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Stryker Corp. v. Zimmer, Inc.

United States Court of Appeals, Federal Circuit

September 12, 2016

STRYKER CORPORATION, STRYKER PUERTO RICO, LTD., STRYKER SALES CORPORATION, Plaintiffs-Appellees
v.
ZIMMER, INC., ZIMMER SURGICAL, INC., Defendants-Appellants ZIMMER ORTHOPAEDIC SURGICAL PRODUCTS, Defendant

         Appeal from the United States District Court for the Western District of Michigan in No. 10-CV-1223, Judge Robert J. Jonker.

          Sharon Hwang, McAndrews, Held & Malloy, Ltd., Chicago, IL, for plaintiffs-appellees. Also represented by Deborah Laughton, Stephanie Samz.

          Seth P. Waxman, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, for defendants-appellants. Also represented by THOMAS SAUNDERS; REBECCA A. Bact, Mark Christopher Fleming, Boston, MA; Donald ROBERT Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC.

          Before Prost, Chief Judge, NEWMAN and HUGHES, Circuit Judges.

          Prost, Chief Judge.

         This case returns to us on remand from the Supreme Court of the United States. Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S.Ct. 1923 (2016). In the original appeal, Zimmer, Inc., Zimmer Surgical, Inc., and Zimmer Orthopaedic Surgical Products (collectively "Zimmer") appealed from the final judgment of the United States District Court for the Western District of Michigan that U.S. Patent Nos. 6, 022, 329 ("'329 patent"), 6, 179, 807 ("'807 patent"), and 7, 144, 383 ("'383 patent") were valid and willfully infringed.

         We affirmed the jury's findings that the patents were valid and infringed, and the jury's award of damages to plaintiff-appellees Stryker Corporation, Stryker Puerto Rico, Ltd., and Stryker Sales Corporation (collectively "Stryker"). Stryker Corp. v. Zimmer, Inc., 782 F.3d 649, 653 (Fed. Cir. 2014). However, applying the then-controlling test for willful infringement and enhanced damages under In re Seagate Technology, LLC, 497 F.3d 1360 (2007) (en banc), we reversed the jury's willfulness finding and vacated the associated award of treble damages and attorneys' fees. Stryker Corp., 782 F.3d at 660-62.

         Stryker petitioned for rehearing en banc, which this court denied. Stryker then filed a petition for a writ of certiorari in the Supreme Court. The Supreme Court granted certiorari to determine whether the Seagate test regarding willfulness and enhanced damages was consistent with the Patent Act. Halo Elecs., Inc., 136 S.Ct. at 1928.

         In its decision, the Supreme Court determined that the Seagate test "unduly confines the ability of district courts to exercise the discretion conferred on them." Id. at 1935. Because we decided the willfulness question under the Seagate framework, the Supreme Court vacated our prior decision and remanded the case for further proceedings. Id. at 1935-36.

         On remand, we recalled our mandate and reopened the case. Because Halo was limited to the questions of willfulness and enhanced damages, it left the judgments on other issues undisturbed. For the reasons stated below, we therefore reaffirm the jury's findings that Stryker's patents were valid and infringed. In light of the new willfulness standard articulated by the Supreme Court, we also affirm the jury's finding of willful infringement. However, we vacate and remand the district court's award of treble damages. Finally, we vacate and remand the district court's finding that this was an exceptional case and its award of attorneys' fees.

         I

         The patents at issue concern pulsed lavage devices. Pulsed lavage devices deliver pressurized irrigation for certain medical therapies, including orthopedic procedures and cleaning wounds. The particular devices at issue in this case are portable, battery powered, and handheld. They include both suction and discharge tubes, so they both spray fluid from an external source and also suction off fluid and debris. These devices represent an improvement over older pulsed lavage systems that required a central power source and external mechanical pumps, which meant that they needed to be wheeled around the hospital.

