# Appendix — Ethicon, Inc. v. Handgards, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1748%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1985 - **Citation:** 469 U.S. 1190 ## Text S4-ggqo |; Titeo”™ No. 84-___ | : £0 i964 IN THE Supreme Court of the United States OCTOBER TERM, 1984 >_> ETHICON, INC., Petitioner, —_—Vo— HANDGARDS, INC., Respondent. APPENDIX TO PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT DAVID F. DOBBINS PATTERSON, BELKNAP, WEBB & TYLER 30 Rockefeller Plaza New York, New York 10112 (212) 541-4000 Counsel for Petitioner Of Counsel: GEORGE S. FRAZZA ROGER S. FINE ROBERT P. LOBUE Index to Appendices PAGE Appendix A—Handgards, Inc. v. Ethicon Inc., Nos. 83-1575, 83-1646 (9th Cir., Aug. 2, 1984) (unamended) and judgment thereon .... la Appendix B—Handgards, Inc. vy. Ethicon Inc., Nos. 83-1575, 83-1646 (9th Cir., Sept. 26, 1984) (amending August 2 opinion) .... 34a Appendix C—Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986 (9th Cir. 1979), cert. denied, 444 Ss CEE “5 S's oes none e nen eben ae 37a Appendix D—Handgards, Inc. v. Ethicon, Inc., 552 F.Supp. 820 (N.D. Cal. 1982) ......... 62a Appendix E—Handgards, Inc. v. Johnson & Johnson, 1976-2 Trade Cas. (CCH) § 61,138 (N.D. ET Wisc eek cake vate dade tks es 70a Appendix F—Handgards, Inc. v. Johnson & Johnson, 413 F.Supp. 921 (N.D. Cal. 1975) ...... 80a Appendix G—Cases Deciding Noerr-Pennington/Sham EE cp becpdcbacecuaetu ds 88a EE cuba elueutosvertesiews esas Kes 104a Appendix A UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 83-1575 No. 83-1646 DC# CV-49491-SAW nos HANDGARDS, INC., A CORPORATION, Plaintiff-Appellee, VS. ETHICON, INC., A CORPORATION, Defendant-Appellant. — ++ Appeal from the United States District Court for the Northern District of California Stanley A. Weigel, District Judge, Presiding Argued and Submitted December 20, 1983 — —+ > Before: SNEED, KENNEDY, and BOOCHEVER, Circuit Judges. 2a OPINION SNEED, Circuit Judge: Handgards, Inc. (Handgards) filed this suit against Ethicon, Inc. (Ethicon) for initiating and pursuing a veries of bad faith patent infringement suits in an attempt to monopolize the market for heat-sealed plastic gloves sold to manufacturers of home hair coloring kits. A jury returned a verdict in favor of Handgards, and Ethicon appealed. In Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986 (9th Cir. 1979) (Handgards !), cert. denied, 444 U.S. 1025 (1980), we established a clear and convincing standard for section 2 antitrust liability resulting from the prosecution of a patent suit in bad faith. We then reversed and remanded this case for a new trial. After a new trial, the jury found Ethicon liable under section 2 of the Sherman Act. The district court denied Ethicon’s motion for a judgment notwithstanding the verdict. See Handgards, Inc. v. Ethicon, Inc., 552 F. Supp. 820 (N.D. Cal. 1982) (Handgards II). Ethicon appeals this judgment in all respects. We affirm. Ethicon’s appeal raises the following issues: 1. Does this court have jurisdiction over this appeal? 2. Does substantial evidence support the jury’s finding that Handgards had proven by clear and convincing evidence that Ethicon prosecuted its patent infringement action in bad faith in violation of section 2 of the Sherman Act? 3. Did the trial court err in refusing to instruct the jury that liability under the Sherman Act required a finding by the jury that Ethicon’s patent infringement suit was a “sham” proceeding within the meaning of the Noerr-Pen- nington doctrine? 4. Were the injuries suffered by Handgards such as to afford it standing to seek treble damages under the Sherman Act as required by Associated General Contrac- tors of California, Inc. v. California State Council of Carpenters, 103 S. Ct. 897 (1983)? 3a 5. Was the damage award by the jury properly supported by the evidence? 6. Did the trial court err in awarding post-judgment interest from the date of the entry of the first judgment in 1976? After concluding that this court has jurisdiction to hear and determine this appeal, we resolve each of these issues in a manner favorable to Handgards. L. FACTS AND PROCEEDINGS BELOW A complete statement of the facts is set forth in Handgards I, 601 F.2d at 988-92; therefore, here we shall outline the history of the prior litigation only briefly. In 1962 Ethicon filed a patent suit against Plasticsmith, Inc. and Mercury Manufacturing Company, two corporations that subsequently combined to form Handgards. Ethicon alleged that these corporations had infringed its Gerard and Orsini patents involving the production of plastic gloves. In 1968 the trial court entered judgment for Handgards because it found Ethicon’s Gerard patent invalid on the basis of “prior public use” by Lyle Shabram. Ethicon had dropped its enforcement of the Orsini patent earlier in the case. This court affirmed the district court’s decision, and the Supreme Court denied review. Ethicon, Inc. v. Handgards, Inc., 432 F.2d 438 (9th Cir. 1970), cert. denied, 402 U.S. 929 (1971). Meanwhile, in 1968 Handgards filed this civil antitrust action alleging that Ethicon and its parent, Johnson & John- son, “had either unilaterally or in concert, monopolized, at- tempted to monopolize, and conspired to monopolize trade and commerce for the purpose of eliminating plaintiff as a competitor in the sale of disposable plastic gloves to the health care and medical markets.” Handgards I, 601 F.2d at 989. Handgards also sought a declaration of invalidity of the Orsini patent. Jd. at 991. The jury found the Orsini patent valid under a preponderance of the evidence proof standard; yet, it found 9 4a Ethicon liable for bad faith prosecution of the invalid Gerard patent. The jury also found that no conspiracy to monopolize had existed between Johnson & Johnson and Ethicon. Handgards was awarded $2,073,000 before trebling, See id. at 991-92. On appeal, we reversed the jury’s antitrust verdict and imposed a clear and convincing standard of proof for bad faith prosecution of a patent infringement action. Jd. at 996-98.' After a new jury trial, the district court entered a verdict of $3,587,331 before trebling, attorneys’ fees of $1,064,943, and about $3,000,000 in post-judgment interest, Handgards II, 552 F. Supp. at 824. Ethicon’s motion for a judgment notwith- standing the verdict, or, in the alternative, a new trial was denied. /d. at 821. II. JURISDICTION In 1982 Congress passed the Federal Courts Improvement Act of 1982 in part to promote predictability, uniformity, and the efficient administration of patent law. Pub. L. No. 97-164, 96 Stat. 25. See S. Rep. No. 275, 97th Cong, Ist Sess. 1, reprinted in 1982 U.S. Code Cong. & Ad. News 11. To achieve these goals, Congress created the United States Court of Appeals for the Federal Circuit (Federal Circuit). See generally Note, An Appraisal of the Court of Appeals for the Federal Circuit, 57 S. Cal. L. Rev. 301 (1984). The Federal Circuit was given exclusive jurisdiction “of an appeal from a final decision of a district court of the United States . . . if the jurisdiction of that court was based, in whole or in part, on section 1338.” 28 U.S.C. § 1295(a)(1)(1982)(emphasis added). Section 1338 (a) gives district courts exclusive jurisdiction over “any civil action arising under any Act of Congress relating to patents.” 28 U.S.C. § 1338 (1982). Because section 1295 is in effect for all l We also found “that no evidence of any overall scheme to monopo- lize exist{ed] apart from allegations that directly relate[d] to the bad faith prosecution charges.” 601 F.2d at 994 (emphasis in original). Thus, Handgards’ second claim of an “overall scheme” to monopolize was re- jected. Sa appeals filed after October 1, 1982, see Pub. L. 97-164, § 402, 96 Stat. 57, it is applicable to this appeal. Both parties suggest that we have jurisdiction, and we agree.” The phrase “based, in whole or in part, on section 1338,” is new and, as far as we know, has not been interpreted in the context of a mixed patent/antitrust appeal by any court. Commentators have argued that this language could support several types of jurisdiction.» See Newman, Tails and Dogs: 2 Our ability to determine whether this appeal lies within section 1291 or section 1295 is inherent in a court’s ability to determine its own jurisdic- tion. See United States v. United Mine Workers of America, 330 U.S. 258 (1947); C. Wright, The Law of Federal Courts § 16 (4th ed. 1983). 3 Judge Jon O. Newman has summarized three basic approaches to the Federal Circuit’s jurisdiction as follows: First, the CAFC [{(Federal Circuit)] could have what might be called traditional “arising under” jurisdiction. Under this approach an entire case would be appealable to the CAFC if a claim in the district court arose under the patent laws. That approach would clearly send the whole case to the CAFC when the plaintiff asserted a patent claim (either of infringement or patent invalidity), but might not have this effect if the patent claim was asserted only as a defense. Second, the CAFC could have what might be called “case” jurisdiction. Under this approach, the entire case would be appealable to the CAFC, so long as there was a patent issue in the case, whether or not that issue was raised solely as a defense. Third, the CAFC could have what might be called “issue” jurisdiction. Under this approach, only the patent issues would be appealable to the CAFC, leaving the remaining issues for appeal to the court of appeals for the pertinent geographic area. Newman, supra, at 238-39. A student note advances a fourth approach that combines both case and issue jurisdiction. See Note, supra, at 332-33. We believe that only one approach is possible under the language of the statute and its legislative history. Congress expressly adopted “arising under” juris- diction and rejected case and issue jurisdiction. See injru text (quoting House and Senate Reports adopting “arising under” approach); S. Rep. No. 275, supra, at 19, reprinted in 1982 U.S. Code & Ad. News at 29 (rejecting case jurisdiction approach); Hearings on Court of Appeals for the Federal Circuit Act of 1981, H.R. Rep. No. 312, 97th Cong., Ist Sess. 41 (1981) (rejecting the issue jurisdiction approach adopted for the Temporary Emergency Court of Appeals in Coastal States Marketing Inc. v. New England Petroleum Corp., 604 F.2d 179 (2d Cir. 1979)). (footnote continued) 6a Patent and Antitrust Appeals in the Court of Appeals for the Federal Circuit, 10 Am. Pat. L.A.Q. J. 237, 238-39 (1982); Note, supra, at 326-33. The House Report states that “[c]ases will be within the jurisdiction of the Court of Appeals for the Federa] Circuit in the same sense that cases are said to ‘arise under’ federal law for purposes of federal question jurisdic- tion.” H.R. Rep. No. 312, 97th Cong., Ist Sess. 41 (1981). See also id. at 23-24. The Senate Report explicitly adopts the same position: It has been argued that a jurisdictional grant to the new court to consider appeals from a district court when jurisdiction was based, “in whole or in part,” on section 1338 of title 23 [sicj(which confers on the district courts original jurisdiction of a ivil action arising under an act of Congress relating ae tents, plant variety protec- tion, copyright and trademarks) is too broad and that specious patent claims will be tied, for example, to sub- stantial antitrust claims in order to create jurisdiction in the Court of Appeals for the Federal Circuit. However, the statutory language in question requires that the dis- trict court have jurisdiction under 28 U.S.C. § 1338. This is a substantial requirement. S. Rep. No. 275, 97th Cong., supra, at 19, reprinted in 1982 U.S. Code Cong. & Ad. News at 29. Whether the district court’s jurisdiction here arose “under any Act of Congress relating to patents” presents a difficult issue.’ We do have the benefit of hindsight, however, to We recognize that traditional “arising under” jurisdiction poses certain rroblems for patent appeals. See Lever, The New Court of Appeals for the Federal Circuit (Part II Conclusion), 64 J. Pat. Off. Soc’y 243, 254-58 (1982); Note, supra, at 328-30 (pointing out that many cases with substantial patent issues evade “arising under” jurisdiction because of the well-pleaded complaint rule and existing intercircuit conflicts on the issue of patent jurisdiction). However, Congress was aware of these problems and nonethe- less chose to adopt the existing “arising under” framework. We are not free to disregard this express congressional intent. 4 For a discussion of “arising under” jurisdiction in the patent context, see C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure: Jurisdiction § 3582 (1975 & 1980 Supp.). 7a determine what issues were adjudicated in the district court.° This hindsight facilitates the determination of the substantial- ity of the district court’s jurisdiction under 28 U.S.C. § 1338 (1982) in both trials. In the district court proceedings from which this appeal is taken (Handgards IJ) the jurisdiction of that court was neither based in whole or in part on section 1338. The entire proceeding was based on the antitrust laws. See 15 U.S.C. § 4 (1982). Jurisdiction under section 1338 was irrelevant.