Appeals court reverses Cochlear win in Advanced Bionics patent spat

A federal appeals court last week overturned a win for Cochlear Ltd. (ASX:COH) in its patent spat with Advanced Bionics over hearing implant technology, sending the case back to district court for reconsideration in light of a recent U.S. Supreme Court decision.

The cochlear implant patents were licensed to Advanced Bionics by the Alfred E. Mann Foundation, named for 1 of the inventors of cochlear implant technology. The foundation sued Cochlear in 2007, alleging infringement of a pair of patents covering the hearing implant technology.

In January 2014 a jury in the U.S. District Court for Central California found that Cochlear infringed both patents and awarding $131.2 million in damages. Because the jury also found that the infringement was willful, Cochlear could have been on the hook for treble damages if Judge Fernando Olguin agreed.

But Olguin in April 2015 vacated the damages award, ordered a news damages proceeding and invalidated 3 of 4 claims in the 2 patents, ruling that they failed to disclose key elements. Further proceedings awaited a decision on both parties’ appeals by the U.S. Court of Appeals for the Federal Circuit.

The Federal Circuit bench Nov. 17 ordered the Central California court to reconsider the willfulness judgment in light of the Supreme Court’s decision last June in Halo v. Pulse/Stryker v. Zimmer relaxing the standard for enhanced damages awards in patent infringement cases.

The appeals court also reversed the invalidity judgment for 1 of the patent claims and remanded the case for consideration on the damages issue and willfulness infringement of 2 claims for the remaining patent.

Cochlear said that, because the patents have expired, a decision in the case won’t disrupt its U.S. business. The company said it set aside about $29.2 million (A$21.3 million) in December 2013 to cover the dispute.

“We are pleased that the Circuit Court affirmed the infringement of Claim 10, reinstated the jury’s verdict of infringement on Claim 1 of the ‘616 patent, and instructed the District Court to consider the jury’s finding of willful infringement in light of the Supreme Court’s new willfulness standard described in the 2016 Halo v. Stryker decision,” Alfred Mann Foundation CEO David Hankin said in prepared remarks.

($1 = A$1.3709799041)

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