CAFC Rules That Objective Recklessness Prong Of Willful Infringement Is For Judges To Decide

June 16, 2012 – Blog Post

On June 14, 2012, the Federal Circuit granted a limited en banc rehearing in Bard Peripheral Vascular, Inc. et. al. v. W.L. Gore & Assocs. Inc., No. 2010-1510, to allow the panel to revise its findings on willful infringement. In a simultaneous opinion, the panel vacated the portion of its previous ruling relating to willfulness and held that the threshold “objective recklessness” prong of the willful infringement test is a question of law to be decided by the trial court.

Bard had filed suit against Gore in 2003 for infringement of U.S. Patent No. 6,436,135 directed to prosthetic vascular grafts made of highly-expanded polytetrafluoroethylene. A jury found the ‘135 patent valid and willfully infringed by Gore, awarding Bard $102 million in lost profits, $83 million in reasonably royalties, and an ongoing royalty rate of 10%. The trial court judge awarded Bard enhanced damages based on the finding of willfulness, doubling the award to $371 million and setting the ongoing royalty rate between 12.5% to 20% for Gore’s various types of infringing grafts. Additionally, the trial court judge awarded Bard its attorneys’ fees and costs in the amount of $19 million. On February 10, 2012, the Federal Circuit affirmed. 670 F.3d 1171 (Fed. Cir. 2012).

Gore petitioned for rehearing and rehearing en banc. Supported by an amici curiae brief, Gore faulted the district court’s willfulness analysis and challenged the panel’s finding that willful infringement – which requires a showing by clear and convincing evidence that (1) an accused infringer acted despite an objectively high likelihood that it was infringing a valid patent, and (2) the risk was either known or so obvious that it should have been known to the infringer – is purely a question of fact. In its revised opinion, the Federal Circuit agreed that the trial court did not address the first “objective prong” as a separate legal test from the second “subjective prong,” holding that “the threshold objective prong of the willfulness standard enunciated in Seagate is a question of law based on underlying mixed questions of law and fact and is subject to de novo review.” The issue of willfulness was remanded to the trial court for reconsideration of its denial of JMOL of no willful infringement in view of the Federal Circuit’s holding.

The court noted that while “[t]he ultimate question of willfulness has long been treated as a question of fact,” its opinions since Seagate “have begun to recognize that the issues are more complex.” For example, the panel explained that the “threshold determination of objective recklessness … entails an objective assessment of potential defenses based on the risk presented by the patent,” which “may include questions of infringement but also can be expected in almost every case to entail questions of validity that are not necessarily dependent on the factual circumstances of the particular party accused of infringement.” Observing that issues falling “somewhere between a pristine legal standard and a simple historical fact” should at times be decided according to whether “one judicial actor is better positioned than another to decide the issue in question,” the court found that a judge “is in the best position for making the determination of reasonableness,” drawing a parallel to the Supreme Court’s decision in Markman v. Westview Instruments, Inc. that claim construction is likewise best left to the judge.

The Federal Circuit clarified that a judge may still allow the jury to determine the underlying facts relevant to defenses that are a question of fact or a mixed question of law and fact, but “the ultimate legal question of whether a reasonable person would have considered there to be a high likelihood of infringement of a valid patent should always be decided as a matter of law by the judge.”

Judge Newman dissented-in-part on the ground that the objective prong could be decided in Gore’s favor under the new standard without a remand.