° The situation with respect to Handgards I is more complicated. True, the major thrust of the district court pro- ceedings in Handgards | was toward the antitrust laws, but it is also true that in those proceedings the validity of the Orsini patent was litigated. The determination that the Orsini patent was valid, however, in no way a'tered Ethicon’s liability under the antitrust laws. It, of course, had no effect on our jurisdic- tion to hear and determine the Wendeards / appeal because at that time 28 U.S.C. § 1295(a)(1 1982) had not been enacted. See 28 U.S.C. § 1291 (1976). Whether it would have deprived 5 An appellate court must look beyond the stated jurisdictional basis to determine the nature of the claims actually litigated. See C. Wright & A. Miller, Federal Practice and Procedure: Civil § 1206, at 77 (1969) 6 Of course, the fact that this suit required an interpretation of the patent laws to determine antitrust liability does not make it “arise under” section 1338. See Koratron Co. v. Deering Milliken, Inc., 418 F.2d 1314, 1316-18 (9th Cir. 1969), cert. denied, 398 U.S. 909 (1970) 7 In 1968 Handgards filed this antitrust suit against Ethicon under (1) an “overall scheme” theory and (2) a “bad faith” prosecution theory to monopolize the disposable glove market. See Handgards, Inc. v. Johnson & Johnson, 413 F.Supp. 921, 923-25 (N.D.Cal. 1975). The bad faith prosecu- tion theory was based on Ethicon’s Gerard patent infringement suit. Before trial, however, the district judge required that Handgards amend its com- plaint to include a request to declare the Orsini patent invalid. After the jury’s finding that the Orsini patent was not invalid, Judge Orrick found that the Orsini patent was irrelevant to tite antitrust injury caused by Ethicon’s bad faith prosecution of the invalid Gerard patent. Thus, the question of the Orsini patent’s validity completely dropped out of the antitrust suit. Handgards did not appeal the jury’s Orsini patent verdict in Handgards 1, and it was not raised during the second trial in Handgards 11. us of jurisdiction had it been in effect is an issue we need not address. The important fact is that both we and the district court had jurisdiction beyond question in Handgards /. \t would be both wasteful and foolish for us now to hold that we lack jurisdiction to hear and determine the appeal in Handgards II because had section 1295(aX(1) been effective in 1979 our appellate jurisdiction in Handgards I would have becn subject to question. We, therefore, hold that we have jurisdiction to hear and determine this Handgards I/ appeal. Under these circumstances, the district court’s jurisdiction in Handgards 11 was not based, in whole or in part, on section 1338 jurisdiction. Our holding obviously foreswears any attempt to establish definitively the precise scope of 28 U.S.C. § 1295(a(1) (1982).” It is a perplexing statute the meaning of which we suspect will become fixed only by means of case-by-case analysis. To observe judicial restraint and decide no more than we must is the appropriate course here. Ly) District courts should take special measures to ensure that litigants do not manipulate the jurisdiction of the Federal Circuit: Federal District judges are encouraged to use their authority under the Federal Rules of Civil Procedure, see Rules 14i), 16, 20(b), 42(b), $4(b), to ensure the integrity of the jurisdiction of the federal court of appeals by separating final decisions on claims involving substantial antitrust issues from trivial patent claims, counterclaims, cross-claims, or third party claims raised to manipulate appellate jurisdiction S. Rep. No. 1275, supra, at 20, reprinted in 1982 U.S. Code Cong. & Ad News at 30. The district court may also sever the unrelated nonpatent claims from the patent claims under Fed. R. Civ. P 21. See Committee on Patents. The New Court of Appeals for the Federal Circuit 749-50 (1983). Such severance practices along with explicit findings on whether “arising under” section 1338 jurisdiction exists will ensure “that the tail of a patent issue does nol wag the dog of an antitrust issue.” Newman, supra, at 242. See also Lever, supra note 3, at 258-65 9a ARE THE JURY FINDINGS PROPERLY SUPPOKTED BY THE EVIDENCE In Handgards 1, 601 F.2d at 994-96, we held that to establish section 2 liability Handgards had to prove (1) by clear and convincing evidence that Ethicon prosecuted the Gerard patent suit in bad faith;’ (2) that Ethicon had a specific intent to monopolize the relevant market; and (3) that a dangerous probability of success existed. On appeal, Ethicon argues that it is entitled to judgment as a matter of law and that no substantial evidence supports the jury’s finding on each of the section 2 elements. We cannot reverse the jury’s finding unless “if, without accounting for the credibility of the witnesses, we find that the evidence and its inferences, considered as a whole and viewed in the light most favorable to the nonmoving party can support one reasonable conclusion—that the moving party is entitled to judgment notwithstanding the adverse verdict.” William Inglis & Sons Baking Co. v. ITT Continental Baking Co., Inc. 668 F.2d 1014, 1026 (9h Cir. 1981), cert. denied, 459 U.S. 825 (1982). We shall review the evidence under headings corre- sponding to the issues in which Handgards had the burden of persuasion. A. Clear and Convincing Evidence of Bad Faith Prosecution of the Patent Suit Handgards presented evidence that Ethicon actually knew that the Gerard patent was invalid on one or more of three separate grounds. First, it alleged that Ethicon knew that Lyle Shabram, not Gerard (an Ethicon employee), was the first inventor of the plastic glove process. See 35 U.S.C. § 102(g) (1982). (The Prior Invention Issue.) Thus, Ethicon fabricated Gerard’s invention dates during the patent infringement litiga- 9 In these cases the anticompetitive conduct directed to accomplishing the unlawful purpose is the bad faith prosecution of the patent infringement suit. 10a tion interrogatories to appear earlier than Shabram’s dates of invention. Second, Handgards alleged that even if its dates were correct, Ethicon knew that the patent was invalid under the “on sale” or “in public use” defense because Gerard had sold gloves to A.S. Aloe in 1957, more than one year before he filed a patent application. See 35 U.S.C. § 102(b) (1982). (The “On Sale” or “In Public Use” Issue.) Finally, Handgards contends that Ethicon definitely knew of Shabram’s prior public use in 1963, and yet it continued to litigate the patent suit through trial and appeal to the Supreme Court. (The Prior Public Use by Shabram Issue.) These theories were asserted to prove that Ethicon prosecuted the patent infringement suit in bad faith in an effort to monopolize the relevant market. We shall evaluate the evidence with respect to each of these theories. Before doing that, however, we must address some funda- mental challenges with respect to the trial court proceedings. Ethicon challenges the district judge’s submission of these issues to the jury and his alleged prejudicial conduct toward Ethicon throughout the trial. Ethicon argues that the district judge must make a threshold legal determination whether Handgards had established, by clear and convincing evidence, that the ‘Gerard patent was invalid on the basis of any grounds not previously litigated in the patent suit before submitting such grounds to the jury in the instant case. This is not so. In Handgards I, 601 F.2d at 996, we established a clear and convincing evidence standard for a jury’s factual finding of bad faith. We did not establish such a standard for a “threshold legal determination” by a district judge. Ethicon’s argument also challenges the district court’s sub- mission to the jury of the unlitigated defenses of patent invalidity. Only Shabram’s prior public use defense was liti- gated in the earlier patent infringement suit. We agree that district courts must be especially careful when submitting to a jury unlitigated patent defenses. Here, however, we find that the district judge acted properly. The factual inconsistencies relating to Ethicon’s Gerard patent required that Handgards present all of the defenses. Under the alleged facts. ine Gerard patent could have been invalid under any one or all of the submitted defenses. It was up to the jury to decide whether a defense existed and whether Ethicon actually knew that the patent was invalid on the basis of the defense.'° Ethicon also argues that the trial judge’s conduct constituted prejudicial error. It contends that the trial judge applied a different set of rules to Ethicon, made hostile comments to Ethicon’s counsel, and interrupted Ethicon’s direct and cross examination. Thus, Ethicon claims that the judge’s actions tainted the jury’s impression of Ethicon in a case in which the primary issue was bad faith. Our review of the record leads us to reject this conclusion. Very few cases outside of the criminal law area support an appellate finding of general judicial misconduct during trial. See C. Wright & A. Miller, supra note 5, § 2809, at 66 (1973 & 1982 Supp.). The standard for reversal is whether the trial was unfair. See Goldman v. Fenn, 252 F.2d 47, 48 (ist Cir. 1958). A trial is not unfair unless the trial judge expresses his opinion as to an ultimate issue of fact in front of a jury or argues for one of the parties in the suit. See Maheu v. Hughes Tool Co., 569 F.2d 459, 471-72 (9h Cir. 1978); Nordmann v. National Hotel Co., 425 F.2d 1103, 1109 (9th Cir. 1970). Ethicon does not allege such conduct, and no evidence exists to support an inference that the trial judge affected the jury’s inquiry into bad faith. Complex antitrust cases tried before a jury present difficult problems for a trial judge. See generally W. Schwarzer, Manag- ing Antitrust and Other Complex Litigation (1982). In this case the trial judge limited the trial presentations to four days for each side. Because Handgards completed its case in one half the allotted time, the judge appropriately gave more latitude to its presentation. Ethicon’s presentation posed more problems 10 = The district judge did instruct the jury that first it had to determine the invalidity of the patent on the basis of a particular defense and then only could it determine whether Ethicon knew the patent was invalid on the basis of that defense. Ee 12a for the court. We find no objection to the judge’s conduct during trial. No error exists. We now turn to Handgards’ three theories. 1. The Prior Invention Issue During the second trial, Handgards focused its presentation on the facts showing that by 1964 Ethicon had acquired sufficient information to indicate with certainty that the Gerard patent was invalid on the basis of Shabram’s prior invention. Handgards asserted that instead of abandoning the suit, Ethicon in 1967 fabricated a date earlier than that of Shabram’s invention in response to Handgards interrogatories. To support its allegations, Handgards introduced evidence that Gerard discovered the use of paper as a backing and carrier on May 24, 1957, and did not solve the sticking problem until November 1957. This evidence, which consisted of Gerard’s communications to his patent attorney in 1958 and Gerard’s sworn depositions taken in 1959, directly conflicted with Ethi- con’s interrogatory answer in 1967 that Gerard had developed the process in 1956. Ethicon attempts to counter this proof in several ways. First, it argues that because Handgards did not attempt to prove that Shabram was a prior inventor, it cannot+claim that Ethicon should have known that the Gerard patent was invalid on the basis of section 102(g).'' This is incorrect. Handgards did offer proof of both Shabram and Gerard’s dates of conception and reduction to practice. It is Ethicon that failed to present evidence that would have questioned Shabram’s dates of inven- tion or conception. In fact, Handgards presented a former employee of Ethicon, Mr. Baab, who testified that Gerard, an 11 Ethicon also contends that when Shabram abandoned his interfer- ence proceeding, under established patent law he conceded priority of invention. See 35 U.S.C. § 135 (1982); 37 C.F.R. § 1.262(b)(1982). We disagree. Although it is true that an abandonment of an interference proceeding operates as an adverse award of priority, we do not believe this patent rule was intended to determine whether a party knew that its patent was invalid because of prior invention. To determine this actual knowledge, we must allow Handgards to present evidence of Shabram’s priority. l3a employee of Ethicon, had told him that the Gerard patent was invalid on the basis of Shabram’s prior art. Ethicon vigorously objects to the introduction of this evidence. It contends that the relevant inquiry is whether Ethicon’s attorney knew of the prior invention, not Gerard. We disagree. It is true that Handgards had to prove that the agents, officers, and directors of Ethicon responsible for prosecuting and maintaining the suit were in possession of facts that prevented them from holding a good faith belief that the Gerard patent was valid. However, evidence that the inventor/patentee/employee knew the patent was invalid is very probative of Ethicon’s knowledge. C/. WR. Grace & Co., Inc. v. Western U.S. Industries, Inc., 608 F.2d 1214, 1218-19 (9th Cir. 1979), cert. denied, 446 U.S. 953 (1980). We refuse to establish a requirement that Handgards had to prove that the patent attorney knew the Gerard patent was invalid. Second, Ethicon argues that the district court erred by allowing Handgards’ expert to testify on Gerard’s reduction to practice date. We disagree. “The trial court is vested with broad discretion concerning the admissibility or exclusion of expert testimony and the court’s action is to be sustained unless shown to be manifestly erroneous.” Reno-West Coast Distribu- tion Co., Inc. v. The Mead Corp., 613 F.2d 722, 726 (9th Cir.), cert. denied, 444 U.S. 927 (1979). The presentation of an expert’s testimony was entirely appropriate to show the facts necessary for a reduction to practice. Third, Ethicon argues that Gerard’s invention was reduced to practice in September 1956. It contends that the fact that the paper backing had not been discovered until May 1957 did not prevent a reduction to practice in 1956. Handgards, however, argues that the paper carrier distinguished Gerard’s invention from the prior art. Handgards also introduced evidence that Gerard’s patent counsel and Johnson & Johnson’s in-house patent counsel accepted a November 1957 reduction to practice date on the basis that the paper sticking problem (an essential element of the invention) had been solved. We believe that under these circumstances the district judge properly left the evidence for the jury to determine the date on which Ethicon believed that Gerard had reduced his invention to practice. I l4a Finally, Ethicon argues that Handgards cannot attack Gerard’s reduction to practice date because during the patent trial Handgards accepted the date by stipulation and during the second antitrust trial Handgards conceded that Ethicon’s inter- rogatory answer had not prejudiced its patent trial. We dis- agree. A stipulation of a fact in a patent trial in which the fact was not necessary to prove the defense that was going to be litigated cannot bind Handgards in a susbsequent antitrust trial in which Handgards attempts to prove that Ethicon’s answer to the interrogatory was knowingly falsified. After all, it is Ethicon’s bad faith in the patent trial that is at issue; thus, Handgards must be allowed to challenge the interrogatory answer. Our review of the record convinces us that the Gerard reduction to practice issue was properly submitted to the jury. 2. The “On Sale” or “In Public Use” Issue Under 35 U.S.C. § 102(b) (1982), if Gerard placed his invention “on sale” or “in public use,” he had one year to file for a patent. Because Gerard filed for a patent on June 2, 1958, the invention could not have been “on sale” or “in public use” prior to June 2, 1957, for his patent to be valid. Handgards introduced evidence that on May 28, 1957, Gerard had sold one gross of gloves and had*taken an order for seventy-two gross from A.S. Aloe. This could be viewed as having invalidated the patent. To avoid this result, Ethicon in the patent case argued that the first sale did not