Fee award against law firm authorized under 28 U.S.C. § 1927, federal judge says
In what can only be described as a scathing rebuke of the litigation tactics employed by two successful intellectual property attorneys, U.S. Judge Richard P. Matsch of the District of Colorado on Feb. 12 ordered those attorneys and their firm – Terrence McMahon and Vera Elson of McDermott, Will & Emery (MWE) – to cover the attorneys fees of opposing counsel. The ruling in Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersystems GmbH comes in the decade-old patent infringement dispute between Medtronic Inc. and BrainLAB Inc. over patents relating to surgical navigation systems that use computer-generated images to guide a surgeon during surgery.
Although the Tenth Circuit U.S. Court of Appeals has not yet addressed the issue of whether 28 U.S.C. § 1927 authorizes fee awards against law firms, Judge Matsch nonetheless deemed such an award appropriate in the case of MWE, which represented Medtronic. Medtronic, for its part, was deemed jointly and severally liable under 35 U.S.C. § 285.
BrainLAB suffered “an injustice” at the hands of Medtronic, Judge Matsch wrote, when Medtronic and MWE proceeded with their allegations “cavalierly, with reckless indifference” following an adverse claim construction ruling. Medtronic and MWE could have accepted that the claim construction rulings stripped the merits from their case, but instead chose to push onward, and in the process pursued “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.” In addition, MWE deceived the jury into accepting the statements in BrainLAB’s application before the U.S. Food and Drug Administration (FDA) as an admission of patent infringement, and offered a closing argument that misdirected the jury’s attention from the focus of the case in a “carefully crafted” effort to avoid Judge Matsch’s previously-entered instructions.
In his Feb. 12 ruling, Judge Matsch wrote:
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.
McMahon, who heads MWE’s Intellectual Property, Media & Technology Department, and Elson, who heads the firm’s Silicon Valley IP department, thus far have refused to comment on the ruling. BrainLAB has until March 12 to file a detailed description of the services rendered by their attorneys in connection with the district court proceedings in the lawsuit, from Feb. 2005 to the present. According to published reports, the fees will most likely total several million dollars.
At least one other court has cited Judge Matsch’s ruling so far. Judge Harrington’s February 25 ruling on Plaintiffs' Motion for Enhanced Damages and Attorneys' Fees in Depuy Spine v. Medtronic (D. Mass.) cited Judge Matsch’s opinion:
As Judge Richard Matsch of the District of Colorado has recently observed, "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 Navigation, Inc. v. Brainlab Medizinische ComputerSystems GMBH, 98-cv-01072-RPM, 2008 U.S. Dist. LEXIS 13483, 2008 WL 410413 at (D. Colo. Feb. 12, 2008) (Order for Award of Attorney Fees and Costs). The defendants here clearly sought to take advantage of the technical and legal complexities inherent in this case.