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Veeco Instruments Inc. v. SGL Carbon, LLC

United States District Court, E.D. New York

November 2, 2017

VEECO INSTRUMENTS INC., Plaintiff,
v.
SGL CARBON, LLC, and SGL GROUP SE, Defendants.

          MEMORANDUM & ORDER

          PAMELA K. CHEN, United States District Judge:

         Plaintiff Veeco Instruments Inc. (“Veeco”) brings this action against Defendants SGL Carbon, LLC (“SGL Carbon”) and SGL Group SE (“SGL Group”) (collectively, “SGL”), seeking damages and injunctive relief for SGL's alleged infringement of Veeco patents in violation of the Patent Act, 35 U.S.C. § 271. Before the Court are (1) Veeco's motion for a preliminary injunction against SGL Carbon (Dkt. 23), and (2) Veeco's motion for expedited discovery (Dkt. 21). For the reasons stated below, the Court grants Veeco's motion for a preliminary injunction and denies Veeco's motion for expedited discovery as moot.

         BACKGROUND[1]

         I. Overview

         Plaintiff Veeco is a New York-based company that designs, manufactures, and services equipment that enables the manufacture of light-emitting diodes (“LEDs”), power electronics, hard drives, and other electronic components and devices. (Declaration of Sudhakar Raman (“Raman Decl.”), Dkt. 26-13, ¶¶ 4-5.) In 2003, Veeco began obtaining patents related to metal-organic chemical vapor deposition (“MOCVD”) reactors, a technology that enables high-volume fabrication of metal-organic semiconductor wafers, which can, in turn, be processed into LEDs. (Raman Decl. ¶¶ 8, 11; Dkt. 25-7.) Between 2003 and 2016, Veeco invested more than $475 million in research and development, and intellectual-property acquisitions, to develop its MOCVD technology, and further spent millions of dollars more on sales, advertising, personnel, and infrastructure for its MOCVD products. (Raman Decl. ¶ 9.) Veeco's sales of MOCVD products and services increased gradually over the same timeframe, and, since 2014, Veeco has accounted for roughly 60% of the global MOCVD market. (Raman Decl. ¶ 9.)

         Veeco attributes its dominant share of the MOCVD market, in large measure, to a distinctive feature of Veeco's MOCVD reactors: a removable wafer carrier, typically made of graphite, that is mounted on a spindle centrally positioned within the reactor. (Raman Decl. ¶¶ 10, 14, 24.) According to Veeco, this distinctive assembly-i.e., a wafer carrier detachably mounted on a spindle-increases the throughput of Veeco's MOCVD reactors by up to 40% and confers additional advantages over MOCVD reactors that do not incorporate a similar assembly. (Raman Decl. ¶¶ 14-15; see also Reply Declaration of Dr. Alexander Glew (“Glew Reply Decl.”), Dkt. 42-26, ¶ 83.) Veeco owns several patents related to this assembly, including U.S. Patent No. 6, 726, 769 (the '769 Patent), which is directed to Veeco's unique wafer carrier design. (Raman Decl. ¶ 11; see also Dkt. 20-1 (the '769 Patent).)

         Although Veeco directly manufactures, sells, and services its MOCVD reactors, Veeco relies on third-party suppliers to manufacture and sell wafer carriers for those reactors. (Raman Decl. ¶¶ 18, 30.) To that end, Veeco has granted limited licenses to several suppliers, including SGL, authorizing them to manufacture and sell Veeco's proprietary wafer carriers to Veeco and Veeco's customers, typically in exchange for a reasonable royalty for each wafer carrier sold. (Raman Decl. ¶ 32.) In particular, under various written agreements, Veeco has authorized SGL to manufacture and supply wafer carriers to Veeco and Veeco's customers since at least 2010. (Raman Decl. ¶¶ 34, 39.)[2]

         In or around 2013, while continuing to manufacture wafer carriers for Veeco's MOCVD systems, SGL began manufacturing wafer carriers for a new entrant into the MOCVD market, a China-based company called Advanced Microfabrication Equipment, Inc. (“AMEC”). (Declaration of Christoph Henseler (“Henseler Decl.”), Dkt. 36-4, ¶ 15.) After struggling to break into the MOCVD market in 2013, 2014, and 2015, AMEC began to see market traction in 2016, finishing the year with a small but significant share of global sales. (Dkt. 26-18 (IHS Technology Q1 2017 Report); Declaration of Dr. Kenneth Serwin (“Serwin Decl.”), Dkt. 36-6, ¶ 28; Dkt. 54-3 (September 2017 AMEC Presentation).) AMEC's upward trend has continued in 2017, with some (including AMEC itself) predicting that AMEC could overtake Veeco as the market leader in MOCVD systems by the end of the year. (Dkt. 54-3; see also Reply Declaration of Christopher Gerardi (“Gerardi Reply Decl.”), Dkt. 42-2, ¶ 20.)

