Tuesday, January 24, 2006


WILLFUL INFRINGEMENT FOUND DESPITE 3 OPINIONS OF COUNSEL:

Applied Medical Resources Corp. v. U.S. Surgical Corp., January 24, 2005 (Fed. Cir. 05-1149)

The Federal Circuit reviewed US Surgical's appeal from the decision of the Central District of California granting judgment of willful infringment of U.S. Patent 5,385,553. The invention relates to surgical devices called trocars, which are used as access ports into the abdomen during laparoscopic surgery.

During earlier litigation ("Applied I"), US Surgical's "Versaport" product was found to infringe the '533 patent, and a 7% royalty rate was applied to damages, along with a permanent injunction. After US Surgical redesigned the Versaport product, Applied again sued them on the same patent, and the jury found willful infringement ("Applied II"). US Surgical argued to the Federal Circuit that Applied was collaterally estopped from applying different damages determinations in Applied II, since the Applied I case already determined the proper amount. The Federal Circuit rejected this argument:

[T]here is no legal or factual basis for viewing the separate infringements caused by sales of Versaport I and Versaport II as the same infringement. U.S. Surgical has asserted that Versaport II is a different product from the Versaport I trocar . . . U.S. Surgical has also agreed that Versaport II involved different infringement issues than Versaport I because the seals were different . . . Having conceded that Versaport I and Versaport II were different infringements, U.S. Surgical’s attempt to conflate the two products for purposes of damages fails. Because the determination of reasonable royalty damages is tied to the infringement being redressed, a separate infringement beginning at a different time requires a separate evaluation of reasonable royalty damages. To argue otherwise, U.S. Surgical would have to concede that it has willfully violated the permanent injunction in Applied I.

Furthermore, US Surgical sought to overturn the denial of a JMOL regarding willful infringement. US Surgical pointed to "design around" evidence and further relied on three opinions of counsel regarding theVersaport II product as sufficient showings that the infringement was not willful. The Federal Circuit also rejected these arguments:
Applied responds that U.S. Surgical does not rebut the evidence cited by the court as supporting the jury’s verdict of willful infringement, which showed that U.S. Surgical (1) desperately needed a trocar with a floating seal to satisfy its customer demands, (2) began its redesign efforts only in response to the threat of an injunction in Applied I, (3) did not give its engineers sufficient time to avoid an infringing design, (4) did not rely upon any opinions of counsel in good faith, and (5) continued selling its infringing trocars for eight months after the ruling of infringement.
Regarding the opinions of counsel the Federal Circuit noted:
[T]he first letter was simply “ship[ped] off in the mail,” the second letter did not address infringement of the claims of the ’553 patent and was limited to the issue of contempt, and the third letter arrived after U.S. Surgical began selling Versaport II. Based on this evidence, a jury could have reasonably concluded that U.S. Surgical paid little if any attention to the opinion letters.

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