By: Audrey A. Millemann

The law of willful patent infringement has changed.  After the Federal Circuit’s decision in Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., 682 F.3d 1003 (Fed. Cir. 2012), it will now be more difficult for patent owners to prove willful infringement and recover enhanced drawings.

In Bard, the plaintiff, Bard Peripheral, owned a patent covering blood vessel grafting technology.  Bard filed suit for patent infringement and the case was tried to a jury in the district court for the District of Arizona.  The jury found that Gore had infringed Bard’s patent and that the infringement was willful, awarding Bard $185 million in compensatory damages and $185 million in enhanced damages for willfulness.

Gore appealed and a panel of the Federal Circuit Court of Appeals affirmed the verdict.  Gore then petitioned for an en banc rehearing on the issue of willfulness.  The appellate court granted the petition and referred the case to the same panel for reconsideration.

On June 14, 2012, the panel issued its decision.  The decision vacated the previous decision as it pertained to willfulness and set a new standard for determining the objective prong of the willfulness test.  The panel remanded the case to the trial court for the consideration of the finding of willfulness.

The test for willfulness was established by the Federal Circuit in its 2007 decision in In re Seagate Technology, LLC,  497 F.3d 1360 (Fed. Cir. 2007).  There, the court held that willful infringement was a two-pronged test.  The first prong is an objective standard: did the infringer act despite an objectively high likelihood that it was infringing? The second prong is a subjective standard: did the infringer know or should have known of the high risk that it was infringing?  The Seagate court did not change the longstanding rule that the issue of willfulness is a question of fact which is reviewed by the appellate court under a clearly erroneous standard.

In subsequent cases, the Federal Circuit held that if an infringer acted based on a reasonable defense, the objective prong would not be met. 

In Bard, the court explained that since Seagate, its view on willfulness had changed, stating: “[O]ur opinions have begun to recognize that the issues are more complex.”

            The court stated, at 1006:

            “[W]e conclude that simply stating that willfulness is a question of fact over-simplies the issue.  While the ultimate question of willfulness based on an assessment of the second prong of Seagate may be a question of fact, Seagate also 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 on the factual circumstances…”

The court acknowledged that it may be difficult to determine whether a particular issue is a question of law, a question of fact, or a mixed question of law and fact.  However, the court held that the first prong of the willfulness test, the objective standard of reasonableness (objective recklessness), should be decided by the judge as a question of law and would be reviewed under a de novo standard.  The court stated that the judge was in “the best position for making this determination of reasonableness,” even if the issue was a mixed question of law and fact. 

The court explained that in applying its new rule, in cases where the defense is solely a legal question, such as when a defendant relies on a theory of claim construction, the trial judge will simply decide whether the defendant was objectively reasonable.  In those cases where the defense is a question of fact or a mixed question of law and fact, such as anticipation or obviousness, then the underlying factual issues may be decided by the jury, but the trial judge must decide the objective reasonableness of the defense.  “[T]he 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.”  Id. at 1008.

After setting forth the new rule, the court remanded the Bard case to the trial court for the purpose of determining whether Gore’s defenses were objectively reasonable.  If the defenses were objectively reasonable, then the threshold for reaching the second prong would not be met.  The jury’s verdict of willfulness would be reversed.

In analyzing the effect of the Bard decision on patent litigation, most commentators believe that the case will result in fewer findings of willfulness, because judges will be reluctant to risk reversal of their rulings under a de novo standard of review.  Thus, it is expected that plaintiffs will find it more difficult to obtain judgments of willfulness and to recover enhanced damages.  The decision also may further complicate trials of patent infringement cases, by requiring a separate hearing, perhaps with separate phases, on willfulness.