         According to Veeco, the recent surge in AMEC's market share is attributable in large part to SGL's infringement of certain U.S. patents that Veeco owns related to its spindle-mountable wafer carriers. (Pl.'s Br., Dkt. 26-1, at 2-3.) In particular, Veeco claims that SGL has infringed and, unless enjoined, will continue to infringe the '769 Patent by selling spindle-mountable wafer carriers to AMEC and AMEC's customers, in violation of 35 U.S.C. § 271. (Pl.'s Br. At 11-15.). In early 2017, prior to filing this action, Veeco informed SGL through in-person meetings and by letter that SGL is infringing Veeco's patents and requested that SGL cease sales of wafer carriers to AMEC and AMEC's customers. (Raman Decl. ¶ 42.) When SGL did not cease these sales, Veeco filed the above-captioned action to recover damages and to enjoin SGL Carbon[3] from further infringement. (Raman Decl. ¶ 42; Compl., Dkt. 1 (filed April 12, 2017).)

         II. Veeco's Patents

         Veeco's claims of patent infringement against SGL Carbon are based on two U.S. patents that were obtained by Emcore Corporation (“Emcore”) in 2001 and later acquired by Veeco through an acquisition of Emcore's MOCVD division in 2003. (Raman Decl. ¶ 8; Dkt. 25-7; Dkt. 20-1; Dkt. 20-2.) The two patents are U.S. Patent No. 6, 506, 252 (the '252 Patent, Dkt. 20-2), and U.S. Patent No. 6, 726, 769 (the '769 Patent, Dkt. 20-1), the latter of which is a “continuation” of the '252 Patent that “incorporates [the '252 Patent] by reference in its entirety” ('769 Patent 1:8-15). Both patents are titled “Susceptorless Reactor for Growing Epitaxial Layers on Wafers by Chemical Vapor Deposition, ” and both patents have the same specification. (Compare Dkt. 20-2, with Dkt. 20-1); see also Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 689-90 (Fed. Cir. 2008) (reviewing continuation patents “sharing the same specification”); AK Steel Corp. v. Sollac, 344 F.3d 1234, 1236 (Fed. Cir. 2003) (same).[4]

         The '769 Patent gives a general description of the field of the invention and the general purposes of the invention. The specification states that, “[t]he present invention relates to making semiconductor components and more particularly relates to devices for growing epitaxial layers on substrates, such as wafers.” ('769 Patent 1:18-20.) According to the specification, in the “typical” chemical vapor deposition process, a solid substrate, “usually a wafer, is exposed to gases inside a CVD reactor. Reactant chemicals carried by the gases are introduced over the wafer in controlled quantities and at controlled rates while the wafer is heated and usually rotated. . . . When the reactant gas reaches the vicinity of a heated wafer, the organic components [of the gas] decompose, depositing the inorganic components on the surface of the wafer in the form of . . . epitaxial layers.” ('769 Patent 1:50-2:5.) Thereafter, “the coated wafers are subjected to well-known further processes to form semiconductor devices such as lasers, transistors, light emitting diodes, and a variety of other devices.” ('769 Patent 1:33-36.)

         A. Typical Prior Art

         In relevant part, the '769 Patent specification describes the prior art as a “vertical CVD reactor” in which “a wafer 10 is placed on a wafer carrier 12, which is placed on a susceptor 14.” ('769 Patent 2:33-35.) “The susceptor 14 is permanently mounted and supported by a rotatable spindle 16, which enables rotation of the susceptor 14, the wafer carrier 12 and the wafer 10.” (Id. 2:39-42.) “A heating assembly 20, which may include one or more heating filaments 22, is arranged below the susceptor 14, ” such that “[t]he heating assembly 20 heats the susceptor 14, the wafer carrier 12 and, ultimately, the wafer 10.” (Id. 2:44-49.) In the normal operation of the prior art, “[a]s the wafer-supporting assembly (spindle/susceptor/wafer carrier) rotates the heated wafer 10, the reactant gas is introduced into the reaction chamber 18, depositing a film on the surface of the wafer 10.” (Id. 2:53-56.) This “typical” prior art is illustrated in the following diagrams from the '769 Patent, the components of which refer to the numbering stated in this paragraph.

