Federal Circuit Draws the “Final Curtain” on a Long Saga, Affirming the District Court’s Decision That the Patent-in-Suit Is Not Invalid and Is Willfully Infringed
February 10, 2012
Last Month at the Federal Circuit - March 2012
Judges: Newman (dissenting), Gajarsa (author), Linn
[Appealed from: D. Ariz., Judge Murguia]
In Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., No. 10-1510 (Fed. Cir. Feb. 10, 2012), the Federal Circuit affirmed the district court’s findings that U.S. Patent No. 6,436,135 (“the ’135 patent”) was willfully infringed and not invalid for improper inventorship, anticipation, obviousness, or lack of written description. The Court also affirmed the district court’s award of enhanced damages, attorneys’ fees and costs, and an ongoing royalty in favor of Bard Peripheral Vascular, Inc. and David Goldfarb (collectively “Bard”).
The technology at issue involves prosthetic grafts used to bypass or replace blood vessels. The grafts are made from highly expanded polytetrafluoroethylene (“ePTFE”), which W.L. Gore & Associates, Inc. (“Gore”) sells under the brand name “Gore-Tex.” Peter Cooper was the Plant Manager of Gore’s Arizona facility and primarily was involved in making ePTFE tubes. Cooper provided the tubes to various researchers, who evaluated their suitability as vascular grafts. One researcher was David Goldfarb, a surgeon at the Arizona Heart Institute (“AHI”). Goldfarb experimented with twenty-one grafts supplied by Cooper, one of which was determined to be a successful implant in a dog.
In April 1974, Cooper filed a U.S. patent application claiming the use of ePTFE as a vascular graft. In October 1974, Goldfarb also filed a U.S. patent application claiming the use of ePTFE as a vascular graft. There followed an eighteen-year interference (“Interference”) and two appeals to the Federal Circuit, Cooper v. Goldfarb (“Cooper I”), 154 F.3d 1321 (Fed. Cir. 1998), and Cooper v. Goldfarb (“Cooper II”), 240 F.3d 1378 (Fed. Cir. 2001). Ultimately, Goldfarb was awarded priority of invention because Goldfarb established that he had reduced the invention to practice before Cooper. Cooper I, 154 F.3d at 1326-27. The Court in Cooper II explained that Cooper conceived the invention, but only after sending to Goldfarb tubes which Goldfarb used to conceive the invention and reduce it to practice.
The ’135 patent issued with claims to a vascular prosthesis comprising ePTFE “having a microstructure consisting of nodes interconnected by fibrils which permits tissue ingrowth, wherein an average distance between nodes is not less than about 6 microns.” Slip op. at 4-5. Bard filed suit against Gore for infringement of the ’135 patent. A jury found the ’135 patent valid and willfully infringed by Gore, awarded Bard lost profits of $102 million, royalties of $83 million, and set a reasonable royalty rate of 10%. The district court awarded enhanced damages, doubling the award to $371 million and awarded Bard $19 million in attorneys’ fees and costs. The district court also awarded an ongoing royalty with rates from 12.5% to 20% for Gore’s various types of infringing products. Gore timely appealed, contending that the jury’s verdict on the inventorship, anticipation, obviousness, written description, and willful infringement issues was not supported by substantial evidence and the district court abused its discretion in awarding enhanced damages, attorneys’ fees and costs, and ongoing royalties.
The Court first addressed Gore’s argument that Cooper’s contributions to the conception of the invention were significant to make him a joint inventor. The Court disagreed with Gore’s inventorship argument because substantial evidence was presented that Cooper did not communicate to Goldfarb that the internodal distance was the key to creating successful grafts. As noted in Cooper I, during Goldfarb’s testing of the ePTFE material, Cooper was focusing on the porosity of the material and not its fibril length. Cooper also admitted that, even after he conceived the importance of fibril length, he did not convey that information to Goldfarb. The Federal Circuit found that “[t]his lack of communication and utter lack of understanding of what would make a successful graft is substantial evidence in support of the jury’s verdict implicitly finding that Cooper’s contribution was insignificant.” Id. at 14. The Court also noted that Gore attempted to recast its inurement argument in the Interference to one of joint inventorship in the present case. But Gore’s argument remained unchanged and the Court found no evidence that Cooper either recognized or appreciated the critical nature of the intermodal distance and communicated that key requirement to Goldfarb before Goldfarb reduced the invention to practice. Thus, the Court held that the district court did not err in denying Gore’s motion for JMOL on the inventorship issue.
As for the dissent’s opinion on inventorship, the Court noted that the dissent appeared to reach its opposite conclusion by ignoring the applicable standard of review and giving insufficient weight to the jury’s verdict. Because Cooper did little more than share with Goldfarb what was already well known, the Court held that the jury had substantial evidence to find that Cooper’s contribution was not significant enough to make him a joint inventor.
Next, the Court addressed the jury’s finding that the ’135 patent claims were not anticipated by a prior art article by H. Matsumoto et al. (“Matsumoto”), describing ePTFE vascular grafts. Bard’s technical expert testified that Matsumoto did not provide enough information for a doctor to re-create a working vascular graft. Bard also presented evidence that others were unable to replicate Matsumoto’s work. This was substantial evidence for the jury to find that Matsumoto does not enable a person of ordinary skill in the art to make the invention without undue experimentation and therefore cannot be used as an anticipatory reference to invalidate the ’135 patent. The Court also noted that Matsumoto does not refer to the internodal distance recited by the asserted claims, and that the PTO considered Matsumoto and did not find that it anticipated the ’135 patent. Accordingly, the Court found that a reasonable jury could find that Gore failed to show by clear and convincing evidence that Matsumoto anticipated the claimed invention and held that the district court did not err in denying Gore’s motion for JMOL on anticipation.
