April 9, 2009 9:00 AM

The Am Law Litigation Daily: April 9, 2009

Posted by Alison Frankel

IP
Kirkland Wins Hundreds of Millions in Patent Damages for Medical Device Client
One of the longest, strangest patent cases on record is now (at last) on its way to generating a whopper of a payday for a medical device company called C.R. Bard. Last week Tucson federal district court judge Mary Murguia doubled a $185 million jury verdict against W.L. Gore & Associates, and tacked on $19 million in attorneys' fees, for an interim total judgment of $410 million. (Murguia's order is under seal, but Bard disclosed the amount in a filing with the Securities and Exchange Commission.) That's not it for Gore, though. According to Bard's lead counsel, Steven Cherny of Kirkland & Ellis, Judge Murguia is weighing motions for supplementary damages and a compulsory licensing fee. The total, he told us, will likely top $600 million.

It's been a long, long time coming. "I'm telling you, this was the most complicated case I've ever seen," Cherny said. "It had a lot more human interest than most patent cases."

The story begins all the way back in the 1970s, when W.L. Gore, the company that produces Gore-Tex, asked a young doctor named David Goldfarb to work on possible medical applications for its Teflon-like textile. Goldfarb's lab developed a breakthrough vascular graft. "This was a profound invention," Cherny said.

Goldfarb, who hadn't received any payment from Gore, applied for a patent on his graft. So, however, did Gore. It would take a week of Litigation Daily postings to recount all of the suits, countersuits, and Patent and Trademark Office machinations that followed over the next 25 years; the file at the PTO is more than ten feet high. We'll give you the shortened version: In 2002--decades after Gore cornered a large piece of the market with its own version of Goldfarb's graft--the PTO finally awarded Goldfarb the patent on his invention.

By then the doctor had licensed the patent to Bard, which went to Gore with a licensing proposal. Gore turned it down, so Bard sued in Arizona federal district court for infringement. In 2004, the lawyer who'd started the case with Goldfarb back in the 1970s retired. Bard brought in Cherny, then a 39-year-old partner at Fish & Neave, to handle it.

The case went to trial in November 2007. Cherny opened with a photograph of Goldfarb from the 1970s, when he'd developed the graft, and contrasted it with a 2007 photo of the doctor, who sat at counsel table throughout the trial. "He looks old," Cherny said. "He's been fighting for all these decades."

The trial featured some wild diversions, such as the testimony of a former ally of Goldfarb who claimed he had perjured himself 30 years earlier when he said the doctor had invented the graft. Or the testimony about a doctor from the Netherlands who was rumored to have played a role in the invention but who left a copy of his lab notebook to be guarded by his lawyer in the U.S.; the lawyer destroyed the notebook when he closed his practice, and the Netherlands doctor developed Alzheimer's. Cherny and Gore's trial team, which included lawyers from Morgan Finnegan and Osborn Maledon, had to deal with 30-year-old interrogatories and depositions.

After the jury found Gore had willfully infringed Goldfarb's patent and awarded $185 million in damages in December 2007, Judge Murguia held a bench trial on Gore's claims of inequitable conduct. In an 83-page ruling last July (in which the long-suffering judge recounted most of the history of the case), she found no inequitable conduct. Then, on March 31, the judge denied Gore's posttrial motions.

Gore lawyer James Gould, now at Locke Lord Bissell & Liddell, referred us to Gore's public relations department, which gave us a statement: "We are disappointed in the decision, as we believe the patent was invalid and unenforceable. We plan to take the appeal to the federal circuit."

Cherny, who's been working on the case for a relatively short stretch of its history, still feels like he's grown up with the Goldfarb vascular graft. "I was pretty young when I started on this," he told us. "This case had every issue you could imagine."

Securities
L.A. Federal Judge Refuses to Dismiss Countrywide Subprime Class Action--Again
Los Angeles federal judge Mariana Pfaelzer denied motions by Countrywide, its auditors, its underwriters, and its outside directors to dismiss an amended shareholder class action against them. The ruling comes less than four months after Judge Pfaelzer denied motions to dismiss the plaintiffs' first complaint. She has also refused to dismiss a shareholders derivative suit against several Countrywide directors and officers.
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Law Firms / White-Collar
Divided Loyalties: A Cautionary Tale, at Irell's Expense
Last week a California federal judge referred Irell & Manella to the state bar for disciplinary action for breaching its duty of loyalty to its client, former Broadcom CFO William Ruehle. The judge, who is presiding over a criminal stock options backdating trial against Ruehle, also ruled that statements Ruehle made to Irell during an internal investigation are not admissible in his trial because they are protected by attorney-client privilege.
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International / IP
Sweet Surrender: Bingham Wins ITC Sugar Substitute Case
The International Trade Commission has upheld its ruling that Chinese companies can make copycat versions of the sweetener Splenda, rejecting an appeal by Splenda's maker, British food company Tate & Lyle.
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International
Kelley Drye Files $1 Billion Suit Accusing Insurers of Aiding Chinese Food Dumping
A class action complaint filed Tuesday alleges that six major insurance companies--with the tacit cooperation of the U.S. Department of Commerce--secretly facilitated the import of Chinese products that were dumped on the market at ruinous prices.
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Edited by Alison Frankel

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