         Image Omitted

         ('769 Patent at ECF[5] 3.)

         ('769 Patent at ECF 6.)

         The '769 Patent specification then describes certain shortcomings of the typical prior art, each of which relates to the prior art's incorporation of a “susceptor” as part of the “wafer- supporting assembly (spindle/susceptor/wafer carrier)” that rotates the substrate wafers during the deposition process. ('769 Patent 2:53-55.)

         First, a CVD reactor “having both a susceptor and a wafer carrier contains at least two thermal interfaces”: one interface between the heating assembly and the susceptor, and a second interface between the susceptor and the wafer carrier. ('769 Patent 2:66-3:3.) The drawback of this feature is that “the typical susceptor possesses a significant heat capacity, and thus a large thermal inertia, substantially increasing the time required to heat and cool down the wafer carrier 12. This results in a longer reactor cycle and consequent reduction in the productivity of the reactor.” (Id. 3:13-18.)

         Second, in CVD reactors with a susceptor, “the susceptor must withstand a large number of reactor cycles since it is permanently mounted in the reaction chamber, and typically may not be easily replaced without interrupting the reactor cycle, opening up the reactor and removing the parts that permanently attach the susceptor to the spindle, such as screws, bolts and the like.” ('769 Patent 3:23-29 (illustration reference number omitted).)

         Third, “every additional interface in the wafer-supporting assembly, ” including the interfaces with the susceptor, “increases the manufacturing tolerance requirements” of the CVD reactor, because, for example, “the spacing between the susceptor 14 and the wafer carrier 12 must be precise and uniform to produce the required uniform heating of the wafer.” ('769 Patent 3:34-40.) The specification explains that, over time, the susceptor may gradually become deformed due to its exposure to extreme heat, and “[t]he accumulated deformation of the susceptor eventually may lead to an excessive vibration of the wafer-supporting assembly during rotation in the deposition process, and the resulting loss and destruction of coated wafers.” (Id. 3:49-54.)

         Fourth, in a CVD reactor with a permanently mounted susceptor, “the susceptor is typically rigidly attached to the spindle to minimize the vibration during the operation of the reactor. The spindle/susceptor connection is heated during the repeated operation of the reactor and sometimes becomes difficult to disassemble, complicating the maintenance and the replacement procedures.” ('769 Patent 3:55-61.)

         Fifth and finally, susceptors typically increased the weight of the wafer-supporting assembly in a CVD reactor, which is problematic because “the heavier is the wafer-supporting assembly, the larger is the mechanical inertia of the spindle. In turn, the high mechanical inertia increases the strain on the spindle-supporting assembly, reducing its lifetime.” ('769 Patent 3:62-65.)

         B. Description of the Invention

         The '769 Patent specification states that “[t]he present invention” addresses the shortcomings of the prior art, described above, “by providing a novel CVD reactor in which the wafer carrier is placed on the rotatable spindle without a susceptor, and a related method of growing epitaxial layers in a CVD reactor.” ('769 Patent 4:8-12; see also Id. 8:55-57 (“In contrast to the prior art CVD reactor shown . . ., the reactor of the present invention does not include a susceptor.”).)[6] The patent specification then speaks of the “invention” as having multiple aspects. One aspect of the invention is “an apparatus for growing epitaxial layers on one or more wafers by chemical wafer deposition . . . and includes a reaction chamber, a rotatable spindle, a heating means for heating the wafers and a wafer carrier for supporting and transporting the wafers between a deposition position and a loading position.” (Id. 4:38-44.) As another aspect of the invention, the specification refers to “a method of growing epitaxial layers on one or more wafers by chemical wafer deposition.” (Id. 6:64-66.) As another aspect, the specification describes “[t]he wafer carrier of the invention, ” which “may include a top surface and a bottom surface” with certain physical characteristics. (Id. 5:1-10.) As another aspect, the specification also delineates “the wafer-supporting assembly of the present invention, ” which, in contrast to the prior art, does not include a susceptor. (Id. 7:49-53.)

