By Dennis Crouch
Bard Peripheral v. W.L.Gore (Fed. Cir. 2012) (on rehearing)
In an important decision, the Federal Circuit has ruled that the “objective prong” of the test for willful patent infringement is a separate question of law. Moving forward, it will be the trial court’s duty to determine whether the defendant’s actions were objectively reckless. Further, the objective prong will now be subject to de novo review on appeal.
This new system somewhat parallels the judge-determined claim construction that must occur before a jury can determine infringement. As with claim construction, this new judge-focused sub-test will likely drive results in most cases. Because it will be prior-in-time, the judicial decision on objective recklessness will filter-out many willfulness allegations before they reach the jury. And the jury, once it is told that the judge has determined the behavior objectively reckless, is likely to find any infringed patent to be willfully infringed.
Right to Jury: The right to a jury decision on the issue of willfulness already stood on shaky foundation because, by statute, the judge decides the monetary award. The changes in the law brought about here in Bard coupled with those outlined in Seagate suggest that right may now be fully eroded. Further, the decision suggests that it may be proper to treat the entire issue of willfulness as a question of law.
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Treble Damages: The text of the Patent Act appears to provide courts with broad power to treble any damages awarded. The statute reads that “the court may increase the damages up to three times the amount found or assessed.” Although the text offers no limitation on that power, the Federal Circuit has limited the use of enhanced damages to only apply when the adjudged infringement is found to be willful. In Seagate, the Federal Circuit defined a two-prong test for willfulness that requires clear and convincing evidence (1) “that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent” and (2) that the infringer had knowledge (or should have known) of this risk.
Willfulness is a question of fact that has been traditionally decided by a jury. However, as the statute suggests, it is the judge who determines the extent of any enhanced damages (with the limit of three-times the compensatory damage award). Here, the infringer argued that a court (rather than a jury) should first decide the sub-question of whether there existed (at the time of the infringement) an objectively high-likelihood that the infringer’s action’s constituted infringement. The appellate court agreed:
After reviewing the Supreme Court’s precedent in similar contexts, as well as our own, we conclude that simply stating that willfulness is a question of fact over-simplifies the issue. While the ultimate question of willfulness based on an assessment of the second prong of Seagate may be a question of fact, Seagate also requires a threshold determination of objective recklessness. That determination entails an objective assessment of potential defenses based on the risk presented by the patent. Those defenses 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.
In considering the standard applicable to the objective prong of Seagate, it can be appreciated that “the decision to label an issue a ‘question of law,’ a ‘question of fact,’ or a ‘mixed question of law and fact’ is sometimes as much a matter of allocation as it is of analysis.” Miller v. Fenton, 474 U.S. 104, 113-14 (1985). When an “issue falls some-where between a pristine legal standard and a simple historical fact, the fact/law distinction at times has turned on a determination that, as a matter of sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.” Id. at 114; see also Markman v. Westview Instruments, Inc., 517 U.S. 370, 388 (1996) (applying this test to determine that claim construction is best left to the judge). We believe that the court is in the best position for making the determination of reasonableness. This court therefore holds that the objective determination of recklessness, even though predicated on underlying mixed questions of law and fact, is best decided by the judge as a question of law subject to de novo review.
On remand, the district court will be required to specifically consider the question of objective recklessness.
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Clear and Convincing Evidence Standard for a Question of Law?: Seagate requires that objective recklessness be proven with clear and convincing evidence. As the en banc court wrote in 2007 “to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Normally, clear-and-convincing evidence is a standard for proving facts. Here in Bard, however, the court now holds that the objective recklessness prong is a question of law. Since the panel here has no power to modify Seagate, the odd joining of these decisions is that the issue of law must still be proven by clear and convincing evidence. In a concurring opinion to the i4i decision, Supreme Court Justice Breyer wrote on this topic – noting that the clear and convincing evidence standard of proof “applies to questions of fact and not to questions of law.” The panel opinion here in Bard either did not recognize this problem or chose to ignore it. The tension here between Seagate and Bard is genuine.
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The majority opinion was written Judge Gajarsa (Senior Judge) and joined by Judge Linn. Judge Newman wrote in dissent and argued that there was no need for a remand because the jury willfulness determination was clearly wrong.
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This case has been brewing for 38 years! Initially it was an inventorship dispute that took 28 years to settle at the PTO, followed by a litigation battle for the past 8 years. The patent covers a prosthetic vascular graft used in bypass surgeries and was originally filed as an application in 1974. U.S. Patent No. 6,436,135.