occur until November 24, 1957. However, if this was the crucial date with respect to the patent’s validity, Ethicon is confronted with two damaging consequences. Sha- bram’s prior invention would invalidate Ethicon’s patent, see infra pp. 17-18, and the November 24, 1957 date is inconsistent with Ethicon’s assertion in 1967 that the Gerard process was developed in 1956. See supra p. 12. On the other hars!. were 1956 the crucial date the issue whether Gerard placed his invention “on sale” or “in public use” prior to June 2, 1957 becomes critically important. For this reason the A. S. Aloe transaction must be considered. It was quite proper for the jury to have been given the opportu- lSa nity to consider these alternatives although this involved sub- mission to the jury of defenses not previously litigated in the patent suit. Ethicon also argues that the Gerard patent covered the process of making the gloves, not the product (gloves), thus the Aloe transaction could not invalidate the patent. We disagree. The district judge’s jury instruction combined the “on sale” and “in public use” defenses because the Aloe transaction raised a possibility that the patent was invalid under either. Although it is clear that the “on sale” and “in public use” defenses are separate, many courts have evaluated them to- gether. See, e.g., Dart Industries, Inc. v. E.I. Du Pont De Nemours and Co., 489 F.2d 1359, 1364-65 (7th Cir. 1973), cert. denied, 417 U.S. 933 (1974). This is entirely appropriate in cases in which the product of the process is sold. See Powell Manufacturing Co. v. Long Manufacturing Co., 319 F. Supp. 24, 44 (E.D. N.Car. 1970), aff'd, 171 U.S.P.Q. 328 (4th Cir. 1971); Kalvar Corp. v. Xidex Corp., 556 F.2d 966 (9th Cir. 1977). In such cases the saie of a product before the critical date will invalidate the process patent under the “in public use” defense. See Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516 (2d Cir.), cert. denied, 328 U.S. 840 (1946). Courts also have found that a sales solicitation that involved the display of operable samples of the invention constituted placing the invention “on sale” even when produc- tion models were not available for delivery. See, e.g., Am- phenol Corp. v. General Time Corp., 397 F.2d 431, 436-37 (7th Cir. 1968); J.L. Clark Manufacturing Co. v. American Can Co., 256 F. Supp. 719, 730-35 (D. N.J. 1966). Thus, the Aloe transaction could have invalidated the patent even if the process, not the product, was the object of the patent. Ethicon also argues that the Aloe transaction falls within the experimental use exception to section 102(b) as a matter of law. We disagree. Hendgards presented evidence that Gerard had stated that the Aloe transaction was a commercial sale and fo: purposes of generating orders. Although Ethicon contested this evidence, it did not introduce such evidence that would require l6a us to grant an experimental use exception as a matter of law. The issue was properly before the jury. Finally, Ethicon contends that its reliance on patent counsel precludes a finding of bad faith based on the “on sale” or “in public use” defenses. However, Handgards presented evidence that showed Gerard had knowledge of the prior delivery and order to Aloe, and that Ethicon also was aware of this transaction. Thus, if the jury found the patent invalid by reason of the transaction, this knowledge could support a finding of bad faith. 3. The Prior Public Use by Shabram Issue The prior public use by Shabram defense was litigated in the patent trial.'* Using a “beyond a reasonable doubt” standard, Judge Burke found the Gerard patent invalid because of Shabram’s prior use. Handgards presented the testimony of Mr. Baab, who said that Gerard had told him that he had purchased a glove prior to his invention. To support its allegation of Ethicon’s bad faith prosecution, Handgards showed that during the patent trial, Shabram’s testimony was corroborated by five witnesses. Ethicon, on the other hand, produced no evidence in the patent trial directly contradicting this testimony. Yet, it continued to litigate the patent through the Supreme Court’s denial of certiorari. Ethicon primarily argues that its patent counsel disbelieved Shabram and his witnesses. It points to prior inconsistent statements by Shabram and his self-interest as the alleged prior inventor to support its right to contest his testimony. Ethicon also quotes from this court’s decision affirming Judge Burke with the caveat that the decision “could have been decided either way.” Ethicon, Inc. v. Handgards, Inc., 432 F.2d 438, 438 (9th Cir. 1970), cert. denied, 402 U.S. 929 (1971). Ethicon therefore argues that this evidence should bar Handgards from 12 Ethicon argues that Handgards conceded the use of Shabram’s prior public use as a basis for bad faith prosecution. This is not supported by the record. The district judge clearly instructed the jury as to the law on this defense. 17a relitigating the issue in this antitrust case. We disagree. Our review of the record indicates that Handgards’ evidence of Gerard’s knowledge of prior use requires that this issue go to the jury.'? This evidence was not available in the patent suit; thus, both the district court and the circuit court’s opinions should not bar litigation of this issue for the first time. The district court properly instructed the jury that the fact that Ethicon lost the prior suit did not establish that it was brought in bad faith. The jury had to determine whether Ethicon initiated or pursued the infringement suit against Handgards knowing that the patent was invalid. 4. Conclusion as to the Clear and Convincing Evidence of Bad Faith Our examination of the record convinces us that the district court properly instructed the jury in accordance with our opinion in Handgards I. The jury was instructed that a patent is presumptively valid and that presumption can only be rebutted with clear and convincing evidence. See 601 F.2d at 996. Substantial evidence exists to support a finding by the jury that Handgards established such a rebuttal and that Ethicon prosecuted its patent suit in bad faith. B. Specific Intent to Monopolize the Relevant Market Ethicon argues that its repeated attempts to license both the Gerard and the Orsini patents preclude a finding of a specific intent to monopolize as a matter of law. It contends that Handgards refusal to negotiate prevents it from now challeng- ing the terms of the license offers as unreasonable. We dis- agree. Handgards presented substantial evidence to support the jury’s finding of specific intent. Courts have used the requirement of specific intent “to confine the reach of an attempt claim to conduct threatening 13 Ethicon also argues that Gerard’s alleged expressions of opinion should not be imputed to the corporation. As stated before, Gerard’s involvement in both the invention and subsequent production of plastic gloves requires that this testimony go to the jury. 18a monopolization.” William Inglis, 668 F.2d at 1027 (citations omitted). An antitrust plaintiff can establish the existence of specific intent not only by direct evidence of unlawful design, but by circumstantial evidence of illegal conduct. Id. Thus, as we said in Handgards I, 601 F.2d at 993 n.13, “[t]he requisite intent to monopolize in this case could be inferred from the finding of bad faith.” Substantial evidence exists to support such an inference. Handgards, presented evidence that once it had become a viable competitor with twenty-five percent of the market in 1964, Ethicon took steps to eliminate competition from the relevant market. The most damaging evidence introduced was a letter written by Gerard, an Ethicon employee, to Sam Porter, a major distributor and potential joint venturer of hair care gloves. This letter asserted the validity of Ethicon’s Gerard patent and the company’s intent to enforce the pat- ent.'* After the letter was received, Porter stopped purchasing gloves from Handgards and refused to negotiate any joint venture with Handgards. Ethicon also sent a similar letter to several other purchasers of hair care gloves. This evidence along with the prosecution of a bad faith patent suit provides a sufficient basis for a jury’s finding of specific intent to monop- olize. Ethicon’s argument that its repeated license offers ne- gated this intent was presented to and rejected by the jury. The mere existence of license offers does not require that we ignore the strong evidence presented by Handgards which supports the jury’s finding.’ 14 Gerard wrote: If you will read this patent, you will find that anyone manufacturing plastic gloves on paper are in violation. At this time, we have a patent infringement trial upon the Federal Court calendar in the Northern Jurisdiction of California. I can assure you that this patent is enforceable or Ethicon would never have purchased it from me at the cost they paid without first investigating it very thoroughly. I can also assure you that our legal department intends on enforcing this patent. 15 Ethicon’s argument that Handgards should have accepted its license offer on both patents, and subsequently sued for an antitrust violation is not 19a C. Dangerous Probability of Success Within the Relevant Market Ethicon argues that Handgards’ failure to prove actual exclusion of competition from any market prevents a finding of a dangerous probability of success. We have never es- tablished an actual exclusion requirement.'® A jury may infer a dangerous probability of success “either (1) {rom direct evi- dence of specific intent plus proof of conduct directed to accomplishing the unlawful design, or (2) from evidence of conduct alone, provided the conduct is also the sort from which specific intent can be inferred.” William Inglis, 668 F.2d at 1029 (footnotes omitted). Of course, proof of direct market power on the part of the defendant tends to support a finding of a dangerous probability of success. In this case Handgards presented evidence showing that Ethicon controlled ninety percent of the relevant market of hair care gloves and that no competition emerged until the district court declared the Gerard patent invalid. Although Ethicon disputes this evidence, no facts have been presented that would require a reversal of the jury’s finding.'’ convincing. At the time Ethicon offered the patent licenses, te law of “license estoppel” was unclear. See Lear, Inc. v. Adkins, 395 U.S. 653, 661-68 (1969). Thus, the existence of the license may have prevented a subsequent challenge of the patent’s validity. This uncertainty also was aggravated by the fact that Handgards had not fully developed its theory to challenge Ethicon’s conduct. Handgards acceptance of the licenses may have precluded certain avenues of relief. See, e.g., Automatic Radio Manufac- turing Co., Inc. v. Hazeltine Research, Inc., 339 U.S. 827 (1959). Given this situation, a license offer should not preclude as a matter of law a finding of intent to monopolize. It was proper for the jury to consider Ethicon’s offers and Handgards refusal to negotiate. The jury also properly evaluated Handgards’ evidence that the license offers were unreasonable. 16 Ethicon’s citation to Carpet Seaming Tape Licensing Corp. v. Best Seam, Inc., 694 F.2d 570, 580 (9th Cir. 1982), cert. denied, 104 S. Ct. 78 (1983), does not support its actual exclusion argument. 17 Ethicon also argues that the relevant market of heat sealed gloves sold to hair care kit manufacturers is improper as a matter of law. We disagree. We have said repeatedly that the definition of a relevant market is 20a Handgards’ evidence has met our requirement of proof “that the defendant patentee possessed or threatened to possess an ability to lessen competition in the relevant market.” Handgards I, 601 F.2d at 993 n.13. IV. THE NOERR-PENNINGTON ISSUE The Noerr-Pennington doctrine recognizes an immunity from antitrust liability rooted in the recognition of fundamen- tal civil rights. See Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657 (1965). “Under the Noerr-Pennington doctrine, bona fide efforts to obtain or influence legislative, executive, judicial or adminis- trative actions are immune from antitrust liability [on the basis of the first amendment’s guaranteed right to petition].” Clip- per Exxpress v. Rocky Mountain Motor Tarriff Bureau, Inc., 690 F.2d 1240, 1251 (9th Cir. 1982), cert. denied, 103 S.Ct. 1234 (1983). However, the immunity does not extend to so- called “sham proceedings,” which were instituted without probable cause and in complete disregard of the law to inter- fere with the business relationships of* a competitor. /d. at 1251-54; California Motor Transport Co. vy. Trucking Unlim- ited, 404 U.S. 508 (1972). The justification for the doctrine does not exist under such circumstances. Ethicon argues that the district court’s refusal to instruct the jury on Noerr Pen- nington immunity and to require a finding of a sham proceed- ing deprived it of access to the antitrust immunity and thus constituted reversible error. We disagree. an issue of fact for the jury. See, e.g., Grevhound Computer Corp., Inc. v. International Business Machines Corp., 559 F.2d 488, 493-96 (9th Cir. 1977), cert. denied, 434 U.S. 1040 (1978). See also Telex Corp. v. International Business Machines Corp., 510 F.2d 894, 914-19 (10th Cir.), cert. dismissed, 423 U.S. 802 (1975). Thus, the jury’s finding will not be disturbed unless it is ciearly erroneous. In this case substantial evidence exists to support a jury’s finding that excluded other gloves (e.g., industrial, household) from a definition of the relevant market. a 2la In Clipper Express we held that to invoke the sham excep- tion to Noerr-Pennington immunity the plaintiff must prove that the defendant’s litigation of baseless claims constituted some abuse of process. 690 F.2d at 1259. We believe that Handgards I established a standard that embodies both the Noerr-Pennington immunity and the sham exception. There we held that “the jury should be instructed that a patentee’s infringement suit is presumptively in good faith and that this Nresumption can be rebutted only by clear and convincing evidence [of bad faith].” 601 F.2d 996. The good faith pre- sumption affords the equivalent of the Noerr-Pennington im- munity while the requirement of bad faith litigation easily affords the equivalent of the sham exception. See R. Bork, The Antitrust Paradox 354 (1978) (“Certainly, in a proper case, a proved intent not to bar competitors from the courtroom but, by litigation of baseless claims, to bar them from a market or to delay their entry should suffice for a violation of the Sherman Act.”). Thus, to require a jury instruction as to Noerr-Pennington immunity and the sham exception would be duplicative.'