It’s been two and a half years since Stryker Corp. and Zimmer Inc. took their long-running patent infringement dispute to the U.S. Supreme Court, ending in a new, more relaxed standard for imposing enhanced damages on willful infringement.
But the two medical device companies are still thrashing out exactly how much money Zimmer should pay for willfully infringing Stryker’s patents on specialty suction devices. On remand from the Supreme Court, U.S. District Chief Judge Robert Jonker of the Western District of Michigan again imposed the maximum penalty, trebling the jury’s $70 million award. With supplemental damages, prejudgment interest and an $8 million attorney fee award, the total came to $254 million.
On Monday, Wilmer Cutler Pickering Hale & Dorr partner Seth Waxman argued to the U.S. Court of Appeals for the Federal Circuit that Zimmer shouldn’t have to swallow one of the largest enhanced damage awards in patent history. He accused Jonker of mechanically applying the Read factors—a set of guidelines district judges use when considering enhancements—in a mechanical, check-the-box fashion. What’s more, Jonker ignored that the Federal Circuit itself has found in previous appeals that Zimmer’s trial defenses were “not unreasonable.”
“The district court’s award of the maximum enhanced damages was flawed as a matter of law,” Waxman said in Stryker v. Zimmer, asking the judges to “clarify and correct the district court’s confusion on the meaning of the Read factors, in order to provide lower courts with guidance.”
While one of the judges suggested that some clarification could be in order, it didn’t sound as if it would help Waxman’s client.
“You’re agreeing there’s going to be enhancement, and now we’re talking about whether the enhancement ought to be three times or two and a half times or one and one quarter times,” Chief Judge Sharon Prost said. While “maybe, maybe not” the appellate judges might agree it should be somewhat less, it’s not the appellate court’s role to scrutinize the percentage. “Your argument is they went too far, but how far is too far?” she said.
Waxman argued that the Supreme Court made clear that treble damages are reserved for “the worst of the worst” and that there are numerous mitigating factors on Zimmer’s side, including that Stryker waited 10 years to bring its infringement suit.
Stryker’s attorney, Sharon Hwang of McAndrews, Held & Malloy, argued that the Supreme Court adopted a flexible “totality of the circumstances” test for willfulness, and that Jonker did not abuse his discretion in applying it.
Judges Kathleen O’Malley and Todd Hughes expressed concern about Jonker’s use of the Read factors. “Do you agree that district courts are sort of all over the board in how they apply the Read factors and there needs to be some guidance,” O’Malley asked, “regardless of how we come out?”
“I think if we’ve learned anything” from the Supreme Court’s decision, “it’s that there’s no rigid formula here,” Hwang said. “These are all very fact-specific circumstances.”