Stryker Corp. v. Zimmer Inc.
| Decision Date | 07 August 2013 |
| Docket Number | CASE NO. 1:10-CV-1223 |
| Parties | STRYKER CORPORATION, STRYKER PUERTO RICO, LTD., and STRYKER SALES CORPORATION, Plaintiffs and Counter-Defendants, v. ZIMMER INC., and ZIMMER SURGICAL, INC., Defendants and Counter-Plaintiffs. |
| Court | U.S. District Court — Western District of Michigan |
HON. ROBERT J. JONKER
Stryker and Zimmer are the two principal participants in the market for orthopedic pulsed lavage devices. A modern, orthopedic pulsed lavage device is a combination spray-gun and suction-tube, used by medical professionals to clean wounds and tissue during surgery. In 2010, Stryker sued Zimmer, alleging that Zimmer's line of Pulsavac Plus pulsed lavage devices infringed three of Stryker's patents--U.S. Patent No. 6,022,329 ("the 329 patent"), U.S. Patent No. 7,144,383 ("the 383 patent"), and U.S. Patent No. 6,179,807 ("the 807 patent"). After claims construction and a round of summary judgment, one infringement claim and 22 invalidity defenses remained for trial. So did a series of remedial issues. (See Order Regarding Stryker's Motion for Partial Summary Judgment of Infringement, doc. # 247).
After two weeks of trial--featuring hundreds of exhibits and more than a dozen witnesses--and multiple days of deliberation, the jury returned a verdict unequivocally in Stryker's favor. In particular, the jury found: (1) that the Pulsavac Plus products infringed claim 2 of the 329 patent; (2) that Zimmer failed to establish any of its 22 invalidity contentions; and (3) that Stryker was entitled to $70 million in lost profits. (Verdict, doc. # 381.) The jury also found that Zimmer willfully infringed the valid claims under the patents in suit. (Id.)
The jury's verdict for Stryker means that the post-verdict motions must be evaluated against the prevailing narrative at trial. Here is a summary of that narrative. Through the proceedings, the jury learned that pulsed lavage devices had, for years, served an important function in surgical procedures--cleaning out wounds and removing necrotic tissue from wound sites. Early-model pulsed lavage devices were bulky and required a centralized power source. They had to be wheeled around a hospital, from one room to another. Stryker solved the problems associated with the size and power needs of pulsed lavage devices by designing a portable, disposable, battery-powered, hand-held pulsed lavage device. Zimmer's Manufacturing Manager and Rule 30(b)(6) witness agreed that the Stryker products were "pioneering."
Zimmer had no answer for Stryker's new technology and saw its market share fall precipitously, to the point where Zimmer's presence in the pulsed lavage marketplace was at risk. Rather than relying on their own engineers to develop an alternative, Zimmer hired an independent contractor with no experience in pulsed lavage devices. In essence, Zimmer handed the independent contractor a copy of Stryker's product and said, "Make one for us." Under those conditions, it is not surprising that the finished Zimmer product turned out to look and function like Stryker's product. Nevertheless, Zimmer got its product to market quickly and in direct competition with Stryker. In doing so, it did not seek advice of outside patent counsel to assess the potential for infringement of Stryker's patents, or to opine on the validity of Stryker's patents.
Once Zimmer introduced its competing product, there was fierce, direct market competition between Stryker and Zimmer. Zimmer constantly sought to lure customers away from Stryker and had a fair amount of success in doing so with its new product. Then, in 2007, Zimmer was forced to pull its product from the market due to technical problems. Zimmer had received so many complaints about its product that it decided to cease production entirely and not re-start production until December 2008, when it reentered the market. Upon reentering the market, Zimmer recaptured most of the market share it had forfeited by its year-plus absence.
Stryker filed this suit against Zimmer in 2010, alleging infringement of the 329, 807, and 383 patents. Zimmer lost every argument it advanced at claim construction, then lost most of the disputed claims on summary judgment. It lost all of its remaining claims at trial. At the time the jury announced its verdict, Zimmer had not changed its product design.1 This is consistent with both the market and litigation strategy that Zimmer has followed for years. Zimmer chose a high-risk/high-reward strategy of competing immediately and aggressively in the pulsed lavage market and opted to worry about the potential legal consequences later. When Stryker sued, Zimmer's able counsel offered the most plausible defenses that were available to them given Zimmer's pre-litigation market conduct. Ultimately, however, the trial proofs demonstrated that this was not a close case. Therelative quality of the expert testimony on liability was notably favorable to Stryker. On damages, the quality of the expert testimony was closer, but still favored Stryker. Zimmer ultimately stuck with an "all or nothing" damages defense--rather than trying to chip away at Stryker's proposed lost profit number or its alternative theory--and lost, as the jury's verdict demonstrates.
