In December 2007 an Arizona jury awarded $185 million in damages to C. R. Bard in its long-running patent dispute with W. L. Gore & Associates, partly based on expert analysis and testimony by Dr. Louis Berneman, supported by Cornerstone Research. In 1984 Gore obtained an option from Bard to license any patent resulting from a patent application that in 2002 issued as the Goldfarb patent. By then Gore was making vascular grafts covered by the patent but did not obtain a license from Bard to continue doing so. Bard filed suit, claiming infringement by Gore.
Bard’s counsel, Latham & Watkins, retained Dr. Berneman—a principal at Texelerate, a technology transfer consulting firm—to analyze the option granted to Gore in 1984. Cornerstone Research supported Dr. Berneman in preparing his two expert reports and his testimony at deposition and the ensuing jury trial. At issue was whether, as Gore contended, the option was irrevocable and perpetual or whether, as Bard contended, it should have been exercised within a reasonable period and, if so, what that period should have been.
Dr. Berneman found that a defined period in which to exercise an option is an essential, standard element of patent license option agreements and that three to six months would have been a reasonable period for Gore to have exercised its option after the Goldfarb patent was issued. Thus Gore’s contention that its option to license the patent was perpetual and irrevocable was inconsistent with customary practice.
Gore also claimed that the damages it owed were set by the 1984 option, which had a 5 percent royalty rate. But Dr. Berneman concluded that Gore’s decision not to exercise the option meant that the 5 percent royalty rate in the original option agreement was no longer available. The jury agreed, finding that the royalty rate from 1984 should not be a factor in the 2002 hypothetical negotiation. The jury’s damages award provided for a royalty well in excess of the rate contained in the 1984 option agreement.