Stryker Corp. v. Intermedics Orthopedics, Inc.

• Decision Date: 11 July 1995
• Docket Number: No. CV 90-3006 (ADS).,CV 90-3006 (ADS).
• Citation: 891 F. Supp. 751
• Parties: STRYKER CORPORATION and Osteonics Corporation, Plaintiffs, v. INTERMEDICS ORTHOPEDICS, INC. and Marli Medical Supplies, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

891 F. Supp. 751

STRYKER CORPORATION and Osteonics Corporation, Plaintiffs, v.INTERMEDICS ORTHOPEDICS, INC. and Marli Medical Supplies, Inc., Defendants.

No. CV 90-3006 (ADS).

United States District Court, E.D. New York.

July 11, 1995.

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Morgan & Finnegan, New York City, for plaintiffs; John A. Diaz, Robert E. Paulson, Christopher A. Hughes, James W. Gould, Michael A. Nicodema, Andrea L. Wayda, of counsel.

Bell, Seltzer, Park & Gibson, Charlotte, NC (Larry C. Jones, Frank B. Wyatt, II, Guy R. Gosnell, of counsel), Fulbright & Jaworski, Houston, TX (James W. Repass, Patricia J. Kerrigan, of counsel), Fulbright & Jaworski, New York City(Ralph Dawson, of counsel), for defendants.

OPINION

FINDINGS OF FACT AND CONCLUSIONS OF LAW

                       Table of Contents
                INTRODUCTION .................................................................... 761
                  I.  BACKGROUND ................................................................ 762
                      1. The 023 Patent and Claims .............................................. 762
                      2. The APR II and the Parties' Contentions ................................ 764
                 II.  AS TO PATENT INFRINGEMENT ................................................. 766
                      1. Literal Infringement ................................................... 766
                         A. The Legal Standard .................................................. 766
                         B. The Infringed Claims ................................................ 767
                            (1) Limitation (iii)
                                "Enabling Flexing" of the Shaft ................................. 769
                                 (a) Claims Construction ........................................ 769
                                 (b) Infringement Determination ................................. 772
                            (2) Limitation (ii): "Distal Tip Integral With The Distal End of the
                                Stem" ........................................................... 776
                                 (a) Claims Construction ........................................ 776
                                 (b) Infringement Determination ................................. 779
                            (3) Limitation (v): A Fixation Resistant Surface-Finish ............. 783
                                 (a) Claims Construction ........................................ 783
                                 (b) Infringement Determination ................................. 785
                         C. Other Evidence of Infringement: Development of the APR II Distal
                            Sleeve After the February 1988 AAOS Meeting ......................... 786
                

         D. Conclusions and Findings as to Literal Infringement ................. 791
                      2. Infringement Under the Doctrine of Equivalents ......................... 792
                         A. The Legal Standard .................................................. 792
                         B. The Defendant's Equivalency Contentions ............................. 793
                         C. Equivalence of the APR II and the 023 Patent ........................ 794
                         D. Prosecution History Estoppel ........................................ 795
                         E. Conclusion and Findings as to Equivalents ........................... 796
                III.  AS TO UNENFORCEABILITY: II. EQUITABLE CONDUCT AND INVALIDITY .............. 797
                      1. Inequitable Conduct .................................................... 797
                         A.  Applicable Legal Standard .......................................... 798
                         B.  Determination of Inequitable Conduct ............................... 800
                            (1) Materiality of the Whiteside Device ............................. 800
                            (2) Intent to Deceive ............................................... 804
                      2. Invalidity ............................................................. 806
                         A. Invalidity Under 35 U.S.C. §§ 102 and 103 ................. 806
                            (1) Legal Standard .................................................. 806
                                 (a) The Hoffman-Daimler Patent ................................. 807
                                 (b) The Lee and Ling Patents ................................... 808
                         B. Invalidity Under 35 U.S.C. § 112 ............................... 810
                            (1) The Legal Standard .............................................. 810
                            (2) Definiteness Analysis ........................................... 810
                      3. Conclusion and Findings as to Unenforceability ......................... 812
                 IV.  WILLFUL INFRINGEMENT ...................................................... 813
                  V.  DAMAGES ................................................................... 817
                      1. Lost Profits ........................................................... 818
                         A. The Legal Standard .................................................. 818
                         B. Evidence Regarding Osteonics's Lost Profits ......................... 819
                            (1) Panduit Factor One: Demand for the Patented Product ............. 819
                            (2) Panduit Factor Two: The Absence of Acceptable Non-Infringing
                                Substitutes ..................................................... 823
                            (3) Panduit Factor Three: Osteonics's Manufacturing and Marketing
                                Capacity ........................................................ 825
                            (4) Panduit Factor Four: The Amount of Profit Osteonics Would
                                Have Made ....................................................... 825
                         C. Conclusions and Findings on Lost Profits ............................ 830
                      2. Reasonable Royalty ..................................................... 832
                      3. Prejudgment Interest ................................................... 832
                      4. Enhancement of Damages and Attorneys' Fees ............................. 833
                         A. Enhancement of Damage Award ......................................... 833
                         B. Attorneys' Fees ..................................................... 834
                      5. Injunctive Relief ...................................................... 835
                 VI.  CONCLUSION ................................................................ 835
                

