Federal Circuit Rejects Ensnarement Defense and Finds that the Ensnarement Defense is an Issue of Law

In DePuy Spine, Inc. v. Medtronic, Inc., Civ. Case Nos. 90 USPQ2d 1865 (Fed. Cir. 2009), DePuy owns U.S. Pat. No. 5,207, 678 (the ‘678 patent).  The ‘678 patent is directed to a medical device that is a pedicle screw used in spinal surgeries.  DePuy sued Medtronic, accusing Medtronic of infringing the ‘678 patent with Medtronic’s Vertex pedicle screws.  The U.S. District Court for the District of Massachusetts denied Medtronic’s ensnarement defense, found that Medtronic engaged in litigation misconduct, with both decisions being appealed before the Federal Circuit Court.  Additionally, DePuy cross-appeals from the District Court’s granting of Medtronic’s motion for judgment as a matter of law (JMOL) of no willful infringement and from the denial of DePuy’s motion for a new trial for reasonable royalty damages. 

In a prior appeal, the Federal Circuit Court upheld the District Court’s granting of summary judgment as per Medtronic not literally infringing the ‘678 patent with Medtronic’s Vertex pedicle screws.  However, the Federal Circuit Court reversed the District Court’s granting of summary judgment of noninfringement under the doctrine of equivalents.  In the prior appeal, the Federal Circuit Court remanded the case because it found a question of fact existed on whether the Vertex screw’s conical shape was insubstantially different from the ‘678 patent’s screw having a limitation in claim 1 of the patent reciting a “spherically-shaped portion.  In the remanded case, Medtronic asserted an “ensnarement” defense against the doctrine of equivalents issue, wherein the Medtronic asserted that the scope of equivalency of the ‘678 patent would “ensnare” the prior art. 

The District Court, in holding that ensnarement is a legal limitation of the doctrine of equivalents, decided the ensnarement would be decided by the District Court at the end of the infringement proceeding and would not be decided by the jury.  Further, the District Court found that the prior art was not ensnared by a hypothetical claim meant to cover the allegedly infringing device. 

On appeal, the Federal Circuit stated that ensnarement bars a patentee from asserting a scope of equivalency for the present invention that would encompass or “ensnare” the prior art, citing Wilson Sporting Goods Co. v. David Geoffrey & Assoc., 904 F.2d 677, 683 (Fed. Cir. 1990).  In appealing the District Court’s denial of Medtronic’s ensnarement defense, Medtronic asserts that the ensnarement issue should have gone to the jury, rather than being decided by the District Court because the underlying factual issues are to be resolved by the jury, if such is requested. 

The Federal Circuit Court stated that ensnarement should be treated, for procedural purposes, the same as prosecution history estoppel, and found that “[u]ltimately, however, ensnarement is a question of law for the court, not the jury, to decide.”  The Federal Circuit Court stated that the Supreme Court, in Warner-Jenkinson Co., v. Hilton Davis Chem. Co., 520 U.S. 17, 39 n.8 (1997), recognized “various legal limitations on the application of the doctrine of equivalents…,” which “are to be determined by the court either on a pretrial motion for partial summary judgment or on a motion for judgment as a matter of law at the close of the evidence and after the jury verdict.”  The Federal Circuit Court goes on to note that, although the Supreme Court did not explicitly recognize ensnarement as one of the various legal limitations on the application of the doctrine of equivalents, the Federal Circuit Court has consistently treated ensnarement as one of the various legal limitations. 

In citing Loctite Corp. v. Ultraseal Ltd., 781 F.2d 861, 870 (Fed. Cir. 1985), the Federal Circuit Court stated that “[w]e have called ensnarement and prosecution history estoppel, collectively, “two policy oriented limitations” on the doctrine of equivalents, both of which are “applied as questions of law.””  Furthermore, the Federal Circuit Court went on to say that “[e]nsnarement, like prosecution history estoppel, limits the scope of equivalency that a patentee is allowed to assert.  This limitation is imposed even if a jury has found equivalence as to each claim element,” citing Wilson Sporting Goods, 904 F.2d at 683, 687.  Consequently, the Federal Circuit Court views ensnarement as a question of law, and reviewed the ensnarement defense asserted by Medtronic de novo. 

