"The math is stark: infringement victory + validity win + $10 million jury award = $1, if you cannot apportion value to the patented invention. . . ."
On October 2, 2025, the Federal Circuit handed down a decision that should make every patent litigator wince. In Rex Medical, L.P. v. Intuitive Surgical, Inc., Nos. 2024-1072, 2024-1125, slip op. (Fed. Cir. Oct. 2, 2025) ("Rex Med., slip op."), a jury had awarded Rex Medical $10 million after finding that Intuitive's robotic surgical staplers infringed claim 6 of U.S. Patent No. 9,439,650 ("the '650 patent"). The Federal Circuit affirmed the infringement finding. Rex Med., slip op. at 18-24. It also rejected Intuitive's invalidity challenge. Id. at 25-27. But the Federal Circuit upheld the district court's reduction of that $10 million award to a single dollar in nominal damages. Id. at 12-18. In short, Rex won on every substantive issue but ultimately failed to prove what its patent was worth.
The opinion reads as a cautionary tale about the perils of relying on a single damages theory, particularly one built on a comparable license that bundles multiple patents without "apportioning" or isolating the value contributed by the '650 patent itself to the infringing products. But beneath the court's legal and factual analyses lies a costly missed opportunity. Rex held a patent covering innovations in surgical stapling technology—innovations that addressed century-old challenges in one of medicine's most fundamental surgical procedures. The Federal Circuit's decision contains clues suggesting that, with proper expert testimony and a multi-pronged damages approach, Rex might have preserved at least a portion of its jury award. Understanding what Rex might have done differently requires understanding both the technology it patented and the evolving problems that technology solved.
The Evolution of Surgical Stapling: From Brutal Clamps to Robotic Precision
The Historical Problem
The story of surgical staplers begins with a fundamental challenge: manually suturing tissue with needle and thread is time-consuming, prone to error, and particularly dangerous in procedures involving the esophagus and stomach. The gastro-esophageal junction presents special challenges—the tissue is thin and variable in thickness, the anatomy is curved, and uneven stitching can cause strictures, fistulas, or fatal leaks of digestive acids.
Hungarian surgeon Hümér Hültl created the first mechanical stapler in 1908, an eight-pound device that required two hours to assemble. See Andrey Akopov et al., Surgical Staplers: The History of Conception and Adoption, 112 ANNALS THORACIC SURGERY 1716, 1716 (2021). Soviet engineers advanced the technology post-World War II, and by the 1960s, American companies like United States Surgical Corporation brought commercial staplers to market. See id. at 1717-20. The laparoscopic revolution of the 1980s-90s demanded even more sophisticated designs—thinner, more flexible devices capable of articulation through small incisions.
But problems persisted. Prior art staplers described in the '650 patent's background typically used separate mechanisms for the devices' clamping jaws and firing staples. See U.S. Patent No. 9,439,650 col. 1 ll. 13-67 (describing prior art limitations). These disjointed systems struggled to maintain consistent jaw alignment during firing, especially along curved tissue paths. Misalignment meant uneven compression—crushing tissue in some areas, leaving gaps in others. In esophagogastrectomy, anastomotic leaks occurred in 21.8% of cases in one study, with in-hospital mortality rates for affected patients ranging from 10% to 38% across procedure types. See Raquel Ortigão et al., Anastomotic Leaks following Esophagectomy for Esophageal and Gastroesophageal Junction Cancer: The Key Is the Multidisciplinary Management, 2021 GE PORT. J. GASTROENTEROLOGY 1, 1 (2021); see also Edmund S. Kassis et al., Predictors of Anastomotic Leak After Esophagectomy: An Analysis of the Society of Thoracic Surgeons General Thoracic Database, 96 ANNALS THORACIC SURGERY 1919, 1923 (2013) (10.6% leak rate and mortality rates ranging from 4.4% to 11.6%).
The '650 Patent's Integrated Solution
This is the landscape into which Rex's inventors introduced their innovation. Filed as a provisional application on January 31, 2001 and ultimately issuing on September 13, 2016, the '650 patent described a flexible endoscopic stapler with an I-beam mechanism that performed multiple functions simultaneously.
Traditional staplers typically used separate components for different tasks: one mechanism to close the jaws, another to maintain clamping distance, and yet another to fire staples. The '650 patent integrated these functions into a single advancing beam. See id. col. 5 ll. 45-47; col. 6 ll. 26-31.
