St. Jude Medical, Inc. et al v. Access Closure, Inc.
ORDER denying without prejudice 380 Motion to Approve Appeal Bond and Stay Execution of the Monetary Judgment. Defendant shall file within 10 days of this Order's entry its motion to approve its revised bond clarifying the third clause. T he bond amount is sufficient. Plaintiff's response to Defendant's motion to approve is due 7 days after Defendant's motion is filed. The response shall address only the nullification-clause issue. No reply will be considered. Signed by Honorable Harry F. Barnes on December 18, 2012. (cap)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
ST. JUDE MEDICAL, INC.; and
ST. JUDE MEDICAL PUERTO RICO, LLC
CASE NO. 4:08-CV-04101
ACCESS CLOSURE, INC.
Before the Court is Defendant Access Closure, Inc.’s Motion to Approve Appeal
Bond and Stay Execution of the Monetary Judgment. (ECF No. 380). Plaintiff1 has
responded. (ECF No. 382). The matter is ripe for the Court’s consideration.
Plaintiff obtained a jury verdict in December 2010 finding that Defendant had
infringed several of Plaintiff’s medical-device patents, including U.S. Patent No.
7,008,439 (the “Janzen ’439 patent”). Although the jury found that patent to have been
infringed, it also found two of the patent’s claims invalid for double-patenting. Plaintiff
raised a safe-harbor defense to its patent under 35 U.S.C. § 121, and that defense was
tried to the Court in June 2011. The Court found the safe-harbor defense applicable and
effective to save the patent.
Defendant is appealing the Court’s safe-harbor decision, among others. In the
meantime, the Court has granted Plaintiff relief in the form of a permanent injunction
(now stayed pending appeal) and a monetary judgment for $21.7 million. At the parties’
The Court will treat both St. Jude entities together in the singular.
request, the Court has put off resolving any attorneys’ fees, costs, interest, and other
damages issues until Defendant’s appeal is concluded.
After staying the permanent injunction, the Court gave Defendant several
extensions of time to obtain a supersedeas bond to stay the monetary judgment pending
appeal. Plaintiff agreed to those extensions. The parties, however, are still unable to agree
on a bond amount. Defendant believes its current $21.7 million bond is sufficient;
Plaintiff finds that amount too low. Defendant filed the instant motion on November 20,
2012 asking the Court to approve its bond over Plaintiff’s objection.
The Federal Rules of Civil Procedure entitle an appellant to stay a monetary
judgment by obtaining a supersedeas bond. Fed. R. Civ. P. 62(d). The rule does not say
what amount is required. “The function of a supersedeas bond is to protect the judgment
creditor’s position from erosion during any period that its right to execute is obstructed
by a stay pending appeal….” Olympia Equip. Leasing Co. v. Western Union Tel. Co., 786
F.2d 794, 800 (7th Cir. 1986) (Easterbrook J., concurring); Miami Int’l Realty Co. v.
Paynter, 807 F.2d 871, 873 (10th Cir. 1986). The ordinary bond amount includes
“interest, costs, and damages for delay.” New Access Communications LLC v. Qwest
Corp., 378 F. Supp. 2d 1135, 1138 (D. Minn. 2005) (internal quotation omitted). Though
the ordinary bond includes those amounts, exceptional circumstances sometimes justify
departing from the norm. Hopfinger v. Kidder Int’l, Inc., 827 F. Supp. 1444, 1453 (W.D.
Mo. 1993). Whether to require a bond and, if so, for how much, is left to the Court’s
discretion. Dillon v. City of Chicago, 866 F.2d 902, 904 (7th Cir. 1988).
Plaintiff finds two faults with Defendant’s supersedeas bond: (1) the amount—
namely, what it does not include; and (2) the wording of one of its three clauses. The
Court will address each alleged fault in turn.
Defendant’s bond is for $21.7 million—the amount for which the Court has
entered judgment in Plaintiff’s favor for compensatory damages for infringement of two
patents. (ECF No. 308). That judgment, by the parties’ design and intention, reserved
judgment on several other forms of relief, including: (1) compensatory damages for
infringement of the ’439 patent; (2) supplemental damages for infringement of the ’439,
’616, and ’375 patents; (3) pre-judgment interest; (4) willful-infringement damages; (5)
attorneys’ fees; (6) post-judgment interest; and (7) whatever other relief the Court finds
appropriate. (ECF No. 308, 2–3).
Plaintiff wants the bond to go beyond the judgment amount to include interest and
costs. The Court does not find such an expansion warranted by the facts.
The Court is of course mindful of the ordinary rule that an appeal bond should
secure the value of the appellee’s judgment while the appeal moves forward, and that the
value of the appellee’s judgment ordinarily grows with interest. But in this case, Plaintiff
agreed to reserve its request for post-judgment interest until Defendant concludes its
appeal. The only firmly settled part of Plaintiff’s judgment so far is the $21.7 million in
compensatory damages the Court has awarded. The other parts of Plaintiff’s relief remain
to be determined, and Plaintiff does not quibble with the majority of that relief—e.g.,
supplemental damages, enhanced damages, pre-judgment interest, and costs—being left
out of Defendant’s bond.
