Terrence McMahon got some vindication Monday.
The Federal Circuit U.S. Court of Appeals reversed a stinging $4.3 million sanctions order against the noted trial lawyer's firm, McDermott, Will & Emery, and client Medtronic Inc.
Colorado Senior U.S. District Judge Richard Matsch had excoriated McMahon and his co-counsel Vera Elson in February 2008 for proceeding "cavalierly, with reckless indifference to the merits of Medtronic's infringement claims," in a patent dispute with BrainLAB over surgical equipment.
In a detailed 38-page ruling, a three-judge Federal Circuit panel unanimously concluded that Matsch was too tough on the McDermott lawyers.
Judge William Bryson wrote for the panel that "Medtronic did not improperly prolong the proceedings by pursuing its claims through trial" and disagreed "with most of the district court's criticisms of Medtronic's litigation tactics."
A blustery, battle-tested trial lawyer, McMahon said he was "delighted" by the decision.
"This is a complete vindication of the trial work we did for Medtronic, and I'm pleased that the Federal Circuit has concluded that we engaged in proper and zealous advocacy," he said.
Medtronic sued in 1998, accusing BrainLAB of infringing on its patents with the VectorVision line of image-guided surgical navigation equipment. Matsch refused to dismiss the case on summary judgment and a jury handed Medtronic a $51 million win. That verdict has since been overturned. It was only after the trial that Matsch issued the sanctions, ordering McDermott and Medtronic to pay $4.3 million worth of BrainLAB's legal fees.
In its reversal, the Federal Circuit echoed an oft-heard criticism about Matsch's order: If the judge didn't like what was going on in the courtroom, why didn't he stop it?
"The district court's characterization of Medtronic's claims as frivolous is undermined by the fact that the court denied BrainLAB's motions for summary judgment and denied each of its motions for [judgment as a matter of law] filed during the trial," Bryson wrote.
The panel only agreed with Matsch about one thing: that McMahon stepped over the line when he argued that a BrainLAB letter to the Food and Drug Administration alluding to the two companies' products as "equivalent" showed evidence of infringement.
"That single incident, viewed in context, is not sufficient to support the district court's finding that this case is 'exceptional,' and it is plainly insufficient to support the broad attorney fee award that the district court entered in this case," Bryson wrote.
Although the panel judges completely vitiated Matsch's order, they bent over backwards to point out that judges should still rule their courtrooms as they see fit.
In a concurrence, Judge Alan Lourie wrote that the court reversed because "each incident had explanations that the panel believed were exonerating," but "this case should not be viewed by district judges as chilling their taking charge of their courtrooms and ensuring that proper arguments are made against proper opponents."
Matsch is a well-respected judge who oversaw the Oklahoma City bombing trial.
Medtronic and McDermott wasted no expense on the appeal. Supreme Court frequenters Seth Waxman, for Medtronic, and Carter Phillips, for McDermott, argued the case before the Federal Circuit. Jay Campbell of Renner, Otto, Boisselle & Sklar represented BrainLAB.