Both sides have brought a number of post-verdict motions. Zimmer has brought ten post-verdict motions for judgment as a matter of law ("JMOL") or for a new trial. Specifically, Zimmer has moved: (1) for JMOL to preclude Stryker from recovering lost profits damages from before November 5, 2010 (doc. # 369); (2) for JMOL as to the invalidity of claim 2 of the 329 patent, or, in the alternative, for a new trial on the validity of claim 2 (doc. # 401); (3) for JMOL barring Stryker from recovering pre-suit damages under the doctrine of laches (doc. # 418); (4) for JMOL of non-infringement of claim 2 of the 329 patent, or, in the alternative, for a new trial on the issue of non-infringement of claim 2 (doc. # 425); (5) for JMOL limiting Stryker's damages because Stryker failed to mark its pulsed lavage devices in accordance with 35 U.S.C. § 287(a) and for a new trial on the issue of marking (doc. # 430); (6) for a new trial (doc. # 435); (7) for JMOL that Stryker's asserted claims under the 383 patent are invalid, or, in the alternative, for a new trial on the validity of those claims (doc. # 438); (8) for JMOL that claims 45, 50, 51, and 52 of the 807 patent are invalid, or, in the alternative, for a new trial on the validity of those claims (doc. # 442); (9) for JMOL that Zimmer did not wilfully infringe Stryker's patents (doc. # 447); and (10) for JMOL to preclude Stryker from receiving lost profits damages and limiting Stryker's reasonable royalty recovery, or, in the alternative, for a new trial on damages (doc. # 453). Stryker has brought five post-verdict motions, seeking (1) a permanent injunction against Zimmer or, in the alternative, an ongoing royalty (doc. # 396); (2) supplemental damages (doc. # 414); (3) a finding of an"exceptional case" and an award of attorney's fees (doc. # 410); (4) an award of prejudgment interest (doc. # 399); and (5) enhanced damages for willful infringement (doc. # 405).
Both parties' post-verdict motions are addressed in this Order. The Court does not believe oral argument is necessary to illuminate the issues exhaustively briefed by the parties. For the reasons set out below, each of Zimmer's motions is DENIED and each of Stryker's motions is GRANTED.
Zimmer is not entitled to prevail on any of its post-verdict motions.
A. Motion for JMOL to Preclude Stryker from Recovering Lost Profits Damages from Before November 5, 2010 (doc. # 369)
Zimmer's first motion is for judgment as a matter of law ("JMOL") to preclude the Stryker plaintiffs from recovering lost profits damages from before November 5, 2010, on the ground that Stryker Sales Corporation lacks constitutional standing to sue for lost profits from before that date. A party is entitled to lost profits damages from an infringer if, during the period of infringement, the party had the right to exclude others from making, using, selling, or offering to sell inventions practicing the patents-in-suit. See WiAV Solutions LLC v. Motorola, Inc., 631 F.3d 1257, 1264 (Fed. Cir. 2010) (citing 35 U.S.C. § 271(a) and Warth v. Seldin, 422 U.S. 490, 500 (1975)). The question raised by Zimmer's motion is whether Stryker Sales Corporation had that right before November 5, 2010. See id. (citing Morrow v. Microsoft Corp., 499 F.3d 1332, 1340 (Fed. Cir. 2007)).
At the outset, the parties dispute whether Stryker's motion is properly characterized as asserting a lack of standing or merely as arguing against a particular damages theory. The distinction is an important one. Constitutional standing is a component of federal subject matter jurisdiction,meaning a party's lack of standing may be raised at any time in the litigation. See Zurich Ins. Co. v. Logitrans, Inc., 297 F.3d 528, 531 (6th Cir. 2002) (); see also FED. R. CIV. P. 12(h)(3) (). A motion to limit damages, on the other hand, goes to the merits of a party's claim and, therefore, may be waived if not included in the final pre-trial order. See Rockwell Int'l Co. v. United States, 549 U.S. 457, 474 (2007) (); Ghandi v. Detroit Police Dep't, 823 F.2d 959, 962-63 (6th Cir. 1987) (). The issue was not preserved in the final pre-trial order in this case. (See Order Accepting Parties' Pretrial Order, doc. # 345; Proposed Final Pretrial...
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