         C. Illustrations of the Invention

         The specification contains illustrations showing the different aspects and embodiments of the invention.[7] One illustration, reproduced below, is described as “a highly schematic front cross-sectional view of the wafer-supporting assembly of the present invention, showing the wafer carrier mounted on the upper end of the spindle in the deposition position.” ('769 Patent 7:49-53.) [Image Omitted] ('769 Patent at ECF 6.) This illustration shows “the reaction chamber 100, a spindle 250 having an upper end 280 located inside the reaction chamber 100, a wafer carrier 200 and a radiant heating element 140.” ('769 Patent 10:53-57.) As shown in the illustration, the wafer-supporting assembly of the invention does not include a susceptor; instead, the wafer carrier is mounted directly on the end of the spindle. Also as shown in the illustration, “[t]he spindle 250 has a cylindrical shape and an axis of rotation 255, ” and, during the deposition process, “the upper end 280 of the spindle 250 is inserted in the central recess 290 of the wafer carrier 200.” (Id. 11:1-16.)

         Another illustration shows a variation of the wafer-supporting assembly with a modified spindle:

          [Image Omitted]

         ('769 Patent at ECF 8.) The specification explains that, in this variation of the invention, “the spindle 400 includes a narrow portion 485, [which] includes the spindle wall 482, [and] terminates in a top surface 481.” (Id. 12:4-7.) The distinctive aspect of this variation is that, unlike other variations, “the upper end 480 of the spindle 400 is inserted into the central recess 390 until there is a tight fit between the spindle wall 482 and the walls of the recess 390, which creates a force of friction for retaining the wafer carrier 300 in the deposition position.” (Id. 12:16-21.)[8]

         Finally, the specification contains several illustrations showing the possibility of a separate “retaining means” in the wafer-supporting assembly. ('769 Patent 11:42-61.) As the specification explains, “[t]he invention does not exclude the possibility that intermediate elements may be present between the spindle 120 and the wafer carrier 110, for example the elements that would facilitate retaining the wafer carrier 110 on the spindle 120, such as rings, retainers, and the like, as long as these intermediate elements do not interfere with the removal or detachment of the wafer carrier . . . [during] the normal course of the operation of the reactor.” (Id. 8:60-67.) As examples of such retaining elements, the specification contains illustrations depicting spindles that include vertical indentations or notches that could be fitted into a correspondingly designed wafer carrier, as a means to improve the fit between the spindle and the wafer carrier, as shown in the figure below:

          [Image Omitted]

         (Id. at ECF 11.)

         D. Relevant Claims

         Although the '252 Patent and '769 Patent share the same title and specification, their claims are markedly different. The claims of the '252 Patent are directed to an apparatus comprising (i) a reaction chamber, (ii) a rotatable spindle, (iii) a wafer carrier, and (iv) a heating element. (See Dkt. 20-2 at ECF 18.) By contrast, the claims of the '769 Patent are directed more narrowly to the wafer-supporting assembly of the apparatus disclosed in the '252 Patent-i.e., the wafer carrier and the spindle assembly for such a reactor. (See '769 Patent at ECF 18-19.) For purposes of this dispute, the relevant claims of the '769 Patent are as follows:

         1. An apparatus for supporting and transporting at least one wafer in a CVD reactor having a rotatable spindle, said apparatus comprising:

a top surface having at least one cavity for retaining said at least one wafer, and
a bottom surface having a central recess adapted for detachably inserting an upper end of said rotatable spindle;
said apparatus being transportable, in the normal course of operation of the CVD reactor, between a position in which said spindle is inserted into said central recess for rotation therewith and a position detached from said spindle.

         2. The apparatus of claim 1, wherein said central recess extends from said bottom surface of said apparatus to a recess end point, which is located at a lower elevation than said top surface of said apparatus and at a higher elevation than said bottom surface of said apparatus.

         3. The apparatus of claim 2, wherein said central recess comprises a recess wall and an end surface, said recess wall extending from said bottom surface of said apparatus toward said end surface of said central recess.

         4. The apparatus of claim 3, wherein said recess wall terminates at said end surface.

         5. The apparatus of claim 4, wherein said end surface contains said recess end point.

         . . .

         10. The apparatus of claim 3 having a center of gravity located below said end surface of said central recess.

         . . .

         13. The apparatus of claim 1, wherein said top surface and said bottom surface of said apparatus are substantially parallel to each other.

