In its June 14, 2012, decision in Bard Peripheral Vascular, Inc. v. W.L. Gore & Assoc., Inc., the Federal Circuit appears to have made it more difficult to prove willful infringement of a patent. Absent a showing of willfulness, a plaintiff in a patent infringement case has almost no chance of obtaining “enhanced damages,” i.e., treble actual damages and attorneys’ fees.
In its 2007 opinion, In re Seagate Technology, 497 F.3d 1360, the Federal Circuit established a two-prong test for proving willful patent infringement:
- The infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent (the “objective prong”); and
- That the objectively-defined risk was either known or so obvious that it should have been known to the accused infringer (the “subjective prong”).
At issue in Bard Peripheral was the Seagate test’s objective prong. The defendant,W.L. Gore, argued that it did not act despite an objectively high likelihood that its action constituted infringement of the plaintiff’s patent because Gore had a valid defense to the infringement claims, negating Seagate’s objective prong. Gore asserted several defenses that it argued were reasonable, including inventorship, inadequate written description, obviousness, and anticipation. Gore further argued that Bard Peripheral failed to present evidence proving willfulness by clear and convincing evidence.
The trial court submitted the issue to the jury, who rejected Gore’s argument and returned a finding of willfulness. The jury awarded Bard US$185 million for willful infringement of its patent relating to blood vessel grafts. The trial court upheld the jury award, explaining that the jury’s award was supported through the extensive litigation history before the PTO. Additionally, the trial court exercised its discretion and awarded double damages of US$371 million.
The Federal Circuit panel initially upheld the willfulness finding. In a subsequent en banc review, however, the court vacated the first panel’s opinion as to willfulness and instructed the panel to revisit that issue and “explicat[e] the standard of review applicable to it.”
After undertaking the further analysis required by the en banc panel, the Federal Circuit held that the trial court had fundamentally erred in allowing the jury to decide whether there was an objectively high likelihood that the accused products infringed the patents in suit – i.e., the first prong of the Seagate test. Although this had been a regular practice among trial courts, the panel noted that the Federal Circuit’s opinions on willfulness since Seagate “have begun to recognize that the issues are more complex” and that
…simply stating that willfulness is a question of fact oversimplifies 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.
The Federal Circuit explained that this objective prong analysis 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 not necessarily dependent on the factual circumstance of the particular party accused of infringement.” The court, not the jury, is best positioned to make this determination.
In light of this, the panel held that the “threshold determination of objective recklessness . . . is best decided by the judge as a question of law subject to de novo review.” Importantly, the panel noted that a trial court may still allow the jury to determine the facts underlying Seagate’s objective prong, so long as the “the ultimate legal question of whether a reasonable person would have considered there to be a high likelihood of infringement of a valid patent” is decided as a matter of law by the judge.
A remaining open question is in what form Seagate’s standard requiring clear and convincing evidence of willfulness will survive post-Bard. In Seagate, the Federal Circuit held that a patentee must establish both prongs of the willfulness test by clear and convincing evidence. However, under Seagate both prongs of the test were
seemingly questions of fact to be decided by the fact finder. Now, under Bard, the objective prong of the Seagate test is a question of law to be decided by the judge. Importantly, as highlighted by Justice Stephen Breyer’s concurrence in the Supreme Court’s Microsoft v. i4i Ltd. Partnership1 decision last year, the clear and convincing standard of proof only applies to questions of fact, not questions of law.
The Bard panel did not expressly discuss the impact of its decision on the standard of proof for willfulness. However, it is possible that courts will apply a split-standard for the different prongs of the Seagate test. In other words, courts will likely isolate the factual inquiries of the Seagate test – the subjective prong as well as any factual questions underlying the willfulness allegations – and continue to apply a “clear and convincing” standard. On the other hand, a clear and convincing standard “has no application” to the first prong of the test – now a legal issue for the judge.2
Ultimately, it seems that patentees post-Bard Peripheral may have a more difficult time proving willfulness. A number of factors contribute to this:
- Trial courts may now rule on willfulness at summary judgment or through other proceedings separate from trial. Courts are generally better equipped to determine objective inquiries – such as the reasonableness of an accused infringer’s defense – than juries. This will lead to many willfulness allegations being filtered out before trial.
- Courts may also now rule that a particular defense – for example, one based on a claim construction position – is reasonable as a matter of law.
- Appellate review of willfulness findings will now be conducted de novo instead of for clear error. Consequently, the Federal Circuit will give no deference to a 1 __ U.S. __. 131 S.Ct. 2238, 2253, (2011) (citing Addington v. Texas, 441 U.S. 418 (1979)). 2 See id. (“where the ultimate question . . . turns on the correct answer to legal questions . . . today’s strict standard of proof has no application.”). willfulness determination, and trial courts may be more reluctant to find willfulness out of concern for being reversed. Moreover, the Federal Circuit’s independent review will permit it to unify its objective prong jurisprudence, leading to more consistent rulings.