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Archived updates for Tuesday, January 31, 2006

Management Pressure, Late Opinion, and Lack of Reliance Supported Willfulness Verdict

In Applied Medical Resources Corp. v. United States Surgical Corp. (Fed. Cr. January 24, 2006), the federal Circuit agreed with Applied that substantial evidence supported the jury’s verdict of willful infringement.

As the district court correctly noted, Applied presented evidence from which a jury could reasonably infer that U.S. Surgical desperately needed a universal seal trocar to remain competitive in the surgical business, that U.S. Surgical’s management did not properly oversee or adequately participate in the development of Versaport II, and that U.S. Surgical’s management placed intense time pressure on their engineers to create a new product.

At trial, U.S. Surgical produced three written opinions from outside counsel dated May 29, 1997, May 30, 1997, and June 30, 1997, in an attempt to show that it relied on legal advice to make and sell the infringing trocars. However, the first letter
was simply "ship[ped] off in the mail," the second letter did not address infringement of the claims of the ’553 patent and was limited to the issue of contempt, and the third letter arrived after U.S. Surgical began selling Versaport II. Based on this evidence, a jury could have reasonably concluded that U.S. Surgical paid little if any attention to the opinion letters.

Other evidence also undermines U.S. Surgical’s alleged good faith reliance on the
legal opinions. Thomas Bremer, U.S. Surgical’s former Senior Vice President and General Counsel, testified that U.S. Surgical wanted "no gap" in the supply of Versaport trocars once the Applied I injunction took effect on May 20, 1997. A
reasonable jury could have believed that U.S. Surgical was not concerned about
infringement and would have proceeded to manufacture Versaport II despite
receiving outside legal opinions. Mr. Bremer also offered additional testimony
from which a jury could have inferred that he did not rely on the legal opinions
as legitimate advice as to whether Versaport II infringed, but rather sought legal opinions for their potential evidentiary value on the issue of willful infringement in future litigation. This could have suggested to the jury that U.S. Surgical did not rely on any opinions of counsel in good faith.

We conclude that the jury’s finding of willfulness was supported by substantial
evidence, and therefore that the district court did not err in denying U.S. Surgical’s motion for judgment as a matter of law of no willful infringement.

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