[00:00:00] Speaker 03:
5-4-1, striker versus zimmer.

[00:00:44] Speaker 00:
May it please the Court.

[00:00:48] Speaker 00:
The district court's award of the maximum possible enhanced damages was flawed as a matter of law.

[00:00:55] Speaker 00:
First, the district court failed to apply Reed's instructions to give weight to factors that are mitigating and ameliorating.

[00:01:05] Speaker 00:
And second, the court flatly misapplied several of the Reed factors, including concealment,

[00:01:12] Speaker 00:
closeness of the case, motivation for harm, and duration of the misconduct.

[00:01:18] Speaker 03:
Here's the concern I have.

[00:01:21] Speaker 03:
This is the totality of the circumstances analysis.

[00:01:24] Speaker 03:
This case has been around and back and forth for a long time, as we both know.

[00:01:28] Speaker 03:
And what you're saying is you're agreeing there's going to be enhancement.

[00:01:33] Speaker 03:
And now we're talking about whether the enhancement ought to be three times, or two and a half times, or one and a quarter times.

[00:01:41] Speaker 03:
And whereas maybe, maybe not any of us sitting as a district court might shave off some amount of money from the three times, it's really hard as an appellate level for us to start scrutinizing what percentage the district court should have applied.

[00:02:00] Speaker 03:
Even if your argument is they went too far.

[00:02:04] Speaker 03:
How far is too far?

[00:02:05] Speaker 03:
And how much does that equate to?

[00:02:07] Speaker 03:
What are we supposed to do with that?

[00:02:09] Speaker 00:
So, Chief Judge Prost, our position is, at least with respect to this panel, we are not disputing the subjective willfulness finding.

[00:02:17] Speaker 00:
The question is how much enhanced damages are appropriate.

[00:02:21] Speaker 00:
We're not asking, we're not suggesting what the right number is.

[00:02:24] Speaker 00:
We're not asking this court to come up with the right number.

[00:02:26] Speaker 00:
That is the function of the district court.

[00:02:29] Speaker 00:
It is the function of this court, and I would submit,

[00:02:32] Speaker 00:
a very, very important function in light of HALO to clarify and correct the district court's confusion on the meaning of the read factors in order to provide lower courts with guidance.

[00:02:48] Speaker 00:
We have a situation, and this case illustrate well illustrates it, in which different district courts around the country looking at the same facts

[00:02:58] Speaker 00:
are applying the Reed factors in diametrically different ways.

[00:03:02] Speaker 04:
Now, the consequence in this case... Even the Supreme Court's broad language in Halo about the exercise of discretion and the totality of the circumstances, I mean, is there a mechanical application of the Reed factors that's even necessary?

[00:03:17] Speaker 00:
So, no one has suggested, including this Court's opinion in Reed, that a mechanical application is appropriate.

[00:03:25] Speaker 00:
What Reed said

[00:03:27] Speaker 00:
and underscored was that, number one, and Halo underscored it, that treble damages are reserved for the, quote, worst of the worst.

[00:03:39] Speaker 00:
Number two, that to ensure adequate appellate review by this Court, the district court is obligated to explain the basis for the award, particularly where the maximum amount is imposed.

[00:03:52] Speaker 00:
And third, and most important,

[00:03:54] Speaker 00:
The court must consider all of the circumstances, including factors that are mitigating or not mitigating.

[00:04:01] Speaker 00:
Now, in this case, the record is filled with mitigating factors.

[00:04:07] Speaker 00:
The district court treated Zimmer as if it was a company that intentionally infringed known patents, concealed its sales,

[00:04:19] Speaker 00:
ignored infringement letters, and was unable to present reasonable defenses when sued.

[00:04:25] Speaker 00:
When, in fact, Zimmer launched its product before the patents in suit even issued, it openly sold its product for 10 years with the patent holder and its principal competitor's knowledge without a whisper from Stryker or even a suggestion that it was violating any of its patents.

[00:04:46] Speaker 00:
And when it was sued, it came up with,

[00:04:49] Speaker 00:
What this court has now twice said were reasonable legal defenses to all of the claims of all three of the asserted patents.

[00:04:59] Speaker 04:
And this is- Why is anything that we have said about those defenses meaningful when those decisions were vacated?

[00:05:06] Speaker 00:
Well, this court issued a decision following remand in which the court said, okay, our previous decision

[00:05:16] Speaker 00:
vacated the enhanced damages award because of the failure of proof of objective reasonableness, and that's no longer a factor.

