Tronzo v. Biomet Inc
| Decision Date | 17 January 2001 |
| Citation | 236 F.3d 1342,57 U.S.P.Q.2d 1385 |
| Parties | (Fed. Cir. 2001) DR. RAYMOND G. TRONZO, Plaintiff-Appellant, v. BIOMET, INC., Defendant-Appellee. 00-1007 DECIDED: |
| Court | U.S. Court of Appeals — Federal Circuit |
James F. Davis, Howrey Simon Arnold & White, LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Jeffrey I. Auerbach, Of counsel on the brief were Robert S. Hackleman, Connis O. Brown, III, and George S. LeMieux, Gunster, Yoakley Valdes-Fauli & Stewart, P.A., of Fort Lauderdale, Florida.
Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, argued for defendant-appellee. With him on the brief were Don O. Burley, and Robert L. Burns. Of counsel on the brief was L. Martin Reeder, Jr., Greenberg Traurig, P.A., of West Palm Beach, Florida. Of counsel was Edwin G. Torres, Steel Hector & Davis LLP, of Miami, Florida.
Before NEWMAN, Circuit Judge, ARCHER, Senior Circuit Judge, and LOURIE, Circuit Judge.
Dr. Raymond G. Tronzo ("Dr. Tronzo") appeals the judgment of the United States District Court for the Southern District of Florida. Tronzo v. Biomet, Inc., No. 91-8175-CIV-HURLEY (S.D. Fla. Aug. 27, 1999), and underlying orders.Specifically, Dr. Tronzo appeals the reduction in an award of compensatory damages from $7,134,000 to $520, the reduction of punitive damages from $20,000,000 to $52,000, and the rejection of Dr. Tronzo's request for a new trial in light of the court's reduction of the jury's award of compensatory and punitive damages. Concluding that the district court erred only in revisiting the issue of the proper amount of punitive damages, we affirm-in-part and reverse-in-part.
This case returns to this court following remand from an earlier appeal, Tronzo v. Biomet, Inc., 156 F.3d 1154, 47 USPQ2d 1829 (Fed. Cir. 1998) ("Tronzo I"), from the judgment of the Southern District of Florida, Tronzo v. Biomet, Inc., 950 F. Supp. 1149, 41 USPQ2d 1403 (S.D. Fla. 1996).
The underlying dispute between Dr. Tronzo and Biomet concerns a medical device, called an "acetabular cup," that forms the upper portion of a hip implant. Dr. Tronzo alleged that he had established a confidential relationship with Biomet for the purpose of bringing his acetabular cup design to market. According to Dr. Tronzo, Biomet was to pay him for his invention if he could successfully obtain a patent on his invention. Dr. Tronzo claims that Biomet failed to compensate him and, instead, took his ideas and incorporated them into its highly successful Mallory/Head cup design (named after Drs. Thomas Mallory and William Head). Dr. Tronzo brought suit in the Southern District of Florida for infringement of United States Patent No. 4,743,262 ("the '262 patent"), issued May 10, 1988, and, under Florida law, for breach of a confidential relationship, fraud, and unjust enrichment.
A jury found in favor of Dr. Tronzo on all counts, finding, by special verdict, that the '262 patent was valid and willfully infringed by Biomet and that Biomet was liable under state law for breach of a confidential relationship, fraud, and unjust enrichment. The jury awarded Dr. Tronzo $3,805,000 for patent infringement, $4,757,000 in compensatory plus $15,000,000 in punitive damages for the breach of a confidential relationship, $7,134,000 in compensatory plus $20,000,000 in punitive damages for fraud, and $4,750,000 in compensatory damages for unjust enrichment. The district court then enhanced the jury's patent infringement award by 50% (pursuant to 35 U.S.C § 284), dismissed the unjust enrichment count, and capped the total recovery at $7,134,000 in compensatory damages plus $20,000,000 in punitive damages to avoid double recovery.
On appeal of the district court's decision, Biomet argued that some of the claims of the '262 patent were invalid and that the other claims asserted were not infringed. Biomet further contested liability with respect to the state law claims and the compensatory damages associated with those claims. Biomet did not appeal the punitive damage award.
In reviewing Biomet's appeal in Tronzo I, we reversed the district court's findings of patent infringement, holding that some of the asserted claims were invalid and the other claims were not infringed. In addition, we upheld the district court's finding of liability on the state law counts, but reversed its judgment with respect to the amount of compensatory damages, holding that Dr. Tronzo had failed to establish the necessary nexus between the damages claimed and the injury sustained. The damages award granted by the district court had been computed based on Biomet's profits. We concluded that this was an incorrect measure of Dr. Tronzo's damages under controlling state law. See Tronzo I, 156 F.3d at 1161, 47 USPQ2d at 1835.
