• Willfulness Defenses Will Now Be Decided by Trial Judges, Not Juries
  • July 7, 2012
  • Law Firm: Sunstein Kann Murphy & Timbers LLP - Boston Office
  • Patent owners often try to prove that a defendant’s infringement is willful because it may entitle them to multiple damages. Willfulness was center stage in 2007 in In re Seagate Technology, LLC, when the Federal Circuit redefined the inquiry with a two-pronged approach:

    First, “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.”

    After that showing is made, “the patentee must also demonstrate that this objectively defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.”

    In a 2010 opinion, the Federal Circuit ruled that an accused infringer can fend off the “objective” prong when it “relies on a reasonable defense to a charge of infringement.” Such defenses to willfulness may be based on the accused infringer’s belief that a particular claim term will be construed so as not to cover his product, or on a theory of patent invalidity based on the obviousness of the asserted invention, or on the fact of a third-party product already on the market.

    Now a new opinion from the Federal Circuit, vacating a portion of the court’s own decision in Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., refines the analysis further.

    In the earlier opinion, a three-judge panel of the Federal Circuit tackled a difficult inventorship dispute in the competitive world of vascular grafts, on which we reported. The court noted that willfulness is a fact determination (typically for the jury) and upheld the jury’s willfulness finding and the trial court’s refusal to set it aside.

    The Federal Circuit supported its decision by noting, among other things, that Gore was well aware of the patent, having been involved in a patent interference proceeding aimed at invalidating it and having proffered certain prior art references intended to persuade the PTO that the patent was invalid.

    Gore asked the Federal Circuit for a rehearing of the February opinion by the entire court. The court agreed and at the same time returned the willfulness issue to the three judges who originally handled this appeal.

    The panel, which had previously appeared to agree with the trial court’s factual assessment of Gore’s infringement, determined that “the trial court failed to address the objective prong of willfulness as a separate legal test from Seagate’s subjective component.”

    The panel went on to say, “The court now holds 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 new ruling affects who decides whether a party has a reasonable infringement defense that might preclude a finding of willful infringement. For Bard and Gore, this 30+ year dispute continues as the trial court must reconsider the determination that the infringement was willful.

    Any new legal standard comes with uncertainty in application and of course, a good measure of speculation. The Federal Circuit’s June 14 opinion tackled the question of whether a judge or jury is the decision-maker on the reasonableness of the alleged infringer’s defense. The Federal Circuit concluded that, like claim construction, this is a matter of law to be decided by the judge, not the jury. This is true both for defenses that rely strictly on a legal analysis and those that rest on factual findings traditionally within the province of the jury.

    The Federal Circuit reasoned that, when there is a mixed question of fact and law, it is fitting to have a single judicial actor make the reasonableness determination. The court drew on other areas of law for support, noting the "objectively baseless" standard that a party in an antitrust suit must meet to prove that it has been sued in a “sham litigation.”

    The Federal Circuit held that a trial judge “may...allow the jury to determine the underlying facts relevant to the defense in the first instance, for example the questions of anticipation or obviousness. But consistent with this court’s holding today, 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 a judge.”

    If the infringer fails to knock out the willfulness claim on the “objective” prong of the Seagate test, it is up to the jury to evaluate the second prong, determining whether the objective risk was known or should have been known to the infringer.

    The newest batch of yet-to-be-answered questions includes: Will we now see separate reasonableness hearings, similar to the Markman hearings we already have on claim construction. If so, when will they occur? (After all, a party can only be liable for willful infringement if it is infringing in the first instance.)

    What is the best way for overburdened courts to use scarce judicial resources in light of this decision? How and when should juries be instructed? Will local patent rules be amended to put procedures in place to streamline the proceedings?

    Certainly, litigants will refine their strategies to account for the trial judge’s role in evaluating whether an accused infringer has acted reasonably or recklessly. This may involve preparing an expert to testify as to the reasonableness of a defense or drafting jury instructions to explain a judge’s finding on the first prong of the willfulness inquiry.