Vexatious Plaintiff Is Slapped With $4.5M In Fees

By Zi Wang

In MarcTec LLC v. Johnson & Johnson, 664 F.3d 907 (Fed. Cir. 2012), the Federal Circuit affirmed the district court’s holding that the case is exceptional and awarded a total amount of more than $4.5 million in attorney and expert fees to the defendant.

Plaintiff MarcTec filed suit against Cordis, a subsidiary of Johnson & Johnson, alleging the latter of infringing the ‘753 and ‘290 patents. The two patents-in-suit are directed at surgical devices and implants with a therapeutic-agent-containing coating bonded by heat.  According to the prosecution history, in order to overcome the PTO’s rejection over the ‘417 patent, the patentee highlighted the fact that the coating is to be bonded by heat.  The patentee also tried to distinguish his invention from stents during prosecution for similar reasons.  The allegedly infringing product in question is the Cypher stent manufactured by Cordis.  The product utilizes the technology disclosed by the ‘417 patent, the same patent plaintiff distinguished and disclaimed to obtain allowance for his own patents. The Cypher’s coating is sprayed onto the stent at room temperature and bonds to it at room temperature.

During the Markman hearing, counsel for MarcTec instructed the district court that it should focus on the claim language and look to the specification only if there is ambiguity in that language.  MarcTec tried to minimize the role of the specification because the specification’s discussion of bonding is uniformly directed to heat bonding.  The district court rejected MarcTec’s such attempts.  Specifically, the district court limited the ‘753 and ‘290 patents to heat bonding, and excluded stents from both patents.  Cordis moved for summary judgment of noninfringement accordingly.  In response, MarcTec offered expert testimony that spraying the coating at nearly the speed of sound (“unrelated to anything that happens in the Cypher coating process”, to quote the district court) would cause an increase in temperature for 5 millionths of a second such that heat is involved in bonding the coating to the stent.  The district court was unpersuaded by such “an untested and untestable theory that is neither reliable nor relevant”, and found noninfringement, pointing to “undisputed evidence” that establishes that the coating adheres to the stent at room temperature.  MarcTec also brought up the use of heat in some of the manufacturing steps before the coating is applied, which the district court readily found irrelevant.

MarcTec then appealed to the Federal Circuit, which affirmed the district court’s decision to grant summary judgment for the defendant.  After the district court granted summary judgment in its favor, Cordis moved to have the suit declared exceptional under 35 U.S.C. § 285, and to be compensated for its reasonable attorney and expert witness fees.  A case may be deemed exceptional under § 285 where there has been willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Federal Rules of Civil Procedure 11, or like infractions.  Cordis argued that MarcTec engaged in litigation misconduct by: (1) misrepresenting claim construction law to avoid intrinsic evidence; (2) mischaracterizing the district court’s claim construction; and (3) offering “junk science” that was unreliable, untestable, and had no relevance to the case.  Cordis further argued that MarcTec filed a frivolous and baseless lawsuit and acted in bad faith by continuing to pursue its claims without any evidence of infringement.

The district court agreed with Cordis and declared the case exceptional.  Specifically, the court found that MarcTec’s allegations were baseless and frivolous, and that MarcTec acted in bad faith in bringing and maintaining the litigation.  The court criticized MarcTec for ignoring the specification and prosecution history in its claim construction argument.  Moreover, the court found that, even after it had evidence that the Cypher stent’s coating is applied at room temperature and does not bond using heat, MarcTec continued to pursue its frivolous case “by relying on mischaracterizations of the claim construction adopted by this Court and expert testimony that did not meet the requirements for scientific reliability or relevance required by FRE 702 and Daubert.”  The court further noted that with the patentee having represented to the PTO that the claims exclude stents in order to obtain allowance, MarcTec cannot turn around in litigation and assert the patents against the Cypher stent.  Based on these findings, the district court awarded Cordis $3,873,865.01 in attorney fees and expenses under § 285.  In addition, pursuant to its inherent powers, the court awarded Cordis its expert fees in the amount of $809,788.02.

MarcTec again appealed the district court’s decision to the Federal Circuit, arguing that the district court: (1) applied the wrong standard in declaring the case exceptional under 35 U.S.C. § 285; and (2) abused its discretion in awarding expert witness fees.  The Federal Circuit disagreed, holding that the district court’s deeming the case exceptional was appropriate because the district court made sufficient factual findings to support the conclusion that MarcTec filed an objectively baseless lawsuit in bad faith.  The Federal Circuit also construed the district court’s opinion as having found that MarcTec engaged in litigation misconduct and upheld the finding, thus providing a separate and independent basis supporting the exceptional case determination.  In reaching its conclusions, the Federal Circuit time and again pointed to MarcTec’s attempts at advancing its tenuous claim construction not supported by the specification and prosecution history and dragging out the litigation after claim construction by proffering questionable, unreliable and irrelevant expert testimony.  In addition, the Federal Circuit upheld the award of expert fees not compensable under § 285 because “Cordis was forced to incur expert witness expenses to rebut MarcTec’s unreliable and irrelevant expert testimony which was excluded under Daubert.”

In a press interview, one of MarcTec’s attorneys maintained that the company and its attorneys never acted in bad faith.

Take-away Points: Although awards of attorney fees to the winner in a litigation is not the norm in the American system, plaintiff and defense attorneys alike, while being zealous advocates, should still bear in mind that such awards can happen and plan accordingly.  This case may signal a growing willingness of the courts to find cases exceptional and award fees.  This case also demonstrates the importance of the specification in patent litigation.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s