Federal Jury Awards Smith & Nephew $14.7M for Infringement in Patent Suit against Rival Arthrex

Holding:

A jury sitting in a district court in Oregon awarded a total of $14.7 million to Smith & Nephew, Inc. after finding that its rival medical device maker Arthrex, Inc. had infringed its ‘557 patent on a line of suture anchors. Specifically, the jury found that Arthrex indirectly infringed the patent by selling and marketing its own products named PEEK Suture Talk, PEEK PushLock anchors, and Bio PushLock anchors, and that such infringement was willful. The total award consisted of $4.79 million as lost profit damages, and $9.91 million as reasonable royalty damages.

Detailed Summary:

The complaint alleged that plaintiff John O. Hayhurst is the owner, and Smith & Nephew is his exclusive licensee of the ‘557 patent entitled “Anchoring and Manipulating Tissue.”  According to plaintiffs, defendant has infringed the ‘557 patent directly and/or contributorily and/or by inducing others to infringe it, and that such infringement was willful and wanton.  Plaintiffs further asserted that they “have been irreparably harmed to an extent not yet determined by defendant Arthrex’s infringement, and will continue to be irreparably harmed in the future unless defendant’s enjoined from its infringing activities by this Court.” Amended Complaint, paragraph 8, May 17, 2008.

On the other hand, defendant denied it had infringed the patent, and asserted affirmative defenses of invalidity, unenforceability, and obviousness. First Amended Answer and Counterclaim, paragraphs 10, 11, and 12, June 30, 2008.  Specifically, defendant claimed that the “ ‘557 patent is void and unenforceable because the applicant, Hayhurst, and the licensee, Smith & Nephew, of such patent and/or their authorized representatives willfully, knowingly and with intent to deceive the U.S. Patent Office, withheld from the U.S. Patent Office information concerning prior art, in particular, at least, U.S. Patent No. 2,065,659 to Cullen (“the Cullen patent”) disclosing a tack which is pressed into bone and has a groove for attaching a strand for engaging and securing tissue comprising the bony structure of a jaw. Hayhurst, Smith & Nephew and/or their authorized representatives knew of the Cullen patent and knew that it was pertinent and material to the examination and evaluation conducted by the U.S. Patent and Trademark Office which resulted in the issuance of the ‘557 patent, because the Cullen patent had been previously cited during the prosecution of a related patent application, which issued as U.S. Patent No. 5,417,691 to Hayhurst. The ‘557 patent is therefore unenforceable on grounds of inequitable conduct.” Id.

In the verdict form dated June 11, 2008, and filed on the same date, the jury indicated that the plaintiffs were able to prove by clear and convincing evidence that Arthrex’s indirect infringement was willful.  The jury arrived at the value of $9.91 million as royalty damages by using a 16% rate.

Also See:

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Strong Growth in Demand for Intellectual Property Rights in 2012 – WIPO

USPTO Updates Professional Conduct Rules and Registration Examination for Patent Attorneys

Expanded SHIELD Act Filed to Combat Patent Trolls

USPTO Publishes Final Rules and Guidelines Governing First-Inventor-to-File