[00:05:25] Speaker 00:
But we will reaffirm the fact that it was not unreasonable for a jury to have concluded that there was infringement and the patents were not invalid, but this Court reiterated

[00:05:38] Speaker 00:
as to each of our defenses and at the outset of its opinion, that our positions on those dispositive issues were reasonable.

[00:05:48] Speaker 00:
And that, by definition, shows that the district court erred in the application of the closeness of the case factor.

[00:05:57] Speaker 00:
The case was close.

[00:05:59] Speaker 03:
Aren't we trying to rewrite what the Supreme Court told us in Halo?

[00:06:02] Speaker 03:
I mean, that what?

[00:06:04] Speaker 03:
We should have sent this back and the district court should have done what?

[00:06:07] Speaker 03:
I can't award or I'm only going to do one time damages because the federal circuit or I conclude there was objectively, there were objectively reasonable post hoc litigation positions taken.

[00:06:20] Speaker 00:
Your honor, what the district court should do is exactly what this court told the district court to do in the WCM case, which is it went through and analyzed the district court's application of the read factors.

[00:06:35] Speaker 00:
It explained why, with respect to certain of those factors, the district court had erred as a matter of law, and it remanded to the district court to reconsider the availability and amount of enhanced damages

[00:06:50] Speaker 00:
in light of this Court's articulation of what those read factors mean.

[00:06:54] Speaker 00:
And the, the, the, I can't underscore how important it is.

[00:07:00] Speaker 00:
We have district courts all over the country, some of which, like this Court, may never see another enhanced damages case.

[00:07:08] Speaker 00:
And they are demonstrably applying the same factors quite differently with a consequence.

[00:07:14] Speaker 00:
I mean, here we had a whole jury trial.

[00:07:16] Speaker 00:
There was a determination.

[00:07:17] Speaker 00:
We paid our $90 million.

[00:07:19] Speaker 00:
in compensatory damages.

[00:07:21] Speaker 00:
And on the basis of the district judge's application, I would say misapplication of the read factors, we pay one of what I believe is the second largest enhanced damages award.

[00:07:33] Speaker 00:
I mean, when we're talking about punitive damages, it is, yes, these are all subject to discretion.

[00:07:40] Speaker 00:
But as Halo says, particularly with reference to Judge Friendly's opinion in discretion about discretion,

[00:07:48] Speaker 00:
that it is the function and office of this court to make sure that district courts around the country, and frankly litigants that are deciding whether or not to contest a claim of infringement on assertively valid patents, understand what's facing them, at least understand what the rules of the road are.

[00:08:09] Speaker 04:
But aren't you just asking us to take the read factors and turn them into the exact kind of strict test

[00:08:17] Speaker 04:
that the Supreme Court took away from us when they took away the two part tests that we did before.

[00:08:22] Speaker 04:
The Supreme Court said, and very firmly, that this is something that is an act of discretion by the district court, because the district court's on the ground.

[00:08:30] Speaker 04:
The district court knows what happened.

[00:08:33] Speaker 04:
You talk about some of these defenses that you say weren't so bad, but the district court pointed out there were tons of defenses that were horrible and completely weak.

[00:08:41] Speaker 04:
So why isn't the district court allowed to consider all of that?

[00:08:44] Speaker 00:
Well, here is, I mean, I'll answer your question with respect to closeness of the case and then point out some of the other read factors that we think just have to be clarified by this Court.

[00:08:55] Speaker 00:
With respect to the closeness of the case, with respect, we think, and we think this Court's decisions in a number of its prior cases indicate that if you have, I mean, of course, there are, you know, a dozen or two dozen

[00:09:10] Speaker 00:
asserted claims presented in this case, as to which we had lots of defenses of claim construction and non-infringement.

[00:09:17] Speaker 00:
That's inevitable when you're talking about a dozen or two dozen different litigate patent claims across multiple patents.

[00:09:26] Speaker 00:
The dispositive question is whether or not with respect to every claim of every asserted patent, we had a defense which

[00:09:37] Speaker 00:
Although ultimately unsuccessful was close and was reasonable.

[00:09:42] Speaker 00:
And that's what determines whether the case was close or not.

[00:09:45] Speaker 00:
We could have had 10 defenses or 10 claim construction arguments.

[00:09:49] Speaker 00:
But if one of them won, we would have won.

[00:09:52] Speaker 00:
If one with respect to each of those patents had won, we would have had no liability.

[00:09:58] Speaker 03:
So you're saying that post-HALO, in order to assert or to award these damages,

[00:10:05] Speaker 03:
one has to do an objectively reasonable determination?

[00:10:09] Speaker 00:
No.

[00:10:10] Speaker 00:
First of all... Because that's exactly what the Supreme Court said.