         14. The apparatus of claim 1, wherein said top surface has a plurality of cavities for retaining a plurality of wafers.

         15. The apparatus of claim 1 having a substantially round shape.

         16. The apparatus of claim 1, which is made of graphite. . . .

         22. A wafer-supporting assembly of a CVD reactor comprising:

a. a rotatable spindle having an upper end; and
b. a wafer carrier for transporting and providing support for at least one wafer; said wafer carrier comprising a top surface having at least one cavity for retaining said at least one wafer and a bottom surface having a central recess adapted for detachably inserting said upper end of said spindle;
wherein said wafer carrier is transportable, in the normal course of operation of the CVD reactor, between a position in which said upper end of said spindle is inserted into said central recess of said wafer carrier for rotation therewith and a position detached from said upper end of said spindle.

('769 Patent at ECF 18-19.)

         III. Allegedly Invalidating Prior Art

         SGL Carbon asserts that two products on the market prior to Emcore's application for the '769 Patent invalidate that patent. (Def.'s Opp'n, Dkt. 36-6, at 10-17.)

         A. Emcore's D-180 “Wagon Wheel”

          Several years before submitting the application that yielded the '769 Patent, Emcore began to manufacture and market a new model of MOCVD reactor called the D-180. (Declaration of Eric Armour (“Armour Decl.”), Dkt. 42-8, ¶¶ 9, 18.)[9] For purposes of Veeco's motion, the key feature of the D-180 was a metal component in the shape of a wagon wheel-i.e., a metal structure with an outer ring and three straight segments connecting the outer ring to a circular centerpiece, as depicted in the following schematic for the D-180:

         Image Omitted

         (Armour Decl., Ex. 4.) In a fully assembled D-180 reactor, this so-called wagon wheel was affixed by screws to the top of a rotatable spindle within the reactor, with the “rim” of the wagon wheel extending upward and outward over the heating coils of the reactor, as shown in the following photograph excerpted from the Operations and Maintenance Manual for the D-180 system[10]:

         Image Omitted

         (Armour Decl. ¶ 21.) During the normal operation of the D-180 reactor, a graphite wafer carrier (not depicted in the photograph above) would be placed on top of the wagon wheel with the “rim” of the wagon wheel fitting into a central recess on the underside of the wafer carrier, as depicted in the following diagram prepared by SGL Carbon's expert:

         Image Omitted

         (Surreply Declaration of Dr. Eric Bretschneider (“Bretschneider Surreply Decl.”), Dkt. 49-4, ¶ 54; see also Armour Decl. ¶ 21.)[11]

         Prior to Emcore's application for the '252, '769, and '774 Patents, SGL Carbon manufactured and sold graphite wafer carriers to third parties within the United States for combination with the wagon wheel in D-180 systems. (Henseler Decl. ¶¶ 29, 31, 33, 34, 38.) Each such wafer carrier had the same basic structure: an overall diameter of about 7.2 inches, a thickness of about .21 inches, six cavities on the top surface for carrying 2-inch wafers, and a circular bottom recess with a diameter of about 2.44 inches and a depth of exactly .106 inches to accommodate the rim of the D-180 wagon wheel. (Id.)

         B. SGL Carbon's “Hockey Puck”

         According to SGL Carbon, prior to Emcore's application for the '252, '769, and '774 Patents, SGL Carbon manufactured and sold a product, called a “hockey puck, ” that is relevant to the present dispute. (Def.'s Opp'n at 14-15.) The documentary evidence concerning this “hockey puck” product, however, is scant, consisting of a single SGL Carbon schematic (Henseler Decl., Ex. 10), which an SGL Carbon witness identified as “[a] drawing based on a design by another SGL customer” (Henseler Decl. ¶ 37). The schematic, labeled “HOCKEY PUCK, ” depicts a cylindrical object with a two-inch-diameter cavity on one side and a smaller, deeper recess on the other side. (Henseler Decl., Ex. 10.) But the schematic does not contain any description of the product's intended alignment, function, or use. (Henseler Decl., Ex. 10.) SGL Carbon's expert, Dr. Bretschneider, declared his “understand[ing]” that the “hockey puck” is a wafer carrier for MOCVD reactors, but, according to his declaration, that understanding is based entirely on the SGL Carbon schematic. (See Bretschneider Decl. ¶¶ 145-85 (citing exclusively Henseler Decl., Ex. 10).)