* See Handgards I, 601 F.2d at 995 n.16. V. THE ANTITRUST STANDING OF HANDGARDS In order to receive treble damages under 15 U.S.C. § 15 (1982), Handgards must prove that it has been injured by reason of a violation of the antitrust laws. The Supreme Court recently observed that the question of antitrust standing “re- quires us to evaluate the plaintiff’s harm, the alleged wrongdo- ing by the defendants, and the relationship between them.” Associated General Contractors of California, Inc. v. Califor- 18 Ethicon argues that the existence of nonlitigated defenses cannot render a patent suit a sham under this circuit's Noerr-Pennington precedent. We disagree. If Ethicon knew that the Gerard patent was invalid under ‘a defense, it is irrelevant that the defense was not litigated in the patent infrincement suit. All that is required for a finding of bad faith is the fact that the suit should have never been brought at all. ee 22a nia State Council of Carpenters, 103 8. Ct. 897, 907 (1983). The Supreme Court articulated six factors that should be considered in determining whether a plaintiff has antitrust standing: (1) The causal connection between the alleged antitrust violation and the harm to the plaintiff; (2) Improper motive; (3) Whether the injury was of a type that Con- gress sought to redress with the antitrust laws; (4) The directness between the injury and the market restraint; (5) The speculative nature of the damages; (6) The risk of duplicate recoveries or complex damage apportionment. McDonald v. Johnson & Johnson, 722 F.2d 1370, 1374 (8th Cir. 1983) (citing Associated General Contractors, 103 S. Ct. at 908-12), cert. pending, $2 U.S.L.W. 3792 (1984). Because these factors focus upon the relationship between the type of injury for which damages are sought and the harmful conduct, we shall examine the relationship between each of Handgards’ damage elements and the harmful conduct. A. Handgards’ Lost Profits as a Result of the Pendency of the Bad Faith Litigation The jury awarded Handgards lost profits as a result of the pendency of the bad faith litigation from 1964 to 1973. To justify such an award, Handgards had presented evidence to support all six factors of “antitrust standing” required by Associated General Contractors."” Ethicon directly attacks the jury's finding that the lost profits injury was of a type that Congress sought to redress with the antitrust laws. It presents three arguments to support its contention that no antii: ust injury exists. 19 «Handgards introduced evidence of (1) Ethicon’s prosecution of the Gerard patent suit and its effect of excluding Handgards from the relevant market; (2) Ethicon’s bad faith; (3) the anticompetitive effect of Ethicon’s conduct and its “antitrust injury”; (4) the direct impact of the bad faith patent infringement suit; (5) damages supported by schedules and expert tesuumony, and (6) an appropriate damages apportionment to exclude the effect of the valid Orsini patent when necessary. a ee 23a First, Ethicon argues that its license offers to Handgards on both the Gerard and Orsini patents preclude a finding of antitrust injury. See La Salle Street Press, Inc. v. McCormick and Henderson, Inc., 445 F.2d 84, 95-96 (7th Cir. 1971). In LaSalle, however, the trial court had made an explicit finding that the patent infringement action was brought in good faith. Id. at %. Thus, efforts to settle through the sale of a license precluded a counterclaim for antitrust injury. Here, Ethicon brought a bad faith infringement suit. Any offer to license a patent that it knew was invalid cannot preclude a finding of antitrust injury as a matter of law. As noted before, the license offers were admissible to prove good faith on Ethicon’s part for the purpose of determining intent to monopolize. See supra note 15. Apparently, the jury chose either not to believe the evidence as to the specilic terms of the license offer or to give it the weight sought by Ethicon. Ethicon’s attempt to argue the so-called doctrine of avoidable consequences” should have been directed toward reducing the amount of damages not the existence of an antitrust injury.”’ Second, Ethicon argues that Handgards’ alleged lost profits are attributable to the entry of additional competition, not an antitrust injury. See Brunswick Corp. v. Pueblo Bowl-0-Mat, Inc., 429 U.S. 477 (1977). To have earned the alleged profits, it contends that Handgards would have had to exclude two subsequent competitors, Poly-Version and Clairol, from the relevant market. We disagree. The district judge explicitly instructed the jury that Handgards could not rec for losses resulting from an increase in competition. Also, a@ Handgards points out, Poly-Version did not become a viable competitor until 1971 when it entered into a joint venture with Clairol. Handgards does not seek Poly-Version’s profits from the joint 20 = Under that doctrine, Ethicon argues that had Handgards accepted its licenses, it would have prevented the antitrust injury. See supra note 15. 21 Ethicon also argues that Handgards abandoned its sales to the hair care market as a business decision after the Gerard pallint was invalidated. Handgards vigorously countered this argument. We believe that the jury's resolution of this factual dispute is supported by the evidence. 24a venture. It only looks to these profits as a rational method of calculating profits Handgards would have received had Ethi- con not stopped its efforts to form a joint venture in 1965 and 1968. Aside from the lost joint venture business, Handgards presented evidence that the Gerard patent suit impaired signifi- cantly its ability to raise capital to remain “technologically competitive” and Ethicon’s letter to Handgards’ potential customers frightened many of them away. Ethicon’s conduct not only damaged Handgards but it also had an anticompetitive effect. See California Computer Prod- ucts, Inc. v. International Business Machines Corp., 613 F.2d 727, 732 (Mh Cir. 1979). The bad faith suit not only excluded Ethicon’s only significant competitor, Handgards, it also checked possible future competitors until the Gerard patent had been declared invalid. Although subsequent to that date several competitors entered the market, that did not alleviate the harm to competition that resulted from the prosecution of a suit for a patent that was known to be invalid. We conclude, therefore, that Handgards’ lost profits injury meets the Brunswick test: “Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendants’ acts unlawful.” 429 U.S. at 489 (emphasis in original).” Finally, Ethicon argues that the injury caused by the Orsini patent is not antitrust injury. We agree. However, this does not help Ethicon. There is no showing that Handgards’ lost profits are attributable to the Orsini patent. Ethicon did not attempt to prove that the Orsini patent caused any of the damages.” 22 in Handgards 1, G1 ¥.2d at 997, we questioned the trial court's charge concerning the damages available to the plaintiff for lost profits. Our review of the jury instructions in the second trial leads us to conclude that the district court properly interpreted Brunswick in the context of lost profits. 23 Ethicon argues that Handgards’ resubmission of the identical dam- age schedule proves that the damages caused by the Orsini and Gerard patents are identical. This argument is based on the fact that in the first antitrust trial Handgards claimed that the Orsini patent was also invalid. We disagree. In the first trial Judge Orrick required that Handgards request a declaration of invalidity of the Orsini patent. After the jury's /inding that the 25a oe The evidence was to the contrary. Ethicon based its patent infringement suit against Handgards solely on the Gerard patent. The Ethicon letters to Handgards’ potential customers also explicitly mentioned only the Gerard patent. Furthermore, Handgards introduced evidence that customers refused to deal with it because of Ethicon’s Gerard patent suit. The jury’s verdict must be sustained. B. The Legal Expenses, Attorneys’ Fees, and Costs Incurred in Defending the Gerard Patent Infringement Litigation Ethicon does not challenge the jury’s award of damages for the costs incurred to defend its Gerard patent suit. This is because in Handgards I, 601 F.2d at 997, we found that “[iJn a suit alleging antitrust injury based upon a bad faith prosecu- tion theory it is obvious that the costs incurred in defense cf the prior patent infringement suit are an injury which ‘flows’ from the antitrust wrong.” We do not believe this conclusion is affected by the antitrust standing principles enunciated in Associated General Contractors, 103 S. Ct. at 908-12. Vi. . DAMAGE AWARD PROPERLY SUPPORTED BY EVIDENCE Ethicon argues that Handgards’ damage schedules are insuf- ficient as a matter of law. We disagree. Once the fact of antitrust injury is proven, we have traditionally required a lesser quantum of proof to support the amount of damages. See Blanton v. Mobil Oil Corp., 721 F.2d 1207, 1215-16 (9th Cir. 1983), cert. pending, 53 U.S.L.W. 3022 (1984). An anti- trust plaintiff must simply provide evidence to support a “ ‘just and reasonable estimate of the damage.’ ” Pacific Coast Agri- cultural Export Assoc. v. Sunkist Growers, Inc., 526 F.2d 1196, 1207 (%h Cir. 1975) (quoting Bigelow v. RKO Radio Orsini patent was not invalid, he found that the Orsini paten. was irrelevant to the injury caused by the Gerard patent litigation. We agree. Thus, Handgards’ use of the same damages schedule was proper. —EEEEE> ll] 26a Pictures, Inc., 327 U.S. 251, 264 (1946)), cert. denied, 425 U.S. 959 (1976). A jury’s finding of the amount of damages must be upheld unless the amount is “grossly excessive or monstrous,” clearly not supported by the evidence, or “only based on speculation or guesswork.” Blanton, 721 F.2d at 1216 (citations omitted). In this case Ethicon has failed to demonstrate such error in the jury’s damage verdict. A. Damages for Lost Profits At trial, Handgards presented evidence to support its claim that it lost $3,297,122 in profits between 1964 and 1973 as a result of Ethicon’s conduct. The jury awarded the entire amount to Handgards. On appeal, Ethicon advances four contentions challenging the proof of damages as insufficient as a matter of law. First, Handgards failed to allocate lost profit damages attributable to the valid Orsini patent. Second, the damage schedules assumed an unsupported fifty percent market share for Handgards. Third, Handgards used an un- supported thirty-five to forty percent profit margin to compute its lost profits. Finally, the 1964 to 1973 period chosen for lost profits was arbitrary. . Each of these contentions was presented to and rejected by the jury. In light of the liberal proof of damages standard in antitrust cases, Ethicon does not demonstrate an error that would take the jury’s verdict out of the range of a “just and reasonable estimate of the damages.” Ethicon’s strategic deci- sion not to provide an alternative and tangible basis for calculating damages undoubtedly weakened its position. On appeal, we cannot speculate whether such an alternative sched- ule might have been more reasonable under the circumstances. Cf. D & S Redi-Mix v. Sierra Redi-Mix and Contracting Co.., 692 F.2d 1245, 1249 (9th Cir. 1982); Moore v. Jas. H. Mat- thews & Co., 682 F. 2d 830, 836-37 (9th Cir. 1982). B. Damages for Costs Incurred in Defending the Gerard Patent Suit Handgards presented evidence that it expended $225,000 in attorneys’ fees and $85,000 in executive time to defend against oe < tT A em sc tt A 27a the Gerard patent infringement suit from 1962 to 1971. The attorneys’ fees amount, however, included money spent to defend against both the Gerard and the Orsini patents. Because Ethicon eventually prevailed on the Orsini patent, the district court properly instructed the jury to award only the amount related to the Gerard patent defense. Handgards revised its attorneys’ fees damage claim to $205,000 and the entire amount was awarded by the jury. On appeal, Ethicon argues that the amount allocated to the Gerard patent was unsup- ported by the evidence. We disagree. It is true that Handgards only presented recently prepared schedules of the attorneys’ fees to show that it had expended $20,000 of $225,000 on the Orsini patent issue. It did so because the actual time sheets were accidently destroyed by the patent counsel’s widow. Ethicon argues that the destruction of the best evidence along with Handgards counsel’s prior state- ments charging $180,000 to the Orsini »atent require the district court to dismiss the damages claim. Handgards re- sponded by alleging that its current estimates were based on previously prepared monthly statements. It was only the daily time sheets that were destroyed. And, it acknowledged that its new antitrust counsel, who was unfamiliar with the case, made prior estimates that were unfounded. To support its figures, Handgards argued that the Orsini patent issue was dropped before it got to the discovery stage during the patent litigation. The district court viewed Ethicon’s objection at trial as an attack only on the reliability of Handgards’ evidence, not its admissibility. Therefore, the jury was instructed to weigh both Ethicon and Handgards’ estimates to arrive at the proper figure. We believe that this approach was proper. Courts faced with similar issues have normally left the effect of the destruc- tion up to the jury. McCormick’s Handbook on the Law of Evidence § 273, at 661 (E. Cleary 2d ed. 1972). See generally Oesterle, A Private Litigant’s Remedies for an Opponent’s Inappropriate Destruction of Relevant Documents, 61 Texas L. Rev. 1185, 1221-39 (1983) (discussing sanctions imposed during affected litigation). Thus, we affirm the jury’s verdict of damages awarded for defense of the Gerard patent suit. 28a Vil. POST-JUDGEMENT INTEREST Relying on 28 U.S.C. § 1961 (1982), the district court awarded interest to Handgards on the amount of the first judgment from its date of entry in 1976. See Handgards II, 552 F. Supp. at 821-22. On appeal, Ethicon argues that post-judge- ment interest should apply only from the date of the second judgement whenever the first judgement is reversed and re- manded. We disagree. Under a de novo standard of review,” we affirm the district court’s award of post-judgement interest. The district court relied on Mt. Hood Stages, Inc. v. The Greyhound Corp., 616 F.2d 394, 406 (9th Cir.), cert. denied, 449 U.S. 831 (1980), and Twin City Sportservice, Inc. v. Charles O. Finley & Co., 676 F.2d 1291, 1310 (9th Cir.), cert. denied, 459 U.S. 1009 (1982), to support its post-judgement interest award. See Handgards II, 552 F. Supp. at 821.”