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IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF DELAW ARE

CORDIS CORPORATION,)Plaintiff,)v.Civ. No. 03-27-SLR)BOSTO N SCIENTIFICCORPOR ATION and BOSTONSCIENTIFIC SCIMED, INC.,)

Defendants.M E M O R A N D U M O R D E RAt W ilmington this 28th day of Janua ry, 2010, having conferred with counselregarding multiple pretrial evidentiary issues;IT IS ORD ERE D that:1. Willfulness. The parties dispute the appropriate scope of the Federal

Circuit's decision in In re Seagate Techonology, LLC, 497 F.3d 1360 (Fed. C ir. 2007)(en ban c), as it relates to their proposed ev idence at bar. T he Fede ral Circuit inSeagate revisited its jurisprudence on the doctrine of willfulness in the context of adiscovery dispute, to wit, the question of whether "waive r resulting from adv ice ofcounsel and word product defenses extend to trial counsel." Id. at 1370. The Courtstarted its ana lysis by exploring the definition of the term "willful," as used g ene rally inthe civil context, noting in this regard that the "'standard civil usage' of 'willful' includesreckless behavior." Id. (citing Safeco Ins. Co. of Am. v. Burr, 127 S. Ct. 2201, 2209

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(2007)). The Federal Circuit concluded that,to establish willful infringement, a pa tentee must show byclear and conv incing ev idence that the infringer acted despitean objectiv ely high likelihood that its actions cons titutedinfringement of a valid patent. . . . If this threshold objectivestandard is satisf ied, the paten tee must also dem onstrate thatthis objectively-defined risk (determined by the record dev elopedin the infringemen t proceeding) was either known or so obviousthat it should have been known to the accused infringer. Weleav e it to future cases to further dev elop the ap plication of thisstandard.

Seagate, 497 F.3d at 1371.2. Hav ing announced the general standard, the Federal Circuit resolved the

pending discovery dispute based on the following reasoning: "[I]n ordinarycircumstances, willfulness will depend on an infringer's prelitigation conduct [for,]when a comp laint is f iled, a patentee m ust hav e a good faith basis for alleging willfulinfringement." Id . at 1374 (emphasis added). "Because willful infringement in the mainmust f ind its basis in prelit igation conduct, communications of trial counsel counselhave little, if any, relevance warranting their disclosure." Id . (emphasis added).Moreov er, the opinions of counsel receiv ed after suit was commen ced "appear to be ofsimilarly marginal v alue," as "reliance on the opinions after l it iga tion was commencedwill likely be of l i t t le s ignif icance." Id . (emphasis added).

3. Accepting the Fe deral Circuit's inv itation to "further develop the application of[the] standard" announced in Seagate, the parties at bar focus on one phrase in theCourt's decision, highlighted be low: "If this threshold objective standard is satisf ied, thepatentee mus t also demonstrate that this object ively-def ined r isk (determined b y therecord developed in the inf ringemen t proceeding) was either known or so obvious

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that it should have been known to the accused infringer." Id. at 1371 (emphasisadded). Coun sel's interpretation of what this "record" encomp asses is as ima ginativeas it is variable. Indeed, it has become the new man tra for requests to admit such"objective" ev idence as expert opinions an d court decisions. For instance, in requestingthe admission of (or at leas t permission to refer to) the preliminary injunction decisionsissued in this case, counsel has a rgued, "what could be more objectiv e than threefederal judges on the Court of Appea ls and on e federal judge on the district courtlooking at the ev idence ne utrally, dispassionately, and sa ying[, e.g.,] you're likely tosucceed?" (Transcript from January 20, 2010 pretrial at 15)

4. Before addressing the specific evidentiary disputes raised by the parties, I willtake this opportunity to share my thoughts on the application of the Seagate holding toa trial setting.

a. It cannot be emphasized enough that the litigation process is acomplicated one, comprising mult iple steps a nd m ov ed forward by m ultiple decisions,ranging from resolving a discov ery dispute to a case-dispositive m otion. Consequen tly,I am v ery uncomfortable with characterizing administrativ e an d court decisions a s"objective ev idence" for presentation to a jury. As recognized by counsel, a jury is goingto give such evidence great weight, even when the procedural and substantive basesfor most such decisions will not be apparent to the jury. This strikes me either as thekind of ev idence better suited for review by a court ' or as elicit ing the kind of hindsight

'Although willfulness has be en cha racterized a s a m atter of fact for a jury todetermine (the court being charged with awarding, or not, enhanced dam ages ba sed ona jury's determination), the paradigm sugge sted by counsel is more consistent withwillfulness being a n issue of law.3

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review that is so strenuously discouraged in other aspects of patent law. See KSRIntern. Co . v. Teleflex Inc., 550 U.S. 398, 421 (2007). Therefore, consistent with thereasoning of the Seagate decision a s a whole (and its empha sis on prelit igationconduct), generally only eviden ce regarding the prelit igation lan dscape of the disputewill be admitted.

b. Even in this regard, the proposed evidence must pass muster underFed. R . Civ . P. 403. In other words, while some ev idence may reflect an objectivelyhigh likelihood that certain activit ies constitute infringement of a v alid patent, suchev idence ma y still be excluded if "its probative v alue is substantially outweighed by thedange r of unfair prejudice, confusion of the issues, or misleading the jury."

c. To the extent that probativ e ev idence runs afoul of Rule 403, the courtmay ame liorate the dan ger of unfair prejudice by either a limit ing instruction or bycharacterizing the ev idence in a more neutral way than an adv ocate would.