For ensnarement, the Federal Circuit Court states that “the burden of persuasion is on the patentee to establish…that the asserted scope of equivalency would not ensnare the prior art, Wilson Sporting Goods, 904 F.2d at 685.”  However, in resolving ensnarement’s factual issues, the Federal Circuit Court states that “a district court may hear expert testimony and consider other extrinsic evidence regarding: (1) the scope and content of the prior art; (2) the differences between the prior art and the claimed invention; (3) the level of ordinary skill in the art; and (4) any relevant secondary considerations.  Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966).”  As such, the Federal Circuit Court goes on to say that “[i]f a district court believes that an advisory verdict would be helpful, and that a “hypothetical claim” construct would not unduly confuse the jury as to the equivalence and validity, then one may be obtained under Federal Rule of Civil Procedure 39(c).  See, e.g., Interactive Pictures Corp. v Infinite Pictures, Inc. 274 F.3d 1371, 1375 (Fed. Cir. 2001).”  The Federal Circuit Court relied upon a hypothetical claim that both parties in the suit agreed as literally covering Medtronic’s Vertex pedicle screw.

In analyzing whether the patentee has carried the burden of persuading the court that the hypothetical claim is patentable over the prior art, the Federal Circuit Court looked at Puno and Anderson, two references introduced by the accused infringer, Medtronic.  Both parties agreed that Puno contains all elements of the hypothetical claim except for a “compression member” that presses a screw head against a receiver member.  Medtronic asserts that Andersonteaches the compression member missing from Puno, and thus teaches a rigid pedicle screw.  However, because Puno “teaches away” from a rigid screw that increases the likelihood that the screw would fail in the human body, DePuy argues, and the District Court found that Puno’s teachings counter the reason for which Medtronic argues would make the combination of Puno and Anderson obvious, i.e. the creation of a rigid pedicle screw. 

Medtronic’s argument as per a reason to combine Puno and Anderson relies upon other teachings in the prior art, which Medtronic asserts would have motivated a person of ordinary skill to look past Puno’s warnings regarding a rigid pedicle screw.  Medtronic points to a decision of the Federal Circuit Court, wherein the term “operatively” of claim 5 of Puno was interpreted to mean “posterior stabilization of the spine” rather than “micro-motion.”  In the present appeal, Medtronic asserted that because of the previous claim construction of Puno claim 5, the pedicle screws of Puno are not limited to “micro” or “limited” motion, and thus, can be rigid.  However, the District Court stated that it was not clear that “posterior stabilization” and “micro-motion” were mutually exclusive, and thus rejected Medtronic’s argument, which the Federal Circuit Court affirmed.

Additionally, Medtronic proffered two additional prior art references, Harms (U.S. Patent No. 4,946,458) and Puno (U.S.Patent No. 4,805,602).  Harms, which has the same inventors as the ‘678 patent, and discloses a tightening and loosening of fasteners allowing for a stiff connection or dampening movement.  However, the Federal Circuit Court notes that the Harms patent does not disclose “why a person of ordinary skill would have “desired” either of these rigidity levels, much less why a rigid connection would have been selected in the face of Puno’s warning against such rigidity.”  Puno ‘602, which lists Dr. Rolando Puno as a co-inventor, discloses a screw-and-rod system having an intermediate amount of rigidity as a resolution between the decreasing rigidity of wired systems and the rigidity of plate systems.  However, the Federal Circuit Court notes that “Puno ‘602 consistently views low rigidity as an advantage and high rigidity as a disadvantage…[and] thus bolsters, rather than undermines the district court’s finding that the prior art teaches away from rigid pedicle screws.”  Thus, with the Federal Circuit Court consistently noting that Puno, in light of the teachings of the considered prior art, teaches away from rigid pedicle screws, the Court found that the District Court was correct to find that a person of ordinary skill would have been discouraged in combining Puno and Anderson for the purpose that Medtronic asserts.

The Federal Circuit Court also looked to secondary considerations, and specifically “failure by others” and “copying” to support the conclusion that Medtronic’s asserted combination of Puno and Anderson would not be obvious to one of ordinary skill in the art at the time of the invention.  The Federal Circuit Court notes that the ‘678 patent, which was published in May 1993, had a priority date of ‘1989, and while Medtronic’s engineers were attempting to solve the same problem for which the ‘678 patent is directed towards, namely making the device more rigid, Dr. Kevin Foley of Medtronic viewed a device design with no compression member to be the best solution through April 1993.  However, when the ‘678 patent was issued in May 1993, Medtronic’s engineers changed their device design by inserting a compression member into the pedicle screw device, similar to what was disclosed in the ‘678 patent.  In the appeal, Medtronic asserted that it attempted avoid infringement by designing around the ‘678 patent’s “spherically-shaped” limitation, however, Medtronic was unsuccessful. 

