IP Law Daily, PATENT—D. Del.: Largely favorable post-trial ruling for Advanced Bionics in Austrian competitor’s patent lawsuit, (Oct 3, 2024)

By Saurabh Kashyap, B.A., LL.B., LL.M.

Jury’s infringement verdict for counterclaimed patents upheld due to sufficient evidence; supplemental damages and ongoing royalties awarded for continued post-verdict infringement.

Ruling on multiple post-trial motions in the patent infringement lawsuit between Advanced Bionics, LLC (AB) and Med-EL Elektromedizinische Geräte Ges.m.b.H. (Med-EL), the federal district court in Delaware upheld the jury’s verdict, which found that Med-EL had infringed several of AB’s patents related to cochlear implant technology. The court denied Med-EL’s motions to overturn the verdict or request a new trial, stating that the jury’s findings were well-supported by the evidence. Additionally, the court awarded AB supplemental damages, an ongoing royalty, and interest, as Med-EL had continued infringing AB’s patents even after the verdict, warranting further compensation. However, the court declined AB’s requests for enhanced damages and attorney fees, noting that Med-EL’s conduct did not amount to egregious or exceptional behavior (Med-El Elektromedizinische Gerate Ges.M.B.H. v. Advanced Bionics, LLC, No. 1:18-cv-01530-JDW (D. Del. Oct. 2, 2024)).

Background. The plaintiff/counter-defendant, Med-EL Elektromedizinische Geräte Ges.m.b.H., is a medical device company based in Austria. It specializes in developing, manufacturing, and marketing hearing implant systems. Med-EL provides audiologists and medical professionals with software, like MAESTRO, to fit and customize these devices to meet each patient's specific needs.

The defendant/counter-plaintiff, Advanced Bionics, LLC, is a U.S. company operating as a subsidiary of Sonova AG, a global leader in hearing care solutions. Advanced Bionics also develops and manufactures cochlear implant systems, focusing on creating advanced hearing technology.

Med-EL’s asserted patents included U.S. Patent Nos. RE46,057 (the ’057 patent) and 8,634,909 (the '909 patent). The '057 patent concerns an auditory implant system for improving hearing through advanced sound processing techniques. The ’909 patent covers methods for synchronizing signals in multi-channel cochlear implants to enhance sound perception.

AB asserted U.S. Patent Nos. 6,761,681 (the ’681 patent), 8,155,747 (the ’747 patent), 7,076,308 (the ’308 patent), 8,270,647 (the ’647 patent), 8,155,746 (the ’746 patent), and 7,267,847 (the ’847 patent). The ’681 and ’747 patents relate to innovations in sound signal processing and wireless communication in cochlear implant systems. The ’308 patent, central to the case, covers a method for fitting cochlear implants by globally determining a stimulation threshold or T-level. The ’647 patent, also crucial in the lawsuit, focuses on improving sound quality and user comfort through enhanced sound processors. The ’746 and ’847 patents address power-efficient sound processing and advanced stimulation techniques for implantable hearing systems.

In October 2018, Med-EL filed its initial complaint, accusing AB of infringing its asserted patents. In response, AB counterclaimed, arguing that Med-EL's cochlear implants and related software infringed its ’681, ’747, ’308, and ’647 patents. Later, AB amended its counterclaims to include the ’746 and ’847 patents. AB alleged that Med-EL’s fitting software, MAESTRO, induced audiologists to infringe by instructing them to configure stimulation levels in violation of AB’s patent claims. Following multiple rounds of inter partes review (IPR), several patent claims were invalidated, but key claims from the ’308 and ’647 patents survived.

Both sides filed summary judgment motions on various issues, and the court granted summary judgment on some arguments but allowed AB's counterclaims related to the ’308 and ’647 patents to proceed to trial. In the lead-up to the trial, Med-EL attempted to introduce new damages theories and defenses, which AB successfully challenged, resulting in the exclusion of specific evidence. The case proceeded to a jury trial, where the jury found in favor of AB on its infringement claims. Following the jury’s verdict, both parties have filed post-trial motions, with Med-EL seeking judgment as a matter of law (JMOL) or a new trial and AB requesting enhanced damages, attorney fees, and supplemental compensation for ongoing infringement.

Induced and literal infringement. The court assessed whether Med-EL had induced audiologists to infringe AB's patents, particularly Claims 2 and 3 of the '308 patent. The court pointed out that to establish induced infringement under 35 U.S.C. § 271(b), AB needed to demonstrate that a third party (audiologists) directly infringed the patent and that Med-EL knowingly induced this infringement. Referencing Amarin Pharma, Inc. v. Hikma Pharms. USA Inc., 104 F.4th 1370 (Fed. Cir. 2024), the court also outlined the elements necessary for proving induced infringement, including specific intent and knowledge of the infringement.

