Federal Circuit affirms Morgan Lewis win for nonprofit in patent case

A federal appellate panel on Monday affirmed a $268 million judgment against medical device company Cochlear Ltd. for infringing two hearing aid patents, an award that was doubled for willful infringement by U.S. District Judge Fernando Olguin of Los Angeles in 2018 following a high court decision.

Attorneys for Cochlear argued Olguin erred in not permitting a new trial on damages and whether he abused his discretion in increasing the damages award.

But a U.S. Court of Appeals for the Federal Circuit quickly rejected the Cochlear appeal, giving a big win to the nonprofit Alfred E. Mann Foundation and Advanced Bionics LLC. Alfred E. Mann Foundation et al. v. Cochlear Corp. et al., 2019-1201 (Fed. Cir., filed Nov. 14, 2018).

The lawsuit, first filed in 2007, reached a $131 million jury verdict in 2014. Olguin then cleared Cochlear of willful infringement, dismissed three of the four original patent claims and ordered a new trial.

But a Federal Circuit panel revived the claims in 2016, sending the case back to Olguin to decide willfulness. The appellate panel cited a 2016 U.S. Supreme Court case which gave district courts the right to award enhanced damages as much as triple the compensatory award. Halo Electronics Inc. v. Pulse Electronics Inc. et al., 136 S.Ct. 1923 (2016).

On remand, Olguin concluded in 2018 Cochlear infringed the patents for 11 years after being notified by the foundation and made $1.8 billion in revenue using the infringed patents.

A team of attorneys with Morgan, Lewis & Bockius LLP, led by Thomas M. Peterson of San Francisco, who argued the case, and Michael J. Lyons of Palo Alto, represented the Alfred E. Mann Foundation. Donald M. Falk of Mayer Brown LLP argued for Advanced Bionics.

Peterson and Falk could not be reached for comment Monday.

J. Michael Jakes of Finnegan, Henderson, Farabow, Garrett & Dunner LLP, who argued for Cochlear at the Federal Circuit, referred a reporter's phone call to the company.

Jennifer Stevenson, Cochlear's head of corporate communications, said the Australia-based company would seek en banc review at the Federal Circuit.

"This case relates to two patents that are long expired," Cochlear CEO Dig Howitt said in a statement Monday. "The Court invalidated the first patent and the remaining patent was much narrower in scope. We believe the amount of damages awarded is out of proportion with the limited application of the patented feature."