Medtronic Navigation, Inc. v. Brainlab Medizinische Computersysteme GMBH

United States Court of Appeals for the Federal Circuit
2009-1058, -1059

MEDTRONIC NAVIGATION, INC. (formerly known as Surgical Navigation
Technologies, Inc.), MEDTRONIC SOFAMOR DANEK, INC., and SOFAMOR DANEK
HOLDINGS, INC.,

Plaintiffs-Appellants,

and

ST. LOUIS UNIVERSITY and
TRUSTEES OF DARTMOUTH COLLEGE,

Plaintiffs,

and

MCDERMOTT WILL & EMERY LLP,

Nonparty-Appellant,
v.

BRAINLAB MEDIZINISCHE COMPUTERSYSTEME GMBH,
BRAINLAB AG, BRAINLAB USA, INC., and BRAINLAB, INC.,

Defendants-Appellees.

Seth P. Waxman, Wilmer Cutler Pickering Hale and Dorr LLP, of Washington,
DC, argued for plaintiffs-appellants. With him on the brief were William G. McElwain,
Amy J. Nelson; Mark C. Fleming and Felicia H. Ellsworth, of Boston, Massachusetts.

Carter G. Phillips, Sidley Austin LLP, of Washington, DC, argued for nonparty-
appellant. With him on the brief were Robert N. Hochman and Tacy F. Flint, of Chicago,
Illinois.

Jay R. Campbell, Renner, Otto, Boisselle & Sklar, LLP, of Cleveland, Ohio,
argued for defendants-appellees. With him on the brief were Joshua M. Ryland, Todd
R. Tucker and Kyle B. Fleming. Of counsel was John J. Del Col.

Appealed from: United States District Court for the District of Colorado

Senior Judge Richard P. Matsch
 United States Court of Appeals for the Federal Circuit

2009-1058, -1059

MEDTRONIC NAVIGATION, INC. (formerly known as Surgical Navigation
Technologies, Inc.), MEDTRONIC SOFAMOR DANEK, INC., and SOFAMOR DANEK
HOLDINGS, INC.,

Plaintiffs-Appellants,

and

ST. LOUIS UNIVERSITY and
TRUSTEES OF DARTMOUTH COLLEGE,

Plaintiffs,

and

MCDERMOTT WILL & EMERY LLP,

Nonparty-Appellant,
v.

BRAINLAB MEDIZINISCHE COMPUTERSYSTEME GMBH,
BRAINLAB AG, BRAINLAB USA, INC., and BRAINLAB, INC.,

Defendants-Appellees.

Appeals from the United States District Court for the District of Colorado in
case no. 98-CV-01072, Senior Judge Richard P. Matsch.

___________________________

DECIDED: April 26, 2010
___________________________

Before NEWMAN, LOURIE, and BRYSON, Circuit Judges.

Opinion for the court filed by Circuit Judge BRYSON. Concurring opinion filed by Circuit
Judge LOURIE.

BRYSON, Circuit Judge.
 Medtronic Navigation, Inc., Medtronic Sofamor Danek, Inc., and Sofamor Danek

Holdings, Inc., (collectively, “Medtronic”) and trial counsel McDermott Will & Emery LLP

(“McDermott”) appeal from a district court order awarding attorney fees, costs,

expenses, and interest in the amount of $4,382,031.36. We reverse.

I

Medtronic brought this patent infringement action in 1998. The accused devices

included the defendants’ VectorVision products, which are image-guided surgical

navigation devices that use an array of cameras to detect the position of surgical

instruments through triangulation. The VectorVision devices employ a “passive optical”

guidance system in which the surgical instruments do not carry signal emitters, but

instead carry reflectors that reflect an infrared signal sent from elsewhere. The cameras

use those reflections to determine the locations of the surgical instruments relative to

the patient. Medtronic also alleged infringement by a similar device known as the

ExacTrac, which is used in radiation therapy.

The complaint initially alleged that the defendants (collectively, “BrainLAB”) had

infringed U.S. Patent No. 5,383,454 (“the Bucholz patent”). Medtronic added three

other patents to the suit as it acquired the rights to them. Those patents were U.S.

Patent No. 4,722,056 (“the Roberts patent”) and U.S. Patent Nos. 5,389,101 and

5,603,318 (“the Heilbrun patents”).

The Bucholz patent describes a system and method for tracking and displaying

the location of a surgical instrument within a patient’s head during brain surgery. The

invention uses a “reference means” to detect the locations of the surgical instrument

and the patient’s head, and then determines their relative positions through

2009-1058,-1059 2
triangulation. The only embodiment described in the specification is an acoustic system

in which the “reference means” is an array of microphones that receives sound waves

from emitters located on the surgical instrument and attached to the patient’s head. By

processing the information received by the microphones, the system is able to

determine the location of the instrument within the patient’s body at each moment in

time.

The Roberts patent teaches a method, system, and apparatus that takes a

scanned image from an imaging system, such as a CT scanner, and maps it onto the

image produced by a microscope during a surgical procedure, so that the scanned

image can be displayed as an overlay. The specification describes using either acoustic

or electromagnetic means to establish the spatial relationship between the microscope

and the “fiducials,” i.e., points of reference attached to the patient that are detectable by

the system. The specification adds, without elaboration, that “[a]n optical system can be

used as an alternative to the acoustic system.”

The Heilbrun patents disclose an optical reference system used for locating a

medical instrument relative to a patient’s body within a medical workspace. The

Heilbrun apparatus begins by establishing “a workspace coordinate framework in three

dimensions.” It accomplishes that task by using cameras to make pairs of images of the

workspace, including a “fiducial structure,” along intersecting sightlines. The system

then uses the image pairs to compute the three-dimensional coordinate system.

A

On September 29, 2004, the district court issued a claim construction order. The

court construed the Bucholz patent as limited to tracking systems that use acoustic

2009-1058,-1059 3
methods and the Roberts patent as limited to tracking systems that use acoustic or

electromagnetic methods. The court rejected the broader construction proposed by

Medtronic, which described the inventions as using generic “sensors” or “receivers,” and

not being limited to the use of any particular form of radiation, whether acoustic, optical,

or other. In doing so, the court specifically excluded optical methods, such as the ones

used by BrainLAB’s accused products, from the scope of the claims. The court

construed the Heilbrun patents, which described the use of cameras, as limited to

tracking systems that employ “a static or immovable coordinate system centered in the

workspace that must be reestablished if one or more of the cameras are moved.”

Following the court’s claim construction, BrainLAB advised the court that it

intended to file motions for summary judgment and that it expected that there would not

be a need for a trial on many of the asserted claims because “our products are optical

and the claims are limited to non-optic products.” The district court, however,

responded that “[t]here are issues of fact. And, as you know, if we’re talking about the

doctrine of equivalence, it’s hard not to see issues of fact.”

In February 2005, BrainLAB moved for summary judgment of noninfringement as

to all the asserted patents. Regarding the Bucholz and Roberts patents, BrainLAB

argued that its products employed an optical reference means and therefore did not

literally infringe. In addition, BrainLAB argued that optical systems are substantially

different from acoustic systems and that its products therefore did not infringe under the

doctrine of equivalents. BrainLAB also contended that argument-based prosecution

history estoppel barred Medtronic from asserting the doctrine of equivalents as to the

Bucholz patent. BrainLAB pointed out that the inventor, Dr. Richard Bucholz, had

2009-1058,-1059 4
stated to the examiner that his invention, unlike prior art devices, used emitters located

on the patient and on the surgical probe. By making that argument, BrainLAB

contended, Dr. Bucholz had made a clear and unmistakable disclaimer of “passive”

devices, i.e., those that do not rely on emitters located on the patient and the probe.