Claim 6, the only claim asserted at trial, captures this integration. Building on independent claim 4 and dependent claim 5, claim 6 recites an apparatus with movable jaws that clamp tissue, where a beam with an upper portion, a lower portion, and a connecting web maintains both the clamping distance and jaw alignment from within the jaws. Rex Med., slip op. at 4-5. At least one of the upper or lower portions is "configured to cause the staple pusher to move a staple" as the beam advances from proximal (starting point) to distal (endpoint). The upper and lower portions work together to align the staple slots with the anvil's forming surface. Id.
The specification explains that as the I-beam advances, its sloped leading edge contacts staple pushers sequentially, driving them through slots to eject staples. See the '650 patent col. 6 ll. 26-31; Fig. 15. The entire beam structure engages channels in both jaws, holding them in precise alignment while stapling progresses distally. This contrasts with the prior art's disjointed approach—imagine the difference between a manual can opener with separate pierce-and-cut actions versus a modern one-motion design.
At issue during the trial were Intuitive's "SureForm" line of stapler products used with its da Vinci robotic surgical system. These devices used an I-beam mechanism to clamp jaws, maintain alignment, and trigger staple firing while navigating curved gastro-esophageal anatomy.
Infringement: What the Federal Circuit Found
The Federal Circuit's infringement analysis addressed two disputed claim limitations, both of which illuminate what claim 6 actually covered and why that claim coverage embodies improvements over the prior art for valuation purposes.
The "Lower Portion" Construction: Broader Than Intuitive Wanted
Intuitive argued for a narrow construction of "lower portion," contending it should mean only "the lowest horizontal portion of the 'I' shape"—essentially, just the bottom bar of the I-beam, excluding any vertical extensions. Rex Med., slip op. at 18. The district court rejected this, construing "lower portion" by its plain and ordinary meaning as potentially including "additional material or structures that extend in a perpendicular direction beyond the lowermost section of the beam." Id.
The Federal Circuit affirmed. Id. at 18-20. The claim language was broad: claim 6 recited a "beam" with upper and lower portions, not specifically an "I-beam" (unlike claim 3, which did specify an I-beam shape). The specification mentioned a "lower beam portion" only once, in describing Figure 15's embodiment, but that single reference to one embodiment could not limit the broader claim language. As the court emphasized, quoting Computer Docking Station Corp. v. Dell, Inc., 519 F.3d 1366, 1374 (Fed. Cir. 2008), "this court will not countenance the importation of claim limitations from a few specification statements or figures into the claims, particularly if those specification extracts describe only embodiments of a broader claimed invention." Rex Med., slip op. at 20.
This construction broadened the claim's scope and thereby narrowed Intuitive's design-around options. Intuitive's SureForm products used an I-beam with a lower portion that included a protrusion extending upward from the bottom bar. Under Intuitive's narrow construction, that protrusion wouldn't be part of the "lower portion," potentially providing a non-infringement escape route. Under the district court's construction, the protrusion clearly fell within the "lower portion," and Intuitive conceded infringement under that reading. The broader claim scope and narrowed design-around options therefore elevated the value of the claim's contribution to Intuitive's SureForm products.
The "Configured to Cause" Dispute: Intent Doesn't Matter
The second disputed limitation presented a more nuanced question. The district court construed "configured to cause" to mean "designed, constructed or set up to cause." Rex Med., slip op. at 5, 20-21. Intuitive argued that no substantial evidence supported the jury's finding that its lower portion met this limitation because the disputed protrusion was designed as a "lock-out" mechanism—a safety feature—not primarily to push staples. Id.at 23.
The Federal Circuit rejected this argument, holding that indirect causation satisfied the limitation and that design intent is irrelevant to strict liability infringement. Id. at 21-24.
Rex's theory, supported by expert testimony, was that the lower portion's protrusion contacts a "shuttle" (also called a sled), which then contacts the staple pusher to eject staples. The claim language didn't require direct contact between the lower portion and the staple pusher. Because claim 6 incorporated the transitional phrase "comprising" from parent claims 4 and 5, it didn't exclude additional, unrecited elements like a shuttle. Id. at 24 (citing Crystal Semiconductor Corp. v. TriTech Microelectronics Int'l, Inc., 246 F.3d 1336, 1348 (Fed. Cir. 2001)).
