Court upholds $371 million CR Bard patent award

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(Global Markets) - A divided federal appeals court upheld a $371.2 million award in favor of C.R. Bard Inc in a long-running patent infringement dispute with W.L. Gore & Associates over vascular grafts.

The U.S. Federal Circuit Court of Appeals in Washington, D.C. said there was "substantial" evidence to support a 2007 Arizona jury verdict that Gore, the maker of Gore-Tex, willfully infringed a Bard patent through its sale of the grafts.

Shares of Bard rose as much as 3.7 percent after the decision.

Prosthetic vascular grafts are used to bypass or replace blood vessels to ensure sufficient blood flow to various parts of the body.

Bard's patent had been issued in 2002, 28 years after an application was first filed, and sued Gore for infringement the following year.

The Arizona jury had awarded Bard $185.6 million for lost profit and unpaid royalties, an award that trial judge Mary Murguia later doubled.

"This should be the final curtain of the saga," Judge Arthur Gajarsa wrote for a 2-1 Federal Circuit panel. "We cannot revisit the facts anew, nor meander through the record and select facts like our favorite jelly beans, nor characterize the facts as the Bard would in a Shakespearean tragedy."

The $371.2 million award exceeds C.R. Bard's total reported net income of $328 million for all of 2011. It is unclear whether Gore will appeal the decision to the entire Federal Circuit or to the U.S. Supreme Court.

Neither company responded to requests for comment. Each said it generates close to $3 billion of annual revenue. Bard is based in Murray Hill, New Jersey, and privately held Gore in Newark, Delaware.

Analysts estimated that the litigation could ultimately result in more than $800 million of payments to Bard, including accumulated royalties.

Friday's decision is "a positive milestone," Leerink Swann analyst Rick Wise wrote. "Although Gore still has several possible levels of appeals ... the court's ruling today will likely be very much what the final ruling will look like."

Wise has a "market perform" rating for Bard.

Writing for the Federal Circuit majority, Gajarsa said the Arizona jury had more than enough evidence to conclude that Gore "knew or should have known of the objectively high likelihood" that its grafts infringed Bard's patent.

He also said Murguia acted within her discretion in doubling the damage award, citing the jury finding of willfulness and the "extensive litigation" between the parties, in which Gore had "repeatedly lost yet continued to infringe" the patent.

Judge Pauline Newman dissented.

Murguia last year joined the 9th U.S. Circuit Court of Appeals. She was appointed by President Barack Obama.

In afternoon trading, Bard shares were up $2.67, or 2.9 percent, at $94.98, after earlier rising to $95.68.

The case is W.L. Gore & Associates Inc v. C.R. Bard Inc et al, U.S. Federal Circuit Court of Appeals, No. 2010-1510.

(Reporting By Jonathan Stempel in New York; Additional reporting by Debra Sherman in Chicago; Editing by Lisa Von Ahn and John Wallace)