Smith & Nephew Incorporated v. Arthrex, Incorporated
603 F. App'x 981
Fed. Cir.2015Background
- S&N sued Arthrex for infringement of U.S. Patent No. 5,601,557 (suture-anchor method). Litigation produced three trials and two prior Federal Circuit appeals.
- The patent claims a push-in (resilient) anchor that "lodges" in bone; claim-construction disputes (especially "lodging" and "resile") produced retrials and appellate rulings.
- After the third trial a jury awarded S&N lost profits and reasonable royalties; the district court later granted JMOL of non‑infringement, and the Federal Circuit in 2013 reinstated the jury verdict (remanding for further proceedings).
- On remand Arthrex sought to relitigate patent validity, challenged the lost‑profits award, and opposed S&N’s request for supplemental damages for post‑verdict infringing sales. The district court denied Arthrex’s motions and awarded supplemental damages; Arthrex appealed.
- The Federal Circuit affirmed: it rejected Arthrex’s request to reopen validity based on an alleged broadened construction; upheld the lost‑profits award as supported by substantial evidence; and affirmed the supplemental damages award.
Issues
| Issue | S&N's Argument | Arthrex's Argument | Held |
|---|---|---|---|
| Whether validity may be relitigated after appellate claim‑construction changed (alleged broadening) | Prior summary-judgment validity ruling should remain final; any change is not materially related to invalidity | The 2013 construction broadened "lodging," making prior validity ruling potentially unsound and permitting new invalidity arguments | Arthrex failed to show the construction materially changed the validity analysis; relitigation denied |
| Whether lost‑profits award (market‑share approach) had substantial-evidence support | Jury’s market-share analysis (limited to push‑in/preloaded/pre‑mounted anchors) reflected surgeon preferences and permissible Panduit proof | S&N’s acceptable‑substitute market was unduly narrow; witnesses and experts did not reliably exclude screw‑in or toggle anchors | Substantial evidence supported the jury’s finding that surgeons buying the accused product viewed push‑in anchors as the acceptable substitutes; lost‑profits award affirmed |
| Whether the Federal Circuit mandate precluded district court from reconsidering lost‑profits | Mandate did not resolve damages; district court must address unresolved JMOL/damages issues on remand | Argued mandate barred reconsideration or that failure to cross‑appeal forfeited review | Court applied Laitram: mandate did not preclude district court from deciding damages; Arthrex need not have cross‑appealed |
| Supplemental damages and knowledge for induced infringement (post-JMOL period) | Supplemental damages appropriate using same market analysis; knowledge is factual — district court did not clearly err | JMOL/non‑infringement rulings negated knowledge as matter of law; market changed (all‑suture/biocomposite) so damages formula outdated | District court did not abuse discretion: knowledge is a factual issue (no JMOL as matter of law), and Arthrex’s market‑change evidence was insufficient to require a different supplemental damages calculation |
Key Cases Cited
- Cardiac Pacemakers, Inc. v. St. Jude Med., 576 F.3d 1348 (Fed. Cir.) (changed claim construction may permit directly related new invalidity arguments)
- Laitram Corp. v. NEC Corp., 115 F.3d 947 (Fed. Cir.) (mandate scope — reinstating verdict does not bar district court from deciding unresolved post‑verdict JMOL issues)
- Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152 (6th Cir.) (four‑factor framework for recovering lost profits, including absence of acceptable noninfringing substitutes)
- Global‑Tech Appliances v. SEB S.A., 563 U.S. 754 (2011) (induced infringement under §271(b) requires knowledge that the induced acts constitute infringement)
- Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir.) (substantial‑evidence standard for damages factfinding)