Barclay Damon
Barclay Damon

Legal Alert

En Banc Panel Of Federal Circuit Clarifies Standard For Willful Infringement

Bard Peripheral Vascular, Inc., et al. v. W.L. Gore Assocs., Inc., Docket No. 2010-1510 (decided June 14, 2012).

On June 14, 2012, the full panel of judges of the Court of Appeals for the Federal Circuit (“CAFC”) issued a ruling that clarified the legal standard for finding willful infringement of a patent (the “En Banc Ruling”). Since 2007, the two-pronged standard’s threshold inquiry has required a patentee to show “by clear and convincing evidence that the alleged infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” See In re Seagate Tech., LLC (“Seagate”), 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). The En Banc Ruling confirmed that this threshold question is a question of law for the trial judge – rather than a question of fact for a jury. Consequently, the trial judge’s conclusion is not entitled to any deference upon review.

The case involved a long running dispute over a patent for a prosthetic vascular graft that acts as a substitute for blood vessels in cardiovascular surgery patients needing manipulation and/or facilitation of blood flow (the “‘135 Patent”). Bard sued Gore for infringement and, after a seventeen day trial, the ‘135 Patent was held to be valid and willfully infringed. The jury found, among other things, that certain prior art did not render the ‘135 Patent obvious. That same conclusion previously had been reached in an eighteen year long interference proceeding in the Patent and Trademark Office. Having been involved in the interference, Gore had no evidentiary basis to argue obviousness and, on that basis alone, the jury found that Gore manufactured and sold vascular grafts despite an objectively high likelihood that they infringed the ‘135 Patent. In addition to an award of $19 million for attorneys’ fees and costs, Bard was awarded over $185 million in lost profits and reasonable royalties for past infringement, as well as royalties going forward. Bard’s damages then were doubled, to $371 million, due to the infringement being willful. The trial court denied Gore’s motion for judgment as a matter of law.

Gore appealed, and on appeal a three-judge panel of CAFC applied the two-prong standard from Seagate to uphold the trial court’s finding of willful infringement. Seagate requires the patentee to show by clear and convincing evidence, first, “that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Id. After meeting this threshold question, the patentee then must show that the “objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer.” Id. The three-judge panel noted that the jury’s willfulness finding had a sufficient evidentiary basis and was not undermined by the fact that Gore had several defenses to present at trial.

Gore’s application for rehearing en banc was granted to clarify willfulness and the applicable standard of review. CAFC looked to rulings both before and after Seagate that treated the ultimate question of willfulness as a question of fact. However, other post-Seagate decisions reflect that an accused infringer’s reliance on a defense being reasonable may sometimes depend on whether the defense can be resolved as a matter of law, while other defenses may be resolved as a matter of fact. In likening the willfulness issue to claim construction, CAFC determined that the issue falls “somewhere between a pristine legal standard and a simple historical fact,” and is best left to one judicial actor – the judge. For example, although the factual question of anticipation is for the jury, it is for the judge to determine whether it was reasonable for the accused infringer to rely on an anticipation defense when choosing to practice the patent-in-suit.

Now that it is established that the judge decides whether there is an objectively high likelihood that conduct amounts to infringement, it remains to be seen whether this will lead to more findings of willful infringement, rather than less. However, because these findings now are subject to de novo review, the En Banc Ruling suggests that these findings are more likely to be appealed, and more easily can be reversed.