Posts Tagged: "Stryker Corporation v. Zimmer Inc."

Stryker Corporation was awarded $70 million in lost profits after a jury found that Stryker’s patents were valid and willfully infringed by Zimmer. The district court affirmed the jury’s verdict, awarded Stryker treble damages for willful infringement, and awarded Stryker attorney’s fees. Stryker’s patents concerned portable, battery-powered, and handheld pulsed lavage devices used in orthopedic procedures to deliver pressurized irrigation for medical therapies, including cleaning wounds.

In rejecting the objective prong of Seagate, the Court rejected the notion that a defendant may escape the specter of enhanced damages by asserting a defense that the defendant was unaware of at the time the infringement occurred. For example, the Court pointed out that under the Seagate test, “[t]he existence of . . . a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” Halo at 10. But, as the Court stated, “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.” Id. Moreover, in response to an argument by Pulse based on the Court’s earlier Safeco decision, the Court held that “[n]othing in Safeco suggests that we should look to facts that the defendant neither knew nor had reason to know at the time he acted.” Id. at 11.

In last week’s Halo Elecs. v. Pulse Elecs. decision, the Supreme Court unanimously rejected the Federal Circuit’s Seagate standard for awarding enhanced damages in patent cases under Section 284, finding the Federal Circuit’s two-part test “impermissibly encumbers the statutory grant of discretion to district courts.” Slip Op. at 9. The Supreme Court’s decision, which vacated and remanded, means that the award of treble damage may very well be reinstated in that case, and reversals of enhanced patent damages rulings – both awards and denial – may become less common.

The chance of a court tripling damages for patent infringement has significantly increased. The Supreme Court, Halo Electronics, Inc. v. Pulse Electronics, Inc., et al. and Stryker Corporation, et al. v. Zimmer, Inc., et al., granted district courts more discretion to award enhanced damages for willful patent infringement. However, the Court’s recent decision could have unintended consequences. The Supreme Court’s relaxation of the requirements for willful infringement could be a game changer for patent trolls.

Since the start of the Supreme Court’s term in October, the Court has already agreed to hear two patent cases, Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc. Both cases address the issue of willful infringement and when it is appropriate for a court to award enhanced damages under 35 U.S.C. § 284. The only question that remains is whether the Court will continue its recent trend of taking three or more patent cases a term, or whether it will revert to its longer term average of accepting only one to two patent cases. Against the wider backdrop of the Supreme Court’s shrinking merits docket, it is notable that patent law consistently draws the attention of the Court under Chief Justice Roberts. Here we take a look at four cert petitions raising patent law issues, and handicap the odds of being granted.

The Supreme Court recently decided to review a pair of cases that challenge the Federal Circuit’s willful infringement test. The two cases, Halo Electronics, Inc. v. Pulse Electronics, Inc, (14-1513) and Stryker Corporation v. Zimmer, Inc. (14-1520), are drawing comparisons from commentators to the Court’s Octane Fitness, LLC v. ICON Health and Fitness, Inc. ruling last term based on the similar structure of the tests and statutory language reviewed in both cases. However, another recent SCOTUS case dealing with induced infringement, Commil USA, LLC v. Cisco Systems, Inc., may also shed some light on how the Court will think about willful infringement, since both doctrines center around the defendant’s intent.

Patent damages generally, and enhanced damages specifically, are a patent political powder keg because there are so many corporations that are users of technology. These technology using, or technology usurping, corporations would rather not have to worry about the consequences of infringing patents. This has caused the so-called infringer lobby to put a premium on the issue of damages, specifically advocating positions that would minimize patent damages. Indeed, the infringer lobby has done an excellent job weakening patent rights and impairing the enforceability of patents over the last decade, both in the federal courts and on Capitol Hill. The Supreme Court has even several times mentioned the patent troll problem without the issue being before the Court and neither party being accused of being a troll.

The United States Supreme Court accepted certiorari in two patent cases, which will require the court to determine whether district court judges should have discretion to award victorious patentees with enhanced damages under 35 U.S.C. § 284. While predicting the outcome of a Supreme Court decision is always speculative, this case should be one of the easiest outcomes to predict ever. Unless the Supreme Court fundamentally alters its statutory interpretation from the Octane Fitness case, arbitrarily creating a distinction without a difference, the Supreme Court will grant district courts the same broad discretion on enhanced damages that they have been given with respect to awarding attorneys fees.