° Under Mt. Hood Stages and Twin City Sportservice, a district court must award interest for the original vacated judgement even when “the issue of antitrust liability was not firmly settled until the post-remand judgements, both of which were entered after additional factual inquiry. In both cases [Mt. Hood Stages and 24 Our standard of review is de novo because this issue requires an interpretation of the “date of the entry of the judgment” under 28 U.S.C. § 1961 (1982). See Twin City Sportservice, Inc. v. Charles O. Finley & Co., 676 F.2d 1291, 1310 (9th Cir.), cert. denied, 459 U.S. 1009 (1982). 25 The district court’s policy analysis appears to adopt a mandatory award of interest frbm the first judgment in all cases: A plaintiff’s right to post-judgment interest should not hinge on the fortuity that on remand the finder of fact will award the exact amount of damages awarded at the first trial. Furthermore, if interest is not allowed on the first judgment from the date of its entry simply because the first and second judgments are not for the same amount, then a successful plaintiff could be penalized for receiving a second judgment larger than the first judgment. Handgards II, 552 F. Supp. at 822 (emphasis in original). We do not believe this analysis properly articulates the test for post-judgment interest when the second judgment is larger than the first. a oe Mt altace NO ad ante erie Saini a tna bei bplita erento ies Re Le a oe pte od ee th ee 29a Twin City Sportservice], it can be said that the second judg- ment ‘remains the same—in the same amount, for the same damages incurred during the same period.’ ” Twin City Sport- service, 676 F.2d at 1311 (citing Mt. Hood Stages, 616 F.2d at 407). Accordingly, we reject the assertion that under the cir- cumstances of this case the first judgment cannot establish the date f liability.” Ethicon is on somewhat more solid ground when it contends that no post-judgment interest is available because upon re- mand, the jury returned a larger verdict that that awarded in the first trial.7” Dicta in a recent Ninth Circuit decision sup- ports Ethicon’s argument: 26 To support its argument, Ethicon relies on Ashland Oil, Inc., v. Phillips Petroleum Co., 607 F.2d 335, 336 (10th Cir. 1979) (holding that interest allowed only from date of second judgment when new award of damages based on “additional facts” determined on remand), cert. denied, 446 U.S. 936 (1980), and Hyseli v. lowa Public Service Co., 559 F.2d 468, 476-77 (8th Cir. 1977) (holding that interest allowed only from date of second judgment when first judgment vacated on appeal). Although these cases were cited in dicta by this court in Turner v. Japan Lines, Ltd., 702 F.2d 752, 754 (9th Cir. 1983), an earlier Ninth Circuit case had expressly disapproved of their reasoning to the extent it varied with this circuit’s precedent. See Mr. Hood Stages, Inc. v. The Greyhound Corp., 616 F.2d 394, 407 (9th Cir.), cert. denied, 449 U.S. 831 (1980). To hold Ashland Oil and Hysell applicable here would overrule Mt. Hood Stages and Lew Wenzel & Co. v. London Litho Supply Co., Inc., 563 F.2d 1367 (9th Cir. 1977).,Japan Lines’ attempt to reconcile post-judgment interest law in all of the circuits cannot be viewed as overruling this circuit’s prior precedent. 27 Ethicon cites United States v. Hougham, 301 F.2d 133, 134-35 (9th Cir. 1962) to support its argument. In Hougham the plaintiff sought post- judgment interest on the additional damages awarded in the second judgment from the date of entry of the first judgment. We held that “post-judgment interest should be calculated from the date of the entry of the judgment in which the money damages, upon which interest is to be computed, were in fact awarded.” Jd. at 135. Because the additional damages were actually awarded in the second judgment, interest could not be calculated from the date of entry of the first judgment. However, Hougham did not address the question whether interest from the entry of the first judgment is available to the extent of the original amount when the second judgment is higher. C/. Turner v. Japan Lines, Lid., 702 F.2d 752, 755 n.3 (9th Cir. 1983). (footnote continued) 30a Of course, in those cases where an earlier judgment in favor of plaintiff is vacated on appeal and a new verdict or decision for plaintiff is rendered in the district court on remand, interest under section 1961 should properly run only from the date of entry of the new judgment and not from that of the old judgment since the new verdict or decision presumably will include the value of loss of use of the money judgment from the date of loss up to the date of the new verdict on remand. Turner v. Japan Lines, Ltd., 702 F.2d 752, 757 n.7 (9th Cir. 1983). We decline to interpret Japan Lines’ dicta as an attempt to formulate a general rule for all cases. Such an interpretation would be inconsistent with the reasoning supporting Japan Lines’ holding and result. Interest compensates an injured party “for the deprivation of the monetary value of his loss from the time of the loss to the payment of a money judgment.” Comment, /nterest on Judgments in the Federal Courts, 64 Yale L.J. 1019, 1019 (1955). Normally, there are two components of the total in- terest amount. The first component is the interest from the date of the loss to the date of the judgment. This element can be viewed as either interest or damages. It is generally awarded as prejudgment interest or a portion of the continuing damages up to the time of the judgment.” The second component is the Ethicon also relies on cases that have narrowly interpreted section 1961’s “entry of the judgment” language. See, e.g., Harris v. Chicago Great Western Railway Co., 197 F.2d 829, 836 (7th Cir. 1952); Powers v. New York Central Railroad Co., 251 F.2d 813, 818 (2d Cir. 1958). This court in Japan Lines expressly rejected these cases and instead adopted the Fifth Circuit’s “equitable” construction, of section 1961. See 702 F.2d at 754-55. 28 Prejudgment interest is usually provided by statute for liquidated claims from the date the claim becomes due until the entry of judgment. For example, if a contract provides for liquidated damages, in most states the injured party can collect the liquidated sum and an amount for interest from the date of breach to the date of judgment. In direct contrast unliquidated claims typically reflect prejudgment interest only by way of damages that continue to accrue until the date of judgment. For example, the amount of tort damages for emotional distress is fixed at the time of judgment. Any 3la interest from the date of judgment to the date that the damages are actually paid. This amount is awarded as post-judgimert interest under 28 U.S.C. § 1961 (1982). When there are two judgments for a plaintiff, interest from the date of, and on the amount of, the first judgment also can be viewed as either interest or damages. If the second judgment includes as dam- ages such an amount, post-judgment interest on the amount of the first judgment is not recoverable. It has already been accounted for as damages. Where, however, it has not been included in damages, it can be recovered as post-judgment interest. Thus, we must carefully examine the damages sought in the second trial. During the second trial, Handgards alleged two sources of damages: the legal expenses, attorneys’ fees, and costs incurred for the defense of the bad faith patent suit and lost profits resulting from Ethicon’s conduct. The time period during which these damages were incurred ended prior to the start of the first trial; therefore, the second jury verdict could not include any element of damages for any conduct between the first and the second judgment. Also, our review of the record has not uncovered evidence or a jury instruction that would support the jury’s consideration of the time value of money between the first and second judgments. We can only assume that no part of the additional award included in the second judgment is attributable to post-judgment interest. Thus, Handgards is entitled to “post-first-judgment” interest on the amount of the first judgment from the date of its entry to the date of its payment. award for the loss of the use of money is presumably reflected in the judgment. Because the amount of damages is not fixed until judgment, it is usually not possible to calculate formally prejudgment interest. In this case Handgards had an unliquidated antitrust claim that was not fixed in amount until the first judgment. Once it was fixed, Handgards was entitled to interest on the amount originally determined from the first judgment to the extent it was affirmed by the second judgment. : , 4 i 32a Vill. CONCLUSION Our review of the record leads us to conclude that the district court properly adhered to our decision in Handgards I. Ethicon’s arguments on appeal primarily are an attack on the verdict of the jury. As we have noted many times, “Neither the district court nor this court is free to weigh the evidence or reach a result that it finds more reasonable as long as the jury’s verdict is supported by substantial evidence.” William Inglis & Sons Baking Co. v. ITT Continental Baking Co., Inc., 668 F.2d 1014, 1026 (9th Cir. 1981), cert. denied, 459 U.S. 825 (1982). The verdict is supported by substantial evidence. Thus, we aifirm the entirety of the antitrust verdict against Ethicon. In addition to the district court’s award, Handgards is entitled to its costs and reasonable attorneys’ fees for this appeal. AFFIRMED. Pe te ee epee MY ee ee ee 33a UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Nos. 83-1575, 83-1646 DC CV 49491 SAW { — HANDGARDS, INC., a.corporation, Plaintiff-A ppellee, VS. ETHICON, INC., a corporation, Defendant-Appellant. + JUDGMENT APPEAL from the United States District Court for the Northern District of California. THIS CAUSE came on to be heard on the Transcript of the Record from the United States District Court for the Northern District of California and was duly submitted. ON CONSIDERATION WHEREOF, it is now here ordered and adjudged by this Court, that the judgment of the said District ‘ Court in this Cause be, and hereby is affirmed. A TRUE COPY ATTEST SEP 6, 1984 PHILLIP B. WINBERRY Clerk of Court by: Eliza Lau Deputy Clerk Filed and entered: August 02, 1984 FILED SEP 10 1984 WILLIAM L. WHITTAKER CLERK, U.S. DISTRICT NORTHERN DISTRICT OF CALIFORNIA 34a Appendix B UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 83-1575 No. 83-1646 . HANDGARDS, INC., A CORPORATION, Plaintiff-Appellee, v, ETHICON, INC., A CORPORATION, Defendant-Appellant. Before: SNEED, KENNEDY, and BOOCHEVER, Circuit Judges. + ORDER We amend our opinion in this case as fol' 's. The amend- ments correspond to the [pagination of Appendix A]. + 1. The third paragraph beginning with “Ethicon’s argument also challenges” on page [10a] is replaced with the following: Ethicon argues that the jury should not have considered the defenses that were not litigated in the original patent suit.'° We disagree. Ethicon’s antitrust liability is pre- mised pon its prosecution of a patent infringement suit with the knowledge that its patent was invalid. Handgards 35a J, 601 F.2d at 994. If Ethicon kmew that the Gerard patent was invalid under any defense, it is irrelevant that the ‘defense was not litigated in the patent infringement pro- ; ceeding. All that is required for a finding of bad faith in the context of an infringement suit is that the patent holder, Ethicon, knew that its patent was invalid. The bad faith involved-—attempting to enforce a government / granted monopoly to which the patent holder knows he has no right—is as much extrinsic to the suit as it is inherent in filing a legal cause of action devoid of merit. As Ethicon argues, liability cannot be based solely upon the fact that a valid, unlitigated defense existed to its patent infringement claim. Ethicon must also have known that its patent was invalid by reason of that defense. The district court must instruct the jury first on the law governing the various patent defenses. The court must then be careful to instruct the jury that it must find not only the existence of facts which created a valid defense to the patent claim but also that the antitrust defendant knew, during the course of the patent prosecution, that the patent was invalid by reason of that defense. Here, the district court did just this. The district court instructed the jury that first it had to determine the invalidity of the patent on the basis of a particular defense and only then could it determine whether Ethicon knew the patent was invalid on the basis of that defense. Under the facts presented by Ethicon, the Gerard patent could have been . invalid under any one of or all of the defenses raised by Handgards in the antitrust trial. It was up to the jury to decide whether the factual predicates of a defense were present and whether Ethicon actually knew that the patent was invalid on the basis of the defense. : 10. We refer to these defenses as “unlitigated defenses” or “unlitigated patent defenses.” 2. The remainder of the . . . paragraph . . . on page [lla] after the Goldman vy. Fenn citation is replaced with the foliow- ing: 36a The conduct alleged by Ethicon does not rise to the level of “unfairness” required by our prior cases. See, e.g., Maheu v. Hughes Tool Co., 5€9 F.2d 459, 471-72 (9th Cir. 1978) (a trial is unfair when the judge expresses his Opinion as to an ultimate issue of fact in front of a jury or argues for one of the parties in the suit). And, no evidence exists to support an inference that the trial judge affected the jury’s inquiry into bad faith. 3. The Telex citation is removed from page [20a], footnote 17; the words “clearly erroneous” in the next sentence are deleted and replaced with the words “unsupported by substantial evidence.” 4. The McCormick citation on page [27a] is updated as fol- lows: McCormick on Evidence § 273, at 809-10 (E. Cleary 3d ed. 1984).* ° The balance of the order, consisting of typographical corrections, is omitted. Rite 37a Appendix C UNITED STATES COURT OF APPEALS NINTH CIRCUIT No. 76-3150 May 3, 1979. As Modified on Denial of Rehearing and Rehearing En Banc July 27, 1979. a HANDGARDS, INC., a corporation, Plaintiff-Appellee, va ETHICON, INC., a corporation, Defendant-Appellant. Sefore SNEED and KENNEDY, Circuit Judges, and VON DER Heypt.* District Judee. + SNEED, Circuit Judge. Ethicon appeals from a judgment rendered after a civil jury trial in which it was found guilty of violating Section 2 of the Sherman Act by monopolizing or attempting to monopolize the market for heat-sealed plastic gloves sold to manufacturers Hon. James A. Von Der Heydt, Chief United States District Judge for the District of Alaska, sitting by designation. 