Following a ten-day jury trial on infringement and validity and a two-day bench trial on inequitable conduct, the Court (Zobel, D.J.) denied Defendants’ motions for judgment as a matter of law, found no inequitable conduct, and ordered that a permanent injunction shall enter if and when the patents-in-suit survive reexamination. In addition, the Court instructed the parties to report on how they wish to address the jury’s hopelessly ambiguous damages award.

Smith and Nephew (“S&N”) filed suit against Interlace Medical, Inc. and Hologic, Inc. (collectively, “Holigic”) for infringing two patents—U.S. Patent No. 7,226,459 (the “‘459 patent”), relating to an arthroscopic surgical instrument, and U.S. Patent No. 8,061,359 (the “‘359 patent”), relating to a surgical endoscopic cutting instrument. The jury found all claims valid and infringed.

First, the Court summarily denied Holigic’s motion for judgment as a matter of law. With little to no discussion, the Court concluded that it was “persuaded that the jury had a legally sufficient evidentiary basis for the factual determinations that underlie [the legal] conclusions.”

Second, the Court detailed its findings of fact and conclusions of law with respect to inequitable conduct. Holigic asserted inequitable conduct claims against the inventor, Dr. Marc Hans Emanuel, and S&N’s in-house prosecuting attorney, Norman Hainer. Applying the standard announced in Thereasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (2011), the Court analyzed the allegations against each individual separately.

As to Emanuel, Judge Zobel found that his statements during prosecution suggesting that a certain outlet channel was novel did not amount to “affirmative egregious conduct.” Because there was no dispute that the described outlet channel was contained in the preexisting Olympus endoscope, the Court found Emanuel’s description of the invention “somewhat misleading.” But it also found that the statements did not rise to the level of “false statements, manufactured evidence, or other blatant deceit.” The Court further held that Emanuel’s failure to disclose the Olympus endoscope did not amount to inequitable conduct. Judge Zobel pointed out that Hologic’s evidence with regard to intent rested solely on circumstantial evidence. While such evidence “surely raises a reasonable inference, even a strong inference, that Emanuel deliberately withheld the Olympus endoscope reference,” it was not sufficient to show intent by clear and convincing evidence. In fact, the Court noted that Emanuel’s omission could have been mere negligence and the fact that he “omitted important information is not enough to prove that he did so intentionally.”

As to Hainer, the Court found his testimony that he was unaware of the Olympus endoscope during prosecution non credible. Judge Zobel made specific note of his “regrettable performance at the bench trial and at his deposition.” Nonetheless, the Court concluded that Hologic failed to show that the Olympus endoscope was material because the relevant features of the product were disclosed in another prior art reference that was before the examiner.

The Court went on to address S&N’s request for a permanent injunction. Ultimately, it found that the question of whether or not a permanent injunction should issue to be a close call. While it was persuaded that S&N had suffered some irreparable injury given lost market share and lost business opportunities, the Court believed that some of the injury could be remedied by money damages. After balancing the oft-cited eBay factors, Judge Zobel concluded that “S&N will be entitled to a permanent injunction if the reexamination proceedings and any subsequent appeals are eventually resolved in S&N’s favor.” The Court also directed the parties to meet and confer with regard to an appropriate royalty rate for Hologic to pay S&N while the permanent injunction is stayed.

Finally, the jury returned a verdict that was unclear as to what portion of Hologic’s revenues the 16% royalty would apply. The Court requested that the parties provide some direction as to how they wish to proceed, but ultimately suggested that either a bench trial or new jury trial may be required.