         Stryker and Zimmer are the two main competitors in the orthopedic pulsed lavage device market. Stryker began bringing battery-powered, handheld pulsed lavage devices to the marketplace in 1993. That same year, Stryker filed the application which eventually gave rise to the patents at issue. In February 2000, the first of these patents, the '329 patent, issued. Later that year Stryker sued another manufacturer, Davol Inc., for infringement. That suit settled in 2001, and Davol took a license on the '329 patent. The '807 patent subsequently issued in January 2001, and the '383 patent issued in December 2006.

         Zimmer introduced its first portable pulsed lavage device, the Var-A-Pulse, in 1996. In 1998, Zimmer began to develop a new design, which came to market soon thereafter as the Pulsavac Plus range of products. Zimmer's Pulsavac Plus products achieved a peak of $55 million in annual sales in late 2007 before they were withdrawn from the marketplace due to a product recall, after which sales resumed in December 2008.

         In 2010, Stryker sued Zimmer, alleging that Zimmer's Pulsavac Plus devices infringed various claims of the '329, '807, and '383 patents. The district court granted partial summary judgment in favor of Stryker, finding infringement of the '807 and '383 patents' asserted claims. The question of whether Zimmer infringed the single asserted claim of the '329 patent, as well as Zimmer's invalidity defenses against all of the asserted claims, went to trial. The jury found that the products infringed claim 2 of the '329 patent and that all of the asserted claims were valid. The jury also awarded $70 million in lost profits. It further found that Zimmer had willfully infringed all three patents. The jury also found that Stryker had marked substantially all of its products that commercially embodied the patents-in-suit during the period it sought damages, pursuant to 35 U.S.C. § 287(a).

         In August 2013, the district court issued an order rejecting Zimmer's motions for judgment as a matter of law ("JMOL") on various issues, affirming the jury's verdict, awarding trebled damages for willful infringement, find- ing the case exceptional and thus awarding attorneys' fees to Stryker, and imposing a permanent injunction. The district court subsequently entered final judgment pursuant to its order.

         Zimmer appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

         II

         We turn first to Zimmer's appeal on the issues of claim construction, infringement, and validity.

         Claim construction is an issue of law based on underlying factual considerations. Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S.Ct. 831, 838 (2015). We review the district court's ultimate construction de novo, and any underlying factual determinations for clear error. Id. at 840-41. In construing a claim term, we look at the term's plain and ordinary meaning as understood by a person of ordinary skill in the art. Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc). There is an exception to this general rule when a patentee sets out a definition and acts as her own lexicographer. Thorner v. Sony Computer Entm't Am., LLC, 669 F.3d 1362, 1365 (Fed. Cir. 2012). Infringement is a question of fact. Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1309 (Fed. Cir. 2009). Invalidity by reason of anticipation under 35 U.S.C. § 102 is a question of fact. Atlas Powder Co. v. Ireco, Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999). Invalidity by reason of obviousness under 35 U.S.C. § 103 is a legal conclusion based on underlying facts. Allergan, Inc. v. Sandoz Inc., 726 F.3d 1286, 1290 (Fed. Cir. 2013). Zimmer has the burden to prove invalidity by clear and convincing evidence. Galderma Labs., L.P. v. Tolmar, Inc., 737 F.3d 731, 736 (Fed. Cir. 2013).

         On the issues of infringement and validity that the jury decided, Zimmer appeals the district court's denials of its motion for JMOL. Generally, a district court grants JMOL and sets aside the jury's verdict if it "finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue." Fed.R.Civ.P. 50(a). We apply the law of the regional circuit to our review of the district court's grant or denial of a motion for JMOL. ClearValue, Inc. v. Pearl River Polymers, Inc., 668 F.3d 1340, 1343 (Fed. Cir. 2012). The Sixth Circuit reviews the district court's decision on a motion for JMOL de novo. Barnes v. City of Cincinnati, 401 F.3d 729, 736 (6th Cir. 2005). "Judgment as a matter of law may only be granted if, when viewing the evidence in a light most favorable to the non-moving party, giving that party the benefit of all reasonable inferences, there is no genuine issue of material fact for the jury, and reasonable minds could come to but one conclusion in favor of the moving party." Id.

         For the reasons stated below, we affirm the district court's judgment on the various defenses of noninfringement and invalidity that Zimmer raises across the three asserted patents. However, we ...


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