38a of home hair care coloring kits. Plaintiff-appellee Handgards bases its private antitrust action upon its contention that Ethicon earlier had initiated and pursued a series of patent infringement suits against it in bad faith, or as an integral part of an overall scheme to monopolize. On appeal, Ethicon argues, inter alia, that the district court erred in instructing the jury that Ethicon could be found guilty of an antitrust viola- tion upon proof by a mere preponderance of the evidence that it had prosecuted-one or more ill-founded patent infringement actions in bad faith and with an intent to monopolize. This court has jurisdiction pursuant to 28 U.S.C. § 1291. Because we conclude that the district court erred in so instructing the jury and because of certain deficiencies with respect to the court’s charge regarding damages, we reverse the judgment entered below and remand the case for a new trial. I. Factual Background It is helpful to set forth a brief description of the patent enforcement conduct which forms the basis for Handgards’ antitrust complaint before reviewing the history of the instant action. A. The Prior Patent Enforcement Conduct. The plaintiff-appellee Handgards, Inc. is a Nebraska corpo- ration engaged in the business of manufacturing, distributing, and selling disposable plastic gloves adhered to paper. Handgards was formed from the 1966 merger of two constitu- ent disposable plastic glove manufacturers: Plasticsmith, Inc. (Plasticsmith) and Mercury Manufacturing Company (Mer- cury). The defendant-appellant Ethicon, Inc. is a wholly- owned subsidiary of Johnson & Johnson and is engaged in the business of manufacturing, selling, and distributing surgical supplies. Prior to 1969, Ethicon manufactured, distributed, and sold disposable plastic gloves adhered to paper through its Arbrook division. Ethicon ended its participation in the dis- yer eh eit Al te lie ' : . : | : - j 7 3 39a posable plastic glove business in 1969, when the assets of its Arbrook division were transferred to another Johnson & John- son subsidiary named Arbrook, Inc. In 1961 Ethicon acquired the assets of the Scott Company, which, for several years, had marketed disposable plastic gloves produced in accordance with a process developed by one of its founders, Joe Gerard. In so doing, Ethicon acquired both Gerard’s pending application for a patent on his glove- making process, as well as his glovemaking equipment.’ In 1961 Ethicon also acquired the pending patent application of one Rene Orsini.” On April 3, 1962, the Gerard patent covering a glovemaking process issued to Ethicon. On October 20, 1964, the Orsini product patent covering a heat-sealed glove issued to Ethicon. 3 Both Plasticsmith and Mercury were engaged in the manu- facture of heat-sealed disposable plastic gloves at the time the Gerard patent issued in 1962. After several months of unpro- ductive negotiations concerning a licensing agreement for the Gerard patent between Ethicon and T. Hamil Reidy, the chief executive officer and controlling shareholder of Plasticsmith and Mercury, Ethicon filed patent infringement suits in Octo- ber 1962 against both Plasticsmith and Mercury, alleging in- fringement of the Gerard patent.’ In December 1964, after the Orsini patent issued, Ethicon supplemented its patent infringe- ment complaints against Plasticsmith and Mercury by adding a claim that the Orsini patent also was being infringed. I Gerard filed the patent application covering his glovemaking process on January 2, 1958. 2 Orsini filed an application for a French patent on September 17, 1956; he filed for a United States patent on September 17, 1957. 3 Ethicon filed suit against Plasticsmith, a Delaware corporation, on October 30, 1962, in Delaware. Ethicon filed suit against Mercury, a Nebraska corporation, on October 31, 1962, in Nebraska. After attorneys for Plasticsmith prevailed on a motion to transfer the Delaware action to the Northern District of California, Ethicon’s attorneys consented to the transfer and consolidation of the Mercury action with the Plasticsmith action. 40a In 1966 Plasticsmith and Mercury were merged into a succes- sor corporation, Handgards, Inc., the plaintiff in this case. Reidy continued as the chief executive officer and controlling shareholder in Handgards. In 1967, after learning that some of the allegedly infringing machines operated by Handgards re- portedly were owned by Reidy rather than by Handgards or either of its predecessor corporations, Ethicon filed an in- fringement action against Reidy individually at his Chicago, Illinois residence. Reidy thereafter voluntarily intervened in the consolidated action then pending in California. The consolidated patent infringement suit was tried to the court in 1968. Ethicon’s trial counsel dropped he claims concerning the Orsini patent from the action, reportedly be- cause he thought Orsini to be the weaker of the two patents and because he believed that narrowing the issues before the court would enhance the chance of successfully prosecuting the Gerard patent. On April 25, 1968, the trial judge entered judgment for Handgards, concluding that the Gerard patent was invalid because of the existence of a “prior public use” of the process by Lyle Shabram, one of the founders of Plastic- smith.* On appeal, this court affirmed the district court in a brief per curiam decision.° 4 The “prior public use” defense arises under 35 U.S.C. § 102(b), which provides that: A person shall be entitled to a patent unless— + ” - ” ” (b) the ir.vention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States. 5 Ethicon, Inc. vy. Handgards, Inc., 432 F.2d 438 (9th Cir. 1970), cert. denied, 402 U.S. 929, 91S. Ct. 1525, 28 L.Ed.2d 863, rehearing denied, 403 U.S. 912, 91 S.Ct. 2204, 29 L.Ed.2d 690 (1971). The complete text of the court’s decision reads as follows: Ethicon’s Gerard patent No. 3,028,576 was held invalid because the trial court found that under 35 U.S.C. § 102(b) there was prior public use for more than one year of the concept of the ‘nachine, the subject of the patent. (footnote continued) | | 4la B. History of the Present Action Plaintiff-appellee Handgards filed this civil antitrust action in 1968 seeking to recover treble damages and other equitable relief for the injuries it claimed to its business and property by virtue of the alleged antitrust violations committed by defen- dant-appellant Ethicon and defendant Johnson & Johnson. The gist of the plaintiff’s complaint was that the parent-subsid- iary defendants had either unilaterally or in concert, monopo- lized, attempted to monopolize, and conspired to monopolize trade and commerce for the purpose of eliminating plaintiff as a competitor in the sale of disposable plastic gloves to the hair care and medical markets. Plaintiff altered its primary theory of recovery dramatically during the eight year period between the time it commenced this action and the time of trial in 1976. Handgards’ suit began primarily as a Walker Process case, i.e., a suit alleging antitrust liability for the enforcement of a fraudulently obtained patent (Orsini).° See Walker Process Equipment, Inc. v. Food Ma- There is little ot no direct contradiction in the oral evidence. In our view, ve have a cuse that could have been decided either way. Ethicon contends the testimony of Handgards’ principal was too weak and impaired by certain circumstances. But the trial court was entitled to give more weight to other circumstances which point to Handgards’ —. version being correct. The decree is affirmed because the findings are not clearly erro- neous. 6 Walker Process stands for the proposition that “the enforcement of a patent procured by fraud on the Patent Office may be violative of § 2 of the Sherman Act provided the other elements necessary to a § 2 case are present.” 382 U.S. at 174, 86 S.Ct. at 349. Mr. Justice Harlan, concurring, stressed that “deliberate fraud” was required and that the Court did not hold that private antitrust suits might also reach monopolies practiced under patents that for one reason or another may turn out to be voidable under one or more of the numerous technicalities attending the issuance of a patent [for such a result] might well chill the disclosure of inventions through the obtaining of a patent because of fear of the vexations or punitive consequences of treble-damage suits. 382 U.S. at 180, 86 S.Ct. at 351-352 (Harlan, J., concurring). (footnote continued) 42a chinery & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965). This theory ultimately proved not viable.’ In 1975 Handgards expressly abandoned the Walker Process theory at a hearing on a motion for summary judgment and instead asserted the two theories on which this case ultimately was tried: the first was referred to at trial as the “overall scheme” theory; the second was referred to as the “bad faith” theory. The district court’s published opinion on the motion Handgards’ original complaint charged the defendants with (i) a violation of section 7 of the Clayton Act, allegedly occurring when Ethicon acquired the assets of the Scott Company in 1961 and (ii) violations of the Sherman Act, allegedly occurring as the result of a fraudulent procurement of the Orsini patent. A supplemental complaint was filed in 1974 which also charged that the defendants had continued to violate the antitrust laws since the date of the original complaint by committing certain illegal acts such as the instigation of baseless lawsuits and pricecutting. Neither complaint charged Ethicon with fraudulent procurement of the Gerard patent. Al- though plaintiff sought to add such a contention in 1974, the district court had denied leave to amend the complaint. The only allegations in either complaint pertaining to the invalidity of the Gerard patent were that the Gerard patent had been found invalid on the basis of a prior public use and that “[djuring the pendency of such action, defendants obtained additional information showing and confirming the invalidity of the Gerard patent.” 7 In 1971 Ethicon filed a motion for summary judgment, arguing that the undisputed facts precluded a finding that the Orsini product patent had been fraudulently procured under the criteria set out in Walker Process, supra. See note 6 supra. The district court denied defendant’s motion in 1972 pending completion of discovery in the case, but noted that “[a] ruling that no triable issue of fraud in the procurement of the Orsini divisional patent exists would be within . . . [its] sound discreticn.” Ethicon renewed its motion for summary judgment in 1975, at which time the district court granted the motion in part and denied it in part. Handgards, Inc. v. Johnson & Johnson, 413 F.Supp. 921 (N.D. Cal. 1975). The district court’s opinion on the motion for summary judgment noted the death of any Walker Process allegations, stating that “Handgards represented at oral argument on the motion and in its post-hearing reply memorandum that it was not proceeding as though this case were governed by Walker Process Equipment, Inc. vy. Food Machinery & Chemical Corp.,” that the “abandonment by plaintiff of its primary theory of recovery based on the Orsini patent is no surprise,” that the “Orsini patent infringement suit was not prosecuted in violation of Walker Process,” and that plaintiff's complaint had never contained a Walker Process allegation regarding the Gerard patent. 413 F.Supp. at 923. 43a for summary judgment reflected the new orientation of plain- tiff’s case. Handgards, Inc. v. Johnson & Johnson, 413 F.Supp. 921 (N.D. Cal. 1975). [1] Handgards now largely bases its monopolization charge on the various patent infringement and other lawsuits brought on behalf of Ethicon by J & J house patent counsel. The claim is rooted in Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th Cir. 1952), cert. denied, 344 U.S. 837, 73 S.Ct. 46, 97 L.Ed. 651 (1952), and its progeny—particularly Mach-Tronics, Incorpo- rated v. Zirpoli, 316 F.2d 820 (9th Cir. 1963), Rex Chain- belt, Inc. v. Harco Products, Inc., 512 F.2d 993 (9th Cir. 1975), and Prelin Industries, Inc. v. G & G Crafts, Inc., 357 F.Supp. 52 (W.D. Okl. 1972). The Ethicon suits were purportedly brought as integral ingredients of a scheme to monopolize the disposable glove market. . . . * * * * * [2] Plaintiff charges that defendants attempted to create a monopoly in the disposable glove industry by accumulating a number of the relevant patents—no mat- ter how weak or narrow—and then instigating a series of lawsuits in order to slowly litigate the competition out of business. * * * * * The bringing of a series of ill-founded patent infringe- ment actions, in bad faith, can constitute an antitrust violation in and of itself if such suits are initiated or pursued with an intent to monopolize a particular in- dustry (and, of course, the other elements of a Section 2 violation are present). Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359 (1973); California Motor Transport Co. v. Trucking Un- limited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972); Kellogg Co. v. National Biscuit Co., 71 F.2d 662, 666 (2d Cir. 1934); Bolt Associates, Inc. v. Rix Industries, supra, {1973-1 Trade Cases 4 74,474 (N.D. Cal. 1973)]. 413 F.Supp. at 923-25 (emphasis in original). 44a The court defined the term “bad faith” in this context as knowing that the particular patent was invalid because (i) Ethicon allegedly knew (through its agent Gerard) of relevant prior art existing more than a year before the filing of the Gerard patent application; (ii) Ethicon allegedly knew (through its agent Gerard) that the invention had been on sale more than a year prior to the filing of the Gerard patent application; or (iii) Ethicon allegedly knew that the Orsini patent was invalid because material information had been withheld from the patent examiner.* /d. at 925. At the trial the parties presented dramatically different versions of the facts to the jury. Plaintiff contended that Ethicon had accumulated the Orsini and Gerard patents, two key patents in the field, intending to monopolize the industry; that Ethicon had initiated and pursued its patent infringement suits against Handgards and its predecessors in bad faith, i.e., with knowledge that the patents were invalid, for the purpose of monopolizing the market;’ that even if brought in good 8 In its 1972 decision on defendant’s motion for summary judgment, see note 7 supra, the district court noted that the failure to supply the Patent Office with the information pertaining to the Orsini patent, which already allegedly was part of its files, did not constitute fraud on the Patent Office in the Walker Process sense. In its 1975 decision on defendant’s motion for summary judgment, the district court formally held that Ethicon’s “failure to inform the Patent Office of information in its own files does not amount to the extremely circumscribed ‘intentional fraud’ necessary to prove an action under Walker Process.” 