Objectively Unreasonable Inventorship Defense Supports Willful Infringement Judgment: Federal Circuit

Practical Law Legal Update 0-595-9745 (Approx. 5 pages)

Objectively Unreasonable Inventorship Defense Supports Willful Infringement Judgment: Federal Circuit

by Practical Law Intellectual Property & Technology

Background

The '135 patent relates generally to prosthetic vascular grafts made of highly-expanded polytetrafluoroethylene (ePTFE) and the patent’s claims are directed to grafts made of ePTFE with varying fibril lengths.

Bard Peripheral Vascular, Inc. (BPV) and Dr. David Goldfarb sued Gore for infringement of the '135 patent in 2003. A jury found the '135 patent valid and that Gore willfully infringed. Gore appealed, and a Federal Circuit panel affirmed the verdict in February 2012. The Federal Circuit granted en banc review for the limited purpose of revising the portion of the panel's opinion related to willful infringement. The en banc court vacated the willful infringement opinion, holding that the threshold determination of willfulness is a question of law subject to de novo review and remanding the case to the district court to apply the correct willfulness standard (Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc. 682 F.3d 1003 (Fed. Cir. 2012) (Bard II)). For more information on the Federal Circuit's en banc opinion on willful infringement, see Legal Update, Objective Recklessness for Willful Patent Infringement is a Matter of Law: Federal Circuit.

On remand, the district court again found that Gore willfully infringed the '135 patent based on its determination that none of Gore's defenses were objectively reasonable. Gore appealed, arguing that:

The case should be dismissed in its entirety because neither BPV nor Dr. Goldfarb had standing to sue at the time of the complaint's filing.
Alternatively, the district court's willful infringement judgment should be overturned based on Gore's inventorship defense.

Outcome

On appeal, the Federal Circuit rejected Gore's arguments, holding that:

Both BPV and Dr. Goldfarb had standing to sue and that it was bound by the prior panel's determination that the plaintiffs had standing.
Gore’s improper inventorship defense was not objectively reasonable.

The Federal Circuit therefore affirmed the district court's determination that the plaintiffs had standing and its judgment that Gore willfully infringed the '135 patent.

Standing

Gore argued that both BPV and Dr. Goldfarb lacked standing to sue because:

Dr. Goldfarb allegedly assigned all of his rights in the '135 patent to Bard Inc. (Bard).
Bard did not properly assign its rights in the patent to BPV because there was no document evidencing the assignment.

The Federal Circuit noted that Gore unsuccessfully raised these same standing arguments twice before the district court, but did not raise them in its prior appeal. The Federal Circuit stated that there was no reason to believe that the prior panel did not consider the standing issue and that it was therefore bound by the prior panel's determination that the plaintiffs had standing. The Federal Circuit also considered and rejected the merits of Gore’s standing arguments.

Willful Infringement

The Federal Circuit reiterated the standards for willful infringement, including that:

To establish willful infringement under In re Seagate Tech., LLC, the patent owner bears the burden of showing by clear and convincing evidence that the accused infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent (497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc)).
Under Bard II, the threshold determination of objective recklessness requires an objective assessment of the accused infringer's defenses and is a question of law subject to de novo review on appeal.

The Federal Circuit then turned to its assessment of Gore's inventorship defense, which was the only defense at issue on appeal. Gore's inventorship defense was based on the fact that its employee, Peter Cooper, supplied the particular ePTFE tubing that Dr. Goldfarb used in making his successful vascular graft. Gore argued that Mr. Cooper was a joint inventor and that the '135 patent was therefore invalid for non-joinder of Mr. Cooper as a co-inventor.

In its objective assessment of Gore's inventorship defense, the Federal Circuit considered:

What constituted the definite and permanent idea of the invention at issue.
Whether Mr. Cooper and Dr. Goldfarb acted in concert to jointly arrive at that idea.

The Federal Circuit relied on the factual record established in earlier appeals in the litigation and an earlier interference proceeding. The court first explained that the invention at issue was not merely the use of ePTFE in vascular grafts and was, instead, the claimed specified dimensions of fibril length essential for a successful graft. The record evidence showed that Mr. Cooper had not conceived of the fibril lengths limitation before he sent the ePTFE to Dr. Goldfarb.

The Federal Circuit then considered whether there had been any contact between Mr. Cooper and Dr. Goldfarb regarding the fibril length limitation. The Federal Circuit agreed with the district court that the factual record showed that Mr. Cooper and Dr. Goldfarb:

Independently conceived of the fibril length limitation.
Did not collaborate, communicate or in any way jointly arrive at the recognition of the importance of fibril lengths to the invention.

The Federal Circuit acknowledged that this was an unusual case with a long history and that the earlier decisions left Gore with a narrow scope of reasonable defenses to infringement. The court explained that, to prevail on remand on the question of willful infringement, Gore would have had to raise new evidence or theories regarding joint inventorship that were not considered, and rejected, in the earlier decisions. Because Gore failed to do so, the majority affirmed the district court's determination that Gore's inventorship defense was not objectively reasonable.

Concurring Opinion (Hughes)

Judge Hughes agreed with the majority's conclusion that Gore's defenses were not objectively reasonable, but wrote separately to state his belief that the full court should review its willfulness jurisprudence. Judge Hughes explained that:

The US Supreme Court's recent decisions in Highmark Inc. v. Allcare Health Management Sys., Inc., 134 S. Ct. 1744 (2014) and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) call into question the Federal Circuit's two-part test for determining willfulness and the de novo standard of review. For more information on the Supreme Court's decisions, see Legal Update, Supreme Court Reverses Federal Circuit's Rigid Fee Shifting Standard in Patent Cases.
A more deferential standard of review should be adopted for willfulness, which would be consistent with the standards for reviewing mixed questions of law and fact in other contexts.

Dissenting Opinion (Newman)

Judge Newman issued a dissenting opinion, in which she criticized the majority for not reviewing the evidence and applying the law objectively. In particular, Judge Newman argued that the majority:

Did not apply the de novo standard of review because it recited only the evidence that supported the district court's judgment, instead of considering arguments from both sides.
Ignored the numerous substantial questions Gore raised challenging the patent's validity and enforceability.

Judge Newman also explained that punitive damages were inappropriate here because Bard was fully compensated with money damages and Gore's infringing products provided significant medical benefits for the public.

Practical Implications

The panel's opinions in this case indicate that there is still uncertainty in the law of willful infringement, particularly on appeal. As a result, the Federal Circuit or the US Supreme Court may decide to revisit the current de novo review standard in favor of a more deferential standard. Until then, accused infringers should be prepared to explain on appeal why their infringement defenses are objectively reasonable.

Objectively Unreasonable Inventorship Defense Supports Willful Infringement Judgment: Federal Circuit | Practical Law