More fundamentally, the court emphasized that "direct infringement is a strict-liability offense that does not require . . . intent to infringe." Id. (citing Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1377-78 (Fed. Cir. 2017)). "It is immaterial whether the designers of the accused devices intended for the lower portion of the beam to cause the staple pusher to move a staple. What matters is that the lower portion of the beam actually does cause the staple pusher to move a staple." Id. at 24 (emphasis in original).
The trial record was replete with supporting evidence. Rex's expert testified that the lower portion "contacts the sled which then in turn contacts the staple pusher to move the staple" and that "the beam is designed to push the shuttle, which pushes the staple pusher." Id. at 23 (citing J.A. 11575, 11599). Intuitive's own expert confirmed that "a function of the I-beam is to push the shuttle, which pushes against the staple pushers." Id. (citing J.A. 11732). Even Intuitive's hardware designer admitted that "without the I-beam, the shuttle wouldn't move." Id. (citing J.A. 11685).
From a valuation perspective, this finding demonstrated that the patented solution addressed a real problem—enabling progressive stapling while maintaining alignment in curved anatomy—and that Intuitive's engineers designed a mechanism that worked the same way, even if for overlapping purposes. The claimed invention worked, and Intuitive's product practiced it.
But proving infringement and proving what that infringement was worth as a measure of damages turned out to be entirely different challenges.
The Damages Disaster: A Textbook Apportionment Failure
The Covidien License: Rex's Best Evidence Gone Wrong
Rex's damages case rested almost entirely on a $10 million settlement and license agreement between Rex and Covidien. Rex had sued Covidien in 2019, asserting infringement of both the '650 patent and U.S. Patent No. 10,136,892 ("the '892 patent"). Before settlement, Rex dropped the '650 patent from the Covidien case. The parties then settled early in the litigation for $10 million and a license to Rex's patent portfolio. Rex Med., slip op. at 6-7. That portfolio license covered both the '892 patent and the dropped '650 patent, plus eight other U.S. patents, seven U.S. patent applications, and nineteen foreign patents or applications. Id. at 7.
In that context, Rex's damages expert, Douglas Kidder, opined that a hypothetical negotiation between Rex and Intuitive for a license to the '650 patent would have resulted in a $20 million lump sum payment, using the Covidien license as his primary comparable license. Id. at 6. The problem with that opinion was apportionment—or more precisely, the complete absence of it.
This problem was compounded by the fact that Rex had initially asserted both the '650 and '892 patents against Intuitive. But after Intuitive filed a petition for inter partes review challenging the '892 patent, Rex dismissed that patent from the case with prejudice. Id. at 3. Thus, the Covidien license was negotiated based on the asserted '892 patent in that prior litigation and ultimately included rights to Rex's entire patent portfolio, while the jury in this litigation was asked to award damages only for the '650 patent, which had been dropped from the Covidien litigation.
Kidder's entire discussion of apportionment consisted of one paragraph asserting that "most of the value" to Covidien and Intuitive was "contained in a license to either the '892 Patent or the '650 Patent" because Rex had only asserted those two patents against each defendant. He concluded that "the additional value obtained by Covidien for rights to patents other than the '650 and '892 Patents likely accounted for little-to-no value to Covidien." Id. at 10-11 (quoting J.A. 3853 ¶ 69). Critically, Kidder's opinion lumped the two patents together without any analysis distinguishing their relative contributions to the $10 million settlement—despite the fact that Rex had dropped the '650 patent from the Covidien case before settlement, suggesting Rex itself may have viewed the '892 patent as the more valuable patent in that context.
Days before trial, the district court excluded Kidder's testimony regarding the Covidien license, finding that he "failed to adequately address the extent to which the '892 patent and the other patents contributed to the lump sum payment" by Covidien to Rex and that his methods were unreliable. Id. at 7.
The Federal Circuit affirmed, citing its 2022 decision in Apple Inc. v. Wi-LAN Inc., 25 F.4th 960 (Fed. Cir. 2022).Rex Med., slip op.at 8-12. In Apple, Wi-LAN's expert had relied on three licenses covering additional patents beyond those asserted in the litigation, opining that the asserted patents were "key patents" and applying a 25% discount for the rest of the portfolio. The Federal Circuit held this opinion was insufficient, noting the expert "failed to address the extent to which these other patents contributed to the royalty rate" and that his "silence on these equally situated patents is troubling and makes his opinion unreliable." Apple, 25 F.4th at 973-74.
