Medtronic, Inc. v. Catalyst Research Corp.

• Decision Date: 18 August 1982
• Docket Number: No. 4-77-Civ. 201.,4-77-Civ. 201.
• Citation: 547 F. Supp. 401
• Parties: MEDTRONIC, INC., Plaintiff, v. CATALYST RESEARCH CORPORATION, Defendant.
• Court: U.S. District Court — District of Minnesota

547 F. Supp. 401

MEDTRONIC, INC., Plaintiff, v. CATALYST RESEARCH CORPORATION, Defendant.

No. 4-77-Civ. 201.

United States District Court, D. Minnesota, Fourth Division.

August 18, 1982.

COPYRIGHT MATERIAL OMITTED

Robert O. Vidas, Schroeder, Siegfried, Vidas, Steffey & Arrett, and Lawrence Brown, Faegre & Benson, Minneapolis, Minn., for plaintiff.

Berj. A. Terzian, Pennie & Edmonds, New York City, and Ronald J. Brown, Dorsey & Whitney, Minneapolis, Minn., for defendant.

MEMORANDUM ORDER

LARSON, Senior District Judge.

The motions pending for consideration by this Court require the Court to evaluate various contentions regarding the validity and enforceability of the two patents in suit, the Moser patent, U.S. Patent No. 3,660,163, and the Schneider patent, U.S. Patent No. 3,674,562, the infringement of those patents by plaintiff Medtronic, Inc., and the amount of damages required to compensate defendant Catalyst Research Corporation (CRC), the owner of the two patents, for plaintiff's infringement. Much of the factual background to this action has been recounted by the Court in previous Orders.¹ Specifically before the Court at this time are plaintiff's motion for judgment notwithstanding the verdict or in the alternative for a new trial, plaintiff's motion for a judicial license under the Moser and Schneider patents, and defendant's motion for prejudgment interest in the amount of $297,032.74.

This suit was originally commenced by plaintiff in June 1977, bringing to an end discussions that had been taking place between the parties regarding a patent license under the Moser and Schneider patents. Plaintiff sought a declaratory judgment that defendant's patents were invalid and not infringed by plaintiff. Defendant counterclaimed alleging patent infringement, and in 1980 initiated two foreign patent infringement actions against plaintiff. Plaintiff was then granted leave to amend its complaint to add a breach of contract claim and to supplement its validity and infringement allegations, see Medtronic, Inc. v. Catalyst Research Corp., 518 F.Supp. 946, 956 (D.Minn., 1981), and on May 7, 1981, filed its Amended and Supplemented Complaint. Counts I and II of that complaint form the basis of the issues to be decided here. Count I deals with the Moser patent; Count II, the Schneider patent.

Prior to trial, defendant voluntarily filed a reissue application for the Schneider patent to delete example III, which in the course of the litigation was found to contain a typographical error. This Court denied plaintiff's motion for an Order compelling the defendant to submit the Moser patent for similar proceedings, see Medtronic, Inc. v. Catalyst Research Corp., No. 4-77-Civ. 201, Memorandum Order (D.Minn., filed November 3, 1981), and on April 22, 1982, ruled on various summary judgment motions relating to the government's right or title to the patents in suit. See Medtronic, Inc. v. Catalyst Research Corp., No. 4-77-Civ. 201, Memorandum Order (D.Minn., filed April 22, 1982). The Court held that the government's royalty-free license to the Schneider invention did not extend to Medicare or Medicaid funded purchases of pacemakers that incorporated infringing batteries, and further ruled that plaintiff's allegation that the government had equitable title in and to the patents in suit was insufficient as a matter of law as a defense to defendant's infringement counterclaim. Although plaintiff sought leave to amend its complaint a second time to allege that the government had legal title to the Moser patent, the Court denied this request on the ground that "to do so would create unwarranted delays and would infuse another complex issue into an already complex patent case." Id., slip op. at 7.

Because of this complexity, the Court agreed with counsel's suggestion at the pretrial conference to bifurcate the trial into two segments: the first, a trial on the question of patent validity, enforceability, and infringement, and the second, a damages trial. Accordingly, on May 24, 1982, trial on the substantive patent claims commenced. Plaintiff Medtronic presented the testimony of a total of 19 witnesses; defendant CRC called 11 witnesses for its portion of the case. On June 11, plaintiff provisionally rested, and the Court granted defendant's motion for a directed verdict as to those aspects of plaintiff's Amended and Supplemented Complaint that plaintiff agreed to remove or eliminate. See Tr. XI-1; XIV-108 to -143. At the close of the evidence, after approximately four weeks of testimony, the Court granted plaintiff's motion for a directed verdict on defendant's claim of willful infringement and granted defendant's motion for a directed verdict on plaintiff's claim of anticipation. In the Court's view, plaintiff had failed to submit evidence that the Moser and Schneider patents were anticipated by the prior art or lacked novelty pursuant to 35 U.S.C. § 102. An invention is new or novel unless a single prior art reference includes every element found in the invention at issue. The Hermann patent is the closest prior art to the Moser and Schneider inventions, but this patent does not disclose the inventions of Moser and Schneider in such full, clear, and exact terms that one skilled in the art could construct and practice either of these inventions without having to use the Moser and Schneider teachings or some inventive skill. See E. I. duPont de Nemours & Co. v. Berkley & Co., 620 F.2d 1247, 1261 (8th Cir. 1980); Phillips Electronic & Pharmaceutical Industries Corp. v. Thermal & Electronics Industries, Inc., 450 F.2d 1164, 1169 (3rd Cir. 1971). The Moser and Schneider patents are thus not invalid for lack of novelty.

