and damages: Given the detailed allegations of pre-suit notice to AUO, a central issue will be whether AUO's continued activities after being put on notice of the patents constitute objective recklessness, potentially exposing it to enhanced damages if infringement is found.