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Jury’s Willfulness Determination Affirmed Under Modified In re Seagate Standard

cafc-federal-circuit-windowsIn re Stryker Corporation v. Zimmer, Inc.,  (Before Hughes, Newman, and Prost, CJ.) (Opinion for the court, Prost, CJ.) Click Here for a copy of the opinion.

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.

On appeal, the Federal Circuit initially held that Stryker’s patents were valid and infringed but reversed the district court’s finding of willfulness and the award of treble damages and attorney’s fees, applying the test for willful infringement and enhanced damages set forth in In re Seagate Technology, Inc. For infringement to be willful under the Seagate standard, a patentee had to establish by clear and convincing evidence that there was an objectively high likelihood that the accused infringer’s actions constituted patent infringement and that the risk was “either known or so obvious that it should have been known to the accused infringer.”

Stryker filed a petition for writ of certiorari in the Supreme Court, which was granted to determine whether the Seagate test regarding willfulness and enhanced damages was consistent with the Patent Act. The Supreme Court rejected the Federal Circuit’s Seagate approach, finding that “[t]he subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.” Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1932 (2016). The Supreme Court also rejected the use of a clear and convincing standard in favor of a preponderance of the evidence standard.

On remand from the Supreme Court, the Federal Circuit re-affirmed the jury’s finding that Stryker’s three patents were valid and infringed and it affirmed the jury’s award of lost profits. The Federal Circuit also affirmed the jury’s subjective willfulness determination, which Zimmer had not appealed, finding that willful misconduct had been sufficiently established under the higher clear and convincing evidence standard. However, the Federal Circuit vacated the district court’s award of enhanced damages and remanded for the district court to determine whether the case was exceptional enough to warrant enhanced damages. The Federal Circuit also vacated and remanded the district court’s award of attorney’s fees, which had been based solely on its determination that Zimmer was liable for willful infringement.

The award of damages for willful infringement and of attorneys fees for an “exceptional case” are independent matters of discretion for the district court to evaluate under the totality of the circumstances in each case.

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