Federal Circuit No. 2015-1079

The Federal Circuit overturned the District Court's denial of a new trial under Federal Rules of Civil Procedure 60(b)(3) coming out of the 11th Circuit.

The claims of Rembrandt's U.S. Patent No. 5,712,327 are directed to a "soft" contact having a "surface layer." At trial, Rembrandt's expert testified that the JJVC's contacts were soft, but drastically changed his testimony on cross-examination. JJVC's counsel and expert repeatedly impugned the credibility of Rembrandt's expert for his conflicting testimony, and the District Court ultimately excluded the testimony of Rembrandt's expert.

Following trial, the jury returned a verdict of noninfringement. In addition, the District Court ruled that, as a matter of law, Rembrandt had failed to prove that JJVC's accused products were "soft" because the only evidence produced was the excluded testimony of Rembrandt's expert.

After the trial, Rembrandt discovered JJVC's expert had testified falsely and withheld testing results and data analysis that would undermine his opinions. Rembrandt then moved for a new trial under FRCP 60(b)(2) and (3). The District Court denied the motion, but the Federal Circuit reversed on FRCP 60(b)(3).

To prevail in a motion under FRCP 60(b)(3), the moving party must establish (i): the adverse party engaged in fraud or other misconduct; and (ii): this conduct prevented the moving party from "fully and fairly presenting its case."

The District Court asserted that the fraud must be perpetrated by, known by, or should have been known by the non-moving party or counsel to establish that the "adverse party engaged in fraud or other misconduct." After a review of the record, the District found that there was insufficient evidence to conclude that JJVC's attorneys knew of the fraud.

The District Court further asserted that the conduct did not prevent Rembrandt from "fully and fairly presenting its case." As a result of the misconduct, Rembrandt mainly lost an opportunity to discredit or eliminate JJVC's expert witness. However, Rembrandt had failed to establish its case of infringement. The District Court stated, "This is true even without considering that JJVC was entitled to judgment as a matter of law because Rembrandt failed to present evidence on an essential element of its case."

The majority in the Federal Circuit panel decision disagreed with the District Court's analysis. First, the majority asserted that complicity is not required to show the adverse party engaged in fraud. Rather perjury of a material witness is sufficient. In addition, the majority found that, in light of the evidence, JJVC's counsel should have known that about its expert's perjury and withholding of documents.

Second, the majority asserted that the Rembrandt was denied the ability to fully and fairly present evidence on the "soft" element. This is true even though JJVC's expert did not testify about the "soft" element. Rather, the majority stated that Rembrandt need only show that timely production "would have made a difference in the way Rembrandt's counsel approached the case or prepared for trial."