According to the court, AB successfully demonstrated that Med-EL’s MAESTRO software, used by audiologists to fit patients with cochlear implants, directly infringed AB’s ’308 patent by instructing audiologists to set a T-level in a way that violated the patent's claims. The T-level, as interpreted by the court, refers to the lowest stimulation intensity a patient can perceive, and the MAESTRO software enabled the global setting of the T-level, which was found to match this patent requirement.

The court found sufficient evidence to support the jury's conclusion that Med-EL had induced infringement. Med-EL's internal documents provided compelling evidence, including its "Handbook for Educators," which described how the T-level should be set to a specific percentage of another stimulation level (the M-level). This document aligned with AB's claim that setting the T-level globally to a particular percentage of the M-level constituted direct infringement of its patents.

Med-EL argued that its MAESTRO software had substantial non-infringing uses, such as individual electrode-based T-level fitting or other techniques like Electrically Evoked Stapedius Reflex Testing (eSRT). However, the court held that these arguments did not outweigh the overwhelming evidence that the global T-level setting was the primary method used by audiologists and that this method infringed AB's patents.

Willfulness. In addition to proving infringement, AB claimed that Med-EL's infringement was willful, entitling it to enhanced damages under 35 U.S.C. § 284. The court pointed out that willful infringement requires proof that the infringer deliberately disregarded the patent holder's rights and demonstrated reckless or intentional behavior.

The court found sufficient evidence to support the jury's willfulness finding. It noted that Med-EL had known about the ’308 patent since at least 2007 yet continued to use its fitting methods without making any substantial changes to avoid infringement. The court pointed to testimony from Med-EL employees, particularly concerning modifications made to the MAESTRO software in response to the lawsuit. Med-EL had changed the percentage used for the T-level setting from 10% to 8%. However, a Med-EL representative testified that there was “no technical reason” for this change other than legal advice, indicating that Med-EL was aware of its potential infringement but chose only minor adjustments to avoid liability.

Despite the jury’s finding of willful infringement, the court declined to award enhanced damages. The court applied the factors from Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), and concluded that while Med-EL's behavior was intentional, it did not rise to the level of egregious misconduct that would warrant additional punitive damages. The court found that Med-EL had not engaged in bad faith conduct or malicious litigation tactics, and its actions were more aligned with standard competitive business practices.

Supplemental damages and ongoing royalty. The court awarded AB supplemental damages for sales that occurred after the jury's verdict but before the entry of final judgment. This award was based on the jury's royalty rate of $28.58 per infringing unit. The court also granted AB an ongoing royalty for future sales of Med-EL's cochlear implants and related products. The court set the ongoing royalty at $39.75 per unit, adjusting the rate based on updated data reflecting increases in audiologists' salaries. Citing XY, LLC v. Trans Ova Genetics, 890 F.3d 1282 (Fed. Cir. 2018), the court emphasized that a patentee is entitled to compensation for post-verdict infringement.

The court also highlighted that Med-EL’s continued sale of infringing products justified both the supplemental damages and ongoing royalty. Additionally, the court noted that Med-EL’s modifications to its software were insufficient to avoid infringement, and AB was entitled to ongoing compensation to account for future sales.

Attorney fees and interest. While AB sought attorney fees under 35 U.S.C. § 285, the court declined this request, concluding that the case did not meet the “exceptional” standard required for such an award, as required under Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014). The court found that while Med-EL’s conduct was willful, it was not objectively unreasonable or conducted in bad faith. However, the court awarded AB both pre-and post-judgment interest, following the standard practice of compensating the patentee for the delay in receiving damages.

Conclusion. Ultimately, the court upheld the jury’s findings of patent infringement and willfulness, awarding AB compensation for Med-EL’s past and future infringement of its cochlear implant technology. While the court denied enhanced damages and attorney fees, it granted supplemental damages, an ongoing royalty, and interest to ensure that AB was adequately compensated for Med-EL’s continued infringement.

The Case is No. 1:18-cv-01530-JDW.

Judge: Wolson, J.

Attorneys: Frederick L. Cottrell (Richards, Layton & Finger, P.A.) for Med-El Elektromedizinische Gerate Ges.m.b.H. Steven J. Balick (Ashby & Geddes P.A.) for Advanced Bionics, LLC.

Companies: Med-El Elektromedizinische Gerate Ges.m.b.H.; Advanced Bionics, LLC

Cases: Patent DelawareNews