Tag Archives: willful infringement

Federal Circuit Again Splits on Willful Infringement

by: Robert Wagner, intellectual property attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

6436135 ImageThe Federal Circuit issued another contentious decision on the subject of willful infringement on Tuesday in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., (No. 2014-1114), splitting 2-1 and with another judge calling for the Circuit to revisit the law in this area.

The Bard-Gore case has had a long and tortured past, beginning more than 40 years ago. Gore, which makes an ePTFE polymer under the brand name Gore-Tex®, invited Dr. David Goldfarb to its facilities in 1973 to participate in a study of Gore’s product for use as a vascular prosthesis. Gore was trying to find new uses for its product, including in the medical fields. Based on the materials that Gore provided to Dr. Goldfarb, Dr. Goldfarb filed a patent application on the structure of the most effective of the samples he tested back in 1974. Peter Cooper from Gore had previously filed a patent application, and the USPTO conducted an interference proceeding.

In the interference proceeding, the USPTO concluded that Cooper was the first to conceive of the subject matter of the invention, but Dr. Goldfarb was the first to reduce it to practice. Therefore, the USPTO awarded the patent to Dr. Goldfarb. The Federal Circuit affirmed, and the patent ultimately issued in 2002. During the pendency of this dispute, Gore continued to develop and sell ePTFE grafts and medical devices.

In 2003, Dr. Goldfarb and Bard sued Gore for infringement (previously, Dr. Goldfarb licensed the patent to Bard). The jury returned a verdict of willful infringement and awarded over $185 million in damages, which the district court doubled. The district court also awarded attorneys’ fees and costs. The Federal Circuit affirmed in a split panel, but the full Circuit vacated the decision in a rehearing en banc, ordering the district court to reconsider the willful infringement finding de novo. The district court reconsidered the evidence and reinstated its prior judgment. The Federal Circuit, in this decision, affirmed in a 2-1 decision with three separate opinions.

Judge Prost, writing the opinion of the Court, reviewed the evidence de novo and concluded that Gore’s defenses were not reasonable. In particular, the Court rejected the notion that the fact that a prior member of the panel at the Federal Circuit dissented does not mean that Gore’s position was reasonable. The Court did not want to create the precedent that a single dissenting view would preclude a finding of willful infringement as a matter of law.

Judge Hughes wrote a concurring opinion in which he called into question the Federal Circuit’s jurisprudence on willful infringement—in particular, the two-part objective-subjective test and the de novo standard of review. He believes that the full panel should reconsider the law in this area and should apply a deferential standard of review.

Finally, Judge Newman wrote a strong dissent in which she would have reversed the district court’s decision on willfulness. She was troubled by the majority’s failure to discuss what she believed to be relevant evidence supporting Gore’s position. She was also troubled by the fact that the district court refused to enjoin Gore from selling its products but then enhanced the damages.

This decision is another in which the judges on the Federal Circuit are openly questioning the current state of the law on willful infringement. It will be interesting to see if the Federal Circuit rehears one of these cases en banc to settle the disagreements that are brewing internally.

 

 

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Fed Circuit Reverses Willful Infringement Finding

by: Robert Wagner, intellectual property attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

(Cross-posted at DRI Community Page)

The Federal Circuit on Friday issued an opinion that struck a judge’s finding of willful infringement and the corresponding award of triple damages in Stryker Corp. v. Zimmer, Inc. (No. 13-1668). The Court concluded that the defendants’ defenses were not objectively unreasonable, even though they were unsuccessful at trial. Chief Judge Prost wrote the opinion, which was joined by Judges Newman and Hughes.

Background

US06179807-20010130-D00000Stryker and Zimmer are competitors in the medical device industry, and, in particular, the orthopedic pulsed lavage device market. Three patents were in suit (Nos. 6,022,329, 6,179,807, and 7,144,383); all of which involved pulsed lavage devices that deliver pressurized irrigation for certain medical therapies, including orthopedic procedures and cleaning wounds. The patents claimed portable, handheld, battery-powered devices that represented an improvement over the older systems that were larger and more cumbersome to use.The district court granted summary judgment of partial infringement of the ‘807 and ‘383 patents, and the jury found infringement of the ‘329 patent. The jury rejected Zimmer’s invalidity defenses and then awarded $70 million in lost profits, which the district court trebled after finding that Zimmer willfully infringed. The Federal Circuit affirmed both the infringement findings, although it noted that the questions were close, and the non-invalidity findings. It did, however, reverse the district court’s finding that Zimmer willfully infringed.

