Settlement Held Not a Basis for Vacatur of Inequitable Conduct Findings. Rinse. Repeat

Medtronic Vascular, Inc. v. Boston Scientific Corp., 2009 WL 383237(E.D.Tex. Feb 11, 2009) (NO. CIV.A. 2:06-CV-78).
Avid Identification Systems, Inc. v. Philips Semiconductors Inc., 2009 WL 383232(E.D.Tex. Feb 11, 2009) (NO. 2:04-CV-183).
Judge: T. John Ward
Back to twins again.  This time they're identical, not mine, and ugly.
I typically don't post on cases together, but here the similarities seemed significant.  Judge Ward issued both of these orders on February 11, and West reported them both this morning.  Both were in cases tried to jury verdicts. And in both, bad things happened after that.  In Avid, the plaintiff obtained a verdict for $6 million in unfair competition damages and $26,891 (yes, that's only $26 thousand) in patent damages before Judge Ward declared the '326 patent unenforceable due to inequitable conduct.  In 2008 Medtronic obtained a $250 jury verdict, which Judge Ward cut by over 90% to $19.09 million, in part due to a finding of inequitable conduct, before entering judgment last month.
In Avid, the plaintiff filed an Unopposed Motion For Reconsideration of the Court's Order of Inequitable Conduct, which, pursuant to a settlement agreement executed between the parties in the case, was unopposed by defendants.  Judge Ward denied the motion, finding that the motion wasn't presented as a motion to vacate based on mootness as a result of setlement, but rather as a reconsideration.  He noted that the law is that absent “exceptional circumstances,” a vacatur of a court's earlier ruling is not justified based simply on the parties' settlement.  Judge Ward then found that there was no longer any Article III case or controversy on the issue of unenforceability of the '326 patent as a result of the settlement agreement, thereby rendering the issue moot.
But even considered as a motion to vacate based on mootness, the Court failed to find any “exceptional circumstances” under the facts presented that would justify vacatur of the Court's earlier decision.  Nor would he have granted it on the merits, he observes in a footnote, noting  Dr. Stoddard's "incredible" testimony that there was no sales activity prior to the critical date.  (Ed note: I don't think he meant "incredible" in a good way here).
In Medtronic, Judge Ward again recites the basic case facts and notes that he has before him the parties' Joint Motion to Vacate Judgment and Enter Stipulated Dismissal With Prejudice as a result of the parties' settlement. Specifically, the parties asked the Court to vacate the August 29, 2008 Memorandum Opinion and Order regarding inequitable conduct (the court had found both the '057 patent and '358 patents unenforceable based on inequitable conduct), as well as its order regarding prejudgment interest and the final judgment.   And again, he denied the relief sought, stating:

"Here, the parties have failed to show an equitable entitlement to an “extraordinary remedy” of vacatur. The only reason presented to the Court to vacate its earlier orders is that the parties have entered into a settlement agreement. Granting a vacatur based solely on this reason would effectively result in the exact same relief that Bancorp [U.S. Bancorp Mortgage v. Bonner Mall P'ship, 513 U.S. 18, 29 (1994)] holds is inappropriate. The Court entered its inequitable conduct finding in this case six months ago. In Bancorp, the Supreme Court recognized that the public's interest must be taken into account when analyzing whether to vacate a judgment which was presumptively correct and valuable to the legal community as a whole. Public interest in a finding of unenforceability of the two patents in issue here is an important factor that this Court cannot ignore. Also relevant to the facts of this case is Supreme Court's mandate in Bancorp that the standard for vacatur should discourage “rolling the dice” and encourage settlement. The inequitable conduct issue is one where parties would indeed be willing to “roll the dice” if the result could easily be overcome through settlement and vacatur. Therefore, the Court is not convinced that vacatur is appropriate here."

(Internal citations omitted).