BrainLAB took the position that its products do not infringe the Heilbrun patents

because its products use a “dynamic” system with pre-calibrated cameras, while the

Heilbrun patents employ a “static” system that must be recalibrated each time the

cameras are moved.

In its briefs in response to BrainLAB’s summary judgment motions, Medtronic

represented that in view of the court’s claim construction, it would not argue for literal

infringement of the Bucholz and Roberts patents, but would limit its infringement theory

for those patents to the doctrine of equivalents. As for BrainLAB’s contention regarding

argument-based prosecution history estoppel, Medtronic argued that Dr. Bucholz’s

statements to the examiner did not constitute a clear and unmistakable disclaimer of

passive devices. According to Medtronic, Dr. Bucholz’s statements were simply

directed at providing further details regarding a particular embodiment, rather than

suggesting that the location of the emitters was critical to the claimed invention as a

whole. With regard to the Heilbrun patents, Medtronic argued that even if BrainLAB’s

devices use cameras that are pre-calibrated relative to one another, the devices still rely

on a fiducial structure to establish a coordinate framework within the medical

workspace, and that the “dynamic” quality of BrainLAB’s system is achieved simply by

refreshing the workspace calibration at a rapid and automated rate.

2009-1058,-1059 5
 Two weeks before trial, the district court denied the summary judgment motions

in full. The court announced its decision orally, stating simply, “[O]n the defendant’s

motions for summary judgment, I’m denying them. I’m sure that’s not coming as a

shock to you, but the filings have been helpful . . . . [T]he papers filed have given me

more information as to the parties’ respective views of the law that will be applicable in

the case.”

B

Trial before a jury began on September 12, 2005. Following Medtronic’s case-in-

chief, BrainLAB moved for judgment as a matter of law (“JMOL”) under Rule 50(a) of

the Federal Rules of Civil Procedure. In the motion, BrainLAB raised many of the same

arguments it had raised in its motions for summary judgment, except that it added an

argument that infringement by equivalents under the Bucholz patent was barred by

amendment-based prosecution history estoppel. BrainLAB contended that Dr. Bucholz

had surrendered all non-acoustic subject matter by adding the term “reference means”

to the Bucholz patent, because the district court had later limited that term to mean “an

array of microphones.” The district court denied the motion at that time, stating that it

would “revisit these points . . . at the conclusion of all of the evidence when you will

renew this motion. And we’ll have a better opportunity to read some of this law.” With

respect to BrainLAB’s prosecution history estoppel argument, the court stated, “Well, I

don’t understand the law, and I’m going to deny the motion. You can brief it further

before we go to the jury. But at this point in the case, I don’t understand it.”

At the close of the evidence but before the case went to the jury, BrainLAB

renewed its JMOL motions. The district court again denied the motions, stating that

2009-1058,-1059 6
 the approach here is going to be we’re going to go to the jury on
everything that is a jury issue . . . . [The] estoppel issues are not going to
go to the jury and they’ll be considered by [the] Court after a verdict, if
there’s a plaintiffs’ verdict. . . . I’m not suggesting that these arguments
don’t have some merit, you know, but I’ve got a jury here. They’ve been
here for two and a half weeks. I’m going to use them all I can to help
resolve the issues in this case. And accordingly, I’m going to submit all of
these issues to the jury. Post verdict, if there’s a plaintiffs’ verdict, we can
re-visit these issues.

The jury returned a verdict for Medtronic. It found that BrainLAB had infringed

the Bucholz and Roberts patents under the doctrine of equivalents and that BrainLAB

had infringed the Heilbrun patents both literally and under the doctrine of equivalents.

The jury awarded Medtronic $50 million for infringement of the Bucholz and Roberts

patents, and an additional $1 million for infringement of the Heilbrun patents. After the

jury was dismissed, the district court judge stated, “I enjoyed working with counsel and I

think that both sides, all of you, have presented the case in the best possible way, both

with respect to the professionalism involved and also with being mindful of the need to

do it efficiently.”

C

After trial, BrainLAB once again filed JMOL motions under Rule 50(b). This time,

however, the district court granted the motions and entered judgment of

non-infringement as to all four patents. Medtronic Navigation, Inc. v. BrainLAB

Medizinische Computersystems GmbH, 417 F. Supp. 2d 1188 (D. Colo. 2006).

With respect to the Bucholz patent, the court held that Medtronic’s doctrine of

equivalents theory was barred by prosecution history estoppel, adopting both the

argument-based and amendment-based theories advanced by BrainLAB. The court

also held in the alternative that the evidence failed to show factual equivalence because

2009-1058,-1059 7
the claimed acoustic system operates differently from the accused optical system in

several respects, beyond the fact that they employ different forms of radiation. Most

significantly, in determining the location of the signal, the acoustic system measures the

time required for the sound to travel from the emitters to the microphones, while the

optical system detects the direction from which the reflected light is received. Other

differences, the court noted, are that the acoustic system has to contend with echoes,

while the optical system does not; that the acoustic system has to rely on sequential

activation and detection of each energy source, while the optical system can detect the

light reflected from multiple markers simultaneously; and that the patented system

requires that the surgical probe be linked to a power source to energize the emitters on

the probe, while the accused BrainLAB devices do not require a power source on the

probe because the probe uses reflectors rather than emitters. In sum, the court

concluded that the Bucholz system and the accused products do not perform the

function of locating the relative positions of the probe and the patient in substantially the

same way. The court added that the jury’s finding of infringement of the Bucholz patent

“resulted from plaintiffs’ deliberate distortion of the court’s claim construction rulings”

and “abuse of advocacy.”

With respect to the Roberts patent, the court again focused on factual

equivalence, and for the same reasons the court concluded that the “way” prong of the

“function-way-result” test was not satisfied. The court explained that “broad conceptual

similarity does not support a finding of equivalence.”

The district court noted that a different analysis was required with respect to the

Heilbrun patents, which use cameras to locate objects within a medical workspace. The

2009-1058,-1059 8
issue with regard to the Heilbrun patents, the court explained, was whether BrainLAB’s

VectorVision products establish a “workspace coordinate framework in three

dimensions” by using a “fiducial means . . . positioned within said workspace,” as

required by claim 1 of each of the Heilbrun patents. There was no literal infringement,

the court concluded, because the evidence did not show that the BrainLAB devices use

a fiducial means to establish the workspace coordinate framework. In the BrainLAB

devices, the court held, the coordinate framework is pre-established by some other

means, and the fiducial means in the BrainLAB devices serves a subsidiary purpose:

tracking the location of the patient (in the VectorVision) or determining the isocenter of a

radiation therapy machine (in the ExacTrac). As for the jury’s finding that the Heilbrun

patents were infringed under the doctrine of equivalents, the court ruled that the record

was devoid of particularized testimony to support that aspect of the jury’s verdict; the

court therefore granted judgment to BrainLAB on that issue as well.

Medtronic appealed from the district court’s order granting judgment for BrainLAB

as a matter of law. This court affirmed the district court’s ruling in a non-precedential

opinion. Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersysteme

GmbH, 222 F. App’x 952 (Fed. Cir. 2007). This court’s ruling was based on essentially

the same grounds given by the district court. The court did not, however, adopt or

comment on the district court’s criticisms of the advocacy of Medtronic’s trial counsel. 1

1
BrainLAB argues that the district court’s criticisms of counsel’s conduct
constituted findings of misconduct and that the “mandate rule” bars Medtronic from
challenging those findings in this appeal. There is no force to that argument. The
district court’s criticisms had little or nothing to do with whether JMOL was properly
granted, and this court neither expressly nor implicitly adopted those criticisms. Our
decision in the JMOL appeal therefore has no preclusive effect with respect to the
sanctions issue in the present appeal. See Laitram Corp. v. NEC Corp., 115 F.3d 947,

2009-1058,-1059 9
 D

After the appeals process was completed, BrainLAB filed a petition in the district

court seeking attorney fees and expenses based on 35 U.S.C. § 285, 28 U.S.C. § 1927,

and the court’s inherent powers. BrainLAB argued that the case was exceptional and

that Medtronic and its trial counsel, McDermott, had prolonged a frivolous lawsuit and

had obtained an improper jury verdict through litigation misconduct and abusive

advocacy.