Rex's situation was worse. Kidder hadn't even attempted a percentage allocation of value to the '650 patent. He simply asserted—based on nothing more than strategic litigation choices—that "most, if not all" value resided in the '650 and '892 patents. As the Federal Circuit observed, this opinion was "untethered to the facts of this case." Rex Med., slip op. at 11.
The court identified even more specific failures. Kidder "did not allocate the Covidien lump sum payment at all between the '650 and '892 patents." Id. at 11. He never analyzed whether the licensed foreign patents covered the same technology or Covidien's foreign products. Id. at 11. The fact that only two patents were asserted in U.S. litigation "proves little to nothing about the relative value of foreign patents, which cannot be asserted in the U.S." Id. His reliance on "general observations about other unrelated patent portfolios" was "equally unreliable." Id.
The '892 Patent Problem: A Crucial Clue
The Federal Circuit's opinion contains a detail that makes Rex's apportionment failure even more significant. The court noted that Kidder's report stated "the '892 Patent and the '650 Patent describe different design choices but the same stapling innovation."Rex Med., slip op. at 10 (emphasis added).
This divergence mattered because Rex's litigation choices suggested the '892 patent might have been more valuable than the '650 patent, at least in the Covidien context. Rex dropped the '650 patent before Covidien settlement negotiations, "leaving only the '892 patent at issue." Id. at 14-15. As Intuitive pointed out, "if an asserted patent has the 'most value,' then the '892 patent, not the '650 patent, would have been most valuable to Covidien." Id. at 15.
This created the paradox at the heart of Rex's damages case. The comparable license that supposedly demonstrated the '650 patent's value was negotiated when Rex itself apparently believed the '892 patent was more important, having dropped the '650 patent from the case prior to settlement. Yet Kidder offered no analysis distinguishing between the two patents' relative contributions to the $10 million payment.
What the Trial Record Offered (And Didn't)
With Kidder's expert testimony excluded, Rex fell back on testimony from its president, Lindsay Carter, who had helped negotiate the Covidien license. Carter testified that the license focused on the '650 and '892 patents and described factors Rex considered: Covidien settled early, was cooperative, wanted special contract language, didn't challenge the patents at the USPTO, and "saw real value" in the patents. Rex Med., slip op. at 15.
But as the Federal Circuit noted, "Rex did not present any testimony from Mr. Carter (or anyone else) discussing the relationship or differences between the '650 and '892 patents." Id. at 14. The jury heard no testimony on how to apply the licensing factors to apportion value specifically to the '650 patent, or "whether all, some, or none were applicable." Id. at 15.
Carter's testimony about expired patents was particularly problematic. He testified he'd been told that foreign patents had expired four years before the license, but admitted on cross-examination he had no personal knowledge to confirm this, and the district court therefore held the testimony was inadmissible hearsay. Id. at 15.
More fundamentally, Carter testified about what he didn't know: he wasn't sure whether there was an established royalty rate for the '650 patent, didn't know what Intuitive would consider reasonable, and wasn't sure the Covidien license was relevant to Intuitive's damages. He nevertheless acknowledged the $10 million wasn't based on Covidien's product sales, and he "could not actually assign any value to the '650 patent." Id. at 16.
The trial record did include market opportunity figures ($750 million total for bariatric, thoracic, and colorectal procedures) and stipulated SureForm sales figures ($607,708,024 from August 2018 to January 2022). Id. at 17. But "the jury was given no way to use these large numbers to assign value to a license to the '650 patent." Id. The figures were "never broken down or explained" and were untethered to the patented invention's specific contribution. Id.
The JMOL of No Damages: When $10 Million Becomes $1
After the jury returned its $10 million verdict, Intuitive moved for judgment as a matter of law. The district court granted JMOL, reducing the award to $1 in nominal damages. Rex Med., slip op. at 7, 12.
Under Federal Rule of Civil Procedure 50(a), JMOL is proper only when "there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue."< em>Promega Corp. v. Life Techs. Corp., 875 F.3d 651, 659 (Fed. Cir. 2017). Patent damages are questions of fact where the plaintiff bears the burden of proof by a preponderance of the evidence. Id.
The Federal Circuit has explained that juries may "choose an intermediate royalty rate" between competing expert opinions, but the choice "simply must be within the range encompassed by the record as a whole." Rex Med., slip op. at 13 (citing Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 519 (Fed. Cir. 1995)).