5. With this analytical framework in place, the parties' evidentiary disputes areresolved as follows:

a. The parties' st ipulation expa nding the trial record to include "the en tirerecord in the abov e-captioned action" and "[a]ll decisions by this court or by the FederalCircuit" in other case s (D.I. 523) is denied. I am not inclined to clutter the trial recordwith such volum inous ma terials, most of which will not be relevan t to this proceedingand which are a matter of public record in any ev ent.

b. As discussed at the pretrial conference, I propose to summarize theprocedural history of this case by a men ding the third paragrap h in "The Pa rties an dIssues" section of the prelimina ry jury instructions, as follows:

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Under the patent laws of the United States, patent infringementoccurs when the infringing party makes, uses, sells, or offers tosell in the United States a product meeting all requirements of aclaim of a United States patent. In this litigation, the court made apreliminary finding of infringement against defendants, a findingthat was affirmed on appeal. The accused devices were nottaken off the market, however, and the case proceeded totrial based on the court's finding, upon a more developedrecord, that genuine issues of material fact precluded entry ofa summary judgment as to infringement. A jury ultimatelydetermined that Boston Scientific's Express, Taxus Express,Express Biliary and Liberte stents infringed claims 1 and 23 ofthe '762 patent, and that Boston Scientific's Liberte stent infringedclaim 2 of the '406 patent.c. I agree with Cordis that the state of the industry in 2004 (BSC's launch

date) is highly probative. However, consistent with Rule 403, the evidence relating tothe NIR litigation will be circumscribed. 2 I will address this issue more specifically withcounsel prior to trial.

d. No statements issued in any re-examinations proceedings shall beadmitted.

e. As stated at the pretrial conference, Cordis' economic analysis directedat the proposition that "it was economically rational" for BSC to infringe, shall not beadmitted absent further discussion, based on the trial record as it develops.

6. Damages. There are several pending motions relating to damages, whichshall be addressed seriatim.

a. Cordis' motion for reconsideration of one aspect of the September30, 2009 memorandum order (D.I. 485) is denied, but I will clarify my order as follows.

2 1 note in this regard, however, that if BSC were to deny knowledge of the stateof the industry in 2004, the NIR litigation history may be admitted on cross or in arebuttal case.

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Cordis argues that the order "appears to contemp late the imposit ion of 'an ongoingroyalty in lieu of en try of a perman ent injunction' retroactively for past sa les, as we ll asprospectively for future sales." (D.I. 485) That is not what I intended. As recognized inthe newly issued "Compensatory Damages Issues in Patent Infringement Cases: AHan dbook For Federal D istrict Court Judges" ("the Handbook"), there is a "relativepaucity of guidance" in this area of the law. (D.I. 543, ex. 1 at 31) I agree with Cordisthat the "ongoing royalty" form of relief has been characterized as an alternative to theimposit ion of a perman ent injunction and injunctive relief generally is prospective innature. (See id . at 30) Based on this reasoning, Cordis argues that the formula forassessing an ongoing royalty should be confined to the ongoing royalty phase of thiscase. T he problem w ith this analysis under the circumstances a t bar is that, in a m arketwhere no injunctions have be en entered aga inst infringing products and where dam ageswere bifurcated pending app eal, a pa rty like BSC will be unduly prejudiced if it cann otinclude ev idence of the change in circumstance s post-verdict; i.e., for the four-yearperiod between the jury ve rdict and the da mage s trial. As I see it, therefore, although Iagree that an "ongoing royalty" determination should be ma de by the court and a pplyonly to future infringing sales, I believe I hav e the authority to adm it any releva ntev idence in the da mage s jury trial with respect to the hypothetical negotiation, including

'The assessm ent of damages for infringemen t taking place after a verdict"should take into account the change in the pa rties' bargaining posit ions, and theresult ing chan ge in econom ic circumstances, result ing from the determina tion ofliability." Am ado v. Microsoft Co rp. , 517 F.3d 1353, 1362 (Fed. Cir. 2008).

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that related to the parties' change in e conomic circumstances.4b . Entire market value. BSC argues, in its motion to preclude the

dama ges calculations of Creighton G. Hoffma n, that Cordis has not established its rightto recover lost profits because it has not proven that "' the patented technology serves a sthe basis for customer demand.' (D.I. 543 at 2, citing the Handbook, ex. 1 at 19)According to BSC, "Mr. Hoffman did not present any ev idence demon strating that thebare-metal stent compon ent - the only compon ent of a drug-eluting stent that theasserted claims of the '762 patent cov er - formed the ba sis of demand for drug-elutingstents, as required by the entire market value rule." (D.I. 502 at 9) The fallacy with thiscontention, as a rgued by Cordis, is that the infringing ba re-metal stents were the onlydelivery vehicles for the drug. This certainly is not a case where the patented feature isoptional or unimportant; l iterally, without the paten ted feature, BSC wou ld not hav e aproduct to sell. Without further discussion, BSC's motion (D.I. 501) is denied. See Rite-Hite C orp . v. K elley Co., 56 F.3d 1538 (Fed. C ir. 1995).

c . Lost profits. BSC contends that Cordis is not entitled to lost profitsbased on the fact that Cordis has been found to infringe the Jang '021 patent. Despitethe fact that I rejected this contention in my Septem ber 30, 2009 order, BSC filed amotion for summary judgment on the sam e issue. That motion (D.I. 514) is denied.Moreov er, because BSC has n ev er made an y effort to stop the sales of the Cypher stentby seeking an injunction, the Jang v erdict is not releva nt to, nor shall it be me ntioned in

4 In this regard, I conclude that Mr. Sims, BS C's dam ages e xpert, appropriatelyidentif ies in his supplemental report the even ts that have transpired since the verdict,without changing his range of v alues.7

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