Willful Infringement Discussion and Analysis

For purposes of this post, I am going to focus on the willful infringement discussion by the Federal Circuit. The Court started off with the standard recitation of the In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc) test. First, the patentee must show by clear and convincing evidence that the infringer acted despite an “objectively high likelihood that its actions constituted infringement of a valid patent.” The state of mind of the infringer is not relevant to this inquiry, so the fact that an infringer may not have be aware of or was not considering these defenses while it was infringing is not relevant. If the infringer’s position is “susceptible to a reasonable conclusion of non infringement,” the patentee has failed to prove the objective prong. If the patentee can show that the infringer was objectively reckless, then it must also show by clear and convincing evidence that the “objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.”

The district court did not analyze the objective nature of the infringement, but, instead, focused on the subjective portion. It concluded that Zimmer acted willfully because: (1) Zimmer “all but instructed its design team to copy Stryker’s products”; (2) Stryker’s patents were pioneering; and (3) the secondary considerations of non-obviousness “made it dramatically less likely that Zimmer’s invalidity arguments were reasonable.” The Federal Circuit found this approach to be in error, because the district court failed to analyze the objective prong of the Seagate test first.

Under Seagate, the Federal Circuit started with the objective prong. It considered Zimmer’s defenses to each patent and ultimately concluded that none of them were unreasonable. As such, Stryker failed to prove by clear and convincing evidence that Zimmer was objectively reckless, which meant that the district court’s willful infringement finding had to be reversed.

For example, the Federal Circuit noted that in order to prove infringement of the ‘329 patent, Stryker had to obtain a broad construction of one of the terms in the patent (“handle”), which was not explicitly supported by the specification. It then had to convince the jury that a component of the infringing device (a motor) was located in the handle, even though it was not precisely located in the handle. And, Stryker had to overcome some statements during prosecution that were relevant to the location of the motor. Ultimately, the Federal Circuit found Zimmer’s position was not unreasonable.

With respect to the ‘807 patent, Stryker also had overcome prior art that was very close to the claims of the patent and had to overcome a non-infringment position that was not unreasonable. Finally, with respect to the ‘383 patent, Zimmer relied on an obviousness defense based on references identified by the PTO examiner during prosecution of a related patent. The Federal Circuit concluded that it was not unreasonable to believe that the claims were invalid based on these references.

Conclusions

This case highlights some important factors for accused infringers. Courts must be made aware of the fact that the objective prong should be considered in isolation from the accused infringer’s conduct and knowledge. It is to be assessed based on the objective record developed during the entire course of the litigation, which may include defenses that were not known to the accused infringer until after the litigation began. This segregation can be especially important where, as it appears was the situation in this case, there is strong evidence of copying.

The Federal Circuit also looked to what PTO examiners were doing during the prosecution of related patents. The Court did not go so far as to say that a PTO examiner’s rejection forms a reasonable basis that would prevent a finding of objective recklessness (which it likely could not given that the prosecution was of a related patent, and not the patent in suit), but it did look at what was being done in its objectiveness analysis. Finally, the Court seemed to put an emphasis on the fact that the infringer’s defenses were based on the plain meaning of the claim terms, as opposed to more convoluted meanings. Developing strong infringement defenses is always important, but it becomes doubly so when willful infringement is at issue.

Court Awards Limited Enhanced Damages in CMU v. Marvell Case

by: Robert Wagner, patent attorney at the Pittsburgh law firm of Picadio Sneath Miller & Norton, P.C. ()

marvell_chipYesterday, Judge Nora Barry Fischer issued her opinion in the Carnegie Mellon University v. Marvell Technology Group, Ltd. patent infringement lawsuit in the United States District Court for the Western District of Pennsylvania (Case No. 2:09-cv-00290-NBF) and awarded an additional 23% in enhanced damages above and beyond the jury’s $1.17 billion award. In total, with all enhancements and interest awards, Marvell is facing at least a $1,535,889,387.60 damage award with an ongoing $0.50/chip royalty for the lifetime of the patent.