Here, the record provided no such range. The Covidien license established a ceiling of $10 million for the entire portfolio, but with no evidence apportioning that sum to the '650 patent alone, no floor existed above zero. The Federal Circuit held: "The record does not provide evidence from which the jury could find or infer a damages number for a license to the '650 patent between ~$1 and $10 million." Id. at 16.
This wasn't speculation about what the jury might have done—it was an assessment of evidentiary sufficiency. As the court explained, 35 U.S.C. § 284 "requires the award of a reasonable royalty, but to argue that this requirement exists even in the absence of any evidence from which a court may derive a reasonable royalty goes beyond the possible meaning of the statute." Id. at 14 (quoting Devex Corp. v. Gen. Motors Corp., 667 F.2d 347, 363 (3d Cir. 1981)). Damages "must not be left to conjecture by the jury. They must be proved, and not guessed at." Id. (quoting Promega, 875 F.3d at 660). Here, "awarding damages between ~$1 and $10 million for a license to the '650 patent would require improper guesswork."Id. at 17.
The Federal Circuit also affirmed the denial of a new damages trial. As the district court had reasonably explained, Rex "had the opportunity to conduct discovery and to call other witnesses, such as its damages expert, to offer other evidence potentially relevant to damages. Instead, Rex chose to hinge its damages theory on the very license that the court had already precluded its expert from testifying about." Id. at 17-18 (emphasis added).
The phrase "chose to hinge" is critical. This wasn't a case where the patentee offered multiple theories and all failed for reasons beyond its control. Rex made a strategic decision to rely exclusively on the Covidien license. When that theory collapsed in pretrial motions practice, Rex had no fallback.
What Rex Might Have Done: A Multi-Pronged Approach
The Federal Circuit's opinion doesn't just explain why Rex failed—read carefully, it contains clues about how Rex might have avoided catastrophe. Combined with established patent damages precedents and the technical story of evolving surgical stapling improvements, these clues suggest Rex had multiple paths to proving a reasonable royalty.
Salvaging the Covidien License Through Proper Apportionment
The Covidien license wasn't inherently unusable. Comparable licenses relating to the claimed invention are often the most reliable evidence of a reasonable royalty because they reflect real-world negotiations. ResQNet.com , Inc. v. Lansa, Inc., 594 F.3d 860, 869-70 (Fed. Cir. 2010). The problem was the failure to apportion.
A properly supported apportionment analysis might have started with a technical expert—separate from the damages expert—who could compare the '650 and '892 patents' relative scope and value. This expert could have analyzed several factors.
That analysis begins with a comparison of claim scope. The '892 patent's claim 1 requires specific structural features (orthogonally attached flat plates, coplanar pusher and web, precise blade positioning). The '650 patent's claim 6 uses broader functional language (portions "configured to cause" staple movement, "cooperatively engage" for alignment). Did this difference mean claim 6 covered more potential designs, making it more valuable? Likewise, did the '892 patent's structural specificity further reduce its relative value to the '650 patent due to possible design around options? There does appear to be realistic arguments for attributing greater value to the '650 patent relative to the '892 patent.
The analysis would then focus on mapping the relevant features of the accused products. Covidien's actual products could be analyzed to determine which patent's claims they practiced more directly. Understanding which patent posed the greater infringement threat could help allocate settlement value.
The analysis would also explain the litigation's context. Rex dropped the '650 patent before the Covidien settlement. A technical expert might opine on why—was it because the '892 patent provided better coverage of Covidien's products? Understanding this choice could help allocate value while distinguishing between Covidien's accused products and Intuitive's SureForm products.
The foreign patents required similar attention. Were they continuations or equivalents of the '650 and '892 patents? Did they cover the same technology or different innovations? Did Covidien sell accused products abroad? In this way, the analysis would show which patents factored more heavily into Covidien's settlement decision.
Based on such technical analysis, the damages expert could then apply a percentage split—perhaps 50% of the settlement value derived from the '650 patent, 40% from the '892 patent, and 10% from remaining patents. This would yield a $5 million baseline for the Covidien settlement based on the '650 patent. And if doubled, as Rex's damages expert seemed to suggest was appropriate in view of Intuitive's product sales, the Covidien license would translate into a $10 million recovery from Intuitive—in line with what the jury awarded. Thus tied to specific factual findings rather than untethered assertions, this analysis would have potentially supported a range that encompassed the jury's verdict, or at minimum established a floor well above the $1 nominal damages award.
