A U.S. district court in Michigan recently ruled that Zimmer Inc. must pay Stryker Corp. over $248 million for willful infringement of multiple patents covering wound debridement technology, following a ruling by the U.S. Supreme Court. The litigation dated back to December 2010, when a lawsuit filed by Stryker claimed rival Zimmer’s Pulsavac Plus device for cleaning wounds during orthopedic surgical procedures infringed three of Stryker’s patents for a surgical cleaning wand. In 2013, a federal jury awarded Stryker $70 million in damages plus royalties, after which the presiding U.S. district court judge ruled the infringement was willful and awarded enhanced treble damages and reasonable attorneys’ fees.
On appeal to the U.S. Court of Appeals for the Federal Circuit, the nation’s only appellate-level court with jurisdiction to hear patent cases, the Federal Circuit upheld the U.S. district court’s finding that Stryker’s patents were valid and infringed by Zimmer. However, the Federal Circuit determined Zimmer’s infringement was not willful and thus overturned the enhanced damages award and attorneys’ fees. Under the governing two-prong test set forth in In re Seagate Technology, LLC, a patentee could only be awarded enhanced damages for willful infringement if it proved by clear and convincing evidence that: (1) the infringer acted with “objective recklessness;” and (2) the infringer acted with “subjective knowledge” of wrongdoing.
Stryker appealed to the U.S. Supreme Court. The Supreme Court agreed to hear the case in tandem with Halo Electronics, Inc. v. Pulse Electronics, Inc., wherein the Court expressly rejected the Federal Circuit’s two-prong test as “unduly rigid.” The Supreme Court in Halo explained that the Federal Circuit’s test allowed some of the worst patent infringers to evade liability through the ingenuity of their attorneys, and therefore redefined the standard with a renewed emphasis on an infringer’s subjective, pre-litigation knowledge. The Supreme Court also lowered the burden of proof from clear and convincing evidence to a preponderance of the evidence and increased the district court’s discretion to decide when to award enhanced damages, noting it should “be reserved for egregious cases typified by willful misconduct.” The Federal Circuit remanded the case back to the U.S. district court to apply the Supreme Court’s new enhanced damages standard.
On remand, the U.S. district court judge ruled that Zimmer must pay over $248 million for willfully infringing Stryker’s patents, reaffirming the court’s earlier decision awarding enhanced treble damages on the 2013 jury verdict. The court found that “Zimmer’s conduct was more egregious than most, and Zimmer is precisely the type of egregious infringer the Supreme Court had in mind when it relaxed the… standard to provide district courts with the freedom to exercise their discretion to enhance damages in cases of willful infringement.” Remarkably, the court noted that while the jury’s original $70 million verdict “may sound large in the abstract, but in context may not be enough, without enhancement, to deter infringing conduct” after finding Zimmer had sales of $7.7 billion in 2016. The case is Stryker Corp. v. Zimmer Inc., Case No. 1:10-cv-01223, in the U.S. District Court for the Western District of Michigan and the patents-in-issue are U.S. Patent Nos. 6,022,329; 6,179,807; and 7,144,383.
Post-Halo decisions such as Stryker Corp. v. Zimmer Inc. highlight the importance of conducting timely, competent analysis of a patent to help avoid enhanced damages for willful infringement. For instance, conducting a freedom-to-operate or validity opinion before a product goes into production may demonstrate good faith and impact the opinion’s usefulness as a defense against willful infringement claims. The competence and qualifications of the person reviewing patents at issue also factor into a court’s consideration of enhanced damages, wherein courts have held that the opinions of people without expertise in reading patent claims are not a good faith belief in non-infringement. Thus, it is important to speak with a patent professional at the onset to investigate the merit of any patent infringement concerns to help avoid enhanced damages for willful infringement in the future.
- Luke C. Holst is a registered patent attorney with experience in both patent prosecution and patent litigation. Holst is a former Patent Examiner in the Biomedical Device Technology Center at the U.S. Patent and Trademark Office; Law Clerk to the Honorable Mark W. Bennett at the U.S. District Court for the Northern District of Iowa; and Legislative Counsel at the U.S. Capitol to an Iowa Congressman on the U.S. House of Representatives Committee on the Judiciary. At McGrath North, Holst works on patent issues, other intellectual property matters, and litigation.