The district court agreed with BrainLAB, held that the case was exceptional

under 35 U.S.C. § 285, and ruled that an award of attorney fees was justified.

Medtronic Navigation, Inc. v. BrainLAB Medizinische Computersystems GmbH, No.

98-cv-1072 (D. Colo. Feb. 12, 2008). In so doing, the district court relied on two

grounds. First, the court ruled that Medtronic should have “accept[ed] that the claims

construction rulings stripped the merits from this case.” According to the court,

Medtronic either should have sought to take an interlocutory appeal from the claim

construction order or should have abandoned its case when BrainLAB filed its motions

for summary judgment. Second, the court ruled that Medtronic’s counsel had engaged

in various forms of litigation misconduct during the trial, including misleading the jury as

to the court’s claim construction; focusing on a comparison between a Medtronic

product and a BrainLAB product, rather than on a comparison between the patent

claims and the accused products; and wrongfully arguing that a statement in an FDA

submission made by BrainLAB constituted an admission of infringement.

951 (Fed. Cir. 1997) (mandate rule applies to issues expressly decided by the reviewing
court and those decided by necessary implication).

2009-1058,-1059 10
 With respect to Medtronic’s failure to abandon its claims after the claim

construction ruling, the court ruled that Medtronic and the McDermott lawyers “had a

duty to reexamine this litigation [after claim construction] and make an objective

assessment of the validity of Medtronic’s claims that BrainLAB’s products infringed the

patent claims as construed.” Instead, the court stated, Medtronic continued undeterred

despite full awareness that its case was without merit, “reflecting an attitude of ‘what

can I get away with?’”

The district court charged that Medtronic had artfully avoided the court’s claim

constructions in order to create an illusion of infringement and had “chose[n] to pursue a

strategy of distorting those rulings [and] misdirecting the jury to a different reading of the

claim language.” In particular, the court criticized Medtronic for “repeatedly describ[ing]

the Bucholz invention as having ‘an array of sensors’ for detecting radiated energy—the

claim construction that Medtronic had argued and lost.”

The district court also criticized Medtronic for disregarding the prosecution history

of the Bucholz patent, which had proved fatal to Medtronic’s doctrine of equivalents

claim. The court concluded that in light of the prosecution history, Medtronic “fully

understood that it could not rely on the Bucholz ’454 Patent . . . unless the Bucholz

Patent claims were construed so as to bring that technology within the literal claim

scope.”

As for the Heilbrun patents, the district court stated that Medtronic “struggled to

articulate a viable theory of infringement” after the claim construction order and “never

was able to do so.” The court characterized Medtronic’s theory, that BrainLAB’s

dynamic referencing system was simply a faster version of the static system described

2009-1058,-1059 11
in the Heilbrun patents, as flawed because it “failed to take into account the actual

operation of the BrainLAB products.” The court added that Medtronic’s position at trial

with respect to the Heilbrun patents was different from the position it had taken in its

summary judgment responses.

In addition to awarding attorney fees under 35 U.S.C. § 285, the district court

invoked 28 U.S.C. § 1927 and held McDermott jointly responsible for the fee award on

the ground that the McDermott attorneys had proceeded “cavalierly” and “with full

awareness that their case was without merit.” In the alternative, the court based its

order against McDermott on its inherent authority to assess fees against counsel who

engage in abusive litigation conduct. Both Medtronic and McDermott have appealed

the sanctions order to this court.

II

Awards of attorney fees under section 285 are reviewed under a highly

deferential standard. See Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1026

(Fed. Cir. 2008) (factual findings in section 285 determination are reviewed for clear

error; legal conclusions are reviewed without deference; determination of whether and

in what amount to award fees is reviewed for abuse of discretion). Despite our

reluctance to second-guess the judgment of trial judges who typically have intimate

knowledge of the case, we have the responsibility, in light of the substantial economic

and reputational impact of such sanctions, to examine the record with care to determine

whether the trial court has committed clear error in holding the case exceptional or has

abused its discretion with respect to the fee award. Where we have found error, we

have reversed exceptional case findings and vacated attorney fee awards based on

2009-1058,-1059 12
those findings. See, e.g., DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567

F.3d 1314, 1337-39 (Fed. Cir. 2009); FieldTurf Int’l, Inc. v. Sprinturf, Inc., 433 F.3d 1366

(Fed. Cir. 2006); Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed.

Cir. 2005); Stephens v. Tech Int’l, Inc., 393 F.3d 1269 (Fed. Cir. 2004); Forest Labs.,

Inc. v. Abbott Labs., 339 F.3d 1324 (Fed. Cir. 2003). Based on a close study of the

record in this case, we conclude that the district court committed clear error in finding

this case to be exceptional, and we therefore reverse.

A

We first address the district court’s ruling that Medtronic acted improperly in

failing to abandon its claims following the district court’s claim construction order. The

salient inquiry is whether Medtronic’s claims were so lacking in merit that Medtronic was

legally obligated either to abandon its case altogether or to limit itself to challenging the

district court’s claim construction order on appeal. If Medtronic’s infringement claims

were not frivolous or objectively unreasonable, Medtronic was entitled to pursue those

claims, and its ultimate lack of success does not render the case exceptional. See

Brooks Furniture, 393 F.3d at 1384 (“[E]nforcement of patent rights that are reasonably

believed to be infringed does not entail special penalty when the patentee is

unsuccessful.”).

We have held that there is a presumption that an assertion of infringement of a

duly granted patent is made in good faith. Brooks Furniture, 393 F.3d at 1382; Springs

Window Fashions LP v. Novo Indus., L.P., 323 F.3d 989, 999 (Fed. Cir. 2003). Clear

and convincing evidence is required to overcome that presumption and show that the

patentee’s infringement claims were vexatious, unjustified, or frivolous, and were

2009-1058,-1059 13
pursued in bad faith. Serio-US Indus., Inc. v. Plastic Recovery Techs. Corp., 459 F.3d

1311, 1322 (Fed. Cir. 2006); Forest Labs., 339 F.3d at 1329-30.

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 JMOL filed during the trial. Absent misrepresentation

to the court, a party is entitled to rely on a court’s denial of summary judgment and

JMOL, as well as the jury’s favorable verdict, as an indication that the party’s claims

were objectively reasonable and suitable for resolution at trial. See ResQNet.com, Inc.

v. Lansa, Inc., 594 F.3d 860, 875 (Fed. Cir. 2010) (“[T]he district court's denial of

summary judgment of noninfringement reflects the belief that it was reasonable for

ResQNet to have retained that patent for suit.”); Forest Labs., 339 F.3d at 1330 (district

court’s denial of JMOL at the close of the evidence and the jury’s favorable verdict

“suggest that [the patentee’s] position was not baseless”); Beckman Instruments, Inc. v.

LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989) (“[W]e find it difficult to agree

that the inequitable conduct defense was ‘baseless’ when it survived a motion for

summary judgment and was rejected only after findings were made on disputed facts.”);

Browning v. Kramer, 931 F.2d 340, 345 (5th Cir. 1991) (“[O]ne might well wonder how a

case could be so frivolous as to warrant sanctions if it has sufficient merit to get to

trial.”); Ruben v. Warren City Sch., 825 F.2d 977, 988 (6th Cir. 1987) (“A sanction is

generally improper where a successful motion could have avoided any additional legal

expenses by defendants.”); see also Schlaifer Nance & Co. v. Estate of Warhol, 194

F.3d 323, 338 (2d Cir. 1999) (favorable jury verdict “also speaks against the District

2009-1058,-1059 14
Court’s finding of the absence of colorability—the attorneys were not the only ones who

found SNC’s claim convincing”).

