A federal appeals court handed Medtronic Inc. (NYSE:MDT) a win in a patent infringement lawsuit filed by Synthes Inc. subsidiary Spine Solutions Inc. over spinal implant technology.
The U.S. Court of Appeals for the Federal Circuit overturned portions of a lower court’s ruling in favor of SSI, pulling back at least $5.7 million in extra damages awarded for willful infringement and voiding a permanent injunction barring foreign sales of the allegedly infringing devices, Medtronic’s Maverick line of spinal implants.
The decision, which also held that Medtronic doesn’t have to cover SSI’s legal fees in the case, upheld the other portions of the lower court’s ruling, sending the case back to the lower court for a re-determination of just how much Medtronic owes SSI.
The suit, originally filed in the U.S. District Court for Western Tennessee, accused the Fridley, Minn.-based medical device behemoth of violating SSI’s patent for a two-piece vertebral implant designed to allow "pivotability" between vertebrae, according to court documents. The infringing devices, the Maverick, A-Maverick, and O-Maverick were alleged to violate seven claims in the patent. A district court jury found for SSI, awarding the $5.7 million in damages plus 18 percent interest on a further $9.1 million from infringing sales. The lower court then doubled the damages award, finding the infringement to have been willful and barred Medtronic from selling the devices overseas.
The appeals court found that one of the Medtronic implants, the O-Maverick, does not infringe two of the patent’s claims, reversed the district court’s judgment of infringement and remanded the case back to Tennessee for a judgment of noninfringement "with respect to O-Maverick," according to court documents.
"[O]ur holding of noninfringement with respect to O-Maverick does not disturb the parties’ stipulation that Maverick and A-Maverick infringe the asserted claims," the appeals court ruled.
Medtronic argued that SSI was not due any lost profits because it did not actually make any products covered by the patent. SSI retorted that Synthes, by an implicit agreement but not in writing, has the exclusive right to patent as SSI’s corporate parent.
The appeals court agreed with Medtronic, finding no evidence of an exclusive agreement between SSI and Synthes. The court vacated an extra damages award for willfulness and ordering the lower court to determine "the proper reasonable royalty to which SSI might be entitled on the infringing sales of Maverick and A-Maverick."
"The evidence of record shows that SSI owns and enforces the … patent and that Synthes Spine is the only entity that makes and sells products practicing the patent. Based solely on this ‘organization,’ SSI asks us to infer that it made an implied promise to exclude all entities other than Synthes Spine from practicing the … patent," according to court documents. "SSI is not entitled to recover for any lost profits suffered by Synthes Spine or Synthes Inc. It is undisputed that SSI does not itself sell any products. Therefore, SSI is not entitled to any lost profits damages."