Hypothetical Negotiation via Georgia-Pacific Factors
Even without a perfectly apportioned license, Rex could have built a reasonable royalty calculation using the fifteen factors from Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). See Rex Med., slip op. at 8 (discussing hypothetical negotiation approach). Several factors would have been particularly relevant.
Factor 9 addresses the utility and advantages of the claimed invention over the prior art. This is where the story of surgical stapling evolution becomes directly relevant to damages. An expert could have testified—supported by medical literature—that prior art staplers struggled with curved gastro-esophageal anatomy because they used disjointed mechanisms for clamping and firing. The '650 patent's integrated I-beam approach maintained jaw alignment during progressive stapling, potentially reducing anastomotic leak rates. Each prevented leak avoided patient mortality risk, reduced readmissions, and decreased malpractice liability. A health economics expert could estimate the per-procedure value of this risk reduction. Multiplied across thousands of procedures, this created substantial value attributable to the patented improvement.
Factor 8 focuses on the profitability of the accused product. The trial record included evidence that Intuitive sold over $607 million of accused SureForm products. Rex Med., slip op. at 17. But there was no testimony connecting this revenue to profit margins or breaking down which portion of profits derived from the patented I-beam technology versus other features.
A damages expert could have analyzed Intuitive's financial disclosures showing margins on SureForm products. For example, if we assume Intuitive earned 60% gross margins and a properly apportioned technical analysis attributed 15% of the product's value to the '650 patent's I-beam mechanism, that would suggest approximately 9% of revenue as profit attributable to the patented feature (60% x 15% = 9%). Even a modest royalty rate on that figure would yield damages substantially above the nominal $1 award.
The key is that each factor would be supported by specific evidence—medical literature on leak rates, financial data on profitability, expert testimony on design alternatives—rather than speculation. And the factors would cross-validate one another, showing a consistent range rather than a single point estimate.
The Analytical Approach: Intuitive's Incremental Profits
Similar to Georgia-Pacific Factor 8, another methodology Rex might have pursued is the analytical approach, which calculates a reasonable royalty based on the infringer's anticipated incremental profits from the patented technology. See TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 899 (Fed. Cir. 1986).
For the '650 patent, this analysis would examine what additional profits Intuitive earned because its SureForm products incorporated the patented I-beam mechanism. Several sources of incremental profit might exist: cost savings from reduced surgical complications (if the integrated beam design reduced leak rates, hospitals might pay a premium for SureForm or purchase it in higher volumes); avoided R&D costs (developing the I-beam mechanism required engineering effort that Intuitive might have saved); or market differentiation and premium pricing (if the patented beam technology allowed Intuitive to position SureForm as a premium product).
The analytical approach requires subtracting baseline profits—what Intuitive would have earned selling a non-infringing alternative—from actual profits. If prior-generation staplers without integrated beam mechanisms had lower margins due to higher complication rates or less efficient manufacturing, the difference might be quantifiable.
Market Value and Design-Around Costs
Perhaps the most intriguing alternative involves assessing the '650 patent's value based on what it would cost Intuitive to design around it. The design-around cost approach rests on a simple premise: in a hypothetical negotiation, a licensee wouldn't pay more for a license than it would cost to develop and implement a non-infringing alternative. See Grain Processing Corp. v. Am. Maize-Prods. Co., 185 F.3d 1341, 1350-51 (Fed. Cir. 1999) (discussing design-around as relevant to reasonable royalty).
For the '650 patent, design-around analysis would require examining claim 6's limitations and asking: how could Intuitive achieve the same functional result without infringing?
The analysis would focus on engineering challenges. The "configured to cause" limitation requires at least one beam portion to trigger staple firing as the beam advances. To avoid this, Intuitive might need to decouple staple actuation from the beam entirely—perhaps using a separate cable-driven mechanism or independent motors. This would require substantial redesign of the SureForm's internal architecture.
The analysis would likewise address the regulatory costs of redesigning the products. This is where design-around analysis becomes particularly relevant for medical devices. The SureForm staplers are Class II medical devices under FDA regulations. Any significant design modification would likely require a new 510(k) premarket notification demonstrating substantial equivalence to a predicate device. If the design changes are substantial—particularly if they alter the fundamental mechanism of action—the FDA might require clinical data to demonstrate safety and efficacy, potentially costing millions and delaying launch of the redesigned products.