Of course, if the party’s success at the summary judgment stage is due to false

or misleading representations about its evidence, the party cannot rely on the district

court’s denial of summary judgment to shield it from liability for sanctions. However, the

district court did not point to any misrepresentations made by Medtronic and its counsel

at the summary judgment stage, and in our review of the record we have found none.

As for the court’s statement that Medtronic and its counsel had a legal obligation

not to oppose BrainLAB’s summary judgment motions, we disagree. An examination of

each of Medtronic’s infringement claims at trial confirms that each was sufficiently

reasonable to warrant being litigated to verdict, even though all of them were ultimately

rejected by the district court in its JMOL ruling and by this court on appeal.

1

With regard to the Bucholz and Roberts patents, Medtronic revised its case in

light of the district court’s claim construction ruling. Medtronic withdrew its claims of

literal infringement as to those two patents and proceeded only with claims of

infringement under the doctrine of equivalents. Although the district court complained

that Medtronic’s doctrine of equivalents theory applied to subject matter that was

outside the scope of the court’s claim construction, that is not an indication of

impropriety, as any assertion of the doctrine of equivalents “necessarily deals with

subject matter that is ‘beyond,’ ‘ignored’ by, and not included in the literal scope of a

claim.” Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 149 F.3d 1309, 1317 (Fed.

Cir. 1998). Thus, even though the district court in its claim construction ruling had

2009-1058,-1059 15
rejected Medtronic’s argument that the literal scope of the Bucholz and Roberts patents

should extend to an “array of sensors” in general, rather than be limited to acoustic

sensors, Medtronic was entitled to argue that an “array of sensors” could still infringe

under the doctrine of equivalents.

Medtronic made no attempt to conceal the fact that the Bucholz and Roberts

patents, as construed, relied principally on microphones and sound waves as the

means for performing the locating function, and that BrainLAB’s devices relied on

cameras and light waves. Instead, Medtronic sought to persuade the jury that despite

that difference BrainLAB’s devices and methods were substantially equivalent to the

claimed subject matter for purposes of the doctrine of equivalents.

In opposing summary judgment, Medtronic relied heavily on the reports of Dr.

Bucholz, Dr. Roberts, and its expert witness, Dr. Eric Grimson. Dr. Bucholz explained

that although

an optical position sensing system with reflective markers uses a different
form of radiation than an acoustic position sensing system (light versus
sound), the two position sensing systems are equivalent because both
determine the position of a surgical probe by using radiation, triangulation,
sensors and emitters. Both systems perform . . . substantially the same
function of determining the position [of] a point in the workspace relative to
a set of sensors.

He also stated that “[a]nyone familiar with position sensing systems would understand

that there are engineering, medical and convenience trade-offs associated with acoustic

and optical position sensing systems.” Nonetheless, he explained, “each can be used

to sense the position of an object in the medical workplace, and each uses a reference

array for localization. . . . The inventive breakthrough was the ability to map the position

2009-1058,-1059 16
of an ultrasound probe on medical images—a surgical navigation system—and not the

type of radiation-based position sensing system.”

Dr. Roberts stated that the main component of his patent was “the concept of

relating a location in the surgical field to a location in the patient’s imaging studies,”

which was implemented “by accurately overlaying a patient’s scan images over the field

of view of the microscope to allow coordinated viewing of the patient and a computer-

generated image of the patient.” That objective, Dr. Roberts explained, could be

achieved by three different position-sensing systems, “an optical system, [an] acoustic

system, and an electromagnetic system.” He added that each type of system “has its

pros and cons, but surgeons and researchers have used these systems

interchangeably for position sensing during surgery since at least the mid-1980s.”

Dr. Grimson stated that the passive optical systems in BrainLAB’s devices were

substantially equivalent to the acoustic systems of the Bucholz and Roberts patents,

even though the systems used different forms of radiation, because either system could

be used to coordinate the location of instruments or images with the location of a patient

in an operating room. Dr. Grimson further stated that the two systems were legally

equivalent because they performed the same function of using radiation to determine

the location of a particular point relative to the patient; they did so in the same way, by

computer processing of the signals to determine the respective locations by

triangulation; and they achieved the same results.

At trial, Dr. Grimson elaborated on the statements he had made in his report

regarding the issue of equivalence. He began by acknowledging that because the court

had construed the term “reference means” in the Bucholz patent to mean an array of

2009-1058,-1059 17
microphones, BrainLAB’s VectorVision products did not infringe the literal scope of the

patent. Nevertheless, he maintained that the VectorVision products infringed under the

doctrine of equivalents. Dr. Grimson explained that the function of both the patented

reference means and the accused equivalent was to track a surgical instrument, and

that the way the tracking was performed was through

a sequence of sensors, in this case they’re optical sensors, again, there’s
more than one, they’re separated apart. They’re detecting radiation or
energy waves—in this case it would be the light waves, not the sound
waves that we’re seeing here. And, again, as I said in this case the
sensors are cameras, they’re not microphones. But they’re again
triangulating, detecting differences in what is being observed by them,
using that to—to determine a distance, digitizing the result. And then the
result, in my opinion, . . . is the same thing, it’s a set of 3D coordinates.

Dr. Grimson testified similarly with regard to the Roberts patent. The district

court had construed claim 1 of the Roberts patent to include the use of an acoustic or

electromagnetic reference system but had ruled that the claim “does not include an

optical reference system.” Dr. Grimson testified that he had considered and applied the

court’s construction of that claim and had concluded that BrainLAB’s VectorVision

products infringed that step, not literally but under the doctrine of equivalents.

Dr. Kurt Smith, one of the developers of the StealthStation, Medtronic’s optical

tracking device, described a paper that he had co-authored that compared optical and

acoustic tracking systems that were available at the time. He said he and his

colleagues “recognized that these were interchangeable components, and we wanted to

know which one of these tracking units would be most suitable for our surgical

navigation system.” He explained that the optical tracking unit “behaves the same way”

as the acoustic tracking unit: “It’s just that the radiation waves are light waves, as

opposed to sound waves.” The optical and acoustic units, he stated, were

2009-1058,-1059 18
“interchangeable”; they both performed the same function of tracking the probe, and

they “tracked the probe in the same way, using emitters and radiation coming off of

those emitters, that would then be detected by the sensors, whether that radiation was

light or sound.” He added that they both produced the same result, in that they “both

produced that three dimensional coordinate of the tip of the probe, which was needed

by the surgical navigation computer.”

The evidence summarized above was sufficient to justify Medtronic’s decision to

go forward with its claim of infringement under the doctrine of equivalents with respect

to both the Bucholz and the Roberts patents. Medtronic’s expert witnesses set forth

their views that the use of an optical rather than acoustic system was not a sufficiently

important distinction as to render the doctrine of equivalents inapplicable. That position

was not unreasonable even though it did not ultimately prevail.

2

As for BrainLAB’s assertion of prosecution history estoppel with respect to the

Bucholz patent, it is true that Medtronic was ultimately unsuccessful on that issue before

the trial court, and that on appeal we sustained the trial court’s JMOL decision.

However, we do not regard the issue as being so clear-cut that it was unreasonable for

Medtronic to litigate the question until it obtained a ruling from the district court on the

matter. See Haynes Int’l, Inc. v. Jessop Steel Co., 8 F.3d 1573, 1579-80 (Fed. Cir.

1993) (district court erred in awarding attorney fees under 35 U.S.C. § 285 based on the

conclusion that the patentee should have known its infringement claim was barred by

prosecution history estoppel).

