A federal appeals court reversed a portion of its prior ruling that W.L. Gore & Assoc. pay C.R. Bard (NYSE:BCR) $371 million for infringing a vascular graft patent, ordering a lower court to reconsider its decision that the infringement was willful.
Judge Mary Murguia’s decision boosted Bard’s initial $185.6 million award to $371.2 million, prompting Gore to appeal.
The Federal Circuit upheld Murguia in February (sending BCR shares up 2%), Gore again appealed, and a 3-judge panel yesterday issued its new ruling that the willfulness judgment be re-evaluated.
Writing for the 2-member majority, Judge Arthur Gajarsa said Murguia should have first considered whether Gore had an "objectively reasonable" case that the infringement wasn’t willful – including the fact that Bard’s patent application languished for 28 years until it was granted in 2002.
"In this case, Gore asserted several defenses that it says were ‘reasonable,’" according to court documents (PDF). "The trial court, which did an exemplary job presiding over this complex case, did not have the benefit of this court’s clarification, and did not review those defenses under this standard. On remand, therefore, the court should determine, ‘based on the record ultimately made in the infringement proceedings,’ whether a ‘reasonable litigant could realistically expect’ those defenses to succeed. If, in view of the facts, the asserted defenses were not reasonable, only then can the jury’s subjective willfulness finding be reviewed for substantial evidence."
Judge Pauline Newman dissented, writing that the facts of the case make it "apparent that willful infringement is not supportable,” according to the documents.
Bard said in a regulatory filing yesterday that Gore has set aside some $887 million to cover the case.
"Of this amount, approximately $681 million was today affirmed by the [Federal Circuit] Court of Appeals, as were ongoing royalties due for future infringing sales, regardless of any final determination of willfulness," according to the filing. "Approximately $185 million in enhanced damages for willfulness and approximately $21 million in attorneys’ fees and interest pertain to the issue remanded to the District Court.
"Gore may request a review of the decision by the U.S. Supreme Court," Bard said.
The lawsuit’s history dates back to 1974 when Bard originally filed its patent for the grafts, devices used to bypass or reinforce blood vessels. The patent sat ungranted for 28 years while the companies debated who was the first to invent the device.
The lower court found that Gore was not the original inventor on the graft patent. The new ruling found that Gore was not a co-inventor, either.