Finally, the analysis would reveal the market impact during transition from the infringing to the non-infringing products. Even assuming successful redesign and regulatory approval, Intuitive would face a gap period during which it either continues selling potentially infringing products or withdraws SureForm from the market, ceding market share to competitors.
Aggregating these factors—engineering costs, regulatory expenses, and market disruption—suggests the '650 patent represented a significant obstacle to Intuitive's business. In a hypothetical negotiation, this would create substantial upward pressure on the royalty rate.
Of course, design-around cost analysis assumes the patent is clearly infringed and valid. If Intuitive had strong non-infringement or invalidity arguments, willingness to pay drops correspondingly. An expert would need to account for litigation risk in assessing what parties would have negotiated ex ante. But combined with technical expert testimony from a surgical device engineer evaluating feasibility of design alternatives and a regulatory consultant assessing FDA implications, this methodology could have been grounded in facts rather than speculation.
The Strategic Investment Question
The broader question is whether pursuing a multi-pronged damages approach would have been justified given the stakes. Practitioners understand that comprehensive expert work involves substantial investment—technical experts for apportionment, expanded damages expert analysis covering multiple methodologies, regulatory consultants for design-around assessment, and health economics experts for clinical outcome valuation.
But measured against a $10 million jury award—and Kidder's excluded opinion that a hypothetical negotiation would result in a $20 million lump sum payment—the incremental investment in robust damages proofs appears eminently justified. This investment would have provided fallback options. If the district court excluded the Covidien license testimony (as it did), Rex would still have Georgia-Pacific, analytical, and market value theories to present. The exclusion wouldn't have been fatal.
The Federal Circuit implicitly acknowledged this in noting that Rex "had the opportunity to conduct discovery and to call other witnesses, such as its damages expert, to offer other evidence potentially relevant to damages." Rex Med., slip op. at 17-18. The phrase "chose to hinge its damages theory on the very license that the court had already precluded" suggests the problem was strategic, not evidentiary impossibility. Id.
For patent litigators, particularly those representing non-practicing entities, comprehensive damages preparation in high-stakes litigation isn't optional—it's insurance against exactly what happened here.
Lessons and Broader Implications
For Patent Holders: Diversification Applies to Damages Theories Too
The Rex Medicaldecision joins a growing line of Federal Circuit cases tightening damages standards. For example, in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011), the court rejected the "25% rule of thumb." In VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328-29 (Fed. Cir. 2014), the court emphasized apportionment and identification of the "smallest salable unit." In Apple Inc. v. Wi-LAN Inc., 25 F.4th 960 (Fed. Cir. 2022), the court extended its apportionment requirement, holding that experts must address how all patents in a comparable license contributed to the royalty. And in EcoFactor, Inc. v. Google LLC, 137 F.4th 1333, 1339-40 (Fed. Cir. 2025) (en banc), the court reinforced the district court's gatekeeping role against unreliable expert testimony.
The through-line is clear: patent damages must be tied to the specific invention claimed, not bundled portfolios, not entire products with multiple features, and not vague assertions about "key patents" without supporting analysis.
For patent holders, particularly NPEs without their own product sales to anchor lost profits claims under 35 U.S.C. § 284, this means single-theory damages cases are single points of failure. The court's observation that Rex "chose to hinge its damages theory" on the excluded license implies what should have been obvious: strategic litigation choices have consequences.
The overarching point of this case is that apportionment cannot be an afterthought. If a comparable license covers multiple patents, allocation must be supported by specific evidence—technical analysis of claim scope, product mapping, and if possible, documents from the licensee showing which patents mattered to its business decisions. As the court emphasized, relying on "general observations about other unrelated patent portfolios" is "unreliable and untethered to the facts of this case." Rex Med., slip op. at 11.
In other words, the case cannot be developed piecemeal. Technical experts must support damages experts. The technological story of improvement over prior art isn't just relevant to infringement and validity—it's central to proving value under Georgia-Pacific Factor 9 and other methodologies. Rex had a compelling narrative about surgical stapler evolution but never translated that story into economic terms.
For Litigators: Spotting the Apportionment Problem Early
Any license covering more than one patent requires apportionment analysis. Licenses covering patent families plus foreign rights require even more careful analysis. Early in case assessment, litigation counsel should ask: Can we allocate the licensed payment among covered patents based on objective evidence? What discovery can we conduct to understand which patents drove the settlement? Do we need a technical expert to help with apportionment, separate from our damages expert? What fallback damages theories should we develop?