2009-1058,-1059 19
 The district court itself found the estoppel argument sufficiently complex to

warrant postponing ruling on that issue, and it ultimately devoted six pages of detailed

analysis to the issue in its post-trial opinion granting judgment as a matter of law.

Those circumstances, while not dispositive, provide some support for Medtronic’s

argument that it was justified in not throwing in its hand at the summary judgment stage.

See Salovaara v. Eckert, 222 F.3d 19, 29 (2d Cir. 2000); Carlock v. Nat’l Co-operative

Refinery Ass’n, 424 F.2d 148, 152 (10th Cir. 1970).

At the summary judgment stage, BrainLAB’s prosecution history estoppel

argument was based entirely on argument-based estoppel. BrainLAB focused on

whether Dr. Bucholz’s statements to the examiner regarding the use of “emitters”

attached to the instrument and the patient gave up any potential claim of equivalence

for “passive” systems that use reflectors rather than emitters. Medtronic responded by

arguing that those statements did not constitute a surrender of subject matter, but were

only a description of an embodiment provided in response to the examiner’s objection to

the application for lack of specificity. While Medtronic’s argument was ultimately

unsuccessful, we regard it as plausible, particularly in light of the fact that argument-

based estoppel requires a “clear and indisputable” disclaimer of subject matter.

BrainLAB did not make a separate argument for amendment-based prosecution

history estoppel at the summary judgment stage, so that issue does not bear on the

reasonableness of Medtronic’s decision to resist summary judgment with respect to the

Bucholz patent. Nor do we think that Medtronic acted unreasonably in litigating that

issue once it was raised on motion for JMOL.

2009-1058,-1059 20
 The relevant amendment related to the following step of the claim that ultimately

became claim 14 of the Bucholz patent: “measuring the position of the tip of the surgical

probe relative to the reference points of the head.” When the examiner rejected that

claim based on indefiniteness and anticipation by a prior art patent, Dr. Bucholz rewrote

that step by breaking it into two steps: “determining the position of the tip of the surgical

probe relative to reference means having a present location,” and “determining the

position of the reference points of the head relative to the reference means so that the

position of the tip relative to the reference points of the head is known.” Dr. Bucholz

explained that the change was made in order to clarify that his invention related to “a

significantly different problem” than the cited prior art patents, which addressed only

“the ability to superimpose a coordinate system on head images.” He stated that the

prior art patents did not “address how they would localize a surgical instrument within

the head during the course of surgery,” and he emphasized the role of the emitters

located on the probe and on the patient’s head, which could be “sound or light emitters.”

Based on Dr. Bucholz’s comments and the context in which his amendment was

made, Medtronic argued that the amendment did not preclude it from relying on the

doctrine of equivalents. The context in which the amendment was made, Medtronic

argued, demonstrated that the rationale underlying the amendment bore, at most, only a

“tangential relation” to the asserted equivalent in the BrainLAB systems, and thus did

not foreclose recourse to the doctrine of equivalents under the principles of Festo Corp.

v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 740-41 (2002).

The district court rejected that argument, and so did this court on appeal.

However, the amendment to the claim language, which added the term “reference

2009-1058,-1059 21
means,” did not expressly address the form of energy used for tracking, which was the

basis for BrainLAB’s amendment-based estoppel argument. Medtronic’s response was

therefore not so frivolous that it was improper for Medtronic to raise it.

3

With regard to the Heilbrun patents, we are persuaded that Medtronic’s

opposition to BrainLAB’s summary judgment motion was well founded and that its

position at trial was reasonable. Moreover, we disagree with the district court that

Medtronic’s position at trial was inconsistent with its position at the summary judgment

stage.

The dispute over the Heilbrun patents focused on whether BrainLAB’s products

relied on the use of a “fiducial” structure to establish a three-dimensional workspace

coordinate system. The Heilbrun patents, as construed by the district court, required

the calibration process to be performed by photographing the fiducial structure from two

different camera positions. At the summary judgment stage, Medtronic identified four

structures in the accused products that could qualify as “fiducial means” within the

meaning of the Heilbrun patents, two of which related to workspace calibration and two

of which related to camera calibration. At trial, Medtronic presented evidence as to only

the two workspace calibration structures: It identified the “Mayfield star” as the fiducial

structure in the VectorVision and the “isocenter calibration phantom” as the fiducial

structure in the ExacTrac. The district court rejected Medtronic’s infringement theory in

its JMOL opinion because it found that the cameras used in the BrainLAB devices are

already pre-calibrated relative to each other and therefore do not require the use of any

fiducial structure to establish the three-dimensional coordinate system. The court

2009-1058,-1059 22
concluded that BrainLAB’s products use the Mayfield star and the isocenter calibration

phantom to locate points within an existing coordinate system, but not to establish the

coordinate system itself.

Although Medtronic was unable to persuade either the district court or this court

that BrainLAB’s products use a fiducial structure or its equivalent in an infringing

manner, we cannot agree with the district court that Medtronic’s arguments on that

issue were frivolous or vexatious. Medtronic’s claim of infringement was based in part

on the analysis of its expert, Dr. Russell Taylor, and in part on BrainLAB’s documents,

including one that stated that the Mayfield star “establishes the 3D coordinate system

for VectorVision Neuronavigation System within the operating field.”

Furthermore, after considering Medtronic’s submissions at the summary

judgment stage and at trial, we do not perceive that Medtronic changed its position in a

way that was improper. In effect, Medtronic narrowed the scope of its infringement

claim from relying on four structures at the summary judgment stage to relying on only

two of those four structures at trial. A decision by a party to narrow its case for

presentation to a jury does not generally suggest manipulation of the litigation process,

and we see nothing improper in Medtronic’s decision to narrow its infringement claim in

this case. We conclude that Medtronic presented a plausible theory of literal

infringement even under the district court’s restrictive claim construction, both at the

summary judgment stage and at trial.

B

Having decided that Medtronic’s claims were not frivolous and that Medtronic

was not obligated to concede noninfringement in light of the district court’s claim

2009-1058,-1059 23
construction, we turn to the question whether the court’s ruling under section 285 can

be sustained based on the court’s findings of litigation misconduct at trial. The court

focused mainly on comments by Medtronic’s counsel in his closing and rebuttal

arguments.

1

Several of the comments that the district court highlighted were unobjectionable,

and the court’s criticisms of those comments were therefore unwarranted. Perhaps the

best example is the court’s statement that Medtronic’s counsel “repeatedly told the jury

during closing argument that ‘tracking is tracking,’ a statement that misguided the jury

about the requirements of infringement analysis.” The court did not explain how the

“tracking is tracking” comments misguided the jury, but the court’s concern appears to

have been that the comments invited the jury to disregard the court’s claim construction.

The “tracking is tracking” comments, however, were consistent with Medtronic’s theory

of the case that tracking by acoustic methods is substantially equivalent to tracking by

optical methods. In fact, Medtronic’s counsel made clear that his argument about

tracking related to the “function” element of the “function-way-result” test for the doctrine

of equivalents; he argued that tracking was the function performed both in the Bucholz

patent and in the accused devices, and that the difference in the way the tracking was

done effected in the patent and in the accused devices was insubstantial. That

shorthand way of summarizing Medtronic’s theory of the case was not unfair or

confusing. The “tracking is tracking” comments were not accompanied by any

suggestion, subtle or otherwise, that the jury should not follow the court’s instructions.

2009-1058,-1059 24
We fail to see how those statements could have misled the jury as to the issue of

infringement under the doctrine of equivalents.

2

The district court also found that Medtronic’s counsel committed misconduct

during closing argument by suggesting to the jury “that the absence of jury instructions

about the prosecution history of the Bucholz Patent showed that BrainLAB had not been

forthright in its presentation.” The court noted that the jury instructions had not referred

to prosecution history estoppel because the court had ruled that issue to be a question

of law for the court, and not for the jury.

