Damage Award Slashed as Court Finds Defenses Were Not Objectively Assessed
Addressing the issue of willful infringement, the U.S. Court of Appeals for the Federal Circuit reversed the lower court’s finding of willful infringement and award of attorneys’ fees, finding that the defenses asserted by the accused infringer were not objectively unreasonable, despite being unsuccessful at trial. Stryker Corp. v. Zimmer, Inc., Case No. 13-1668 (Fed. Cir., Dec. 19, 2014) (Prost, C.J.).
Stryker brought a suit against Zimmer, asserting infringement of three patents related to devices that deliver pressurized irrigation for certain medical therapies, including orthopedic procedures and cleaning wounds. The Federal Circuit affirmed both the district court’s grant of partial summary judgment of infringement of two of the patents and the jury’s finding of infringement of another patent. The Federal Circuit also affirmed the jury’s damage award of $70 million in lost profits. However, the Federal Circuit reversed the finding of willful infringement and the exceptional case determination.
In reversing this determination, the Federal Circuit found that the district court failed to undertake an objective assessment of Zimmer’s specific defenses to Stryker’s claims. Instead, the district court’s analysis was based on the following points: Zimmer “all but instructed its design team to copy Stryker’s products,” Stryker’s patents were pioneering and the secondary considerations of non-obviousness “made it dramatically less likely that Zimmer’s invalidity arguments were reasonable.” The Federal Circuit found the reliance by the lower court on these points to be in error, because the district court failed to first analyze the objective prong of the Seagate test.
Under the objective prong, the Federal Circuit concluded that each of Zimmer’s defenses were not unreasonable. The Court observed that, in order to prove infringement of one of the patents, Stryker had to obtain a broad construction of a claim term, which was not explicitly supported by the specification. In addition, the Court stated that Striker had to overcome statements made in the prosecution history to persuade the jury that the motor of the infringing device was located in the handle.
With respect to another one of the patents, the Federal Circuit found that Stryker had to overcome the fact that the specification disclosed only one device configuration, which was the exact opposite of the configuration of Zimmer’s device. Also, Striker had to overcome prior art that was very close to the claims of the patent. Finally, the Court stated that Zimmer’s obviousness defense was not unreasonable as it disclosed every claim element and was raised by a Patent and Trademark Office (PTO) examiner during Stryker’s prosecution of a related patent application. Accordingly, the Federal Circuit found that Zimmer’s defenses to infringement were not objectively unreasonable, and, therefore, it did not act recklessly. The Federal Circuit vacated and remanded the district court’s finding of an exceptional case and its award of attorneys’ fees, as these finding were based on the willful infringement determination.