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February 25, 2008

Exuberance Rewarded

Last February, the appeals court found Medtronic's four-patent assertion against BrainLAB worthless, upholding Colorado district court Judge Richard Matsch overturning a duped jury verdict of infringement. Back before the district court, entertaining a post-trail motion by BrainLAB to recover all attorneys fees and costs, Judge Matsch raked Medtronic's attorneys over the coals, particularly Terrence McMahon and Vera Elson of McDermott Will & Emery.

Medtronic v. BrainLAB (Colorado 98-cv-01072-RPM) Dated: February 12, 2008

Judge Matsch:

[T]his Court finds and concludes that... the manner in which plaintiffs' counsel continued the prosecution of the claims through trial was in disregard of their obligations as officers of the court. The fairness of the adversary system of adjudication depends upon the assumption that trial lawyers will temper zealous advocacy of their client's cause with an objective assessment of its merit and be candid in presenting it to the court and to opposing counsel. When that assumption has been contradicted by a trial record of conduct reflecting a winning is all that is important approach to the trial process, the court has a duty to redress this resulting harm to the opposing party.

The jury found for the plaintiffs but the verdict was set aside by this Court's order granting the Rule 50(b) motion. Mem. Op. and Order, Feb. 24, 2006 [doc. 545]. The premises of that order were for the most part the same as those presented in the defendants' motions for summary judgment. In retrospect, those motions should have been granted, saving BrainLAB the cost of a 13-day jury trial. In setting aside the jury's verdict, this Court found that misleading trial tactics by the [McDermott, Will & Emery] MWE lawyers, Mr. McMahon and Ms. Elson, had influenced the jury verdict, and their tactics were an abuse of advocacy.

Medtronic attorneys insistently used product-to-product comparison to argue infringement, not patent claims to product; and in doing so, conjoined the patents together for the sake of argument. They also portrayed an FDA application by BrainLAB as an admission of infringement.

The evidence is not sufficient to support a finding that Medtronic's contentions up to the time of the Court's ruling on the claims construction issues were frivolous, without merit or vexatiously presented. After receiving the Court's claims construction ruling, however, Medtronic and the MWE lawyers had a duty to reexamine this litigation and make an objective assessment of the validity of Medtronic's claims that BrainLAB's products infringed the patent claims as construed. They were obliged to accept those rulings as the law of the case and proceed with an appeal by requesting certification of an interlocutory appeal or conceding the summary judgment motions. Rather than accept that the claims construction rulings stripped the merits from this case, counsel chose to pursue a strategy of distorting those rulings, misdirecting the jury to a different reading of the claim language, and blatantly presenting the jury with a product to product comparison contrary to established law and the Court's cautionary instructions. Additionally, they deceived the jury into accepting the statements in BrainLAB's FDA application as an admission of patent infringement. Capping all of this was a closing argument that misdirected the jury's attention from the focus of the case, carefully crafted to avoid the Court's instructions. That argument distorted both the evidence and the law, misleading the jury into a plaintiffs' verdict.

The adamant denial that there was any abuse of advocacy in this case is in disregard of what this Court has already concluded and displays the same arrogance that has colored this case almost from its inception. Throughout these proceedings Medtronic and the MWE lawyers have demonstrated that when they are faced with adverse court rulings, they proceed undeterred, with only superficial observance of the court's determinations. Such conduct supports the conclusion that after the Markman rulings, Medtronic's primary objective in pursuing this litigation was to put economic pressure on its competitor in the market.

Medtronic and MWE argue that their trial conduct was not abusive advocacy because the Court did not do enough to restrain it. That argument ignores the Court's admonitions on the issue of product-to-product comparisons (Tr. at 1578-79), as well as Medtronic's own representations to the Court.

5,383,454 (Bucholz) prosecution estoppel was key.

[T]he Bucholz Patent was the centerpiece of Medtronic's case, and in particular its damages case. At trial, Medtronic and BrainLAB presented evidence regarding the prosecution history of the Bucholz Patent. During the jury instruction conference, the Court informed counsel that the issues of prosecution history estoppel would be determined by the Court. During closing argument, Mr. McMahon told the jury that the absence of jury instructions about the prosecution history of the Bucholz Patent showed that BrainLAB had not been forthright in its presentation. Tr. at 2991-92. Mr. McMahon's commentary on the lack of jury instructions was another example of the excessive partisanship that colored this trial.

The Bucholz prosecution history ultimately proved fatal to Medtronic's claim based on that patent.

 Claim construction emanating from prosecution estoppel prevented doctrine of equivalents being applicable.

Rather than alter course after the Court issued its claim construction order, Medtronic and MWE proceeded to trial, continuing to advocate Medtronic's interpretation of the Bucholz Patent and telling the jury that "this whole notion that whatever happened in the patent office on this patent, that somehow it was a limitation, is just nonsense." Tr. at 2991:19-21. By pointing the jury to language in the patents that supported Medtronic's reading of the claims, Mr. McMahon was directing the jury to override the court's claim construction. Tr. at 2983-84. He then repeatedly told the jury during closing argument that "tracking is tracking," a statement that misguided the jury about the requirements of infringement analysis.