When viewed in context, counsel’s comment was innocuous. It was made in

response to an argument made by the opposing party, and it did not exceed the bounds

of fair commentary on the issues, the evidence, and the jury’s task as defined by the

court. BrainLAB’s attorney initiated the discussion of the prosecution history of the

Bucholz patent during his closing argument, contending that Dr. Bucholz had agreed to

limit his claims and that he “can’t come back into court under the doctrine of equivalents

and recapture it.” Medtronic’s counsel responded on rebuttal by addressing the

prosecution history at some length; he concluded by telling the jury that “this whole

notion that whatever happened in the patent office on this patent, that somehow it was a

limitation, is just nonsense.” Counsel then added, “When His Honor reads his

instructions to you and he gives his instructions . . . you will not see any instructions that

relates to this argument that [BrainLAB’s counsel] made.”

In effect, Medtronic’s counsel was suggesting to the jury that the argument on

prosecution history estoppel made by BrainLAB’s attorney was erroneous on the merits

2009-1058,-1059 25
and was directed to an issue that was not going to be submitted to the jury. The former

assertion constituted permissible argument, in light of BrainLAB’s focus on the issue in

its closing argument. The latter assertion was clearly correct, as the court had made

clear that it did not intend to instruct the jury on the issue of prosecution history

estoppel. Moreover, counsel’s comments drew no objection from BrainLAB’s lawyer.

Instead, BrainLAB’s lawyer merely requested, in light of the parties’ discussion of

prosecution history estoppel in their closing arguments, that the court instruct the jury

briefly on that issue, a request that the court denied. We conclude that it was improper

for the district court to base its sanctions order to any degree on that portion of

counsel’s closing argument.

3

The district court stated in its sanctions opinion that Medtronic had “pursue[d] a

strategy of distorting” the court’s claim construction rulings, “misdirecting the jury to a

different reading of the claim language,” and “directing the jury to override the court’s

claim construction.” Medtronic did so, according to the district court, through the

opinions of its expert witnesses, which the court characterized as “crafted to fit the

infringement theories put forward by Medtronic’s counsel,” and by making arguments

that gave “superficial recognition to the court’s claim construction rulings, while pressing

its own interpretations of the claims.”

The court complained that Medtronic’s experts misled the jury by referring to the

Bucholz invention as having “sensors” or “an array of sensors” for detecting radiated

energy, which the court characterized as “the claim construction that Medtronic had

argued and lost.” We have read the testimony of Medtronic’s experts with care and do

2009-1058,-1059 26
not interpret their testimony as misleading or displaying an intransigent adherence to

Medtronic’s rejected claim construction.

Dr. Smith stated that the different types of sensors performed the same function,

but he did not conceal from the jury the difference between the sound sensors in the

Bucholz patent and the light sensors in the accused devices. He testified that in Dr.

Bucholz’s prototype device, “there were sensors that would actually be watching [the

surgical] probe,” which “actually had emitters on it, and they were emitting a radiation

source, a sound radiation source. So there were sound waves coming off of that

probe.” The sensors “that were hanging overhead . . . would actually pick up those

sound waves, and then digitize them, make them produce three dimensional

coordinates of where the tip of that probe is in the patient’s head.” Dr. Smith

acknowledged that BrainLAB contended that its devices did not infringe because

BrainLAB’s tracking units use light instead of sound. He then explained the difference

between sound radiation and light radiation by comparing “your car horn . . . there’s an

acoustic radiation coming off of that,” and “the remote for your television . . . there’s a

light radiation coming off of that.”

Similarly, Dr. Grimson made clear in his testimony that he understood the court

to have construed the term “reference means” in the Bucholz patent to mean “an array

of microphones.” He stated that “the function of the reference means—which in the

patent is ‘array of microphones’ the function is to track—is to try and track objects or

bodies.” He then summarized his task in applying the doctrine of equivalents in this

case as being “to try and determine whether I thought the reference means—as the

Court had construed it—was equivalent to the reference means of the optical systems.”

2009-1058,-1059 27
 In criticizing counsel’s argument, the court referred to counsel’s invitation to the

jury to consider language from the Bucholz patent that

refers to radiation, digitizers off-the-shelf, all this, and it’s all right there. . . .
[T]hat’s how it works and that’s what you compare here. Right? You don’t
compare microphones to cameras because the microphones and the
cameras are not doing the work that we’re talking about. We’re talking
about tracking. It’s a device to do tracking and it gets the energy waves,
the sensors receive that, they do triangulation, and then it gets digitized,
and then it goes into the computer.

The court’s concern appears to have been that Medtronic’s counsel led the jury to focus

on “radiation,” “digitizing,” and “tracking,” in order to draw the jury’s attention away from

the differences between microphones and cameras.

In context, it appears that counsel was not asking the jury to compare a

microphone and a camera in the abstract, but rather to compare their relative functions

in the patent and in the accused devices. Counsel argued that if you told a group of

engineers, “we’d like you to compare a camera to a microphone so we can figure out

whether there’s equivalence here, they’re going to [ask] what does the microphone do

and what does the camera do?” He concluded, “The microphone receives the sounds,

right? It’s the sensor for the sounds. The camera receives the light rays, right? And

so, you’ve got to compare the tracking unit.” Because counsel’s invitation to compare

the functions of the microphones and the cameras in the invention and the accused

products served the legitimate purpose of supporting Medtronic’s case for equivalence,

we disagree with the court’s conclusion that counsel urged the jury to disregard the

court’s claim construction.

2009-1058,-1059 28
 4

The district court criticized Medtronic for making improper product-to-product

comparisons between BrainLAB’s accused VectorVision product and Medtronic’s

StealthStation product, which also uses optical tracking technology, for the purpose of

proving infringement, even though the proper comparison was between the BrainLAB

products and the patent claims.

During the trial, the question arose whether Medtronic would be allowed to

introduce evidence regarding its StealthStation device and to compare that device with

BrainLAB’s VectorVision device. In a colloquy with the court, Medtronic argued that it

was proper to introduce the StealthStation for the purpose of demonstrating lost profits,

because the two products were sufficiently similar to be competing products. See King

Instruments Corp. v. Perego, 65 F.3d 941, 952 (Fed. Cir. 1995); Rite-Hite Corp. v.

Kelley Co., 56 F.3d 1538, 1546-47 (Fed. Cir. 1995) (en banc). The trial court admitted

the evidence for that limited purpose and cautioned the jury on several occasions that

Medtronic’s StealthStation was to be considered only in assessing Medtronic’s lost

profits claim and not in determining infringement.

The district court was legitimately concerned that the product-to-product

comparison might confuse the jury by leading it to believe that it should focus on the

similarities between Medtronic’s StealthStation device and BrainLAB’s similar optical

tracking devices. While we agree with the district court that the product-to-product

comparison presented a risk of jury confusion, we see no reason to conclude that the

court’s repeated cautionary instructions were insufficient to explain to the jury the limited

purpose for which the jury was to consider that evidence.

2009-1058,-1059 29
 Neither the trial court nor BrainLAB asserts that it was impermissible for

Medtronic to introduce the StealthStation device into evidence and to demonstrate its

similarities to BrainLAB’s devices as part of Medtronic’s proof of damages. Recognizing

that the evidence was admissible for that purpose, the district court allowed Medtronic

to introduce evidence regarding the StealthStation, subject to a cautionary instruction to

the jurors about the limited purpose for which they were to consider that evidence. In

light of the court’s ruling, it is difficult to fault Medtronic for introducing the StealthStation

evidence. 2

Moreover, the extent to which the StealthStation evidence was admitted at trial

was largely within BrainLAB’s control. Medtronic offered to refrain from demonstrating

its StealthStation device if BrainLAB would agree not to demonstrate its VectorVision

device, but BrainLAB’s counsel refused the offer. As a result, both devices were

demonstrated to the jury.

