February 2015

Finding of Willfulness Upheld Because Joint Inventorship Defense Was Not Objectively Reasonable
Kumiko Kitaoka*

In Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., No. 14-1114 (Fed. Cir. Jan. 13, 2015), the Federal Circuit affirmed the district court’s decision that the plaintiffs—Bard Peripheral Vascular, Inc. (“BPV”) and Dr. David Goldfarb—had standing to sue, and upheld the district court’s finding that W.L. Gore & Associates, Inc. (“Gore”) willfully infringed U.S. Patent No. 6,436,135 (“the ’135 patent”).

The ’135 patent discloses prosthetic vascular grafts that are made of highly expanded polytetrafluoroethylene (“ePTFE”).  The ePTFE material was made of solid nodes of PTFE connected by thin PTFE fibrils.  The distance between the nodes is referred to as the fibril length, and this distance is described as important to the suitability of the ePTFE material for use as a vascular graft.  In 1980, Goldfarb entered into a license agreement with C.R. Bard, Inc. (“Bard Inc.”) concerning the ’135 patent application and any patents that subsequently issued.  In 1996, Bard Inc. acquired IMPRA, which subsequently became a wholly owned subsidiary, BPV.  Bard Inc. transferred its interest in the license agreement to BPV in September 1996.

In 2003, BPV and Goldfarb filed suit against Gore for infringement of the ’135 patent.  A jury found the ’135 patent valid and that Gore willfully infringed.  In 2010, the district court denied Gore’s motions for JMOL, and this decision was upheld by the Federal Circuit in Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 670 F.3d 1171, 1193 (Fed. Cir. 2012) (“Bard I”).  The Federal Circuit, sitting en banc, denied review but granted rehearing for the sole purpose of allowing the panel to revise the portion of its opinion addressing willfulness.  The panel subsequently vacated the parts of its opinion discussing willfulness and allowing enhanced damages and attorneys’ fees.  Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003, 1005 (Fed. Cir. 2012) (“Bard II”).  The panel also held that the objective determination of recklessness—as it pertains to the threshold determination of willfulness—is best decided by the district court as a question of law that is subject to de novo review on appeal.  On remand, the district court found that Gore could not have “‘realistically expected’ its defenses to succeed” and denied Gore’s JMOL on willful infringement.  Slip op. at 4 (quoting Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., No. 03-0597, 2013 WL 5670909, at *12 (D. Ariz. Oct. 17, 2013)).  Gore appealed.

On appeal, the Federal Circuit first considered whether Goldfarb and BPV had standing to sue.  The Court rejected Gore’s arguments that Goldfarb lacked standing because he had virtually assigned his rights to Bard Inc. and that BPV lacked standing because Bard Inc. had not properly transferred its rights.  The Court found that Gore previously raised this standing argument before the district court—prior to its appeal in Bard I—and that Gore had not claimed there was any material difference between its present argument and the argument it raised before the district court.  Stating it had no reason to assume that the Bard I panel did not weigh standing, the Court concluded it was bound by the prior panel’s determination that the plaintiffs had standing and the district court had jurisdiction.  While the Court acknowledged that there are exceptional circumstances in which a panel may not adhere to a previous panel’s decision in a prior appeal, it indicated that no such circumstances were present in this case.  Reviewing the district court’s findings de novo, the Court explained that “Gore’s argument hinges on the absence of a written instrument transferring to BPV what it contends was the virtual assignment from Goldfarb to Bard Inc.”  Id. at 7.  The Court concluded that, in 1997, there was a memorialized transfer of the exclusive license from Goldfarb and Bard Inc. to BPV’s predecessor and thus agreed with the district court that the 1997 agreement settled BPV’s right to sue at the time of the complaint.

Next, the Court turned to whether the district court properly denied Gore’s JMOL reversing willful infringement.  The Court focused its de novo review of the district court’s findings on the issue of inventorship.  The Court explained that Gore’s argument was based on the fact that its employee, Peter Cooper, supplied the ePTFE tubing that Goldfarb used for his successful vascular graft.  The Court noted the heavy burden of showing misjoinder or nonjoinder of inventors and that it must be proved by clear and convincing evidence.  The Court further explained that “the two questions for objectively assessing Gore’s defense are (1) what constitutes the ‘definite and permanent idea’ of the invention at issue and (2) whether Cooper and Goldfarb acted in concert to jointly arrive at that idea.”  Id. at 13.

At the outset, the Court stated that the specified dimensions of fibril length are essential for successful grafts and are the key limitation of the ’135 patent.  In prior appeals, Cooper v. Goldfarb, 240 F.3d 1378 (Fed. Cir. 2001) (“Cooper II”); Cooper v. Goldfarb, 154 F.3d 1321 (Fed. Cir. 1998) (“Cooper I”), the Court had found that Cooper had conceived of the invention first, before Goldfarb reduced the invention to practice.  But the Court found that Cooper had not conceived the fibril length limitation before providing the lot of ePTFE to Goldfarb.  The Court agreed with the district court that Cooper had minimal contact with Goldfarb—the first inventor who reduced the invention to practice—on the subject of the fibril length limitation.  Thus, based on the records in Cooper I and II, the Court held that “Cooper and Goldfarb did not collaborate, communicate, nor in any way jointly arrive at the recognition that fibril length was significant for graft success.”  Slip op. at 15.  The Court concluded, “Goldfarb arrived at conception on his own, and, thus, his reduction to practice did not inure to Cooper.”  Id.

Explaining that prior proceedings shaped what defenses Gore could raise, the Court stated that Gore was left with an exceptionally circumscribed scope of reasonable defense.  The Court opined that “to have stood a reasonable chance of prevailing on this issue, Gore needed to raise new evidence or theories that were not considered in Cooper I and II.”  Id.  The Court agreed with the prior panel that “Gore’s argument remains unchanged and there is still no evidence that Cooper either recognized or appreciated the critical nature of the internodal distance and communicated that key requirement to Goldfarb before Goldfarb reduced the invention to practice.”  Id. at 15-16 (quoting Bard I, 670 F.3d at 1182).  Thus, the Court agreed with the district court that Gore’s position was not susceptible to a reasonable conclusion that the ’135 patent was invalid on inventorship grounds. 

Accordingly, the Court affirmed the district court’s determination of standing and its finding of willful infringement of the ’135 patent. 

In his concurring opinion, Judge Hughes wrote to question the appropriateness of the de novo standard.  While he agreed that when the present evidence was reviewed de novo, Gore’s defenses were not objectively reasonable, he stated that a more deferential standard would be consistent with the standards for reviewing mixed questions of law and fact, as suggested in the recent Supreme Court decisions in Highmark Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014), and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  

Judge Newman dissented and explained that “the question as it relates to willfulness is whether the defense of invalidity could reasonably be raised, not whether it eventually succeeded.”  Newman Dissent at 12.  The flaws in the ’135 patent and the manner in which it was obtained, according to Judge Newman, “provided sufficiently reasonable defenses to both validity and enforceability.”  Id.  Further, Judge Newman found the doubling of the damages award untenable.

*Kumiko Kitaoka is a Law Clerk at Finnegan.