In the panel decision of the U.S. Court of Appeals for the Federal Circuit in February 2012, in the case of Bard Peripheral Vascular v. W. L. Gore & Assoc. (IP Update, Vol. 2, No. 15), the panel majority heralded the decision as marking the “final curtain of the saga.” It has now proven to be merely an intermission. As a result of a panel rehearing, the curtain has now risen on a new chapter of the saga dealing with the issue of the standard of review that applies to the issue of willfulness under In re Seagate (IP Update, Vol. 10, No. 8). Bard Peripheral Vascular v. W. L. Gore & Assoc., Case No. 10-1510 (Fed. Cir., June 14, 2012) (Gajarsa, J.) (Newman, J., concurring in the vacatur; dissenting from the remand). In voicing her dissent from the majority remand, Judge Newman insists that given the new standard of review announced in the opinion, no remand is needed to resolve the willfulness issue.
In the initial panel decision, the willfulness issue centered on whether Bard established “by clear and convincing evidence that [Gore] acted despite an objectively high likelihood that its actions constituted infringement of a valid patent” and that this objectively defined risk … was either known or so obvious that it should have been known to [Bard]” under Seagate.
The majority (in the initial panel decision) pointed to the 18-year-long interference between Cooper (Bard’s inventor) and Goldfarb (Gore’s punitive inventor) and the result of that interference as an indication that Gore’s actions were culpable under the above objectively defined risk portion of the Seagate standard. The majority further concluded that the opinion of Gore’s counsel, introduced on the issue of willfulness and authored by Gore’s interference counsel’s law firm, “was not based on an objective perspective” and that the district court correctly “viewed the objectivity of the opinion as questionable.” Thus, the applying the “substantial evidence” test, the majority concluded that substantial evidence had been presented to the jury to support “the finding that Gore knew or should have known of the objectivity high likelihood that its grafts infringed the … patent.” On that basis, the district court’s willfulness finding was affirmed.
In its new decision, the panel (unanimously) noted that even though many post-Seagate Court decisions generally characterize willfulness as a fact question (and therefore subject to the substantial evidence test in appeals from jury verdicts), “our opinions have begun to recognize that the issues are more complex” and that the characterization of willfulness as a fact issue “oversimplifies” it. Now, in its decision on reconsideration, the panel explained that “[w]hile the ultimate question of willfulness based on an assessment of the second prong [i.e., that the risk was known or obvious] 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 of the factual circumstances of the particular party accused of infringement.”
Thus, on panel rehearing, the unanimous panel holding is “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.” Consistent with its holding, the Court explains that trial courts, “[i]n considering the objective prong of Seagate, … may, when the defense is a question of fact or a mixed question of law and fact, 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 the judge.” Finally, the panel remanded the case to the trial court to “apply the correct standard to the question of willfulness in the first instance.”
Although Judge Newman joined in the vacatur of portions the panel decision “to correct its ruling on the subject of willful infringement,” she dissented from the remand. Judge Newman noted that applying the correct standard “it seems clear that remand is unnecessary” and that, based on the record, “it is apparent that willful infringement is not supportable.”
Practice Note: In terms of appellate review, the issue of objective willfulness will now take its place in a similar posture as other mixed questions of law and fact such as obviousness. Observers will closely watch the de novo review standard as it is applied to the ultimate legal question of willfulness in future Federal Circuit for trends as to whether this new standard of review favors patentee or accused infringers.