University Times

A federal court judge has awarded Pitt $85.8 million in a patent infringement case against a California-based medical equipment manufacturer, but in light of an expected appeal, the University isn’t counting the cash yet.

Although Pitt’s attorneys sought triple damages in the case, in a decision filed April 26, U.S. District Court Judge Arthur J. Schwab doubled the $36.88 million in damages a jury awarded in February in Pitt’s case against Varian Medical Systems.

The judge’s decision orders Varian to pay nearly $73.8 million in damages, $12 million in interest plus attorney fees and additional damages, with interest, for sales dating back to April 2011.

Pitt also is to receive ongoing royalties based on sales of the Varian products.

Meryl Ginsberg, Varian’s director of public relations, stated, “A U.S. District Court found that Varian’s respiratory gating products infringe on a University of Pittsburgh patent.  Varian disagrees with the ruling and will appeal the decision. As this is a matter of ongoing litigation, Varian does not intend to comment further.”

Laura R. Hillock, Pitt associate general counsel, told the University Times, “This anticipated appeal will delay any recovery or payment of the award of damages until the appeal is resolved completely, which could take a year or more. Whether the University ultimately receives any recovery or payment depends on the outcome of the appeal. Accordingly, the University has made no immediate plans for utilizing any award of damages from this case.”

Hillock said the appeal also might delay any payment of court-awarded ongoing royalties. “The timing of these payments will be the subject of post-trial proceedings and possibly could be deferred pending the appeal.”

An appeal would be made to the Federal Circuit Court of Appeals in Washington, D.C., which handles appeals of patent cases from all federal district courts, Hillock said.

Earlier, Schwab divided the trial into three parts, hearing separately the issues of damages, willful infringement and the validity of one of the patents in question.

The court previously found that the company willfully infringed on two of the University’s patents in Varian’s Real-time Position Management Respiratory Gating System (RPM System) and in the Clinac and Trilogy accelerators sold in combination with the RPM System. The RPM System synchronizes imaging and radiation therapy with a patient’s breathing to better target tumors during cancer treatment.

And, on Feb. 23, a jury found that found that Varian should pay Pitt more than $36.8 million for infringing on a Pitt patent  (known as the ’554 patent) from June 16, 2002, through March 31, 2011. (See March 8 University Times.) According to court documents, Varian made a gross profit of approximately $91.58 million on sales of RPM Systems and $849.45 million on sales of the Clinac and linear accelerators sold in combination with RPM Systems during that time.

The jury found Pitt was entitled to a royalty rate of 10.5 percent for Varian’s sales of RPM Systems and a royalty rate of 1.5 percent for Varian’s Clinac and Trilogy linear accelerators sold in combination with RPM Systems.

Although Schwab had ordered the parties to negotiate an ongoing royalty, they could not agree, so the judge ordered that the jury’s figures would apply to sales of the products.

In his April 25 decision, the judge stated that the royalty awarded by the jury “will adequately compensate Pitt for Varian’s continued infringement of the ’554 patent, while leaving Varian with a substantial profit margin,” noting in the decision that both sides would be harmed if Varian stopped selling the infringing products. “Varian would lose its profit on the products while Pitt would lose the royalty that it would receive,” he stated.

The judge also awarded 6 percent interest, compounded quarterly, explaining, “Varian has been unjustly enriched by having access to the $36.8 million the jury found it owes Pitt during the period of infringement. The award of prejudgment interest would be compensatory because it is compensating Pitt for not having access to its money during the period of infringement.”

The judge also awarded Pitt “reasonable” attorneys’ fees. Court documents filed on behalf of the University on Feb. 29 stated that Pitt’s legal fees and expenses had totaled approximately $12 million.

Schwab has given Pitt and Varian until May 4 to either agree on an amount or provide a briefing schedule on when they will have those numbers.

—Kimberly K. Barlow