The jury returned a $1.17 billion award in December 2012, finding that Marvell willfully infringed two of CMU’s patents (U.S. Patent Nos. 6,201,839 and 6,438,180). It awarded a royalty of $0.50 per chip Marvell sold using the patented technology. In September 2013, the Court denied Marvell’s post-trial motions and determined that Marvell’s infringement was willful. The Court yesterday determined that some enhancement of the damage award was appropriate, although not to the extent requested by CMU (who wanted an additional 200% in damages).

In weighing the parties’ arguments as to whether the damage award should be enhanced, Judge Fischer appeared to focus primarily on three factors. First, she was concerned that a double or triple award of damages could cripple Marvell. Second, she was concerned about CMU’s “inexcusable” delay for almost 6 years after learning of Marvell’s infringement before taking action. Finally, she balanced these factors against Marvell’s willful infringement and its actions before CMU filed suit.

Weighing all of these factors (and the others under the Read test), Judge Fischer concluded that a 23% enhancement properly balanced all of the relevant interests.

In this decision, Judge Fischer also awarded damages on the sales of additional infringing products that were not part of the jury’s verdict but occurred before entry of judgment (this was uncontested), established a post-judgment royalty rate of $0.50 per infringing chip sold, and set a 0.14% post-judgment interest rate. She denied CMU’s motion for a permanent injunction and for prejudgment interest, finding that neither were warranted under the circumstances.

Given the amounts at issue, one expects that these decisions will not be the final word in this case, and that at least the Federal Circuit will be looking at this case on appeal.

Federal Circuit Determines That It Has Jurisdiction to Hear Appeal Before Damages or Willfulness Determination

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

Federal CircuitIn an en banc decision in Robert Bosch, LLC v. Pylon Manufacturing Corp., No. 2011-1363, -1364, the Federal Circuit held that it has jurisdiction under 28 U.S.C. § 1292(c)(2) to hear an appeal of a jury’s determination of infringement even though the issues of damages and willful infringement have not been decided. Judge Prost was joined by Chief Judge Rader and Judges Newman, Lourie, and Dyk. Judges Moore and Reyna concurred with respect to an appeal where just the damages determination has not been made, but dissented with respect to appeals where the willful infringement determination has not been made. Judges O’Malley and Wallach dissented as to both.

The case had a rather unusual procedural path. In 2008, Robert Bosch sued Pylon Manufacturing for infringing its patents relating to wiper blades. Pylon moved the district court to bifurcate the issue of infringement from the issues of damages and willful infringement. The court granted the motion and stayed discovery with respect to both damages and willful infringement. The court entered partial summary judgment on some issues in favor of both parties, but found jury questions relating to some of the infringement and invalidity claims. The jury found that Pylon infringed the claims of the patents and that the patents were not invalid. The court denied Bosch’s motion for a permanent injunction. Bosch appealed, and the Federal Circuit, in an opinion written by Judge O’Malley and joined by Judge Reyna, reversed and remanded. The parties also appealed the infringement and invalidity decisions. After oral argument, the Federal Circuit, sua sponte, granted a rehearing en banc to determine whether the Court had jurisdiction to hear the appeal in the first place because the damages and willful infringement issues had not been decided.

Under 28 U.S.C. § 1292(c)(2), the Federal Circuit has jurisdiction to hear appeals “from a judgment in a civil action for patent infringement which would otherwise be appealable . . . and is final except for an accounting.” Thus, the question was whether the damages and willful infringement determinations fall within the rubric of an “accounting.”

In analyzing the history of the statute and the understanding of the term “accounting,” the Court determined that an accounting was “a proceeding that includes the determination of both profits and damages.” The Court further noted that historically such accountings were made by special masters, but that this limitation no longer applied, especially after the merger of law and equity occurred in the courts.

With respect to willful infringement, the Court found that historically the issue of enhancement of damages was determined as part of an accounting. Thus, the Court found that it had jurisdiction to hear appeals when the issues of both damages and willful infringement remain outstanding. The Court then returned the case to the panel to decide the appeal on its merits.

The dissent reached a different conclusion, finding that the historical precedent made clear that the term accounting in the statute did not apply to either the damage or willful infringement determinations. Judge O’Malley noted that “[i]n all other circuits and all other types of cases, the finality requirement plainly applies to outstanding damages determinations.” She cautioned that there was no justification for treating patent cases any differently.