The Court sees no reason why Plaintiff should obtain an advance on its postjudgment-interest relief while waiting as planned for its other relief. Plaintiff cannot lose
what it does not have, and right now it does not have a present claim to post-judgment
interest. In short, Plaintiff agreed not to worry about post-judgment interest until
Defendant’s appeal is through, and it must stand by that agreement.
The Court is unclear on precisely what is included in Plaintiff’s claim to have
“costs” included in the bond amount. Plaintiff trains much of its brief on the inclusion of
interest, but a few of its case quotes prescribe a bond amount that includes “counsel
fees.” (ECF No. 382, at 6). Moreover, “costs” can certainly be taken to mean the ordinary
administrative costs of defending an appeal. The Court finds, however, that neither form
of costs warrants a forced inflation of Defendant’s bond.
First, attorneys’ fees on appeal, while awardable under 35 U.S.C. § 285, Shelcore,
Inc. v. Durham Indust., Inc., 745 F.2d 621, 630 (Fed. Cir. 1984), are awardable only in
exceptional cases. 35 U.S.C. § 285. As things appear so far, the Federal Circuit is
unlikely to find Defendant’s appeal frivolous or exceptional. Id.; Stearns v. Beckman
Instruments, Inc., 737 F.2d 1565, 1569 (Fed. Cir. 1984). The appeal seems reasonable
and in good faith. Moreover, the Federal Circuit disagrees with an “expansive reading of
§ 285.” Forest Lab., Inc. v. Abbott Lab., 339 F.3d 1324, 1329 (Fed. Cir. 2003). The Court
thus finds that appellate attorneys’ fees are not a sufficient potentiality to warrant
increasing Defendant’s bond.
Nor are the ordinary administrative costs of an appeal sufficient to warrant
increasing Defendant’s bond. As Plaintiff notes, the Eastern District of Texas imposes on
supersedeas bonds a $250 charge to cover costs. (ECF No. 382-3, at 5). While
Defendant’s bond would ideally have included such an amount, the lack of $250 is not
likely to jeopardize Plaintiff’s position on the $27.1 million bond.
In sum, the Court finds the amount of Defendant’s bond sufficient under the
Ambiguity in bond clause
Plaintiff’s second problem with Defendant’s bond is the language of one of its
three clauses. That clause states:
Now, therefore, if ACCESSCLOSURE, INC. satisfies the judgment in
full, together with costs and interest on such judgment, or if for any reason
the appeal is dismissed, or the petition for certification is denied, or the
judgment is affirmed, and must satisfy in full any modification of the
judgment and such costs, interest, and damages as any appellate court may
adjudge and award, then this obligation will be null and void; otherwise it
will remain in full force and effect; provided however, the maximum
liability of the Surety shall not exceed the sum of TWENTY SEVEN
MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS
($27,100,000). (ECF No. 381, Exh. 10).
Plaintiff finds the clause ambiguous because, apart from being generally difficult
to understand, it might be interpreted to say that “…if…the judgment is affirmed…then
this obligation will be null and void….” According to Plaintiff, that ambiguity might be
wielded as a way out of coverage, in which case the whole point of the bond is defeated.
The language is so starkly at odds with the entire purpose of the bond that such a result is
unlikely, but uncertainty exists nevertheless.
The Court too finds the clause’s language troubling. “[W]ords are mere
instruments for conveying thoughts to others. The critical people are the users, not the
writers, of words.” Frank H. Easterbrook, Legal Interpretation & the Power of the
Judiciary, 7 HARV. J. L. & PUB. POL’Y 87, 87 (1984). Even if the clause here is clear to
the writer, it is foggy to the reader.
The clause seems to point out certain happenings that nullify the bond. If that is
the intent, Defendant should rewrite the clause to state clearly and succinctly what those
happenings are. The clause’s language could possibly be pieced together, but a clear
rewriting would greatly increase the sureness of the bond and therefore further its
For the above reasons, the Court finds that Defendant’s bond is sufficient in
amount, but that the ambiguous clause should be rewritten to clarify which happenings
nullify the bond. Therefore, upon consideration, the Court finds that Defendant’s Motion
to Approve Appeal Bond and Stay Execution of the Monetary Judgment (ECF No. 380)
should be and hereby is DENIED WITHOUT PREJUDICE. Defendant shall file within
10 days of this Order’s entry its motion to approve its revised bond clarifying the third
clause. The bond amount is sufficient. Plaintiff’s response to Defendant’s motion to
approve is due 7 days after Defendant’s motion is filed. The response shall address only
the nullification-clause issue. No reply will be considered.
IT IS SO ORDERED, this 18th day of December, 2012.
/s/ Harry F. Barnes
Hon. Harry F. Barnes
United States District Judge
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