         According to SGL Carbon, the “hockey puck” was sold by SGL Carbon to customers in the United States as early as 1992. (Def.'s Opp'n at 14.) SGL Carbon makes this assertion based on testimony from its Vice President of Global Marketing and Sales, Christoph Henseler, who was hired by SGL Carbon in November 2008 (Henseler Decl. ¶ 2), roughly sixteen years after SGL Carbon allegedly began selling the hockey puck. Henseler testified that, based on his knowledge of SGL Carbon's conventions for the creation of product schematics, he could infer from the existence of the hockey puck schematic that “SGL was manufacturing and selling wafer carriers in accordance with the [schematic] . . . in the United States in within a year of this [schematic], thus by 1995 or 1996.” (Henseler Decl. ¶ 37.)

         IV. Alleged Infringement by SGL Carbon

         Veeco claims that SGL Carbon's sales of wafer carriers to AMEC and AMEC's customers for combination in AMEC MOCVD reactors infringe the '769 Patent.[12]

         A. SGL's Sales of Wafer Carriers for AMEC Reactors

         According to Henseler, SGL Carbon's Vice President of Global Marketing and Sales, SGL Carbon has been a supplier of wafer carriers to AMEC since May 2013. (Henseler Decl. ¶ 15.) In that time, SGL Carbon has manufactured and sold two models of wafer carriers for combination in AMEC reactors-one model with a diameter of 480mm and one with a diameter of 700mm. (Henseler Dep.[13] 43:19-44:10.) SGL Carbon produces each of the models according to AMEC's exact specifications, which AMEC supplied to SGL Carbon. (Henseler Decl. ¶ 5.)[14] The record indicates, and the parties appear to agree, that the 480mm wafer carrier is designed for combination in AMEC's first-generation Prismo D-Blue MOCVD reactor, which AMEC began selling in 2013, and the 700mm wafer carrier is designed for combination in AMEC's second-generation Prismo D-Blue MOCVD reactor, which AMEC began selling in 2016. (Henseler Decl. ¶ 15; Serwin Decl. ¶ 20; Hr'g Tr. 32, 74, Oct. 12, 2017.)[15]

         The record contains very little detail on the wafer carriers that SGL Carbon has been supplying to AMEC and AMEC's customers. At this early stage of litigation, Veeco has not received any documents from SGL Carbon describing or depicting the wafer carriers, and none of the SGL witnesses deposed by Veeco had detailed knowledge of the characteristics of the products. In the course of briefing the pending motion, however, Veeco obtained from an unidentified source a photograph depicting the bottom surface of a 700mm wafer carrier that SGL Carbon manufactured for an AMEC reactor. (Raman Dep.[16] 315:4-316:25.)[17] The photograph depicts the bottom of a wafer carrier with a small, oval-shaped central recess, which, according to Veeco's expert, Dr. Glew, is adapted to be detachably mounted on a rotatable spindle in a CVD reactor. (Glew Reply Decl. ¶ 69.) SGL Carbon does not dispute Veeco's contention that the photograph depicts a 700mm wafer carrier for an AMEC MOCVD reactor, and SGL Carbon has not rebutted Dr. Glew's testimony that the 700mm wafer carrier contains a small central recess adapted for detachable mounting on a rotatable spindle. (See Hr'g Tr. 188-89, Oct. 12, 2017.)[18]

         B. AMEC's MOCVD Reactors

         As noted above, SGL Carbon supplies 480mm and 700mm wafer carriers for AMEC's first-and second-generation Prismo D-Blue MOCVD reactors, respectively. (Bretschneider Decl. ¶ 191; Declaration of Dr. David Radulescu (“Radulescu Decl.”), Dkt. 35, Ex. 32 at 20.) Neither party, however, has submitted direct evidence of the features of either generation of AMEC's Prismo D-Blue reactor. Instead, Veeco has submitted, among other things, academic articles concerning AMEC's Prismo D-Blue MOCVD technology, copies of AMEC marketing materials, a patent application submitted to the U.S. Patent Office by AMEC, and testimony by Veeco's expert, Dr. Glew, based on these materials and other evidence. (Glew Decl., Dkt. 24; Glew Reply Decl., Dkt. 42-26.) By contrast, SGL Carbon asserts that it does not know the features of AMEC's MOCVD reactors (Def.'s Opp'n at 9; Henseler Decl. ¶¶ 18-20) and has offered no evidence to rebut the circumstantial evidence introduced by Veeco, other than to argue that Veeco's evidence concerning AMEC's Prismo D-Blue reactor is limited entirely to AMEC's first-generation Prismo D-Blue system, which is “not relevant” to AMEC's second-generation system. (See, e.g., Hr'g Tr. 140, Oct. 12, 2017.)

