I like to identify landmark decisions by the Federal Circuit and tell you why I think they are special. Well, here’s another landmark case: it marks the longest patent battle, ever. Seriously. This saga started in 1974 when the patent application involved in this lawsuit was filed in the U.S. Patent and Trademark Office (USPTO). Hopefully, this saga ended with the Federal Circuit’s decision affirming an Arizona court and jury judgment in favor of the patent owner, Bard.
I won’t tell you how old I was in 1974. . . but I wasn’t old enough to know about patents.
Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., No. 2010-1510 (Fed. Cir. Feb. 10, 2012) (Judges Newman, Gajarsa, and Linn)
This epic battle involves prosthetic vascular grafts used to bypass or replace clogged blood vessels. The Goldfarb vascular graft application was filed at the USPTO in 1974 and issued 28 years later, in 2002. (I’ll explain why it sat in the USPTO for so long in a minute.) This patent focuses on certain properties of the plastic material used to make the graft, which consists of solid “nodes” of plastic (called PTFE). These nodes are connected by thin PTFE “fibrils” to form spongy tubes with space for cells to grow into the tubes and integrate them in the body. One important aspect of the patented invention is the average distance between the nodes in these grafts and the consistency of the node spacing across the entire graft.
People, Put the Collaboration Agreement in Writing!
This graft technology developed out of an informal collaboration between Cooper, who was working at W.L. Gore, and Goldfarb, the Director of Research and a Clinical Staff Surgeon at the Arizona Heart Institute. They both filed separate patent applications claiming the use of PTFE in a vascular graft and ended up in an Interference with each other at the USPTO 9 years later. That Interference led to two appeals to the Federal Circuit, and ultimately Goldfarb obtained priority to the invention because he recognized the node properties that made for an optimal graft product after he conducted animal studies with different graft options.
After obtaining priority at the USPTO, Goldfarb’s patent assignee (Bard) filed a lawsuit against W.L. Gore in 2003. Five years later, the jury found that the patent was not invalid for improper inventorship, anticipation, obviousness, or lack of written description. The jury awarded a whopping $102 million in lost profits and $83 million in reasonable royalties to Bard and set a running royalty rate of 10% for any future infringement. The court then awarded enhanced damages, bringing the award to $371 million, and set a royalty rate between 12.5% and 20% that would cover future sales of W.L. Gore’s various infringing grafts. The Arizona court entered an amended final judgment in August of 2010, and W.L. Gore promptly appealed to the Federal Circuit.
Back Again?
The Federal Circuit issued long majority and dissenting opinions, which cover a number of technical patent issues. It reviewed the trial court’s denial of numerous post trial motions on a number of patent issues—motions that W.L. Gore filed after the jury verdict.
I’ll briefly summarize the appealed issues and the Federal Circuit’s rationale for affirming the trial court on all issues in this post.
Inventorship
First, the court considered the long-running inventorship dispute between the parties. The jury concluded that Cooper was not a joint inventor of the patented graft technology—evidence at trial demonstrated that he lacked a conception of the appropriate distances between nodes in the grafts. Thus, the jury found that the patent was not invalid for failure to list Cooper as a co-inventor. The Federal Circuit affirmed the trial court on this issue, agreeing that Cooper didn’t tell Goldfarb that the distances between nodes in the grafts was the key to creating successful grafts. The court also relied on fact-finding discussed in its earlier Interference decisions to support its decision to affirm the trial court.
Judge Newman dissented on this issue. She concluded that Goldfarb was simply testing sample graft products that were given to him for preclinical testing and that he should not be the sole inventor. She concluded that her colleagues’ decision endorses many errors and supports an incorrect reading of inventorship law—“impropriety, questionable advocacy, and confessed perjury.” (See Judge Newman’s dissenting opinion at page 2.) She followed this point with a detailed analysis of the parties’ work with the material before the competing patent applications were filed and listed evidence from the Interference and trial that supported her conclusion.