The contrast with what Rex actually did is stark. There was no technical expert to compare the '650 and '892 patents. There was no analysis of whether foreign patents in the Covidien license covered the same technology. And there was no fallback damages theory when the Covidien license was excluded.
The Story Not Told: Technological Value Versus Legal Value
Perhaps Rex's deepest missed opportunity was failing to connect the technological narrative to the legal question of damages.
The '650 patent represented a genuine advance in surgical stapling technology. The jury found claim 6 valid, and the Federal Circuit affirmed that finding, rejecting Intuitive's invalidity challenges. This means the claimed invention satisfied the fundamental requirements of patentability—it was novel and non-obvious over the prior art. And the integrated I-beam mechanism addressed real problems—jaw misalignment, inconsistent clamping pressure, difficulty navigating curved anatomy—that had plagued surgeons since Hültl's 1908 prototype.
The Federal Circuit's infringement analysis confirmed this. Intuitive's own engineers designed the SureForm products with a mechanism that worked exactly as the patent claimed, even if they characterized the protrusion's purpose differently. Rex Med., slip op. at 23. The fact that the design functioned to cause staple movement through a shuttle was undisputed. This wasn't accidental infringement or a design cleverly skirting the patent's scope—it was a product that practiced a novel and non-obvious invention that solved technical problems inherent in robotic surgical stapling.
This technological story should have anchored the damages case. The evolution from rigid linear staplers to curved endoscopic devices to robotic integration represented a progression of increasingly sophisticated solutions to anatomical constraints. The '650 patent fits within that progression, offering an integrated approach that the prior art lacked.
But Rex never presented that argument in economic terms. There was no expert testimony quantifying how much the integrated beam mechanism contributed to clinical outcomes, or how much value hospitals placed on reliable stapling in high-risk gastro-esophageal procedures, or how the patented solution compared to next-best alternatives in the market as of January 31, 2001 (the patent's priority date).
Without this foundation, the jury heard about a $10 million license covering a bundle of patents but had no way to understand what portion of that value derived from the specific technological contribution of claim 6. The sales figures and market opportunities were just numbers floating in a vacuum, and both the district court and Federal Circuit found no evidence supporting the jury's award of damages.
For Intuitive, the outcome is a complete victory despite losing on liability. The company can continue selling its SureForm products having established through litigation that even if it infringes, the '650 patent's proven economic value is negligible. And having dismissed the '892 patent with prejudice, Rex has now lost its ability to assert these two patents against Intuitive, which according to Rex's damages expert contributed "most, if not all" of the value paid by Covidien for its $10 million license to Rex's patent portfolio.
Conclusion: The Math That Doesn't Add Up
Rex Medical v. Intuitive Surgical will be discussed in patent litigation circles as a cautionary example of apportionment failure. The Federal Circuit's analysis is thorough and consistent with recent precedent tightening damages standards under 35 U.S.C. § 284. The outcome—affirmance on infringement and validity but reduction to nominal damages—demonstrates that winning on liability means nothing if you can't prove the value of your patent.
But Rex's missed opportunity may be more instructive than the court's ultimate holding. Rex held a patent covering real technological innovation in a field where medical complications carry both human and economic costs. The invention solved problems that had challenged surgeons for a century. The accused products practiced the claimed invention in a way that Intuitive's own experts acknowledged. Rex Med., slip op. at 23-24.
Rex had the evidence to tell this story: the history of surgical stapling, the evolution toward integrated mechanisms, the clinical value of reduced leak rates, the regulatory environment for medical devices, and the costs of designing around the patented solution. It had expert witnesses, trial testimony, and demonstrative exhibits. What it lacked was the strategic foresight to connect that technological narrative to a multi-pronged damages framework capable of surviving appellate scrutiny under the demanding standards of Apple, EcoFactor, and their progeny.
The math is stark: infringement victory + validity win + $10 million jury award = $1, if you cannot apportion value to the patented invention. For patent litigators and their clients, Rex Medical's lesson is equally stark: in damages as in engineering, single points of failure are the most dangerous design flaw. This article began with a $10 million verdict vanishing into thin air. It ends with a question for every patent holder entering high-stakes litigation: can you prove what your invention is worth? Rex couldn't. Patentees should learn from this mistake or risk a similar outcome.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