         Together, the materials and expert testimony submitted by Veeco provide significant evidence of the characteristics of both generations of AMEC's Prismo D-Blue MOCVD reactor. As Dr. Glew explained, a 2013 academic paper concerning AMEC's Prismo D-Blue system reported that the Prismo D-Blue system uses a “high-speed rotating mechanism” for rotating wafer carriers inside its reactors. (Glew Decl. ¶ 30.) Based on other academic papers published in or around 2013, and copies of AMEC marketing materials from 2013, Dr. Glew opined that the Prismo D-Blue is an “automated system with a ‘loading station' for wafer carriers, ” which suggests that wafer carriers in the Prismo D-Blue system “are detachable from the rotating [mechanism] and transportable in the ordinary course of operation of the reactor.” (Glew Decl. ¶ 30.)

         In addition, Dr. Glew reviewed U.S. Patent Application No. 13/681, 768 (AMEC's '768 Application, Dkt. 25-4), which AMEC filed in 2013. (Glew Decl. ¶ 31 (citing AMEC's '768 Application).) As relevant to Plaintiff's motion, AMEC's '768 Application disclosed a “supporter” for an MOCVD reactor that “can be detachably connected to a substrate carrier, and support the substrate carrier evenly and reliably while driving the substrate carrier to rotate evenly and reliably in substrate processing.” (AMEC's '768 Application at 2; see also Glew Decl. ¶ 31.) AMEC's '768 Application described the proposed invention as a “holding apparatus” to improve the synchronous movement between the “substrate carrier” and the “spindle” of a CVD reactor. (Dkt. 25-4 at 1-2.) AMEC's '768 Application defines the holding apparatus as comprising “a spindle part; a supporting part connected to one end of the spindle part and extending outwardly from the periphery of the spindle part, the supporting part including a supporting surface; and at least one plug-in part connected to the spindle part and extending by a height towards the first surface of the substrate carrier, ” as depicted in the following diagrams:

         Image Omitted

         (AMEC's '768 Application at ECF 26.)

         Image Omitted

         (Id. at ECF 25.) Dr. Glew opined that the descriptions and illustrations in AMEC's '768 Application “further support” his opinion that AMEC's Prismo D-Blue system employs wafer carriers that are detachably mounted on spindles within the MOCVD reactor. (Glew Decl. ¶¶ 31-32.)[19]

         Finally, Dr. Glew gave testimony that is probative of the features of AMEC's Prismo D-Blue reactor system when he examined a recently obtained photograph of the underside of the 700mm wafer carrier manufactured by SGL Carbon for a second-generation AMEC Prismo D-Blue reactor. (Glew Reply Decl. ¶¶ 68-69.) With respect to that wafer carrier, Dr. Glew opined that the mere structure of the wafer carrier-namely, having a small, oval-shaped central recess on its bottom side-was itself evidence that the MOCVD reactor for which the carrier was created used a spindle, which could be inserted and removed from the wafer carrier's central recess during the ordinary course of operating the reactor. (See Glew Reply Decl. ¶¶ 68-69.) Although Dr. Glew may not have been aware that AMEC began selling a second-generation Prismo D-Blue system in 2016 (see Glew Dep.[20] 412:21-414:23), his testimony about the 700mm wafer carrier nonetheless applied directly to the second-generation system, because, as SGL Carbon acknowledges, the 700mm wafer carrier was manufactured for AMEC's second-generation system. (Bretschneider Decl. ¶ 191; Radulescu Decl., Dkt. 35, Ex. 32 at 20; Hr'g Tr. 137, Oct. 12, 2017.) Based on all of the evidence he reviewed, Dr. Glew opined that “any wafer carrier used in the [Prismo D-Blue] reactor system would necessarily be detachable from the spindle.” (Glew Decl. ¶ 30.)[21]

         Dr. Glew's testimony about the features of AMEC's Prismo D-Blue system is also consistent in material respects with the testimony of SGL Carbon's own experts. In his first declaration, dated August 25, 2017, SGL Carbon's expert, Dr. Bretschneider, opined, inter alia, that MOCVD reactors manufactured by Tang Optoelectronics Equipment Co. (“TOPEC”), another competitor of Veeco (discussed infra), are “susceptorless and utilize removable wafer carriers designed for high speed rotation, similar to those used by both Veeco and AMEC.” (Bretschneider Decl. ¶ 204 (emphasis added).) Similarly, SGL Carbon's economics expert, Dr. Serwin, stated that he understands, based on “conversations with Dr. Bretschneider, ” that “Veeco, AMEC, and TOPEC MOCVD reactors are all susceptorless and use removable wafer carriers designed for high speed rotation.” (Serwin Decl. ¶ 24 (emphasis added).)

