Last Month at the Federal Circuit
Last Month at the Federal Circuit

December 2012

Equitable Aspects Must Always Be Considered in Determining the Availability of Injunctive Relief Regarding Valid and Infringed Patents

Judges:  Rader, Newman (author), Prost (concurring)
[Appealed from D. Del., Chief Judge Sleet]

In Edwards Lifesciences AG v. CoreValve, Inc., Nos. 11-1215, -1257 (Fed. Cir. Nov. 13, 2012), the Federal Circuit affirmed-in-part and remanded-in-part the district court’s rulings on validity, infringement, willfulness, and damages.  Because of a change in circumstances since the challenged rulings, the Court also vacated the district court’s denial of injunctive relief and remanded the case for further consideration of two issues:  the denial of injunctive relief and the application of a litigation-agreed prosecution bar to related patent reexamination proceedings.

Edwards Lifesciences AG and Edwards Lifesciences LLC (collectively “Edwards”) sued CoreValve, Inc. and its successor-in-interest, Medtronic CoreValve, LLC (collectively “CoreValve”), alleging that CoreValve’s Generation 3 ReValving System infringed three of its patents.  The only patent-at-issue in the appeal, however, was U.S. Patent No. 5,411,552 (“the ’552 patent”), directed to a transcatheter heart valve.  The claimed device is mounted on a collapsible stent and implanted into the heart via a balloon catheter.

A jury determined that the ’552 patent was valid and that CoreValve infringed claim 1 willfully.  Consequently, it awarded Edwards $72,645,555 damages for lost profits and $1,284,861 in reasonable royalties.  Although the district court entered judgment on the verdict, it declined to enhance the damages award for willful infringement or to issue injunctive relief against future infringement.  Furthermore, the district court interpreted a litigation-agreed patent prosecution bar to preclude Edwards’s litigation counsel and technical expert from participating in related patent reexamination proceedings.

During the district court proceeding, CoreValve’s only challenge to the validity of the ’552 patent was for lack of enablement.  CoreValve pointed out that, at the time of filing, the claimed device had been implanted only in pigs.  Moreover, some of those experiments were unsuccessful, prompting postfiling design changes.  Edwards also stated that the device at that time was one “to perform testing on,” not “to move in and treat patients.”  Slip op. at 5.  Based on a jury instruction on the issue of enablement, the jury found that the ’552 patent was valid.

“Absent adverse equitable considerations, the winner of a judgment of validity and infringement may normally expect to regain the exclusivity that was lost with the infringement.”  Slip op. at 16.

On appeal, CoreValve argued that in no event does testing in pigs enable use in humans.  However, the Federal Circuit noted that “[c]ontinuing development is often contemplated and necessary, while early filing is often essential,” and when human experimentation is inappropriate, “the enablement requirement may be met by animal tests or in vitro data.”  Id. at 7.  Relying on the eight factors set forth in In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988), the Court held that evidence of successful trials in pigs, conducted in accordance with the ’552 patent’s specification, satisfied the enablement requirement.  The Court therefore affirmed the district court’s validity determination.

Turning next to the jury finding of infringement, the Federal Circuit rejected CoreValve’s arguments that the district court’s claim construction, and thus jury instructions, were incorrect.  First, CoreValve argued that the ’552 patent’s “cylindrical support means” was improperly construed, and that the construction erroneously enlarged the ordinary meaning of “cylindrical” beyond its ordinary meaning and the simple cylindrical shape depicted in the ’552 patent.  The Court agreed with the district court, noting that CoreValve was importing limitations not supported by the specification or prosecution history.  CoreValve further argued that the “commissural supports” of its accused product are not “generally parallel” to the stent’s longitudinal axis, as required by the ’552 patent, and argued on appeal that “parallel” should have been strictly construed as a geometric term with no flexibility of meaning or application.  CoreValve and Edwards both had experts testify on the structure of the accused product, and due to the direct conflict between testimony in the district court, the Federal Circuit deferred to the jury’s finding of infringement and affirmed.

The Court also dismissed arguments asserted by both parties challenging the remedies awarded by the district court.  CoreValve claimed that lost profits were inappropriate in this case because it could have manufactured the accused product overseas.  The Court thought otherwise, reasoning that “[w]hether or not CoreValve could have avoided infringement, it did not do so.”  Slip op. at 15.  In addition, the Federal Circuit rejected Edwards’s challenge of the district court’s decision not to enhance damages for willfulness.  The district court had not abused its discretion because the issues were sufficiently close, and CoreValve’s defenses were not frivolous.

The Court then vacated the district court’s decision not to grant injunctive relief to Edwards.  Citing eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the Court noted that injunctive relief is not automatic.  Rather, courts must exercise discretion consistent with traditional principles of equity.  The district court found that equity did not warrant injunctive relief in this case because Edwards had already compromised its first-mover advantage, market share, and reputation by licensing its patent to another competitor.  Moreover, the district court relied heavily on CoreValve’s representation that it planned to cease infringement immediately by moving its manufacturing operations to Mexico.  As of the time of the appeal to the Federal Circuit, however, CoreValve’s manufacturing operations in the United States continued.  This, the Federal Circuit noted, amounted to “changed circumstances,” worthy of reconsideration by the district court on remand.  Slip op. at 19.

Lastly, Edwards challenged the district court’s interpretation of a litigation-agreed patent prosecution bar that prevented those who had access to confidential information during trial from working on patent prosecution pertaining to the relevant subject matter.  The district court ruled that this language applied even to ongoing reexamination proceedings.  As the Federal Circuit noted, “[t]he risk of inadvertent disclosure or improper use of confidential information is balanced against the potential harm of restricting a party’s right to continued representation by its counsel.”  Id. at 20.  Thus, the scope of restrictions, duration, and subject matter covered by such a bar must reasonably reflect the danger presented by inadvertent disclosure of the confidential information being protected.  After pointing out that the ’552 patent was no longer undergoing reexamination, the Federal Circuit remanded the issue to the district court for further consideration of the prosecution bar.

In a concurring opinion, Judge Prost wrote separately to address the Court’s discussion of the permanent injunction standard.  To the extent the majority’s opinion suggested the creation of a presumption in favor of injunctive relief absent adequate rebuttal by the defendant, Judge Prost disagreed with any such suggestion.  She emphasized the equitable nature of the Supreme Court’s eBay decision and noted that, according to that case, the burden of establishing the relevant equitable factors lies with the plaintiff, not the defendant.