“While the jury’s $130 million verdict is significant and may sound large in the abstract, it may not be enough without enhancement to deter infringing conduct given the context of this case,” Judge Olguin wrote. Evidence presented at trial shows infringing products sold by Cochlear generated $1.8 billion in revenues.
On Sunday, November 4th, U.S. District Judge Fernando M. Olguin of the Central District of California signed an order regarding pending motions in a patent infringement case between Australian medical device firm Cochlear Corporation and the medical non-profit organization Alfred E. Mann Research Foundation for Scientific Research. Among the motions decided by Judge Olguin included a motion for enhanced damages granted by the judge which doubled the damages award to the research foundation up to a reported $268 million.
In the lawsuit, the Alfred E. Mann Foundation asserted two patents which it alleged Cochlear had infringed upon through its sale of cochlear implant technology: U.S. Patent No. 5938691, titled Multichannel Implantable Cochlear Stimulator; and U.S. Patent No. 5609616, titled Physician’s Testing System and Method for Testing Implantable Cochlear Stimulator. The jury in the case found that claims of both patents were infringed by Cochlear and that Cochlear engaged in willful infringement.
Although the jury found that the asserted patents weren’t invalid for either anticipation or obviousness, the court determined that all asserted claims other than claim 10 of the ‘616 patent were invalid for indefiniteness. On appeal to the Federal Circuit, the appellate court affirmed the indefiniteness finding on the ‘691 patent but reversed the finding as to indefiniteness on claim 1 of the ‘616 patent.
Although the ‘691 patent was found to be invalid, the Alfred E. Mann Foundation argued that it was entitled to the entire damages award of $131.2 million because the verdict was fully supported by the ‘616 patent alone. The court ended up agreeing with the plaintiff that Cochlear had forfeited the right to a new damages trial based on the fact that verdict forms proposed by Cochlear asked the jury to determine the proper royalty rate or total damages to award based on infringement of the ‘616 patent or the ‘691 patent. Further, charts included in Cochlear’s proposed verdict forms only sought to apportion damages by infringing product, not by patent or claim.
In assessing the jury’s finding of willful infringement, the court noted that Cochlear appeared to concede that it was aware of the covered technology, including a back telemetry system incorporated into the cochlear implant to minimize power consumption, at least as far back as 1998. Further, the record contained substantial evidence from which a jury could conclude that Cochlear intentionally copied the technology covered in the ‘616 patent, including internal memos indicating Cochlear’s concerns over threats to its market leadership and evidence that the cochlear implants sold by Cochlear used an infringing design over Cochlear’s assertion that the implants were designed with a non-infringing alternative.
After sustaining the jury’s finding of willful infringement, the court analyzed whether enhanced damages should be awarded. The court found that multiple Read factors supported awarding enhanced damages, including evidence that Cochlear deliberately copied the technology covered by the ‘616 patent, that it didn’t investigate the scope of the ‘616 patent to form a good-faith belief that it didn’t infringe and that it previously committed misconduct during the course of litigation. In all, the court found that seven Read factors weighed in favor of enhanced damages, two of which weighed strongly in favor of enhanced damages, and only one Read factor weighed against enhanced damages. Although the court is able to increase the damages award up to three times, the court found that doubling the damages was sufficiently punitive for Cochlear’s egregious conduct.
“While the jury’s $130 million verdict is significant and may sound large in the abstract, it may not be enough without enhancement to deter infringing conduct given the context of this case,” Judge Olguin wrote. Evidence presented at trial shows that the infringing products sold by Cochlear generated $1.8 billion in revenues. Cochlear had publicly stated in a 2016 annual report that the jury’s verdict won’t disrupt Cochlear’s business or U.S. customers.
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