Finally, as we discuss in more detail below, the role of the StealthStation

evidence became intertwined at trial with the question of which company was the true

innovator in the field of surgical navigation devices. BrainLAB argued to the jury that it

was the true innovator. In response, it was reasonable for Medtronic to seek to show

that its similar and competing device, the StealthStation, preceded BrainLAB’s

2
A theme running throughout BrainLAB’s brief is that Medtronic conceded that
the StealthStation did not practice the Bucholz patent but then sought to use the
StealthStation device as a “proxy for the claims.” That argument oversimplifies
Medtronic’s position. Medtronic acknowledged that the StealthStation, which like the
VectorVision used an optical tracking system, did not literally practice the Bucholz
patent as construed by the court. However, Medtronic took the position that both the
StealthStation and the VectorVision used the concepts of the Bucholz patent, which is
why Medtronic could argue that the VectorVision infringed the Bucholz patent under the
doctrine of equivalents and why Dr. Bucholz could characterize the StealthStation as
embodying his technology.

2009-1058,-1059 30
VectorVision product and thus that Medtronic and its predecessors were the real

innovators in the field of optical tracking devices. For those reasons, we do not agree

with the district court that Medtronic’s introduction of evidence relating to the

StealthStation, and its comparison of the StealthStation with BrainLAB’s VectorVision,

constituted litigation misconduct justifying the imposition of section 285 sanctions.

5

Apart from the general issue of product-to-product comparisons, the district court

focused specifically on the “presentation of testimony and closing argument regarding a

letter BrainLAB submitted to the FDA.” The letter, which BrainLAB submitted as part of

its application for approval to sell the VectorVision in the United States, referred to the

“substantial equivalence” between the VectorVision and the StealthStation, which had

already been approved for sale in the United States. Alluding to the FDA submission,

Medtronic elicited testimony from Dr. Smith that in obtaining FDA approval for the use of

passive markers in surgical navigation, BrainLAB had represented to the FDA that its

product was substantially similar to the StealthStation. Dr. Smith testified that BrainLAB

“indicated to the FDA that the VectorVision was substantially equivalent to the

StealthStation and used the StealthStation as their predicate device in that submission.”

The lawyers referred to the FDA submission at several points. First, in his

opening statement at the outset of the trial, Medtronic’s counsel said that BrainLAB “told

the FDA [VectorVision is] equivalent [to StealthStation]—doctrine of equivalent; told the

2009-1058,-1059 31
FDA, equivalent.” That statement suggests that counsel was equating the reference to

equivalence in the FDA submission with equivalence under the doctrine of equivalents. 3

In his closing argument at the conclusion of the trial, counsel for Medtronic did

not refer to the FDA submission. BrainLAB’s counsel, however, referred to it on several

occasions in his closing argument, as part of his effort to show that BrainLAB was the

true innovator in the field of passive optical image-guidance systems. Counsel argued

that BrainLAB had developed the first such FDA-approved system, and that Medtronic

had copied BrainLAB’s technology and then acquired patents in an attempt to force

BrainLAB from the market. BrainLAB’s counsel summarized the point by arguing that

Medtronic made the decision to stop competing with innovation and to
start competing by copying and by fighting in the courtroom. We are here
because Medtronic concluded that it was just too hard to compete with
BrainLAB in the marketplace, so it decided to try to compete in court. . . .
And so, ladies and gentlemen, you have to ask yourself: Whose
innovation really was stolen? Whose labor was stolen? Whose ideas
were really stolen when you look at the evidence? I’ll tell you whose. It
was BrainLAB’s.

On rebuttal, counsel for Medtronic took issue with the argument that BrainLAB

was the true innovator in the field. Counsel began by referring to a letter from the

mid-1990s in which BrainLAB had made a request for a license to the Bucholz patent,

which was denied. Counsel argued that the letter requesting a license “is an admission”

and then added, “So, then, which was sort of amazing, was that now it’s . . . Medtronic

who has stolen from BrainLAB. I just—ladies and gentlemen, I just don’t get that.”

3
In its sanctions opinion, the district court did not refer to that remark by
Medtronic’s counsel, perhaps because any effect of the opening statement on the jury
was likely attenuated by the end of the trial. We address the opening statement remark
because BrainLAB has made an issue of it and because it was the only instance in
which Medtronic’s counsel explicitly linked the similarity between the StealthStation and
the VectorVision with the doctrine of equivalents. Medtronic argues that counsel’s
statement was merely a slip of the tongue.

2009-1058,-1059 32
 Counsel for Medtronic then turned to BrainLAB’s FDA filing. When counsel

began to discuss the FDA letter, counsel for BrainLAB objected that “this is comparing

the devices, not the device [and] the claims.” Medtronic’s counsel replied, “No, Your

Honor, this is—the discussion here is what—this is an admission that was made before

the FDA.” The court overruled the objection.

Medtronic’s counsel then pointed to the portion of BrainLAB’s FDA submission

entitled “substantial equivalence.” Focusing on that exhibit, counsel stated, “They went

to the FDA, and they told the FDA that our products are—the substantial equivalence

here is between this product—that is, the VectorVision—is similar in design,

composition, and function to the StealthStation. Bears directly on what we are doing

here today.” BrainLAB’s counsel objected again that the argument was misleading.

The court then instructed the jury that “the comparison is to be made to the claims and

the defendant’s products. This is not a comparison between [the StealthStation] and

the BrainLAB product.” Medtronic’s counsel responded, “Right, Your Honor, this is an

admission.”

In its sanctions opinion, the district court concluded that Medtronic’s counsel

made those statements with the intent to suggest to the jury that liability under the

doctrine of equivalents depended on comparing the VectorVision with the

StealthStation. The court also concluded that counsel’s statement, “this is an

admission,” was an attempt to undermine the effect of the court’s cautionary instruction

that the jury was to compare the accused products with the claims. The court

characterized Medtronic’s use of the FDA submission as “the most egregious” example

2009-1058,-1059 33
of Medtronic’s effort to induce the jury to compare the two companies’ products for

purposes of determining infringement.

There is support in the record for the district court’s interpretation of counsel’s

remarks, including counsel’s reference to the “doctrine of equivalents” when discussing

the FDA filing in his opening statement, and his comment that the FDA “admission” of

substantial equivalence “bears directly on what we are doing here today.” In particular,

counsel’s heavy emphasis on the similarity between the two devices could be

interpreted, as the district court interpreted it, as an effort to focus the jury’s attention on

a comparison of the products rather than a comparison of the accused products and the

patents.

On the other hand, the context in which those remarks arose makes it possible to

interpret them quite differently. In his closing argument, counsel for BrainLAB focused

at some length on his assertion that BrainLAB, not Medtronic, was the true innovator in

the field, and that Medtronic was attempting to compete “by copying and fighting in the

courtroom.” In light of that contention, it was understandable for Medtronic’s counsel to

point to the FDA submission as evidence that the StealthStation preceded the similar

VectorVision device in the U.S. market. Moreover, in his closing argument BrainLAB’s

counsel downplayed the fact that BrainLAB had sought a license to the Bucholz patent

by explaining that after being denied a license, it had devised a “passive” tracking

system that was very different from an “active” system. In response to that argument,

Medtronic’s counsel was able to use the FDA submission to point out that BrainLAB had

told the FDA that a passive system is “substantially equivalent” to an active one.