SPATT, District Judge:

INTRODUCTION

In years past, a person with an arthritic hip was generally relegated to a wheelchair.The advent of modern medical prosthesis technology now permits such a person to walk and resume a normal life through the use of an artificial socket, ball and neck of the hip joint, known as a hip implant prosthesis or femoral prosthesis.Today, the manufacture and supply of prosthetic devices is a growing and profitable industry.The marketing of such devices is estimated to have generated $2.2 billion dollars in revenue to manufacturers in 1990, and has averaged approximately a 15 percent annual dollar growth since 1988.Approximately one quarter of the orthopedic market involves hip implants.

The present case concerns the alleged infringement of a femoral prosthesis patent.The patent in suit is United States PatentNo. 4,888,023("the 023 patent"), which is entitled "Femoral Prosthesis with Uncoupled Distal Tip."The 023 patent was filed with the United States Patent Office("Patent Office") on January 19, 1988 and assigned by its inventor to the plaintiffOsteonics Corporation("Osteonics" or "plaintiff").The Patent Office issued the patent on December 19, 1989.

Among the key features of the 023 patent is a metal distal (lower end) tip adapted for engagement with the prosthesis's stem by means of complementary tapers.The term "distal" means furthest away from the point of attachment.The term "proximal" means nearest the point of attachment.As related to a hip implant or femoral prosthesis and as the terms are used in this opinion, distal means at the lower end of the prosthetic device, and proximal means at the upper end of the device.A diagram of the 023 patent is annexed as Appendix A.

Osteonics is a subsidiary of the Stryker Corporation and is in the business of "researching, developing, designing, manufacturing, marketing and selling hip and knee implants."(Tr.at 368).¹Since 1988, Osteonics has manufactured and supplied a femoral prosthesis known as the Omniflex, which is the commercial embodiment of the 023 patent.A diagram of the Omniflex is annexed as Appendix B.

The defendantIntermedics Orthopedics, Inc.(the "defendant" or "Intermedics" or "IOI") has, since January 1990, manufactured and supplied to the medical and orthopedic industry a femoral prosthesis known as the APR II.A diagram of the APR II is annexed as Appendix C. Each APR II has a metal distal sleeve which engages with the distal portion of the stem by means of a complementary taper.The successor to the APR II is the APR II-T, which was designed in 1991 and introduced in 1992.The three changes embodied in the APR II-T are (1) a tapered neck to fit the ceramic ball, (2) wrapped porous coating all around the proximal portion of the device, and (3) a multi-sized hollowed stem.The APR II-T retained the tapered stem and the distal sleeve which "serves the same purpose as the sleeve made available with the APR II."(Tr.at 762).

Both Osteonics and Intermedics supply a full complement of Omniflex and APR II stem sizes and correspondingly sized distal tips or sleeves to the hospital operating room, so that the surgeon is able to assemble and use the stem and the tip or sleeve when medically appropriate.The complete APR II hip system sells for between $3800 and $4000.

This infringement suit was brought by Stryker and Osteonics against Intermedics and Marli Medical Supplies, Inc.("Marli"), an Intermedics distributor.Osteonics charges Intermedics with literal and willful infringement of claims 8, 10, and 12 of the 023 patent by reason of its manufacture and sale of the APR II and its successor, the APR II-T....