[00:10:13] Speaker 00:
Of course.

[00:10:14] Speaker 00:
Of course.

[00:10:14] Speaker 00:
What this Court has said in multiple cases after HALO, including Western Gecko and Polara, and I believe also in HALO and Fish's Striker itself on remand, is while objective reasonableness is no longer an absolute defense,

[00:10:31] Speaker 00:
The strength of the claims, the objective reasonableness factor, is nonetheless important as one factor among many in determining whether enhanced damages are appropriate and how much.

[00:10:44] Speaker 00:
And the point here is that we have a situation in which the district judge found, applied the maximum penalty as if we were, as Halo explains, the wanton, malicious pirate who intentionally infringes another's patent.

[00:11:01] Speaker 00:
with no doubts about its validity, no notion of defense for no purpose other than stealing the plaintiff's business when the facts of this case are utterly different.

[00:11:14] Speaker 00:
Just to mention a couple of the other errors on the Reed factors, the district court found that factor number 8, motivation for harm, favored enhanced damages because we were competitors.

[00:11:30] Speaker 00:
This court in Reed and the district court in Power Integrations makes clear, and we think it's correct, that the fact that the alleged infringer and the plaintiff are competitors is insufficient to constitute motivation for harm absent misconduct.

[00:11:48] Speaker 00:
For concealment, there is no question in this case that we sold our product openly for 10 years

[00:11:57] Speaker 00:
10 years after they obtained 66 copies of our product and tested it without one whisper that they even thought we were infringing.

[00:12:07] Speaker 00:
The district court said, well, I'm going to find the concealment factor satisfied.

[00:12:12] Speaker 00:
And by the way, the litigation conduct satisfied because there was a single discovery dispute.

[00:12:22] Speaker 00:
that spanned a few months in which the district court never even knew about until post-trial briefing on enhanced damages.

[00:12:32] Speaker 00:
And I'm going to find that that discovery dispute satisfied consistently.

[00:12:38] Speaker 03:
And this is where I started, which is one of your arguments, your main underlying argument, is that enhanced damage is fine.

[00:12:46] Speaker 03:
But this last number three times ought to be reserved for the worst of the worst of the worst.

[00:12:51] Speaker 03:
And there's not a sufficient finding here that this was the worst of the worst, or not a correct finding.

[00:12:57] Speaker 03:
I don't know what to do with that, because if we send it back and the district court says, okay, federal circuit said three times as reserved for the worst of the worst of the worst, this wasn't the worst of the worst of the worst, I'll shave off $2 million or $3 million.

[00:13:11] Speaker 03:
And then it comes back here and you come up to us and you say, well, it wasn't the worst of the worst and he didn't shave off enough.

[00:13:18] Speaker 03:
And so you ought to send it back again.

[00:13:20] Speaker 03:
How do we do this at the appellate level?

[00:13:22] Speaker 03:
This is exactly, is it not, what the Supreme Court was avoiding our having our doing by giving the discretion to the district court.

[00:13:30] Speaker 00:
Chief Judge Prost, the Supreme Court understood and its reference to the two centuries of case law and this court's function in reviewing the application of discretion under the factors requires that this court clarify

[00:13:49] Speaker 00:
what those factors mean.

[00:13:51] Speaker 00:
If concealment means, as we think, concealment during the alleged period of infringement and not one minor discovery dispute that the district judge didn't even know about and never prejudiced the defendant, you should say so.

[00:14:09] Speaker 04:
But did the Supreme Court ever say go back to the read factors and take those as your new test, your new talisman?

[00:14:16] Speaker 00:
The Supreme Court said that it is an exercise, it is reserved for the worst, the one malicious pirate.

[00:14:23] Speaker 00:
And as this court has repeated, I think in three or four cases post halo, that requires a district court to adequately consider all of the facts and circumstances, including those that are mitigating or ameliorating.

[00:14:41] Speaker 04:
You have to explain yourself.

[00:14:42] Speaker 04:
You have to show your work.

[00:14:43] Speaker 00:
We said that.

[00:14:44] Speaker 04:
But we have never said.

[00:14:45] Speaker 04:
that the read factors are either required as a consideration.

[00:14:49] Speaker 04:
We've said courts can, but don't have to consider them.

[00:14:52] Speaker 04:
And then when they do, we haven't said that there's a precise formula for those read factors.

[00:14:57] Speaker 00:
We're not arguing with respect a precise formula.

[00:15:00] Speaker 00:
We're arguing a situation in which the multiple read factors were demonstrably applied incorrectly.

