(Cross-posted at DRI Community Page)
The Federal Circuit on Friday issued an opinion that struck a judge’s finding of willful infringement and the corresponding award of triple damages in Stryker Corp. v. Zimmer, Inc. (No. 13-1668). The Court concluded that the defendants’ defenses were not objectively unreasonable, even though they were unsuccessful at trial. Chief Judge Prost wrote the opinion, which was joined by Judges Newman and Hughes.
Stryker and Zimmer are competitors in the medical device industry, and, in particular, the orthopedic pulsed lavage device market. Three patents were in suit (Nos. 6,022,329, 6,179,807, and 7,144,383); all of which involved pulsed lavage devices that deliver pressurized irrigation for certain medical therapies, including orthopedic procedures and cleaning wounds. The patents claimed portable, handheld, battery-powered devices that represented an improvement over the older systems that were larger and more cumbersome to use.The district court granted summary judgment of partial infringement of the ‘807 and ‘383 patents, and the jury found infringement of the ‘329 patent. The jury rejected Zimmer’s invalidity defenses and then awarded $70 million in lost profits, which the district court trebled after finding that Zimmer willfully infringed. The Federal Circuit affirmed both the infringement findings, although it noted that the questions were close, and the non-invalidity findings. It did, however, reverse the district court’s finding that Zimmer willfully infringed.
Willful Infringement Discussion and Analysis
For purposes of this post, I am going to focus on the willful infringement discussion by the Federal Circuit. The Court started off with the standard recitation of the In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc) test. First, the patentee must show by clear and convincing evidence that the infringer acted despite an “objectively high likelihood that its actions constituted infringement of a valid patent.” The state of mind of the infringer is not relevant to this inquiry, so the fact that an infringer may not have be aware of or was not considering these defenses while it was infringing is not relevant. If the infringer’s position is “susceptible to a reasonable conclusion of non infringement,” the patentee has failed to prove the objective prong. If the patentee can show that the infringer was objectively reckless, then it must also show by clear and convincing evidence that the “objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.”
The district court did not analyze the objective nature of the infringement, but, instead, focused on the subjective portion. It concluded that Zimmer acted willfully because: (1) Zimmer “all but instructed its design team to copy Stryker’s products”; (2) Stryker’s patents were pioneering; and (3) the secondary considerations of non-obviousness “made it dramatically less likely that Zimmer’s invalidity arguments were reasonable.” The Federal Circuit found this approach to be in error, because the district court failed to analyze the objective prong of the Seagate test first.
Under Seagate, the Federal Circuit started with the objective prong. It considered Zimmer’s defenses to each patent and ultimately concluded that none of them were unreasonable. As such, Stryker failed to prove by clear and convincing evidence that Zimmer was objectively reckless, which meant that the district court’s willful infringement finding had to be reversed.
For example, the Federal Circuit noted that in order to prove infringement of the ‘329 patent, Stryker had to obtain a broad construction of one of the terms in the patent (“handle”), which was not explicitly supported by the specification. It then had to convince the jury that a component of the infringing device (a motor) was located in the handle, even though it was not precisely located in the handle. And, Stryker had to overcome some statements during prosecution that were relevant to the location of the motor. Ultimately, the Federal Circuit found Zimmer’s position was not unreasonable.
With respect to the ‘807 patent, Stryker also had overcome prior art that was very close to the claims of the patent and had to overcome a non-infringment position that was not unreasonable. Finally, with respect to the ‘383 patent, Zimmer relied on an obviousness defense based on references identified by the PTO examiner during prosecution of a related patent. The Federal Circuit concluded that it was not unreasonable to believe that the claims were invalid based on these references.
This case highlights some important factors for accused infringers. Courts must be made aware of the fact that the objective prong should be considered in isolation from the accused infringer’s conduct and knowledge. It is to be assessed based on the objective record developed during the entire course of the litigation, which may include defenses that were not known to the accused infringer until after the litigation began. This segregation can be especially important where, as it appears was the situation in this case, there is strong evidence of copying.
The Federal Circuit also looked to what PTO examiners were doing during the prosecution of related patents. The Court did not go so far as to say that a PTO examiner’s rejection forms a reasonable basis that would prevent a finding of objective recklessness (which it likely could not given that the prosecution was of a related patent, and not the patent in suit), but it did look at what was being done in its objectiveness analysis. Finally, the Court seemed to put an emphasis on the fact that the infringer’s defenses were based on the plain meaning of the claim terms, as opposed to more convoluted meanings. Developing strong infringement defenses is always important, but it becomes doubly so when willful infringement is at issue.