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Exceptional Case Finding and Sanctions Affirmed in Surgical Implant Patent Case

Tuesday, January 17, 2012

MarcTec, LLC v. Johnson & Johnson, No. 10-01285, 2012 BL 134 (Fed. Cir. Jan. 3, 2012) The U.S. Court of Appeals for the Federal Circuit affirmed a district court's judgment declaring a case involving two surgical implant patents exceptional under35 U.S.C. § 285 and awarding the defendants attorney and expert fees of about $4.7 million. The Federal Circuit found that the plaintiff had pursued an objectively baseless suit in bad faith and had engaged in litigation misconduct.

Surgical Implant Patents

MarcTec, LLC is the owner of U.S. Patent Nos. 7,128,753 (the '753 patent) and 7,217,290 the ('290 patent), relating to a surgical implant in which a polymer is "bonded" to an expandable implant where the polymer includes a therapeutic agent. MarcTec brought suit in the U.S. District Court for the Southern District of Illinois against Johnson & Johnson and Cordis Corp. (collectively, "JNJ"), alleging that JNJ's CYPHER drug-eluting, balloon expandable stent infringed the patents in suit. During a Markman hearing, MarcTec urged the district court to adopt plain meaning constructions of disputed claim terms and to look to the specification only if terms were ambiguous. The district court granted summary judgment of noninfringement based on its claim construction of the term "bonded" to mean "bonded by the application of heat," a step that was absent in the CYPHER manufacturing process. MarcTec at 7. In reaching its decision, the district court rejected MarcTec's expert testimony that the CYPHER stent's coating process sprayed droplets at the speed of sound, which would inherently cause heat bonding for five millionths of a second, finding the testimony was unreliable and thus inadmissible under Daubert v. Merrill Dow Pharmaceuticals Inc., 509 U.S. 579 (1993). Additionally, the district court found that MarcTec had disclaimed stents during prosecution of the patents in suit. The Federal Circuit affirmed the noninfringement ruling based on proper claim construction. See District Court Claim Construction Approved in Stent Case,Bloomberg Law Reports® – Intellectual Property, Vol. 4, No. 36 (Sept. 7, 2010), for a discussion of that decision. Subsequently, JNJ moved to have the suit declared exceptional under Section 285 and to be compensated for attorney and expert witness fees. The district court granted JNJ's motion, finding that MarcTec pursued a "frivolous" suit in "bad faith" "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." MarcTec at 11. The district court awarded fees of nearly $4.7 million.

Exceptional Case Finding and Sanctions Affirmed

The Federal Circuit affirmed the exceptional case ruling, finding no error in the district court’s conclusion that MarcTec filed a baseless infringement action in bad faith. While the district court erroneously stated that the law did not require subjective bad faith under Section 285, the Federal Circuit found the error was harmless in view of the district court's factual findings supporting a conclusion of subjective bad faith. Reviewing the record, the Federal Circuit noted that the patent claims were amended during prosecution to require heat for bonding, and that MarcTec mischaracterized the district court's claim construction and presented unreliable scientific testimony. The Federal Circuit thus concluded that MarcTec's proposed claim language, which disregarded the specification and prosecution history, supported a finding of bad faith in bringing a subjectively baseless suit. Additionally, the Federal Circuit held that MarcTec committed litigation misconduct. It found that MarcTec's arguments to ignore the specification and prosecution history misrepresented the law on claim construction as set forth in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). Further, MarcTec's reliance on expert testimony that did not meet the minimum requirements for scientific reliability or relevance supported a finding of litigation misconduct. Finding that MarcTec initiated and pursued a frivolous lawsuit that extended litigation and increased JNJ's litigation costs, the Federal Circuit affirmed the exceptional case ruling and award of attorney fees. The Federal Circuit also affirmed the award of expert fees, finding that MarcTec's "vexatious conduct and bad faith" forced JNJ to incur litigation costs which were not compensable under Section 285. MarcTec at 25. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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