Regarding obviousness, the Court considered Matsumoto and an article by J. Volder et al. (“Volder”). While Volder discussed the “extremely promising characteristics” of PTFE, Volder believed that “increasing the average pore size” would accelerate tissue infiltration, capillary development, and healing time.
The Court reviewed the district court’s “exhaustive findings” regarding Volder and Matsumoto. Id. at 26-28. According to the Court, these findings demonstrate the substantial evidence presented at trial regarding the scope and contents of Volder and Matsumoto, their differences from the claimed invention, and the objective indicia of nonobviousness. Moreover, the Court noted that neither Volder nor Matsumoto disclosed the importance of the internodal distance. The Court thus found clear support for the jury’s obviousness verdict and held that the district court did not err in denying Gore’s motion for JMOL on obviousness.
The Court then determined if the written description of the ’135 patent supports certain claims that are not limited to a prosthesis with a wall thickness of 0.2 to 0.8 mm. The district court found that substantial evidence demonstrated that wall thickness is not an essential element of the invention and denied Gore’s motion for JMOL for lack of written description. The Federal Circuit agreed, noting that the language of the ’135 patent does not mandate a wall thickness within the stated range for the claimed invention. And the record of the Interference and Goldfarb’s testimony further demonstrate that the wall thickness is dependent on the application of the graft. Accordingly, the Court found that substantial evidence supported the jury’s finding that certain claims of the ’135 patent are not invalid for lack of written description, and the district court did not err in denying Gore’s motion for JMOL on the issue.
Regarding willful infringement, the Court determined that Bard presented substantial evidence to support the jury’s finding that Gore’s infringement was willful. Based on the eighteen-year interference, Gore was aware of both the ’135 patent and Goldfarb’s research at AHI. In addition, Gore relied on Matsumoto and Volder to support its invalidity defenses, even though those references were previously considered and rejected as not invalidating by the PTO. Further, the district court found that Gore’s obviousness argument was not meritorious and “not a close call.” Id. at 33. Based on this evidence alone, the Court stated it would have been reasonable for the jury to find that Gore manufactured and sold grafts despite an objectively high likelihood the grafts infringed the valid ’135 patent.
Bard also presented substantial evidence that Gore’s opinion of counsel was not based on an objective perspective. In addition to the opinion’s reliance on Matsumoto and Volder, which were already rejected by the PTO, the bases of alleged invalidity asserted in the opinion were “directly contrary to the validity arguments [Gore] presented to the PTO when attempting to patent Dr. Goldfarb’s invention.” Id. at 34 (alteration in original) (citation omitted). Accordingly, the Federal Circuit found that the district court did not err in denying Gore’s motion for JMOL on willfulness.
The Court also found that the district court did not abuse its discretion in awarding enhanced damages to Bard. In addition to the jury’s finding of willfulness, the district court conducted a detailed and exhaustive review of all nine Read factors to ascertain whether Gore acted in bad faith to merit an increase of the jury’s damages award. The district court found that all of the factors, except whether Gore attempted to conceal its misconduct, weighed in favor of enhanced damages. Three of those eight favorable factors, however, were only slightly in favor of enhancement. Thus, the district court exercised its discretion by only doubling the jury’s damages award, and not tripling as it had the authority to do.
In addition, the Court affirmed the district court’s finding that there was sufficient basis for deeming this case exceptional. The Court noted the jury’s verdict of willfulness, the evidence supporting willfulness, and the extensive litigation history between the parties that Gore repeatedly lost yet continued to infringe. Because Gore also argued contradictory positions on infringement throughout the litigation and relied on testimony that was not credible, the district court did not abuse its discretion in awarding Bard attorneys’ fees and costs.
The Court then examined the district court’s award of an ongoing royalty instead of a permanent injunction, citing reasons of public interest. The district court assessed reasonable royalties based on the parties’ proposed royalty rates, the types of products made by Gore and Bard, and the markets in which they compete. The Court found that taking economic market forces into account was a reasonable and valid assumption by the district court.
In setting the ongoing royalty rate, the district court noted that Bard and Gore compete directly with respect to surgical grafts, Gore profits highly from its infringing products, Gore potentially faces stiffer losses that include a permanent injunction if Bard prevails in a second lawsuit, and Bard seeks adequate compensation and lacks incentive to accept a below-market deal. Based on this reasoning, the Court held that the district court did not abuse its discretion in setting a 12.5% to 20% royalty rate for the ongoing royalty on Gore’s infringing grafts.
In a lengthy dissenting opinion, Judge Newman disagreed with the majority’s decision, finding the infringement trial was “fraught with errors of law, misstatements of fact, and confessed perjury.” Newman Dissent at 11. Judge Newman reviewed the evidence at trial and noted Gore’s extensive experience testing ePTFE and various documents detailing successful results of these tests before Goldfarb’s involvement. According to Judge Newman, as a matter of law, Dr. Goldfarb cannot deprive Gore of the invention Gore possessed and that was known to Gore and published by others before Goldfarb entered the scene. Moreover, Judge Newman stated that the law has been clear that a person who tests a product provided by another, for the purpose designated by the provider, cannot acquire the exclusive right to that product for that use, to the exclusion of the inventor of the use. Thus, Judge Newman believed that a new trial was required, stating that she dissented from “the panel majority’s ratification of this insult to judicial process.” Id. at 21.
Summary authored by Jeremy P. Bond, Esq.