The procedural history of this case, particularly the numerous amendments to the complaint, indicates that Medtronic fully understood that it could not rely on the Bucholz '454 Patent to support its position that Medtronic owned the patent rights to passive optical technology, unless the Bucholz Patent claims were construed so as to bring that technology within the literal claim scope. During closing argument, Mr. McMahon told the jury that Medtronic had built its case "brick-by-brick." But Medtronic's case was built on the Bucholz Patent, and that foundation crumbled after the Court's claim construction order.

Deception was not countenanced.

The conduct of Medtronic and its counsel constituted much more than a few instances of overstepping during a hard-fought battle. This case involved complicated technology. Patent law is complex and not intuitive to the average juror. Parties and counsel have an obligation to refrain from seeking to take advantage of those complexities by employing misleading strategies. Medtronic's infringement claims had the appearance of substance because BrainLAB's VectorVision products, like Medtronic's StealthStation, employed concepts and some features that were also present in the inventions of the asserted patents. Conceptual similarity, however, is not enough to show infringement, and a patent holder cannot pick and choose among features found in various patents in its portfolio and then combine them to show infringement. Medtronic's burden was to prove that each element and limitation of each of the asserted patent claims was found in each the accused products. Instead, Medtronic guided the jury to a comparison of the accused products and the StealthStation, and then offered them a short-cut with the "tracking is tracking" sound bite. Medtronic's untenable positions and misleading tactics complicated the Court's task of analyzing the legal issues.

The court awarded fees and expenses to BrainLAB under 28 U.S.C. § 1927.

"A lawyer's reckless indifference to the law may impose substantial costs on the adverse party. Section 1927 permits a court to insist that the attorney bear the costs of his own lack of care." Id. at 1511 (quoting In re TCI Ltd., 769 F.2d 441, 445 (7th Cir. 1985). Costs and fees may be awarded under § 1927 "when an attorney is cavalier or bent on misleading the court; intentionally acts without a plausible basis; [or] when the entire course of the proceedings was unwarranted." Dominion Video Satellite, Inc. v. Echostar Satellite L.L.C., 430 F.3d 1269, 1278 (10th Cir. 2005) (quoting Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1342 (10th Cir.1998)).

An award under § 1927 requires findings that the attorney's conduct was improper and caused an unreasonable multiplying of the proceedings. See Braley, 832 F.2d at 1513 ("the court must identify the extent of the multiplicity resulting from the attorney's behavior and the costs arising therefrom"); see also Sangui Biotech Int'l, Inc. v. Kappes, 179 F.Supp. 2d 1240, 1243 (D. Colo. 2002). Both requirements are met here.

After the Court issued its claim construction rulings, Medtronic's counsel proceeded cavalierly, with reckless indifference to the merits of Medtronic's infringement claims. The continued prosecution of a claim after its lack of merit has become apparent warrants sanctions under § 1927. Shackelford, 96 F.Supp. 2d at 1145. At trial, MWE's conduct was in disregard for the duty of candor, reflecting an attitude of "what can I get away with?" Throughout the trial, the MWE lawyers artfully avoided the limitations of the patent claims and created an illusion of infringement. They did so with full awareness that their case was without merit.

As the lead lawyers, Mr. McMahon and Ms. Elson were the most visible, but numerous MWE lawyers and support staff participated in the litigation and in the trial. Liability should be borne by the firm.

Law.com characterized the MWE attorneys:

McMahon is a widely known trial lawyer who heads McDermott's formidable IP practice. He's routinely called on for high-stakes cases. Elson is also a respected lawyer who heads the IP practice in Palo Alto.

An appeal may be in the offing.

Posted by Patent Hawk at February 25, 2008 3:06 PM | Litigation

Comments

It is interesting that the very same rationales adopted by the CAFC could be applied to the Saffran patent claims in the litigation with Boston Scientific and J & J to void the recent district court/jury verdict.

Posted by: Joe Breimayer at February 26, 2008 7:27 AM

What a hoot! You should have quoted the early part of the opinion where Judge Matsch complains that he did not have the benefit of viewing the accused products and presumably the Medtronic products at the Markman Hearing, no doubt following the CAFC admonitions prevailing at the time that the claims are to be construed in a vacuum (just using dictionaries?). In hindsight he complains that he would have immediately seen that the claims could not be read on the accused products and avoided the need for a trial. Typical of the CAFC to screw up trial courts. Glad the CAFC has seen the error of its ways and has reverted back to interpreting the claims in the real world in the context of the asserted infringing products at least to know how the claim limitations in dispute are being construed by the parties.

Posted by: mdtwatcher at February 26, 2008 12:36 PM