[00:15:10] Speaker 00:
This single discovery dispute with no prejudice and no judge involvement

[00:15:16] Speaker 00:
caused not only the award of attorney's fees, but was the sole reason cited for satisfying two of the read factors.

[00:15:26] Speaker 00:
The duration of the misconduct, this court has not resolved it, but as we point out, a number of district courts have properly concluded, in our view, that the duration of misconduct is the period of time in which the defendant had noticed that it was infringing.

[00:15:44] Speaker 00:
What the lower court said is, nope, I'm going to find that the duration of the misconduct was the entire 10 years of the infringement period, a period in which even Stryker, our competitor, having tested the products, never wrote us a letter, never called, never suggested that we were infringing these patents.

[00:16:03] Speaker 00:
The meaning of those read factors has got to be uniform.

[00:16:08] Speaker 00:
It's got to be explicated.

[00:16:10] Speaker 00:
It's then up to district judges to exercise their discretion.

[00:16:14] Speaker 00:
and consistent with Reed and Halo, write an opinion that explains how they resolved maybe not all of the factors, but in the case in which the Reed factors are argued both pro and con with respect to the availability vel non of enhanced damages and the amount, it is yes, it is incumbent on the district court

[00:16:38] Speaker 00:
to explain the application of the factors alleged to be present or alleged not to be present and explain to this court why it is so that, notwithstanding the district court's discretion, there is meaningful appellate review.

[00:16:56] Speaker 00:
May I reserve the balance of my time?

[00:16:58] Speaker 03:
You have none, but we'll restore some.

[00:17:00] Speaker 03:
Let's hear from the other side.

[00:17:01] Speaker 00:
Oh, yeah, sorry.

[00:17:10] Speaker 02:
May it please the Court.

[00:17:13] Speaker 02:
The jury in this case found subjective willfulness, and this Court has already affirmed that ruling.

[00:17:18] Speaker 02:
The District Court here did not abuse its discretion in awarding trouble damages and fees for Zimmer's willful infringement.

[00:17:26] Speaker 02:
This is the second time the District Court has considered all of these issues and come to the exact same conclusion.

[00:17:33] Speaker 03:
So after living with this case since 2010, presiding... But what if we were to observe or conclude, as Mr. Watson points out, that the district court's analysis with respect to the four of the reflectors was just plain wrong?

[00:17:48] Speaker 03:
What do we do with that?

[00:17:50] Speaker 02:
Well, here, it's important to remember that the question here is whether there's been an abuse of discretion, not whether this court would have found something else this court should not

[00:18:02] Speaker 02:
substitute its judgment for the district court here.

[00:18:04] Speaker 01:
Sure, but if the district court is using the read factors, even if it's not required to, if that's the framework, and we conclude that some of those decisions under the framework are just flat out wrong, then how are we to know whether the court would have came up with the same damages award if he had corrected those errors?

[00:18:24] Speaker 02:
I think in this particular case, the district court was quite adamant

[00:18:28] Speaker 02:
that looking at the totality of circumstances, and the district court said that Zimmer's overall conduct was a case of egregious piracy.

[00:18:38] Speaker 02:
And I think it's clear that this court, or I'm sorry, the district court found all nine read factors favored substantial enhancement, and then went so far on remand as to say that Zimmer is precisely the type of egregious infringer that the Supreme Court had in mind when it relaxed the Seagate standard.

[00:18:57] Speaker 02:
So here,

[00:18:58] Speaker 02:
Zimmer's telling you about certain factors that it views to be mitigating in this case, but leaving out the facts that tell the rest of the story.

[00:19:07] Speaker 02:
So with respect to copying, for example, there's been deliberate copying found by the district court here.

[00:19:15] Speaker 02:
And while it did take place prior to the issuance of the patents, what Zimmer doesn't say is that it was actually aware of Stryker's patents shortly after issuance.

[00:19:27] Speaker 02:
to knowledge shortly after issuance and well before the damages period started in this case in December of 2004.

[00:19:34] Speaker 02:
So the knowledge of the patents was in 2000 and 2001.

[00:19:40] Speaker 02:
And worse, Zimmer actually tried to get a patent application or tried to get a patent on its copycat Pulsivac Plus product.

[00:19:48] Speaker 02:
Filed its application with the Patent Office.

[00:19:52] Speaker 02:
And it was rejected by the Patent Office as unpatentable over Stryker's Interpulse patent, which was.

[00:19:59] Speaker 04:
But what are we to make of the fact that when you say it was, they knew about the patent, they continued their act of producing these materials.

[00:20:11] Speaker 04:
But you're the only two in the market, right?

[00:20:14] Speaker 02:
Yes, we're the two major competitors.

