The Federal Circuit Affirms an “Exceptional” Case

In Marctech v. Johnson & Johnson the Federal Circuit reviewed whether Chief Judge Herndon of the Southern District of Illinois erred when he found the case was “exceptional” and awarded $3,873,865.01 in fees on that basis. In a unanimous opinion written by Circuit Judge O’Malley, the Federal Circuit panel affirmed the district judge’s opinion.

Title 35 of the US Code Section 285 gives district court judges the discretion to award reasonable attorney’s fees in “exceptional cases.” A case is deemed exceptional when there has been “willful infringement, fraud, or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation…Additionally, a court can award attorney fees under § 285 if the action is brought in subjective bad faith and is objectively baseless.”

The patents at issue were invented by Dr. Bonutti and involved the teaching of antibiotic-containing material that is “bonded” by heat to a surgical device or implant. The defendant Cordis, a Johnson & Johnson subsidiary, manufactured the Cypher stent. A stent is an artificial tube that is inserted into the body to improve flow and to prevent constriction. It is often times used to treat narrow or weak arteries, like the Cypher stent does.

In 2007, MarcTec filed suit against Cordis alleging patent infringement for its Cypher stent. But, the district court found that the Cypher stent used technology invented by a different doctor, Dr. Palmaz. Dr. Palmaz’s inventions were “the same technology that Dr. Bonutti disclaimed to obtain allowance.” In other words, Dr. Bonutti “limited his claims to heat bonding to overcome the Palmaz’s patent.” Additionally, the court found that the terms “surgical device” and “implant” as used in the Bonutti patents exclude stents. This was determined during the Markman hearing, a pretrial hearing where the district judge determines the meaning of patent claims, because Dr. Bonutti disclaimed stents while trying to obtain the patent.

However, Cordis’ product was a stent. Additionally, it was “undisputed that the Cypher’s drug/polymer coating is sprayed onto the stent at room temperature and bonds to it at room temperature, not by the application of heat.”

The district court granted a summary judgment motion for non-infringement and granted an award for attorney’s fees and expert witness fees.

MarcTec argued that the district court erred because it did not find subjective bad faith in light of the fact that the “district court consciously declined to find MarcTec guilty of litigation misconduct.” The Federal Circuit panel disagreed.

The district court made findings that demonstrated MarcTec “engaged in litigation misconduct.” In particular, Marctec misrepresented the law of claim construction and introduced expert testimony that did not meet minimal standards of reliability. Marctec’s attorneys argued for the plain meaning of a claim term at issue, “bonded,” even though the prosecution history showed a meaning that was at odds with the plain meaning of the term. Marctec misstated that the specification and prosecution history should only be used when there is an “ambiguity” in the language.

Also, the district court’s opinion stated that the claims of infringement were “baseless” and “frivolous” and that MarcTec acted in “bad faith…when it had no basis for asserting infringement.” The Federal Circuit stated that regardless of whether the term “subjective” is used to describe “bad faith,” the court’s express findings “are consistent with and fully support a finding of subjective bad faith.” The Federal Circuit panel affirmed the district court’s decision.

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