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Palm Beach Gardens, Fla., orthopedic surgeon Raymond Tronzo was thumbing through a medical magazine more than a decade ago when, to his surprise, he saw an ad for an artificial hip socket called the Mallory-Head cup. It was manufactured by Biomet, a Warsaw, Ind., maker of orthopedic devices, and named after the doctors who ostensibly developed it, Thomas Mallory and William Head. Problem was, Tronzo previously had approached Biomet with a remarkably similar hip socket, called an acetabular cup, which he had invented and patented in 1988. He sued Biomet in U.S. District Court in 1991, alleging patent infringement, breach of fiduciary duty and fraud. Ten years later, Tronzo appears to finally have prevailed. Last month, the U.S. Supreme Court declined to review the $20 million punitive award and a $520 compensatory award upheld by the U.S. Court of Appeals for the Federal Circuit in January. The 38,000-to-1 ratio of punitive damages to compensatory damages is spectacularly greater than what has been considered reasonable in recent years. Biomet had sought to have the punitive damages reduced on the basis that the amount is vastly out of line with guidelines established by the Supreme Court in 1996 in BMW of North America v. Gore. In that case, a majority of justices reversed a punitive award that was 500 times greater than the compensatory award. But in this case, the Federal Circuit ruled that the evidence of the “reprehensibility” of the defendant’s conduct trumped the issue of the astronomical ratio of punitives to compensatories. “With all due respect to the judges on the court, this was a wrong decision,” says Don Burley, a partner in Finnegan Henderson Farabow Garrett & Dunner in Washington, D.C., and one of Biomet’s appellate lawyers. “This was a very valuable invention,” says Robert Hackleman, one of Tronzo’s lawyers and a partner at Gunster Yoakley in Miami. In a court pleading, Hackleman called Biomet “a venal company that made nearly $90 million in profits by defrauding Dr. Tronzo.” In another court brief, Tronzo’s lawyers said that Biomet had profits of $88 million on sales of $143 million from its similar artificial hip device. Biomet continues to market a modified version of the Mallory-Head cup. Tronzo sold his own device to another manufacturer, but it wasn’t particularly successful, Hackleman says. “It’s very difficult when you come along second with a me-too device to get any market penetration,” Hackleman says. Biomet contended that it developed its device independently of Tronzo, and that Tronzo’s patent was based on nothing more than an old idea from a generation earlier. Biomet now must pay Tronzo, who’s retired, the $20 million, though the amount of interest it must pay is still in question. The doctor’s case lasted through two district judges, two appeals and a long parade of attorneys, including some of the most powerful law firms in South Florida and Washington, D.C. The case docket is 52 pages long. “It’s scorched-earth litigation that never ends,” says Hackleman, who was assisted on the case by Gunster partners Connis Brown III and George LeMieux. While Hackleman has been litigating the case for eight years, the events that prompted it go back 20 years, to when Tronzo began developing his own artificial hip socket. He claimed he met with Biomet representatives with the understanding that once he obtained a patent, the company would market his device and pay him royalties. The surgeon won a patent in 1988, but by then Biomet executives “seemed to lose enthusiasm for his project,” Hackleman says. Tronzo soon learned why, when he saw the magazine ad for Biomet’s Mallory-Head cup hip socket device. “It was pretty much based on his design principles,” Hackleman says. Tronzo sued in 1991. The case went to trial in November 1995. In its defense, Biomet claimed that Dr. Head sketched out the Mallory-Head cup on a napkin, says Connis Brown. But the company failed to produce the napkin or the test results of their invention. In addition, it turned out that Mallory and Head used the same engineers for creating their product as had Tronzo. Biomet even used some of Tronzo’s test data to secure its own patent, Brown adds. “They took advantage not only of his data but his intellectual property,” Brown says. In January 1996, a jury found in favor of Tronzo on all counts. He was awarded $55.45 million. That was reduced to $7.1 million in compensatory damages and $20 million in punitive damages when Judge Daniel T.K. Hurley found that some damages were duplicative. After many months of post-verdict motions, Biomet appealed to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. The appeal challenged the validity of Tronzo’s patent and the finding of liability and the amount of compensatory damages. But Biomet did not argue that if compensatory damages were reduced, punitive