         V. Relevant Markets

         The parties have submitted evidence concerning the global market for MOCVD reactors and the global market for wafer carriers for MOCVD reactors.

         A. Market for MOCVD Reactors

         1. Manufacturers

         Since 2010, the global market for MOCVD reactors has been supplied by a small group of manufacturers: Veeco, AMEC, Aixtron SE (“Aixtron”), Taiyo Nippon Sanso (“Taiyo”), and TOPEC. (Declaration of Christopher Gerardi (“Gerardi Decl.”), Dkt. 26-2, ¶¶ 38-39; Serwin Decl. ¶¶ 12-21.) Broadly speaking, from 2010 through 2016, the main competitors in the market for MOCVD reactors were Aixtron, Taiyo, and Veeco, with Veeco's share of the market rising to nearly 70% in 2016 based on units sold, at the expense of gradual losses in market share by Aixtron and Taiyo. (Gerardi Decl. ¶ 39; Serwin Decl. ¶ 27.) According to Veeco, its growing dominance in the MOCVD reactor market is attributable to the “innovative and cost-effective designs” of its MOCVD reactors-most importantly, that Veeco's reactors feature easily removable wafer carriers mounted on susceptorless wafer-supporting assemblies. According to Veeco, it is this feature, which is not embodied in the MOCVD systems offered by Aixtron and Taiyo (Raman Decl. ¶ 23), that has led customers to gradually disfavor Aixtron and Taiyo systems in recent years. (Gerardi Decl. ¶ 39; Serwin Decl. ¶ 28; Bretschneider Decl. ¶ 202.)[22]

         The competitive landscape among MOCVD manufacturers appears to have changed in late 2016 and throughout 2017. In terms of the market overall, Veeco's expert, Dr. Christopher Gerardi, reports that “Wall Street analysts who closely follow the MOCVD industry appear to believe that the market is currently in the early stage of an expansion.” (Gerardi Decl. ¶ 41.) With respect to competition among manufacturers, the record shows that AMEC has competed far more effectively with Veeco in 2017, winning numerous customer orders over competing bids from Veeco, particularly among Chinese customers. (Gerardi Decl. ¶¶ 36, 55-57; Raman Decl. ¶¶ 48-49.) Although the parties quibble over the exact numbers, the present record shows that AMEC's share of the MOCVD market in 2017 has increased from a relatively minor position in 2016 (less than 10% of sales[23]) to a much larger share; indeed, in a recent presentation, AMEC projected that it will eclipse Veeco as the largest seller of MOCVD reactors in 2017. (Dkt. 54-3.) In addition, there is some evidence that TOPEC has become a slightly more significant competitor in the MOCVD market in 2017. (Serwin Decl. ¶¶ 25-26.) The record strongly indicates, however, that TOPEC has not become anything more than a potential competitor in this market-indeed, with the exception of a single MOCVD sale by TOPEC in June 2017, the record contains no evidence that TOPEC has garnered significant market share in 2017. (See Gerardi Reply Decl. ¶¶ 11-23; Dkt. 54-3.)[24]

         The parties give diverging explanations for the recent surge in AMEC's market share. Veeco's overall explanation for AMEC's recent success is that AMEC is competing with Veeco using Veeco's own patented technology, including wafer-supporting assemblies that infringe on Veeco's U.S. Patents, while undercutting Veeco on price due to subsidies by the Chinese government and a lower historical cost of capital. (Pl.'s Br. at 7-10; Pl.'s Reply Br., Dkt. 42-1, at 12-13.) According to Veeco, the effects of AMEC's unfair use of Veeco's technologies began to materialize in late 2016 or early 2017, and not earlier, because AMEC's MOCVD reactors were first field tested and “customer qualified” by potential customers in China in 2016. (Dkt. 26-18 (IHS Technology Q1 2017 Report); Raman Decl. ¶ 49 n.1.) It was then, Veeco asserts, that AMEC's MOCVD reactors entered the market in earnest, after which AMEC began to ...


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