413 F.Supp. at 923. Y Plaintiffs argued that the Gerard and Orsini patents were known by Ethicon to be invalid because they claimed: (1) a Mr. Babb had testified that Gerard had told him that he knew the Gerard patent was invalid; (2) evidence had been introduced suggesting that Ethicon knew of Shabram’s invalidating prior public use; (3) evidence had been introduced suggesting (a) that Ethicon knew that Gerard’s invention had been “on sale” more than one year prior to the date of the filing of the patent application within the meaning of 35 U.S.C. § 102(b) and (b) that Ethicon’s patent attorneys knowingly falsified an answer to an interrogatory in the prior patent action regarding the “on sale” issue; (4) evidence had been introduced suggesting that Ethicon’s patent attorneys knowingly falsified an answer to an interrogatory in the prior patent action concerning the date on which Gerard’s invention had been 45a faith, Ethicon’s infringement suits constituted individuai pred- atory acts in an overall scheme to monopolize; and that Ethicon had generated adverse publicity regarding its infringe- ment actions, threatening potential customers of the plaintiff, with the result that vital corporate resources were committed to defense of the infringement actions, Handgards’ relations with potential customers were impaired, a proposed joint venture was aborted, and the company found itself unable to obtain outside financing necessary for it to remain competitive in the industry. Defendant Ethicon countered by arguing that it lacked any improper monopolistic motive in its acquisition of the Gerard and Orsini patents; that it had initiated the various infringement actions in complete good faith, after careful investigation, and with the reasonable expectation of success; that it did not publicize its infringement actions within the industry; and that Handgards’ competitive problems resulted from its having marketed a lower quality product, provided poorer service, and been unwilling to respond to the competi- tive demands of the industry. The jury returned a general verdict in favor of Handgards in the amount of $2,073,000 prior to trebling and gave the following responses to the special interrogatories submitted in the case: (1) the Orsini patent was not invalid on the basis of prior disclosures of another patent; (2) the relevant market in the case consisted of the market of heat-sealed plastic gloves sold to manufacturers of home hair care coloring kits; (3) Ethicon was guilty of monopolizing or attempting to monopo- lize the relevant market by prosecuting the patent lawsuits against Handgards and its predecessors in bad faith, that is, with actual knowledge that cither the Gerard or the Orsini patent was invalid; (4) Ethicon was guilty of monopolizing or attempting to monopolize the relevant market by prosecuting reduced to a practice, in an attempt to mislead Handgards’ counsel into defending the suit on a more difficult ground; and (5) evidence had been introduced suggesting that Ethicon knew the Orsini patent to have been invalid because of its having been anticipated or made obvious by a prior patent. 46a the prior patent action as a predatory act in an overall scheme designed to exclude Handgards from the market; and (5) & (6) Ethicon and Johnson & Johnson were not guilty of entering into an agreement, combination, or conspiracy to restrain trade or to monopolize the relevant market. Ethicon advances six basic arguments on appeal: (1) the trial court erred in instructing the jury that the bad faith enforce- ment of a patent can, without more, constitute an exclusionary act for which antitrust liability may result; (2) the finding that Ethicon prosecuted its infringement actions in bad faith is based upon pure speculation; (3) the jury’s finding that Ethi- con possessed a valid patent (Orsini) which covered the market found to have been monopolized precludes entry of a verdict of illegal monopolization of that market; (4) the trial court erred in permitting the jury to determine the relevant market and instead should have found that the relevant market was broader than the one chosen by the jury; (5) Handgards failed to show any injury resulting from the alleged section 2 viola- tions by Ethicon; and (6) the trial court erred in dire~‘ing a verdict against Ethicon on its antitrust counterclaim against Handgards. Because we conclude that resolution of appellant’s contentions concerning the bad faith theory and the damages recoverable in a case of this sort necessitate reversal and remand for a new trial, we need not, at this time, reach the other issues urged by appellant. All such issues may be pre- sented to the trial court for such reconsiderations as it deems proper in the light of this opinion. II. Antitrust Liability for Patent Enforcement Conduct A. The Problem We are confronted in this case with the complex interaction between two conflicting bodies of law: One, the patent law, is concerned with the creation and commercial exploitation of a statutory grant of monopoly power; the other, the antitrust 47a law, is concerned with proscribing various kinds of monopoly power.'” Reconciling the interrelationship between the patent and antitrust laws has long been a topic of concern to court as well as to commentators. See, e.g. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965); Rex Chainbelt, Inc. v. Harco Products, Inc., 512 F.2d 993 (9th Cir.), cert. denied, 423 U.S. 831, 96 S.Ct. $2, 46 L.Ed.2d 49 (1975); Kobe, Inc. Dempsey Pump Co., 198 F.2d 416 (10th Cir.), cert. denied, 344 U.S. 837, 73 S.Ct. 46, 97 L.Ed.2d 651 (1952); P. Areeda & D. Turner, //] Antitrust Law { 704a, at 114-15 (1978); L. Sullivan, Handbook of the Law of Antitrust § 181 (1977); and Stedman, Patents and Antitrust—The Impact of Varying Legal Doc- 10 The power to exclude, which is the essence of every patent, is monopoly power. Hence, “[aJny action to enforce a patent is in a very explicit sense ‘exclusionary,’ both in purpose and, if successful, in effect.” L. Sullivan, Handbook of the Law of Antitrust § 181, at 522 (1977). See P. Areeda & D. Turner, /// Antitrust Law ¢ 704a, at 114-15 (1978). The patent laws contemplate “broad criteria of patentability while lodging in the federal courts final authority to [determine patent validity],” R/ »der-Tongue Labo- ratories, Inc. v. University Foundation, 402 U.S. 313, 332 91 S.Ct. 1434, 1444, 28 L.Ed. 2d 788 (1971); patentees invoke that authority by initiating infringement suits to enforce their patents. The antitrust laws on the other hand, proscribe certain types of exclusionary conduct that threaten or create monopoly power, including, in at least some situations, the use of vexatious litigation. See, e.g. Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359, oa remand, 360 F.Supp 451 (D. Minn. 1973), aff'd mem., 417 U.S. 901, 94. S.Ct. 2594, 41 L.Ed.2d 207 (1974). It therefore is necessary to reach an accommodation between the patent and the antitrust laws whenever antitrust liability is premised on a finding regarding a patentee’s intent to monopolize or its exercise of exclusionary power. To determine the existence of section 2 liability properly requires careful distinc- tions between lawful patent-related exclusionary conduct or intent and unlawful patent-related exclusionary conduct or intent; only unlawful patent- reiated exclusionary conduct or intent is evidence of an intent to monopolize or the exercise of exclusionary conduct within the meaning attributed to section 2. See SCM Corp. v. Xerox Corp. 463 F.Supp. 983 (D. Conn. 1978). The task then, is to “identify the point at which. . . |an attempt to enforce a patent], always exclusionary in . . . [the literal sense, . . . become|s] so intractable as to warrant its being called exclusionary in the sense relevant to the establishment of a Section 2 violation. . .” L. Sullivan, supra, § 181, at $22. 48a trines, 1973 Utah L.Rev. 588. This case presents yet another instance in which the boundaries of the patentantitrust inter- face must be determined. Patentees must Be permitted to test the validity of their patents in court fhrough actions against alleged infringers. Theii status as alleged possessors of a legal monopoly does not cause them to be pariahs before the law. Eastern Railroad Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed. 626 (1965) require no less.'' On the other hand, infringement actions initiated and conducted in bad faith contribute nothing to the furtherance of, the policies of either the patent law or the antitrust law.'* The district court was correct in holding, in effect, that such actions may constitute an attempt to monopo- lize violative of Section 2 of the antitrust laws.'? “Bad faith,” 11 It is worth emphasizing that the absence of an immunity does not create an antitrust offense. The fact that defendant’s conduct is not immune from antitrust scrutiny does not satisfy the plaintiff's burden of proving the usual elements of an antitrust offense, including significant harm causally related to the conduct. P. Areeda & D. Turner, supra, / Antitrust Law € 204e2. See California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972); Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359, on remand, 360 F.Supp. 451 (D. Minn. 1973), aff’d mem., 417 U.S. 901, 94 S.Ct. 2594, 41 L.Ed.2d 207 (1974); Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of \Culinary Workers, 542 F.2d 1076 (9th Cir. 1976), cert. denied, 430 U.S. 940) 97 S.Ct. 1571, 51 L.Ed.2d 787 (1977). 12 Subjecting a potential rival or actual rival to. . . [the burden of defending an infringement suit] may weaken him or even dissuade him from beginning or continuing the rivalry with the monopolist-patentee—and perhaps without regard to the merits of the infringement claim. P. Areeda & D. Turner, supra, I/l Antitrust Law € 708, at 145. See generally L. Sullivan, supra, § 181; Stedman, supra, at 593-94. 13 An antitrust plaintiff pursuing a bad faith patent prosecution theory must still prove the other requisities of a § 2 offense. In Walker Process the Supreme Court emphasized the need to demonstrate the patentee’s posses- 49a however, is a subjective state of mind the existence of which, while not susceptible to certain proof, easily can spring from suggestive and weakly corroborative circumstances. The problem, as we see it, is to provide the means whereby the bad faith infringement action can be identified post hoc with a sufficiently high degree of certainty to make it highly improbable that the action in fact was brought in good faith. The imposition of treble damages, a sanction strongly punitive, see Walker Process, supra, 382 U.S. at 180, 86 S.Ct. 347 (Harlan, J., concurring) and P. Areeda & D. Turner, supra, // Antitrust Law 4§ 311, 331, dictates that such means exist. For reasons which appear below the solution of this problem points the way to the proper disposition of this case. sion of exclusionary power with in the relevant market before antitrust liability would result. To establish monoy ization or attempt to monopolize a part of trade or commerce under § ~ of the Sherman Act jon a Walker Process theory], it would . . . be necessary to appraise the exclusionary power of the illegal patent claim in terms of the relevant market for the product involved. Without a definition of that market there is no way to measure. . [defendant’s] ability to lessen or destroy competition. It may be that the [patented] device . . . does not comprise a relevant market. There may be effective substitutes for the device which do not infringe the patent. TI s is a matter of proof, as is the amount of damages. . . 382 U.S. at 177-78, 86. S.Ct. at 350-51. We note the existence of a jury finding in this case that the relevant market consisted of the marke: of heat-sealed plastic golves sold to manufacturers of home hair care coloring kits, or the home hair care plastic disposable glove market; a market coterminous with that covered by the Gerard patent. In view of that finding, Ethicon’s prosecution of a bad faith infringement action likely would constitute an attempt to monopolize violative of section 2. The requisite intent to monopolize in this case could be inferred from the finding of bad faith. Not all bad faith infringement actions will necessarily constitute attempts to monopolize violative of section 2. Nor will a patentee found guilty of prosecuting an infringement action in bad faith necessarily be guilty of an offense of monopolization. The imposition of antitrust liability will depend upon plaintiff's proof that the defendant-patentee possessed or ‘threatened to possess an ability to lessen competition in the relevant market. 50a B. The Solution Our search for a solution commences by distinguishing the facts of this case from those of the cases on which appellee Handgards primarily relies. First, this is not a Walker Process case. Walker Process stands for the proposition that “the enforcement of a patent procured by fraud on the Patent Office” may give rise to antitrust liability. See notes 6 & 7 supra. Plaintiff Handgard« does not contend that Ethicon sought to enforce a fraudulently-procured patent. Instead, Handgards asserts that Ethicon prosecuted infringement ag¢- tions in bad faith, that is, with knowledge that the patents, though lawfully-obtained, were invalid. Second, this is not a Kobe case. Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th Cir.), cert. denied, 344 U.S. 837, 73 S.Ct. 46, 97 L.Ed.2d 651 (1952). In Kobe a patentee had engaged in a plan of monopolization by acquiring all present and future patents relevant to an industry, obtaining covenants not to compete from those from whom it purchased the patents, publicizing its infringement suits throughout the in- dustry, and threatening suit against anyone trading with the alleged infringer. Kobe and its progeny, among which is Rex Chainbelt, supra, hold that a patentee may incur antitrust liability for even the good faith prosecution of a valid patent where it is shown that the infringement suit “was brought in furtherance and as an integral part of a plan to violate the antitrust laws.” Rex Chainbelt, supra, 512 F.2d 1005-06.'