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14 September 2016Patents

Stryker v Zimmer: Federal Circuit rules that infringement was wilful

The US Court of Appeals for the Federal Circuit has affirmed an earlier district court ruling of wilful infringement but has remanded the award of triple damages in the latest patent case between medical devices companies Stryker and Zimmer.

In June this year, WIPR reported that the US Supreme Court had decided to relax the Federal Circuit’s test for awarding enhanced damages in patent cases. The Supreme Court had heard oral arguments in the Halo v Pulse and Stryker v Zimmer cases in February this year.

The cases, which were consolidated, aimed to clarify how enhanced damages are calculated after parties win patent infringement lawsuits.

Halo and Stryker were both seeking a ruling from the Supreme Court after the Federal Circuit’s decision to deny them enhanced damages.

The Federal Circuit had rejected the claims based on its two-part test for determining whether infringement has been wilful.

Stryker secured a $210 million award against Zimmer in 2013 after the US District Court for the Western District of Michigan ruled that the infringement was wilful. But the award was reduced to $70 million after the Federal Circuit said Zimmer’s defence was reasonable.

In 2012, Halo was awarded $1.5 million in damages after the US District Court for the District of Nevada ruled against Pulse. Halo’s claim that the award should be higher was rejected by both the Nevada court and the Federal Circuit.

Under the previous two-part system, known as the Seagate test, courts first assessed whether a patentee can show by “clear and convincing” evidence that an infringer’s actions were objectively unreasonable.

Once answered in the affirmative, the court conducted a de novo review of the infringer’s defence. If the defence was deemed insufficient, the damages award could be tripled.

Halo and Stryker complained that the test was too rigid.

The Supreme Court unanimously found that the standard is “unduly rigid, and … impermissibly encumbers the statutory grant of discretion to district courts”.

The court also found that clear and convincing evidence is not required to secure enhanced damages, but rather parties must meet the preponderance of evidence standard.

Chief Justice Roberts criticised the test for “making dispositive the ability of the infringer to muster a reasonable defence at trial, even if he did not act on the basis of that defence or was even aware of it.

“Culpability, however, is generally measured against the actor’s knowledge at the time of the challenged conduct.”

Following the Supreme Court’s guidance, the latest ruling at the Federal Circuit, which was decided on Monday, September 12, reaffirmed the earlier jury’s findings that Stryker’s patents were valid and infringed.

In an opinion written by Chief Judge Sharon Prost and Judges Pauline Newman and Todd Hughes, they found under the new US Supreme Court standard that Zimmer wilfully infringed Stryker’s patent, despite previously ruling against wilful infringement.

Prost said: “The jury made its determination under the clear and convincing evidence standard, which is a higher standard than is now necessary. We therefore affirm the jury’s finding of wilful infringement.

But the court vacated and remanded the district court’s award for triple damages and vacated the award of attorneys’ fees.

It did not award enhanced damages as “Zimmer did not appeal the jury’s finding of subjective wilfulness under the Seagate test. On the record in this case, wilful misconduct is sufficiently established by the jury’s finding”.

The court returned the issue of enhanced damages to the district court because, “as Halo makes clear, the decision to enhance damages is a discretionary one that the district court should make based on the circumstances of the case, ‘in light of the longstanding considerations ... as having guided both Congress and the courts’”.

A spokesperson for Stryker told WIPR that it does not comment on pending legal matters.

WIPR has followed the Halo v Pulse and Stryker v Zimmer cases closely, with articles including:

SCOTUS hearing: Halo and Stryker cases create ‘trolls v pirates’ debate

WIPR survey: Readers call on SCOTUS to reverse Halo and Stryker rulings

Halo and Stryker cases: SCOTUS relaxes standard for enhanced patent damages

US Supreme Court: three IP decisions and their likely impact

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More on this story

Patents
13 June 2016   The US Supreme Court has today decided to relax the US Court of Appeals for the Federal Circuit’s test for awarding enhanced damages in patent cases.
Patents
24 February 2016   A US Supreme Court case that centres on enhanced damages in patent infringement cases may create a new characterisation of “trolls versus pirates”.