Similarly, the evidence did not support a finding of willful infringement in this case. The issue of willful infringement is relevant only to the question of whether increased or treble damages should be awarded by the Court pursuant to 35 U.S.C. § 284. Such increased damages are within the Court's discretion to award, see Milgo Electronic Corp. v. United Business Communications, Inc., 623 F.2d 645, 665 (10th Cir.), cert. denied, 449 U.S. 1066, 101 S.Ct. 794, 66 L.Ed.2d 610 (1980), but are only warranted upon a clear showing of willful and deliberate infringement. See Western Electric Co. v. Stewart-Warner Corp., 631 F.2d 333, 336-38 (4th Cir. 1980), cert. denied, 450 U.S. 971, 101 S.Ct. 1492, 67 L.Ed.2d 622 (1981); Leesona Corp. v. United States, 599 F.2d 958, 969-70 (Ct.Cl.), cert. denied, 444 U.S. 991, 100 S.Ct. 522, 62 L.Ed.2d 420 (1979). When the issues are close, fairly debatable, and litigated in good faith, a finding of willful infringement is not warranted. See id.; Deere & Co. v. International Harvester Co., 658 F.2d 1137, 1146-47 (7th Cir.), cert. denied, 454 U.S. 969, 102 S.Ct. 514, 70 L.Ed.2d 386 (1981). The evidence is clear that Medtronic had an honest doubt as to the validity of the patents in this case. Indeed, in the Court's view, the question of patent validity is a close and difficult one. Because the cooking process used by Medtronic changes the chemical composition of its batteries, the issue of infringement is also debatable. Moreover, Medtronic officials believed that the June 25, 1976 Agreement between the parties allowed Medtronic to go forward and manufacture lithium-iodine batteries using the Greatbatch technology, free from interference by CRC.² Although the jury's finding on the willfulness issue is advisory in any case, see White v. Mar-Bel, Inc., 509 F.2d 287, 292 (5th Cir. 1975), on this record the Court believed that reasonable persons could not have found that plaintiff acted deliberately and in bad faith, without any regard for the patent rights of CRC. Compare Saf-Guard Products, Inc. v. Service Parts, Inc., 491 F.Supp. 996, 1004-05; 1011-12 (D.Ariz.1980) (court held that because "the defendants in this case have from the outset taken a completely untenable position regarding the validity of the litigated patent," treble damages were justified). Hence, the willfulness issue was not submitted to the jury.

A total of twelve special verdict questions were submitted to the jury, however, and on June 24, 1982, the jury returned its verdict with all questions answered in favor of defendant. Testimony on the damages aspect of the case was subsequently presented. On June 30, 1982, the jury determined that CRC had suffered $5,066,900 in damages as a result of Medtronic's infringement of the Moser and Schneider patents. The motions now before the Court followed the Order for Judgment entered July 12, 1982, pursuant to the jury's special verdict answers.

In its motion for judgment notwithstanding the verdict, plaintiff contends that the Court erred in not granting its motion for a directed verdict on all issues pertaining to validity, enforceability, and infringement of the Moser and Schneider patents. This motion must be determined in accordance with the well-established standards for judgment notwithstanding the verdict pursuant to Fed.R.Civ.P. 50(b). Motions for judgment n. o. v. "should be sparingly granted," see Cleverly v. Western Electric Co., 594 F.2d 638, 641 (8th Cir. 1979), and are justified only when the evidence, granting the prevailing party all reasonable inferences that can be drawn from it, simply fails to support the verdict. See Richardson v. Missouri Pacific Railroad Co., 677 F.2d 663, 665-66 (8th Cir. 1982); Tackett v. Kidder, 616 F.2d 1050, 1053 (8th Cir. 1980). Of course, as plaintiff notes, judgment n. o. v. may be more appropriate or justified in a complex patent case than in some other cases because of the nature of the patent law, particularly where there is a high probability of juror confusion or misunderstanding. Cf. Celotex Corp. v. United States Gypsum Co., 204 U.S.P.Q. 745, 747-48 (N.D.Ill.1979) (jury finding of nonobviousness set aside on grounds that the jury was misled and did not properly apply the law). Indeed, the Eighth Circuit has...