The Federal Circuit Court agreed with the District Court’s finding that secondary considerations indicate nonobviousness, Particularly, Medtronic’s quick adoption of the compression member after the ‘678 patent was issued and because Medtronic argues that such addition of the compression member was obvious despite their initial attempts at making a rigid pedicle screw without the compression member indicate nonobviousness.  Thus, the Federal Circuit Court found that the secondary considerations further support the District Court’s holding that the hypothetical claim would not have been obvious in light of the prior art, and that Medtronic’s ensnarement defense was properly denied.

The Federal Circuit Court also addressed whether the Jury’s awarding of lost profits to DePuy, for the amount of $149.1 million as per the pedicle screws and $77.2 million as per “pull-through” products, was proper.  In order to establish lost profits, DePuy relied upon the four-factor Panduit test requiring a showing of (1) demand for the patented product, (2) lack of acceptable non-infringing substitutes, (3) manufacturing and marketing capability to meet the demand for the patented product, and (4) the amount of profit that would have been made by sales of the patented product.  Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978). 

Medtronic contested the sufficiency of DePuy’s showing of the first two factors.  As per showing a demand for the patented product, Medtronic argues that DePuy failed to show that demand for DePuy’s ‘678 patent product was due to the “top-loading” feature of the screw.  However, the Federal Circuit Court stated that Medtronic’s argument “unnecessarily conflates the first and second Panduit factors,” and that the first factor “does not require any allocation of consumer demand among the various limitations recited in a patent claim.”  The Court went on to state that the first factor merely requires a showing of demand for the patented product, which is a product “covered by the patent in suit” or that “directly competes with the infringing device,” and cited Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1548-49 (Fed. Cir. 1995) (en banc) for support.  The Federal Circuit Court went on to hold that “the focus on particular features corresponding to individual claim limitations is unnecessary when considering whether demand exists for a patented product under the first Panduit factor.”

As per the second Panduit factor, Medtronic asserted that non-infringing bottom loading screws were available on the market during the time at issue.  However, the Federal Circuit Court stated that “because Medtronic did not actually have a noninfringing substitute “on the market” during the relevant accounting period, it was Medtronic that bore the burden of overcoming the inference of unavailability,” citing Grain Processing Corp. v. Am. Maize-Products Co., 185 F.3d 1341, 1353.  Medtronic asserted that bottom-loading screws could have been made during 2000-2003, and that it did provide such screws in 2007.  However, DePuy introduced evidence showing Medtronic was unsuccessful in designing a bottom-loading screw until 2007.  Thus, the Federal Circuit Court held that “a reasonable jury could have concluded…that…the bottom loading design would not have been available or acceptable to consumers before the end of 2003.” 

Furthermore, Medtronic asserts that being precluded from introducing the District Court’s 2004 summary judgment ruling that Medtronic’s Vertex screws did not infringe the ‘678 patent was unfair, because the ruling would help the jury to understand why Medtronic did not switch to bottom-loading screws until 2007.  The Federal Circuit Court noted that the District Court’s summary judgment didn’t address Medtronic’s failure to design a bottom loading screw until 2007 and overcome technical and regulatory hurdles in introducing a non-infringing design to the market.  Additionally, with the likelihood of jury confusion resulting from the District Court having to explain how the summary judgment was overruled in part as per equivalence, but not direct infringement, the Federal Circuit Court held that excluding the summary judgment was not an abuse of the District Court’s discretion.  Thus, the Federal Circuit Court affirmed the jury’s award of lost-profits as per DePuy’s pedicle screws.

In addition to the lost-profits of $149.1 million as per the pedicle screws, the jury also awarded DePuy $77.2 million as per “pull-through” products, which included such products as head braces and vests that are not related to the ‘678 patent or spinal surgery.  The Federal Circuit Court noted that “these products are related only by virtue of the business relationship that is created when a customer first buys a patented Summitand Mountaineer device.”  The Federal Circuit Court went on to note that lost profits are recoverable for unpatented items when they are assembled with or function with the patented item.  American Seating Co. v. USSC Group, 514 F.3d 1262, 1268 (Fed. Cir. 2008).  However, because the “pull-through” products were only sold due to DePuy’s business relationships with the surgeons buying DePuy’s patented pedicle screws, the Federal Circuit Court reversed the award of lost-profit damages arising from the pull-through products.