In response, the panel majority stated that it is affirming the trial court based on the record developed in two prior appeals—the USPTO evidence and statements by the parties—and the long history of the case. Judge Gajarsa, writing for the majority, colorfully stated “[w]e cannot revisit the facts anew, nor meander through the record and select facts like our favorite jelly beans, nor characterize the facts as the Bard would in a Shakespearean tragedy.” (See the majority opinion at Footnote 1.)
Anticipation
Second, the Federal Circuit reviewed the jury determination that a 1973 article that discusses vascular grafts of “expanded PTFE” tested in dogs does not anticipate certain patent claims. Trial testimony demonstrates that the article does not contain enough detailed information to allow someone with skill in this technology area to make the invention or reproduce the results of those studies. The PTO examiner also considered this article during prosecution of the patent, and issued the application claims despite the article’s teachings. The trial court and the Federal Circuit both agreed that the 1973 article doesn’t invalidate the patent claims on anticipation grounds.
Obviousness
Third, the court considered several obviousness invalidity arguments involving both the same article and another article, which discusses grafts made of Gore-Tex-based PTFE for use in A-V shunts (which divert blood from an artery directly to a vein). While this second article discusses changes to pore size to increase cellular penetration of the shunt and better cell growth, the article’s author and the USPTO examiner did not consider the work described in the second article enough to render the Goldfarb invention obvious. So Bard won this issue on appeal, too.
Written Description
Fourth, the court tacked the written description issue. W.L. Gore argued on appeal that the patent description does not support claims that are not limited to a graft wall thickness between 0.2-0.8 mm. The district court found that substantial evidence supported the jury determination that the patent is not invalid for failure to meet the written description requirement and that wall thickness is not an essential element of the invention.
On appeal, the Federal Circuit noted that a patent claim is not necessarily invalid for lack of written description just because it is broader than the specific examples in the patent. It also noted that the USPTO considered fibril length between nodes, not wall thickness, to be the critical element of the invention, and Cooper made arguments supporting that view in the Interference proceeding and at trial. The court affirmed the trial court’s denial of W.L. Gore’s motion on this issue, for these reasons.
Willful Infringement
Fifth, it tackled the willful infringement judgment. The jury found that W.L. Gore willfully infringed several patent claims, even though it had a 2002 legal opinion stating that the claims are invalid. The trial court found sufficient evidence to support the jury finding of willful infringement, including the evidence of an extensive litigation history between the parties, before the USPTO, and W.L. Gore’s reliance on the same articles that the USPTO examiner considered before issuing the Goldfarb patent. The Federal Circuit also affirmed the trial court’s denial of the motion related to willful infringement. (This is a rare affirmance of a willful infringement verdict since the Federal Circuit changed the willful infringement standard in Seagate.)
Enhanced Damages and Attorneys Fees
Finally, the Federal Circuit considered the trial court’s enhanced damages award (which doubled the jury award) and its award of attorneys’ fees and costs ($19 million) to Bard. The district court conducted an exhaustive review of the nine bad faith factors and determined that all but one favored an award of enhanced damages. And the Federal Circuit concluded that the district court did not abuse its discretion in awarding enhanced damages.
The district court also awarded attorneys’ fees for this case because of the jury’s finding of willful infringement, the trial evidence supporting willful infringement, and the extensive litigation history between the parties (when W.L. Gore repeatedly lost yet continued to infringe). W.L. Gore’s reliance on contradictory positions and testimony during the litigations also supported the trial court’s determination that the case is exceptional, and reasonable attorneys fees and costs should be awarded. And the Federal Circuit found the variable ongoing royalty rates set by the trial court appropriate; the rates varied based on market forces, and whether Bard and W.L. Gore competed in the market for each infringing product.
Whew! That’s my short summary of a long saga. If you have the fortitude to read the 61 pages of majority and dissenting opinions, you can find them here.