Because the compensatory damages were computed incorrectly, we remanded to the district court to determine if there was evidence on the record to "prove any of the costs and injuries incurred by [Dr.] Tronzo, such as the costs of prosecuting the patent and lost business opportunities." Id. If no such evidence existed on the record, we left it to the district court to decide, at its discretion, whether it would be appropriate to take new evidence.
On remand, the district court reviewed the evidence on the record concerning damages and concluded that, aside from $520 in patent prosecution costs, there was a "complete absence of competent substantial evidence to support the vacated portion of the award." The district court considered Dr. Tronzo's arguments that his lost business opportunities could be measured by looking to the value of Biomet's Mallory/Head system, which allegedly incorporated Dr. Tronzo's misappropriated ideas. The district court, however, rejected this argument, reasoning that such a measure of damages was foreclosed by our decision on appeal. Then, exercising its discretion, the district court declined to re-open the record to take new evidence concerning compensatory damages. In making this decision, the court reasoned that both parties had been represented by competent counsel and had made strategic decisions in this protracted litigation. Accordingly, the court set the compensatory damages at $520, the maximum amount supported by the evidence in the record.
In response to the district court's reduction of the compensatory damages award, Dr. Tronzo asserted that this order constituted a remittitur, advised the court that he rejected this remittitur, and moved for a new trial on the issue of compensatory damages. The court rejected Dr. Tronzo's motion.
Biomet then moved for a reduction in the amount of punitive damages, arguing that, given the reduction in the compensatory damages award, the disparity between the amounts of compensatory and punitive damages now rendered the punitive damages amount unconstitutional. The court considered Biomet's argument, applying the Supreme Court's criteria in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), to determine whether the punitive damages award violated due process. Noting that the disparity in the awards was greater than 38,000 to 1, the court granted Biomet's motion, and reduced the punitive damages award to $52,000, the maximum amount of punitive damages it considered permissible: 100 times the compensatory damages.
On August 27, 1999, the district court entered its Third Amended Final Judgment, implementing the terms of its several orders and setting compensatory damages at $520, punitive damages at $52,000, and awarding prejudgment interest on the compensatory damages award. Tronzo v. Biomet, Inc., No. 91-8175-CIV-HURLEY (S.D. Fla. Aug. 27, 1999).
In response to the court's reduction in the punitive damages award, Dr. Tronzo again argued this constituted a remittitur, and moved for a new trial on punitive and compensatory damages. The district court denied this motion.
This appeal followed. Dr. Tronzo asserts legal error in the district court's reduction in the jury's awards of compensatory and punitive damages and, in light of these reductions, in the district court's denial of its motions for a new trial on damages.
This appeal follows the remand of an earlier appeal of a matter arising, in part, under the patent laws. Since the jurisdiction of the district court was based, in part, on 28 U.S.C. § 1338 (1994), we have jurisdiction over this appeal under 28 U.S.C. § 1295 (a)(1) (1994).
We review issues not unique to patent law according to the law of the regional circuit where appeals from the district court would normally lie. Novamedix v. NDM Acquisition Corp., 166 F.3d 1177, 1180, 49 USPQ2d 1613, 1615 (Fed. Cir. 1999);Rodime PLC v. Seagate Tech., Inc., 174 F.3d 1294, 1301, 50 USPQ2d 1429, 1434 (Fed. Cir. 1999) (). Accordingly, under controlling Eleventh Circuit law, we review the district court's conclusions of law de novo. Elston v. Talladega County Bd. of Educ., 997 F.2d 1394, 1405 (11th Cir. 1993).
We also review de novo the interpretation of our own mandate in Tronzo I. SeeEngel Indus. v. Lockformer Co., 166 F.3d 1379, 1382, 49 USPQ2d 1618, 1621 (Fed. Cir. 1999).
Dr. Tronzo claims legal error in the district court's reduction of the jury's award of compensatory damages from $7,134,000 to $520. Dr. Tronzo first argues that, under Florida law, a court may broadly consider any evidence of record that logically establishes the correct value of property taken by fraud. Dr. Tronzo contends that the district court should have considered as a proper measure of the value of the "property" taken from him either (1) payments by Biomet to Drs. Mallory...
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