Stryker and Zimmer Biomet Heading to Supreme Court

Stryker Corporation and Zimmer Biomet Holdings, Inc. are heading to the U.S. Supreme Court over a patent damage award that may have far reaching consequences on the size of patent awards based on “willful infringement.”

Stryker Sued Zimmer

Back in 2010 Stryker sued Zimmer over a portable lavage device that Zimmer manufactured to replace its bulky machine. Pulsed lavage is a technique that removes damaged tissue and cleans bones during joint-replacement surgery. Stryker accused Zimmer of hiring someone to basically reverse engineer their device.

Stryker Wins Triple Damages

Stryker won the case and the trial judge tripled the $70 million jury award, “given the one-sidedness of the case and the flagrancy and scope of Zimmer’s infringement.” After additional costs were added, the final judgment in the case was $228 million.

Zimmer Wins Appeal of Award Size

Zimmer appealed the award. A federal circuit upheld the infringement verdict but threw out the increased damage award, saying that Zimmer had presented “reasonable defenses” to Stryker’s claims.

Supreme Court Steps In

At least four justices on the Supreme Court agreed to hear the case. The Court will look at the appeals court ruling that has made it more difficult to get enhanced damages even if a jury finds that the infringer knew of the patent and used the invention anyway. Companies can say they had a reasonable belief the patent was invalid or not infringed to escape the penalty for “willful infringement.”

The effect is “immunizing infringers from enhanced damages so long as they present at least one plausible defense, ” said the Stryker petition to the Court. Stryker argues the standard set by the U.S. Court of Appeals for the Federal Circuit, which handles patent cases, is too rigid.

According to an October 19, 2005 Bloomberg story by Susan Decker and Greg Stohr, the near-elimination of higher damage awards is part of a string of cases that have reduced the amount that patent owners can collect at trial. “The difficulty for the courts has been in finding a balance between deterring abusive lawsuits by patent owners out for a quick buck and ensuring competitors’ disputes are resolved fairly.”

Brad Wright, a patent lawyer with Banner & Wifcoff in Washington, D.C., told Bloomberg, the justices likely took the case because they “view this as another example of the Federal Circuit imposing rigid bright-line rules as a predicate for reaching a legal conclusion.”

In granting Stryker’s appeal the Supreme Court said it would answer the following two questions:

1. Has the Federal Circuit improperly abrogated the plain meaning of 35 U.S.C. § 284 by forbidding any award of enhanced damages unless there is a finding of willfulness under a rigid, two-part test, when this Court recently rejected an analogous framework imposed on 35 U.S.C. § 285, the statute providing for attorneys’ fee awards in exceptional cases?

2. Does a district court have discretion under 35 U.S.C. § 284 to award enhanced damages where an infringer intentionally copied a direct competitor’s patented invention, knew the invention was covered by multiple patents, and made no attempt to avoid infringing the patents on that invention?

No dates for oral arguments were noted in the Court’s decision to hear the case.