damages should be adjusted downward as well. That turned out to be a critical omission. In August 1998, a three-judge panel of the appeals court reversed the finding of patent infringement and upheld the finding of fraud and breach of confidential relationship. The case was remanded to Hurley, who was instructed to make a new determination of damages. In 1999, Hurley ruled that Tronzo was entitled only to $520 in compensatory damages — the fee that he paid to obtain his patent. Biomet then argued that Hurley should correspondingly reduce the punitive damages, citing the BMW case as a guideline on acceptable ratios of punitives to compensatories. But Tronzo’s appellate lawyer, James F. Davis of Howrey Simon Arnold & White in Washington, D.C., contended that Biomet had waived the right to challenge the punitives on remand by virtually ignoring the subject in its appeal. Biomet only mentioned punitives in two footnotes. Biomet countered that it would have been premature to argue the constitutionality of the punitive damages before the issue of compensatory damages was resolved. Biomet’s reasoning was that if the $7.1 million in compensatories were upheld, it had no viable challenge to the amount of the punitives, which were of a 2.8-to-1 ratio to compensatory damages. “The ratio was reasonable, we felt, given the facts and circumstances,” says Biomet attorney Burley. “We thought we’d lose that challenge.” Siding with Biomet, Hurley reduced the punitive damages to $52,000 — a 100-to-1 ratio he said would be constitutional in light of the BMW ruling. Then it was Tronzo’s turn to appeal to the Federal Circuit. In January of this year, a panel of the appellate court upheld the reduced compensatory damages, but reversed Hurley’s reduction of the punitive damages. Senior Circuit Judge Glenn Archer, writing for the panel, said the panel was not persuaded by Biomet’s argument. While conceding that the 38,000-to-1 ratio was high, Archer noted that “the constitutionality of a punitive damages award is not simply a matter of numbers or ratios.” The BMW case that went before the Supreme Court involved a consideration of three “guideposts,” only one of which was the ratio of punitive to compensatory damages, he noted. “The court must also consider the reprehensibility of the conduct and any civil or criminal penalties for similar conduct,” Archer wrote. “And of these three guideposts, it was not the ratio of punitive to compensatory damages, but the reprehensibility of the conduct that was deemed by the Supreme Court to be ‘the most important indicium of the punitive damages award.’ With respect to this most important guidepost, we note that Biomet never challenged on appeal the jury’s finding of wanton or willful conduct in support of the punitive damages liability.” Archer’s panel barred Biomet from contesting the punitives on remand. Burley says any case with punitive damages contains “wanton or willful conduct,” so there was nothing significant about Biomet attorneys not challenging that finding. An amicus curiae brief filed with the Supreme Court for certiorari on Biomet’s behalf described the Federal Circuit ruling as “a particularly egregious example of the exaltation of rigid formality over fundamental fairness,” and a “grave injustice.” With the Supreme Court decision to deny certiorari, you might think the long Tronzo case finally is nearing an end. Not necessarily. Biomet is now appealing the amount of interest it has to pay. Tronzo’s lawyers say interest has been accruing since the 1996 civil verdict in the case. Biomet lawyers argue that interest should only begin accruing at the time the case was reinstated by the appeals court last year. The difference is roughly $6 million vs. $200,000. Regardless of how that shakes out, Tronzo’s lawyers say the retired surgeon feels vindicated. They argue that Biomet tried to disparage Tronzo, a distinguished surgeon who has taught at the University of Pennsylvania and the University of Miami and has written a textbook on hip surgery. On top of that, the litigation became so personally nasty that on the eve of trial in 1995, Tronzo’s lawyers persuaded Judge Hurley to agree to allow no evidence relating to Tronzo’s arrest decades earlier for conspiracy to murder his ex-wife. The doctor was never charged in the alleged plot. “He never did this for the money,” Hackleman says of the surgeon’s lawsuit against Biomet. “Dr. Tronzo truly believes he invented something other people were credited for, only to be derided by Biomet in the press.” Hackleman says his resolve didn’t waver either, despite being embroiled in eight years of difficult litigation. “If you really believe in your client and believe his cause is just, you don’t get discouraged,” he says. “You just have to persevere. Sometimes you win. Sometimes you lose. But you always sleep at night.”

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