* Our 14 The issue in Rex Chainbelt was whether Harco could recover attorneys’ fees incurred in its successful defense of a patent infringement suit as damages resulting from an antitrust violation by Rex Chainbelt. After studying the Peport of the Attorney General's National Committee to Study the Antitrust Laws 247-48 (1955) and a line of cases highlighted by Kobe, supra and Ansul Co. v. Uniroyal, Inc. 448 F.2d 872 (2d Cir. 1971), cert. denied, 404 U.S. 1018, 92 S.Ct. 680, 30 L.Ed.2d 666 (1972), we concluded that “[t}he mere coincidence of an antitrust violation [an illegal tying arrangement] and a patent infringement suit is not sufficient to entitle Harco to attorney's fees expended in defense of the patent infringement claim absent some showing from which the . . . court can find or infer, that the patent infringement suit was brought in furtherance and as an integral part of a plan to violate the antitrust laws.” 512 F.2d at 1005-06 (emphasis added). | Sla careful examination of the record in this case reveals that no evidence of any overall scheme to monopolize exists apart from allegations that directly relate to the bad faith prosecu- tion charges. The old wine in this case consists of evidence indicating that Ethicon may have brought the infringement actions in bad faith. It is the same old wine when put in a new bottle labelled “overall scheme.”"* 15 The district court instructed the jury on both the “bad faith” and “overall scheme” theories, stating that “[the prosecution] of one or more ill-founded patent infringement actions in bad faith. . . constitutes an antitrust violation in and of itself if such suits are initiated or pursued with an intent to monopolize a particular market or industry,” Reporter's Tran- script at 2134, and that “if . . . the lawsuits instituted by Ethicon against plaintiff were brought or maintained in whole or in part to further a plan or a scheme. . . to monopolize .. . or in furtherance of a conspiracy or combination to monopolize or restrain trade . . . [then] the institution and maintenance of these suits violate the antitrust laws, even though the defendants may actually have believed that the . . . patents were valid, and even though the defendants may actually have believed that the. . . patents were valid, and even though the defendants believed that Handgards had infringed these patents.” /d. at 2151. The court defined “bad faith” in this context as “knowing cither at the time the lawsuit is filed or during its pendency that the particular patent s ed upon is invalid.” /d. at 2134. Proof of bad faith, the court charged, must be shown by a preponderance of the evidence, which it described as proof that the proposition is “more likely true than not true.” /d. at 2095. The district court summarized the evidence pertaining to the overall scheme for the jury as follows: . . . {U}nder the overall scheme theory, the plaintiffs contend that the defendants accumulated numerous patents on plastic gloves to prevent competition; that they threatened to sue manufacturers, or purchasers, of allegedly infringing gloves, and misused the Gerard patent. To support this claim, the plaintiff introduced Gerard's letter to Sam Porter, claiming that anyone manufacturing gloves on paper was in violation of his patent, and was subject to suit for patent infringement. The plaintiff also presented the testimony of Mr. Webbe regarding the difficulty that Handgards encountered obtaining financing for its operations. Mr. Campbell, a past employee of Glore Forgan, also testified that his company would not become involved in underwriting the sale of Handgards’ stock, because of the pendency of the infringement suit. Mr. Webbe also testified as to the reluctance of Sam Porter to enter into a joint venture because of the pending suit. And Porter, similarly, testified regarding his concern over the infringement action. (footnote continued) 52a Finally, this is not an Otter Tail case. Otter Tail Power Co. v. United States, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359, on The defendants presented the following evidence to refute the plaintiff's claim that the patent suits were brought as part of an overall scheme to monopolize. Messrs. Laff and Neuman both testified that the patent actions were filed against Plasticsmith and Mercury Manufacturing because Ethicon was unsure of the relationship between the two companies. Mr. Laff explained that Delaware was chosen as the place to sue, because it was more convenient for Ethicon; and that after the court ordered the case transferred to San Francisco, Ethicon did not oppose the consolidation of the lawsuit against Mercury, so the action could be tried as one lawsuit. Messrs. Laff and Neuman testifed that the lawsuit was begun against Mr. Reidy when it was learned that.Mr. Reidy paid for some of the accused machines. The evidence shows Ethicon offered Handgards a license under the Gerard patent prior to the lawsuit. Mr. Webbe and Mr. Blatz have testified that in their opinion the license offered was not reasonable, and would have put Handgards at a competitive disadvantage. Mrs. Laff, Neuman, and Schlemmer, testified that the letter from Mr. Gerard to Mr. Porter, dated March 16th, 1965, in which Mr. Gerard enclosed a copy of his patent, did not constitute a misuse of the Gerard patent. The evidence shows that as of at least the date of that letter, all disposable plastic gloves purchased by hair care kit companies were manufactured under the Gerard process. Mr. Gerard and Mr. Porter testified that the letter was sent at the specific request of Mr. Porter. Messrs. Laff, Neuman, and Schlemmer testified that no one except a manufacturer of gloves could have been sued under the Gerard patent, which was the sole object of that letter. Id. at 2114-16. As we indicated in the text, our review of the record convinces us that only the bad faith theory of recovery exists in this case. The evidence of an overall scheme to monopolize the relevant market constitutes substantially the same evidence relied upon to show Ethicon’s alleged bad faith prosecution con- duct. If this evidence, under the instructions our opinion requires, should fail to support the bad faith theory, it should not be sufficient to support the overall scheme theory. To hold otherwise would undercut the protections we here seek to afford the ordinary patentee. For this reason we are unable to affirm the judgment below on the basis of the jury’s finding that an overall scheme existed. It is unnecessary for us to address explicitly the issue whether the trial court erred in charging the jury on two theories. It is enough to point out that if on retrial the evidence remains substantially the same, the charge 53a remand, 360 F.Supp. 451 (D. Minn. 1973), aff'd mem., 417 U.S. 901, 94 S.Ct. 2594, 41 L.Ed.2d 207 (1974). Handgards has neither pleaded nor proved that Ethicon engaged in a pattern of baseless, repetitive litigation designed to prevent meaningful access to an adjudicatory tribunal. See generally Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of Culinary Workers, 542 F.2d 1076, 1081 n.4, 1087 (9th Cir. 1976), cert. denied, 430 U.S. 940, 97 S.Ct. 1571, 51 L.Ed.2d 787 (1977).'° Rather, this case involves simply the commencement and maintenance of related infringement actions in what the jury found to be bad faith. A clash between the policies of patent and antitrust laws also was present in Walker Process and Kobe. In the former the compromise consisted of erecting high barriers to success by the antitrust plaintiff. As we noted in Cataphote Corp. v. DeSoto Chemical Coatings, Inc., 450 F.2d 769 (9th Cir. 1971), cert. denied, 408 U.S. 929, 92 S.Ct. 2497, 33 L.Ed.2d 341 (1972): The patent fraud proscribed by Walker is extremely circumscribed. In Walker the Supreme Court excluded from its definition of fraud “an honest mistake as to the effect of prior installation upon patentability—so-called ‘technical fraud.’ ” Walker, supra, (382 U.S.] at 177, 86 S.Ct. 347, 350 [15 L.Ed.2d 247]. Wholly inadvertent to the jury should reflect only the bad faith theory. We express no opinion on the type of additional evidence that would require an overall! scheme charge. Kobe, Inc. v. Dempsey Pump Co., 198 F.2d 416 (10th Cir.), cert. denied, 344 U.S. 837, 73 S.Ct. 46, 97 L.Ed.2d 651 (1952) is the archetype, however. 16 Judge Kennedy’s opinion, concurring in the result and qualifiedly concurring in the majority’s opinion, suggests that defendant Ethicon may have available on remand the “immunity” afforded by Franchise Realty. Our opinion treats “infringement actions initiated and conducted in bad faith,” established in the manner we require, as violative of Section 2 of the antitrust law. When so established, it would be strange to then hoid that nonetheless a Franchise Realty immunity might exist. In any event, this is an issue that the present record does not require us to address. 54a errors or honest mistakes which are caused by neither fraudulent intent or design, nor by the patentee’s gross negligence, do not constitute fraud under Walker... . The road to the Patent Office is so tortuous and patent litigation is usually so complex, that “knowing and willful fraud” as the term is used in Walker can mean no less than clear, convincing proof of intentional fraud involv- ing affirmative dishonesty, “a deliberately planned and carefully executed scheme to defraud * * * the Patent Office.” . . . Patent fraud cases prior to Walker required a rigorous standard of deceit. . . . Walker requires no less. 450 F.2d at 772 (emphasis added) (footnote and citatiois omitted). See SSP Agricultural Equipment, Inc. v. Orchard- Rite Ltd., 592 F.2d 1096 at 1103 (9th Cir. 1979). In overall scheme cases such as Kobe, courts require proof of an overall scheme to monopolize independent of the mere commencement of an infringement suit before permitting the imposition of antitrust liability based on patent enforcement conduct. This requirement diminishes the specter of antitrust iahility encountered by an ordinary patentee who brings an infringement action. See Hibner, Litigation as an Overt Act— Development and Prognosis, 46 Antitrust L.J. 718, 720 (1977). The common thread is that in both Walker Process and Kobe barriers were erected to prevent frustration of patent law by the long reach of antitrust law. This suggests our proper course. It is to erect such barriers to antitrust suits as are necessary to provide reasonable protection for the honest patentee who brings an infringement action to protect his legal monopoly. A proper barrier is, in our Opinion, suggested by Walker Process. \t is that the jury should be instructed that a paten- tee’s infringement suit is presumptively in good faith and that this presumption can be rebutted only by clear and convincing evidence. See Cataphote Corp., supra, 450 F.2d at 772; SSP Agricultural Equipment, supra. Such an instruction accords 5Sa the patentee a presumption commensurate with the statutory presumption of patent validity set forth in the patent laws, 35 U.S.C. § 282, which can only be rebutted by a showing of clear and convincing evidence. See, e.g., Santa Fe-Pomeroy, Inc. v. P & Z Co., 569 F.2d 1084, 1091 (9th Cir. 1978); Saf-Gard Products, Inc. v. Service Parts Inc., 532 F.2d 1266, 1271 (9th Cir.), cert. denied, 429 U.S. 896, 97 S.Ct. 258, 50 L.Ed.2d 179 (1976). The trial court in this case, however, gave no such instruc- tion. See note 15 supra. Moreover, it charged that the paten- tee’s subjective bad faith need only be proved by a mere preponderance of the evidence. This constitutes reversible error. The district court charge eliminates a barrier we hold necessary, and were it accepted as proper, “might well chill” legitimate patent enforcement efforts “because of fear of the vexations or punitive consequences of treble-damage suits.” Walker Process, supra, 382 U.S. at 180, 86 S.Ct. at 352 (Harlan, J., concurring). The barrier we impose is not one intended to be utilized in antitrust litigation generally. It is fashioned in response to the unique characteristics of proceedings in which the alleged violation of the antitrust law consists solely of one or more infringement actions initiated in bad faith. Ill. Damages Recoverable By Victims of Bad Faith Infringement Actions Difficulty also exists with respect to the trial court’s charge to the jury concerning the nature of the injuries for which plaintiff properly may recover damages in an antitrust suit based upon a bad faith prosecution theory. “The Supreme Court has recently ruled that the only damages recoverable in an antitrust suit are those which occur by reason of that which made the defendant’s actions unlawful.” Kapp v. National Football League, 586 F.2d 644, 648 (9th Cir. 1978) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. 429 U.S. 477, S6a 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). Brunswick states the applicable rule and is the governing authority: . . . [For] plaintiffs to recover treble damages . . . they must prove more than injury causally linked to. . . [the antitrust violation]. Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendant’s acts unlawful, The injury should reflect the anticompetitive effect either of the violation or of anti- competitive acts made possible by the violation. It should, in short, be “the type of loss that the claimed viola- tions. . . would be likely to cause.” Zenith Radio Corp. v. Hazeltine Research, 395 U.S. [100] at 125 [89 S.Ct. 1562 at 1577, 23 L.Ed.2d 129]. 429 U.S. at 489, 97 S.Ct. at 697-698 (emphasis in original) (footnote omitted). Plaintiff must show that the injury for which it seeks to recover is “the type the antitrust laws were intended to pre- vent” and “flows from that which makes defendant’s acts unlawful.” In a suit alleging antitrust injury based upon a bad faith prosecution theory it is obvious that the costs incurred in defense of the prior patent infringement suit are an injury which “flows” from the antitrust wrong. Damages for the loss of profits, however, will not necessarily so flow. We have some doubt, for example, whether plaintiff's damage claim for lost profits allegedly resulting from the entry of an additional competitor into the market during the pendency of the in- fringement suit is the type of injury for which antitrust recov- ery is appropriate. “The antitrust laws . . . were enacted for “the protection of competition, not competitors.” Brunswick, supra, 429 U.S. at 488, 97 S.Ct. at 697 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 St. Ct. 1502, 8 L.Ed.2d 510 (1962). Moreover, the jury’s finding in this case that Ethicon possessed a valid patent covering the market it was accused of monopolizing also raises doubts concerning 57a whether plaintiff’s lost profits “flowed from” ihe antitrust wrong claimed in this case. The court’s charge concerning the damages available to plaintiff for lost profits is ambiguous. Several times the court stated that plaintiff could only recover for lost profits that it would have earned “but for” the antitrust violation by the defendant. See Reporter’s Transcript at 2160, 2162. The court also stated however, that plaintiff could recover as damages profits lost as the “proximat [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_1748%3A2. Public record. Not legal advice.