Stryker Corporation sued Zimmer, Inc. for patent infringement. There was no question whether Zimmer infringed Stryker’s patent – it did. Zimmer believed Stryker’s patent was invalid and believed that it would prevail in the infringement lawsuit. Zimmer had good reason to believe that the Stryker patent was invalid. As a result, Zimmer continued to infringe the patent both before and during the lawsuit.
Zimmer clearly intended to infringe the patent.
As it turns out, Zimmer’s belief was not correct – Stryker’s patent was valid and was upheld in court. The question then became how much money would Zimmer pay to Stryker for the infringement. Stryker’s actual damages from the infringement were more than $70 million.
The patent statute provides that the U.S. District Court judge has the discretion to award enhanced damages of up to three times actual damages for patent infringement. On appeal, the U.S. Supreme Court concluded that Zimmer’s belief that the patent was invalid, even though reasonable, did not excuse its willful infringement. Zimmer could, therefore, be liable for enhanced damages.
The Supreme Court sent the case back down through the courts for a new decision. The U.S. District Court concluded that Zimmer should pay three times the actual damages, or $250 million, because of the willful infringement. The judge explained in his ruling why enhanced damages were warranted, but did not explain why he chose 3x damages, rather than 2x, or 1.5x. On a second appeal, Zimmer argued to the Federal Circuit Court of Appeals that the degree of enhancement should be proportional to the intentional behavior. The Federal Circuit affirmed the lower court without giving a reason and so rejected the argument.
The bottom line is that patent infringement is a risky business. A potential infringer may believe that he or she can beat a patent in court or before the USPTO, but the potential infringer is well advised to beat the patent before infringing.
— Robert Yarbrough, Esq.