The Software IP Report

Federal Circuit Refines Willful Infringement Standard

By Charles Bieneman

Categories: Patent Infringement, The Software IP Report

The Federal Circuit “now holds that the threshold objective prong of the willfulness standard . . . is a question of law based on underlying mixed questions of law and fact and is subject to de novo review.”  Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc., No. 2010-1510 (June 14, 2012).  The panel here (Judges Newman, Gajarsa, and Linn) had previously affirmed the trial court in all respects.  Gore (the defendant/appellant) petitioned for rehearing en banc.  The Federal Circuit granted the petition, and “returned the matter to the panel for reconsideration . . . for the sole purpose of revisiting the issue of willfulness and further explicating the standard of review applicable to it.”

Judge Gajarsa began his opinion for the panel majority by noting that In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), had, after establishing that an objective standard of recklessness applied to the wilfulness determination, left “the application of this standard” open for “future cases to further develop.”  Seagate’s two-pronged test requires showing, first, that the threshold of objective recklessness has been met, and, then, that the accused infringer knew or should have known of the risk of infringement, i.e., that the accused infringer was subjectively reckless.

While courts have long treated the question of willfulness as one of fact, recent Federal Circuit cases have begun to recognize that the issue is somewhat more complex.  The second prong of the Seagate test, and the ultimate determination of reasonableness, may be a factual question.  However, in considering the first prong, objective recklessness, “the court is in the best position for making the determination of reasonableness.”  The court here therefore held “that the objective determination of recklessness, even though predicated on underlying mixed questions of law and fact, is best decided by the judge as a question of law subject to de novo review.”  The court further explained that:

When a defense or noninfringement theory asserted by an infringer is purely legal (e.g., claim construction), the objective recklessness of such a theory is a purely legal question to be determined by the judge. . . .  When the objective prong turns on fact questions, as related, for example, to anticipation, or on legal questions dependent on the underlying facts, as related, for example, to questions of obviousness, the judge remains the final arbiter of whether the defense was reasonable, even when the underlying fact question is sent to a jury.

The court then summarized “similar holdings in other parallel areas of law.”  For example, the law on enhanced damages for objectively baseless claims, U.S. Supreme Court precedent on sham litigation, and probable cause determinations in criminal cases all put ultimate control of the determination in the hands of the judge.

The court remanded the case back to the district court to apply the correct standard of law.  Judge Newman dissented from this part of the decision.  Based on the willfulness standard that the court had now articulated, she did not see why a remand was necessary.  Further, based on the facts in the record, Judge Newman would have found that willfulness could not be supported.