On cross-appeal to the Federal Circuit Court, DePuy challenged the District Court’s denial of a motion for a new trial on reasonable royalty damages.  In the original trial, DePuy argued for a royalty rate of 15%, whereas Medtronic argued for a rate of 6%.  However, the jury awarded a rate of 0%.  Although DePuy indicated to the District Court that the jury may have misunderstood the application of the royalty rate shortly after the jury was dismissed, DePuy did not file a motion for a new trial until several weeks later.  In denying DePuy’s motion, the District Court stated that any inconsistency in the jury’s verdict should have been addressed before the jury was discharged, citing Wennik v. Polygram Group Distrib., Inc., 304 F.3d 123, 130 (1st Cir. 2002).  In addition to the timeliness of DePuy’s motion, the Federal Circuit Court noted that the lost-profits award of $149.1 million exceeded DePuy’s alternate request of $59.2 million in damages arising from royalties.  Thus, the Federal Circuit Court affirmed the District Court’s denial of DePuy’s motion for a new trial.

DePuy also cross-appealed the District Court’s granting of Medtronic’s motion for Judgment as a Matter of Law (JMOL) of no willfulness in the infringement of the ‘678 patent.  Applying the willfulness standard of In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc) requires showing “by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.”  The Federal Circuit Court stated that “[w]e agree with Medtronic and the district court that there was no legally sufficient evidentiary basis to find an objectively high likelihood under Seagate’s first prong that the Vertex model…infringed the ‘678 patent.”   Accordingly, DePuy’s argument that “knowingly copying a competitor’s patented invention is objectively risky behavior of the highest order,” bears upon the state of mind of the infringer, which corresponds to Seagate’s second prong and is not relevant to the objective inquiry of the first prong of Seagate.  Seagate, 497 F.3d at 1371.  In the first appeal, the Federal Circuit Court affirmed the District Court’s grant of summary judgment of no literal infringement and overturned the District Court’s granting of summary judgment of noninfringement under the doctrine of equivalents, and stated that a jury was needed to resolve the remanded question.  Even though an accused infringer is not immunized from a finding of willful infringement when the issue of infringement is submitted to a jury, the Federal Circuit Court stated that “the record developed in the infringement proceeding in this case, viewed objectively, indisputably shows that the question of equivalence was a close one, particularly insofar as equivalence “requires an intensely factual inquiry.” Vehicular Tech. Corp. v. Titan Wheel Int’l, Inc., 212 F.3d 1377, 1381 (Fed Cir. 2000).”  Thus, Federal Circuit Court held that DePuy failed to meet the requirements of Seagate’s first prong, and thus did not need to address Seagate’s second prong in affirming the District Court’s granting of JMOL of no willfulness.

Lastly, Medtronic appealed the District Court’s granting of $425,375 in attorney’s fees to DePuy and the $10 million sanction levied upon Medtronic based upon the District Court’s finding of litigation misconduct on the part of Medtronic.  According to the District Court, Medtronic “fail[ed] to accept the claim construction governing this case,” and in arguing the reverse doctrine of equivalents as a defense to infringement, “served only to confuse the jury.”  However, the Federal Circuit Court stated that the District Court incorrectly understood the reverse doctrine of equivalents, which can be applied to individual limitations of a claim.  Thus, the Federal Circuit Court held that Medtronic should not be sanctioned for asserting the defense against the infringement of a literal scope of a limitation that did not fall under the District Court’s doctrine of equivalents claim construction.  The Federal Circuit Court reversed the District Court’s finding as per the attorney’s fees and the sanction for litigation misconduct because the District Court’s ruling was merely based upon Medtronic’s assertion of the reverse doctrine of equivalents in its infringement defense, rather than the way Medtronic litigated the defense.

In summary, the Federal Circuit affirmed the District Court’s rulings in denying Medtronic’s ensnarement defense.  The Federal Circuit Court affirmed the jury’s award of lost-profits as per DePuy’s pedicle screws but reversed the jury’s award of lost-profit damages arising from the pull-through products.  Additionally, the Federal Circuit Court affirmed the District Court’s denial of DePuy’s motion for a new trial based on reasonable royalty fees.  Lastly, the Federal Circuit Court reversed the District Court’s imposition of $425,375 in attorney’s fees and the $10 million sanction levied upon Medtronic. 

Significance to Accused Infringers

While often defenses to doctrine of equivalents are evaluated in terms of prosecution history estoppel and whether differences are insubstantial, DePuy Spine, Inc. v. Medtronic is a reminder that even newly-discovered prior art can be useful in ensuring that a claim is not unduly broadened during litigation to cover the prior art.  In addition, since the ensnarement defense is a legal issue, it can be resolved without submitting the issues to a jury.  Thus, the defense can be useful in reducing issues at trial by removing doctrine of equivalents using a motion for summary judgment.  Therefore, while rarely discussed, the ensnarement defense remains a potentially powerful mechanism for simplifying issues for trial.

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