Federal patent decision raises bar for plaintiffs
Willful infringement no longer up to jury
New England In-House Staff
Posted: 12:52 pm Wed, August 15, 2012
TAGS: July 31 2012 issue
In the closely watched Bard Peripheral Vascular, Inc., et al. v. W.L. Gore & Associates decision, the U.S. Circuit Court of Appeals for the Federal Circuit vacated a $371 million patent verdict on grounds that a judge, not a jury, must decide whether an alleged infringer’s defenses were objectively reckless.
Brian T. Moriarty of Hamilton, Brook, Smith & Reynolds in Concord, Mass., said a willful infringement finding allows a judge to award treble damages under 35 U.S.C., §284. The threat of such an award often drives settlement negotiations.
“The Supreme Court and Federal Circuit have been cutting back on willfulness claims over the years, and this is just one in a continuum of cases that are making it increasingly difficult for plaintiffs,” said Moriarty, who was not involved in Bard. “Taking the question out of the hands of the jury, which is what the court has done, lowers the risk for the alleged infringer and makes a plaintiff’s attack for enhanced damages less potent than ever before.”
The Bard appeal, which was brought by Frank P. Porcelli of Fish & Richardson in Boston, prompted amicus briefs from companies such as Verizon Communications, Google and Intel Corp., which frequently have to defend themselves against willful infringement accusations.
Porcelli declined to comment, as did John L. Strand of Wolf, Greenfield & Sacks in Boston, co-counsel to the plaintiffs.
Joshua M. Dalton of Bingham McCutchen in Boston said Bard marks the first time the Federal Circuit has interpreted a two-prong test laid out by the U.S. Supreme Court in its seminal 2007 In re Seagate Technology decision.
In Seagate, the court held that for a plaintiff to prove willful infringement, it must first present clear and convincing evidence that a defendant’s conduct was objectively reckless, Dalton said.
As long as an accused infringer relied on a reasonable defense to a charge of infringement, the court in Seagate said the objective prong would tend not to be satisfied.
In the event the objective prong is met, the second part of the test requires the plaintiff to demonstrate the infringer subjectively knew or should have known its actions were reckless.
“Seagate set the standard for an objective test for willfulness,” Dalton said. “However, the court left for another day whether it was a question to be tackled by a judge or a jury.”
Until Bard, many judges took the position that both prongs of the test were questions of fact for the jury.
But the Federal Circuit’s ruling sends a message to patent attorneys across the country that such a position is no longer appropriate, Dalton said.
“The court is trying to cut back on allegations of willfulness, which every plaintiff seems to make. By identifying this as a question of law, the court was clearly putting people on notice that judges are in a much better position to be making these calls,” he said.
Mark Schonfeld of Burns & Levinson, which has offices in Boston and Providence, R.I., agreed that the Federal Circuit’s ruling provides lawyers with a much clearer roadmap for how to defend and prosecute an infringement case. Moving forward, the ruling will lead to more motions for summary judgment, he said.
While there was uncertainty after Seagate, Schonfeld said, judges are now being told by the Federal Circuit they have the authority to make decisions on willful infringement prior to trial.
“Anytime you turn over to the judge a question previously decided by the jury, you’re talking about a result that could lead to a stricter and more conservative view of the case,” he said. “Everyone is always afraid of the runaway jury result. The feeling among the defense bar is that the judge has a more sophisticated view of the subject and is in a better position to decide questions such as validity and obviousness that often arise on a willfulness claim.”
Kirk Teska of Iandiorio, Teska & Coleman in Waltham, Mass., said most lawyers believe juries are more likely to be swayed by emotion in an infringement case.
When jurors determine that an infringement occurred, the odds go way up that they will also find willfulness, he said.
“It’s almost a sure thing that, after an infringement verdict is returned, the next thing that’s going to happen is they are going to find willfulness,” he said. “Judges are more likely to read through invalidity or non-infringement opinions that defendants get from lawyers like me [who] write them. All the judge has to find is reasonableness. [Bard] makes it much more likely that will happen.”
In 2007, an Arizona jury held that defendant W.L. Gore & Associates willfully infringed plaintiff Bard Peripheral Vascular’s patent through its sale of Gore-Tex vascular grafts, which are used to ensure proper blood flow.
As a result of the finding, a U.S. District Court judge enhanced the jury’s $185.6 million award to $371 million.
The Federal Circuit upheld the award in February. However, the full court granted a petition for rehearing en banc panel and returned the case to the three-judge panel for reconsideration. The court reversed, concluding that judges are in the best position to make a determination on reasonableness.
“The ultimate question of willfulness has long been treated as a question of fact,” Judge Arthur J. Gajarsa wrote on behalf of the court. “Since Seagate, however, … our opinions have begun to recognize that the issues are more complex.”
Gajarsa held that it was an over-simplification to conclude that both prongs of the Seagate test were pure questions of fact. He said the trial judge failed to address the objective prong as a separate legal test from the subjective component.
Gajarsa noted that, until Bard, the Federal Circuit had not been called on to clearly delineate the Seagate test.
“We believe that the court is in the best position for making the determination of reasonableness,” he said. “This court therefore holds that the objective determination of recklessness, even though predicated on underlying mixed questions of law and fact, is best decided by the judge as a question of law subject to de novo review.”