Two of the San Francisco Bay Area's most prominent IP litigators were excoriated this week by a federal judge for allegedly misleading jurors in a patent infringement trial.
McDermott Will & Emery's Terrence McMahon and Vera Elson were chastised for "abuse of advocacy" in the trial judge's Tuesday order requiring the firm and its client to pay the opposing side's attorney fees.
Colorado U.S. District Judge Richard Matsch's ruling comes in a patent fight between medical device companies in which Medtronic Inc., McDermott's client, accused BrainLAB of infringing on technology used to control surgical instruments. Matsch said the McDermott lawyers willfully ignored his rulings on claim construction in their arguments before a Colorado jury in 2005. In patent cases, those orders define the scope of the patents and, therefore, what the plaintiff's lawyers can argue for infringement.
"After the court issued its claim construction rulings, Medtronic's counsel proceeded cavalierly, with reckless indifference to the merits of Medtronic's infringement claims," Matsch wrote.
"At trial, [McDermott]'s conduct was in disregard for the duty of candor, reflecting an attitude of 'what can I get away with?' Throughout the trial, the [McDermott] 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."
The jury was originally swayed by the arguments and returned a $51 million verdict in favor of Medtronic after the 13-day trial. But Matsch set the verdict aside because of the "misleading trial tactics" by McMahon and Elson. His ruling was upheld on appeal last March.
With Tuesday's ruling on attorney fees, the firm and client Medtronic are on the hook for BrainLAB's costs, which IP lawyers say could reach into the millions, since it covers the litigation from 2005 to the present, including trial. BrainLAB has until March 12 to file its bill with the court.
McMahon is a widely known trial lawyer who heads McDermott's formidable IP practice. He's routinely called on for high-stakes cases. Elson is also a respected lawyer who heads the IP practice in Palo Alto. McMahon and Elson did not return phone calls and a McDermott spokeswoman said the firm had no comment.
Lawyers for McDermott, from Denver-based Holme Roberts & Owen, argued in court filings that trial conduct was "professional, proper and well within the bounds of appropriate advocacy."
"We were very pleased with the ruling," said Jay Campbell of Cleveland's Renner, Otto, Boisselle & Sklar, which represented BrainLAB. "We agree with the judge. In the context of the trial, it went far over the line of propriety."
Paul Vapnek, a legal ethics expert and patent lawyer at Townsend and Townsend and Crew, said the order shows that there are limits on "how far you can go in representing a client; winning at all costs is not what you're supposed to do."
Vapnek said the ruling in the Medtronic case will be held up as a cautionary tale for years to come.
"This is going to get circulated around the country as a symbol of what not to do when you're involved in litigation," said Vapnek, co-author of the Rutter Group's California Practice Guide to Professional Responsibility. "I'm going to make a note to put this in our book."
McDermott was brought onto the patent infringement case, Surgical Navig Tech v. BrainLAB Mediz Comp., 1:98-cv-01072, in 2002. The lawyers argued for broad readings of Medtronic's patents during claim construction, but Matsch ruled them to be narrower -- making the argument for infringement more difficult.
The judge said in his Tuesday ruling that while McDermott paid lip service to the orders, the lawyers improperly pointed the jury toward Medtronic's broad reading of the patents. McMahon also made comparisons of the two companies' products, the StealthStation and VectorVision, instead of comparing Medtronic's patents to BrainLAB's product, "contrary to established law," Matsch wrote.
Finally, the judge railed on McMahon for using a Food and Drug Administration letter, in which BrainLAB sought approval for its device and alluded to Medtronic's StealthStation, to bolster the case for infringement.
"Medtronic's counsel were experienced patent litigators who understood the differences between the doctrine of equivalents and the FDA process," the judge wrote. "They knew that BrainLAB's statements in its FDA submission were not an admission that the BrainLAB products infringed the asserted patents."
Lawyers for McDermott argued that the court had an obligation to stop any litigation conduct that stepped over the line, according to the ruling.
Townsend's Vapnek said he had a similar initial reaction, but added that it can be an awkward position for a judge.
"Judges are often reluctant during trial in trying to control the lawyers too closely," Vapnek said. "They don't want to give the jury the impression they're picking one side or the other."
McDermott's lawyers also argued that the judge could have granted BrainLAB's summary judgment motion for dismissal if the case really didn't hold any water.
Judge Matsch, a respected veteran of the bench who oversaw the Oklahoma City bombing cases, shouldered some responsibility for not granting the motion to dismiss, saying essentially that he trusted McDermott when the lawyers claimed there were "material factual questions to be resolved at trial."
Although the firm wouldn't comment, lawyers speculate that McDermott will appeal the ruling. Vapnek also said Elson and McMahon would have to report themselves to the bar because of the sanction against the firm. "I would interpret this, in effect, as a sanction against them," he said