2009-1058,-1059 34
 Given that counsel’s remarks are subject to differing interpretations, and in light

of the deference accorded to trial courts in assessing the conduct of counsel before

them for purposes of imposing sanctions, we are not prepared to override the district

court’s conclusion that the manner in which Medtronic’s counsel presented the

argument regarding the FDA filing was improper. Nevertheless, 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. The district court’s fee award was designed to

compensate BrainLAB for the entire cost of its legal representation after the summary

judgment phase of the case, based on the court’s conclusion that Medtronic

unnecessarily prolonged the proceedings after that point. Because we have concluded

that Medtronic did not improperly prolong the proceedings by pursuing its claims

through trial, and because we disagree with most of the district court’s criticisms of

Medtronic’s litigation tactics, we reverse the trial court’s exceptional case finding and

vacate the attorney fee award under section 285.

III

In light of our analysis of the district court’s ruling under section 285, little remains

to be said about the court’s ruling under section 1927 and the court’s inherent authority.

Section 1927 provides that a court may require an attorney to “satisfy personally the

excess costs, expenses, and attorneys’ fees reasonably incurred” when the attorney

“multiplies the proceedings in any case unreasonably and vexatiously.” 28 U.S.C. §

1927. The court concluded that McDermott should be jointly liable with Medtronic for

the award of fees, costs, and expenses because McDermott should have known, after

2009-1058,-1059 35
the district court entered its claim construction order, that it had no reasonable prospect

of prevailing in the case. Because we have held that it was not unreasonable for

Medtronic to seek relief even in light of the court’s claim construction, it follows a fortiori

that McDermott, as Medtronic’s counsel, cannot be held liable for continuing to

represent Medtronic in that effort. Even if McDermott had concluded that Medtronic’s

prospects for ultimately prevailing in the litigation were significantly diminished by the

court’s claim construction order, it was not unreasonable for McDermott to continue to

press its client’s case in light of the arguments that remained available to it. See

Mezibov v. Allen, 411 F.3d 712, 719 (6th Cir. 2005) (“[A]n attorney is ethically bound to

make reasonable arguments on behalf of his client, even if the attorney disagrees with

them.”); Stitt v. Williams, 919 F.2d 516, 528 (9th Cir. 1990) (“[A] lawyer should not be

sanctioned for failing to abandon his client’s case at the drop of a summary judgment

motion, unless there is no colorable defense to the motion that can be advocated and

no possible merit to any argument that can be advanced.”).

As for the particular instances of alleged litigation misconduct, we have held that

several of those items did not constitute misconduct. Regarding counsel’s remarks

about BrainLAB’s FDA submission, we have upheld the district court’s conclusion that

the manner in which Medtronic’s counsel made his argument on that issue was

improper. But, just as we have held that those remarks, standing alone, were not

sufficient to render this case “exceptional” for purposes of section 285, we also hold that

those remarks did not improperly prolong the proceedings, and thus cannot serve as a

basis for the entry of an award under section 1927.

2009-1058,-1059 36
 As for the district court’s invocation of its inherent authority as a basis for an

award of fees, costs, and expenses, the Supreme Court has emphasized that a court’s

inherent powers “must be exercised with restraint and discretion.” Chambers v.

NASCO, Inc., 501 U.S. 32, 44 (1992). The Court in the Chambers case recognized that

a court may assess attorney fees when a party has acted “in bad faith, vexatiously,

wantonly, or for oppressive reasons.” Id. at 45-46. In the same vein, we have required

“a finding of fraud or abuse of the judicial process before a trial court can invoke its

inherent sanctioning power,” and we have stated that a case must be “sufficiently

beyond ‘exceptional’ within the meaning of section 285 to justify . . . a sanction under

the court’s inherent power.” Amsted Indus., Inc. v. Buckeye Steel Castings Co., 23 F.3d

374, 378-79 (Fed Cir. 1994).

Other courts have taken a similarly narrow view of the role of inherent authority

as a basis for imposing sanctions for misconduct. See, e.g., Amlong & Amlong, P.A. v.

Denny’s, Inc., 500 F.3d 1230, 1252 (11th Cir. 2007) (“[T]he threshold of bad faith

conduct for purposes of sanctions under the court’s inherent powers is at least as high

as the threshold of bad faith conduct for sanctions under § 1927. So sanctions that are

impermissible under § 1927 are also impermissible under a district court’s inherent

powers.”); Zapata Hermanos Sucesores, S.A. v. Hearthside Baking Co., 313 F.3d 385,

390-91 (7th Cir. 2002) (“The inherent authority of federal courts to punish misconduct

before them is not a grant of authority to do good, rectify shortcomings of the common

law . . . or undermine the American rule on the award of attorneys’ fees to the prevailing

party . . . . [I]t is a residual authority, to be exercised sparingly . . . .”); Saldana v. Kmart

Corp., 260 F.3d 228, 238 (3d Cir. 2001) (“[I]nherent power should be reserved for those

2009-1058,-1059 37
cases in which the conduct of a party or an attorney is egregious and no other basis for

sanctions exists.”); Jones v. Winnepesaukee Realty, 990 F.2d 1, 4 (1st Cir. 1993)

(inherent power to award fees “should be used sparingly and reserved for egregious

circumstances”).

We have already held that the conduct in this case does not rise to the level

required to characterize the case as “exceptional” under section 285 and does not

warrant the imposition of sanctions under section 1927. While we have deferred to the

district court’s judgment that counsel’s use of the FDA submission evidence was

improper, it is clear to us that, viewed in context, that incident was not sufficiently

egregious to justify the imposition of sanctions under the court’s inherent authority. We

therefore reverse the district court’s order and vacate the award of attorney fees, costs,

and expenses.

REVERSED.

2009-1058,-1059 38
 United States Court of Appeals for the Federal Circuit
2009-1058, -1059

MEDTRONIC NAVIGATION, INC. (formerly known as Surgical Navigation
Technologies, Inc.), MEDTRONIC SOFAMOR DANEK, INC., and SOFAMOR DANEK
HOLDINGS, INC.,

Plaintiffs-Appellants,

and

ST. LOUIS UNIVERSITY and
TRUSTEES OF DARTMOUTH COLLEGE,

Plaintiffs,

and

MCDERMOTT WILL & EMERY LLP,

Nonparty-Appellant,
v.

BRAINLAB MEDIZINISCHE COMPUTERSYSTEME GMBH,
BRAINLAB AG, BRAINLAB USA, INC., and BRAINLAB, INC.,

Defendants-Appellees.

Appeals from the United States District Court for the District of Colorado in
case no. 98-CV-01072, Senior Judge Richard P. Matsch.

LOURIE, Circuit Judge, concurring.

I fully join the thorough opinion by Judge Bryson which carefully analyzes all the

panel’s grounds for reversing the district court’s sanctions.

However, the court’s opinion should not be understood as in any way impeding

the desirability and ability of district court judges to control their courtrooms and ensure

that substantive arguments are reasonably based.
 Many patent suits are brought these days with little chance of success. Appeals

to this court from summary judgments of non-infringement based on claim constructions

that are affirmed here are testament to the frequency of non-meritorious claims brought

in the district courts. Whether those suits are brought because of poor and non-

objective appraisals of plaintiffs’ prospects or for less worthy motives I do not know. But

district court judges are entirely justified, when they encounter frivolous claims and/or

excessively hard-ball tactics, in imposing sanctions on offending parties. They are

enforcing respect for the courts and the rights of innocent parties to be free of unjustified

claims.

In this case, there certainly were a number of instances during the proceedings

below where the court felt that counsel had overstepped its bounds with their

arguments. We reversed because, as tellingly explained by Judge Bryson, each

incident had explanations that the panel believed were exonerating. But our action in

this case should not be viewed by district court judges as chilling their taking charge of

their courtrooms and ensuring that proper arguments are made against proper

opponents.

With those comments, I fully join in the court’s opinion and judgment.

2009-1058, -1059 2