A nasty patent spat between Johnson & Johnson’s (NYSE:JNJ) Cordis Corp. and Spectralytics, which a jury decided in the latter’s favor to the tune of $22.4 million, went another round this week after a judge added $500,000 to the damages award.
Spectralytics sued Cordis and its laser stent-cutting contractor, Norman Noble Inc., in July 2005, alleging infringement of a patent for a “Laser Cutting Tool for Cutting Elongated Hollow Workpieces.” A jury found for Spectralytics, levying the initial damages award. All but one facet of a Cordis and Noble appeal was denied: the U.S. Court of Appeals for the Federal Circuit sent the case back to U.S. District Court for Minnesota Judge Patrick Schiltz to reconsider his decision not to award enhanced damages and attorney’s fees to Spectralytics.
Now Schiltz has tacked on another $500,000 plus post-judgment interest, but declined to assess any legal costs. Calling the case a close call (Schiltz has indicated in court filings that he’d likely have gone then other way had the case been up to him and that he was troubled by the size of the jury award) and both sides’ conduct "incredibly nasty," the judge found that two of the nine criteria – called "read factors" – for enhanced damages were met.
Sign up to get our free newsletters delivered right to your inbox
"Because the record contains no other evidence to show that Cordis ‘investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed,’ the court finds that this second Read factor weighs in favor of awarding enhanced damages," Schiltz wrote, according to court documents. "The court finds that Cordis is a very large corporation and can afford to pay substantial enhanced damages. The fourth Read factor thus weighs in favor of enhanced damages.
"Although this amount is small compared to both Cordis’s revenues and the amount of compensatory damages, the court finds that it adequately penalizes Cordis for its willful infringement," he wrote. "Further, the court notes that the disparity between this award and the jury’s compensatory-damages award reflects not just that the court’s enhanced-damages award is relatively small, but also that the compensatory-damages award was extremely generous."
Echoing earlier court filings, Schiltz had more harsh words for the legal teams on both sides.
"In its earlier order, the court rejected Spectralytics’s argument that Cordis’s litigation conduct warranted awarding enhanced damages, saying: ‘This was a very hard-fought case with much at stake, and counsel on both sides behaved, at times, less than admirably. The court will not reward the pot for the kettle’s misbehavior,’" Schiltz wrote. "Spectralytics’s desire to re-argue this point is baffling, given the court’s earlier criticism of the litigation conduct of all parties, including Spectralytics itself."
Taking particular issue with a Spectralytics lawyer’s accusation during pre-trial conference that Cordis or Noble deliberately destroyed evidence, Schiltz went so far as to quote from his own remarks during the conference:
"You cannot be throwing allegations around like that, unless you have the evidence to back that up. … [T]hat is not the kind of litigating that I will tolerate in this courtroom. I want you and your side to know that. I mean, both sides’ briefs are incredibly uncivil, incredibly nasty. There is a great deal of misleading. There is a great deal of attacks on the other side. It doesn’t impress the judge. It doesn’t help you [i.e., Spectralytics], and it doesn’t help you [i.e., defendants]. You folks [i.e., defendants] did it virtually as much as Spectralytics did."
"To be clear: Both sides behaved badly in this litigation, and Spectralytics’s conduct was as bad as (if not worse than) the conduct of the defendants," Schiltz wrote.
Europe closes in on single patent system
The European Parliament’s Legal Affairs Committee and Council Presidency agreed to the provisions of a unitary patent system yesterday, leaving it up to the European Union’s governing body and the EU’s 25 member states to ratify the move.
“In 2011, when at the proposal was first put forward, it was clear it was a key measure to be adopted. Today’s agreement represents in this sense a great success, also due to Parliament’s very constructive approach. We had to ensure not only the political consistency of the outcome, but also its legal coherence: The negotiations ended in a positive way in all these aspects,” committee chairman Klaus-Heiner Lehne said in prepared remarks.
The system would create a single patent structure for the union, including a patent court, with patents filed in German, English and French. The aim is to slash 80 percent from the cost of establishing a patent in Europe "so as to improve the competitive position of EU firms vis-à-vis their counterparts in the US and Japan, where patents are substantially cheaper," according to a press release. The new system is expected to go into effect no sooner than 2014. Read more 
ArthroCare settles with insurers over accounting scandal
ArthroCare Corp. (NSDQ:ARTC) put another chapter in a long-running accounting scandal to bed this week, settling with its insurers for $450,000 and agreeing not to seek further payment from them for any further claims against it.
Earlier this week the company settled a shareholders’ lawsuit accusing the company and its management at the time (several of whom were ousted over the scandal) of misleading investors by concealing allegedly fraudulent reimbursement practices in its spine business.
ArthroCare escaped a Securities & Exchange Commission probe into the affair earlier this year, with no admission of guilt, no financial penalty and a promise to be good from now on. Read more
