United States: Willful Patent Infringement And Enhanced Damages

Stryker and Zimmer are competitors selling devices which are a combination spray gun and suction tube for cleaning tissue during surgery. In 2010, Stryker sued Zimmer for patent infringement and a jury found that Zimmer willful infringed Stryker's patents.  The district court trebled damages and awarded $228 million based on evidence that Zimmer copied Stryker's products and accepted the risk of legal consequences given its high-risk/high reward competition strategy.  On appeal, the Federal Circuit affirmed the jury's finding of infringement but, applying its 2007 Seagate (497 F.3d 1360 (2007)) test, vacated the enhanced damages award because Zimmer had asserted "reasonable defenses."

Under Seagate, the patent owner had to prove that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. This "objective recklessness" prong could be defeated if the infringer defending the case raised a "substantial question" about whether the patent was valid or infringed. In June 2016, the Supreme Court issued an opinion that replaced the Federal Circuit's strict Seagate test for enhanced patent damages with a test that is easier for patent owners to meet. The Supreme Court found Seagate's objective recklessness prong was problematic, because it could shield "many of the most culpable offenders." The Supreme Court also rejected Seagate's requirement that enhanced damages be proved under the high "clear and convincing evidence" standard. Instead, culpability (and liability for enhanced damages under 35 U.S.C. § 284)  should be measured by what the actor knew at the time of the challenged conduct and the court should take into account the particular circumstances and exercise its discretion.

On July 12, 2017, U.S. District Judge Robert Jonker in Grand Rapids, Michigan reaffirmed his original award of enhanced damages and attorneys' fees and increased the amount medical device maker Zimmer Biomet Holdings Inc. must pay Stryker Corp for infringing patents on a surgical cleaning wand to US$248.7 million. Read more about the case in the story Stryker awarded US$248.7 million in patent case against Zimmer.  

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