[00:20:16] Speaker 04:
You said they were producing, and yet there was no letter, no demand, no nothing.

[00:20:22] Speaker 02:
Well, here, I think the focus in enhancement determination is really on Zimmer's conduct, the egregiousness of Zimmer's conduct.

[00:20:29] Speaker 02:
And with respect to the timing aspect.

[00:20:31] Speaker 04:
Well, some circumstances could take into consideration and should take into consideration the conduct on the other side, shouldn't it?

[00:20:38] Speaker 02:
Of course.

[00:20:39] Speaker 02:
And the district court did, in fact, take that into consideration.

[00:20:42] Speaker 02:
And more importantly, at Zimmer's insistence, the jury considered the timing issue as part of the willfulness determination and found against Zimmer.

[00:20:52] Speaker 02:
Now the district court specifically, when looking at the totality of circumstances for purposes of enhancing damages here, took into account the alleged delay by Stryker.

[00:21:04] Speaker 02:
And so at appendix 10, note 6, the district court said, any delay by Stryker, and this court previously determined that the delay in this case is insufficient to support Alachi's defense, was not the cause of Zimmer's infringement.

[00:21:19] Speaker 02:
Zimmer is responsible for its own actions.

[00:21:22] Speaker 02:
This language that mirrors the district court in Arctic Cat.

[00:21:26] Speaker 02:
And this court affirmed the word of trouble damages in that case very recently.

[00:21:34] Speaker 02:
With respect to objective reasonableness, the district court specifically considered whether or not it needed to do so.

[00:21:40] Speaker 02:
It specifically considered this court's statements with respect to Zimmer's four defenses that it brought up on appeal last time around.

[00:21:49] Speaker 02:
and still found that Zimmer's conduct when looking at the totality of circumstances was still a case of egregious piracy, warranting fully enhanced trouble damages and fees.

[00:22:02] Speaker 02:
This isn't a de novo review of the facts here.

[00:22:05] Speaker 02:
The district court and the jury have already found the relevant facts, and they were supported by clear and convincing evidence under the Seagate standard, and there's certainly enough to support

[00:22:18] Speaker 02:
the preponderance of the evidence standard under HALO.

[00:22:21] Speaker 02:
So back in 2013, in its original order on post-trial motions, the district court actually set forth a narrative of the facts as he saw them and as was presented to the jury.

[00:22:35] Speaker 02:
And so that's at appendix 8642 to 44.

[00:22:37] Speaker 02:
But we start out with Zimmer found, Zimmer praised Stryker's invention as being pioneering.

[00:22:45] Speaker 02:
That was admitted at trial.

[00:22:47] Speaker 02:
Zimmer referred to Stryker as the market innovators.

[00:22:51] Speaker 02:
Zimmer tried to come up with its own design and did, in fact, put out a product that was not infringing called the Veripulse, but it failed miserably in the marketplace.

[00:23:01] Speaker 02:
And then what happened is Zimmer was afraid that it would be eliminated from the market because of its inferior products.

[00:23:08] Speaker 02:
And according to the district court, Zimmer then embarked on a course of conduct that was high risk, high reward,

[00:23:16] Speaker 02:
They wanted to compete immediately and aggressively in the Pulse Lavage market and opt to worry about the legal consequences later.

[00:23:22] Speaker 02:
According to the district court, Zimmer then handed its inexperienced contractor, HM Design, a copy of Stryker's product and said, essentially, make one for us.

[00:23:34] Speaker 02:
Zimmer made prototypes using Stryker parts.

[00:23:37] Speaker 02:
Zimmer's own witnesses admitted to copying a trial, and the district court found

[00:23:42] Speaker 02:
that Zimmer's resulting pulse of F plus was largely indistinguishable from Stryker's products.

[00:23:48] Speaker 02:
That's why the jury and the district court found that deliberate copying does, I shouldn't say the jury found this, but the district court certainly found that that supports a substantial enhancement here.

[00:24:00] Speaker 04:
Do you agree that district courts are sort of all over the board in how they apply the factors and that there needs to be some guidance regardless of how we come out?

[00:24:08] Speaker 02:
Well, I think if we've learned anything from HALO is that there is no rigid formula here, and these are all very fact-specific circumstances.

[00:24:17] Speaker 02:
The district was, I don't necessarily agree that they're all over the board here.

[00:24:20] Speaker 02:
It's just every case is going to have its own special circumstances.

[00:24:24] Speaker 02:
And I, I do want to at least point out with respect to some of the read factors that Zimmer's Council addressed.

[00:24:32] Speaker 02:
For example, the concealment factor, factor number nine.

[00:24:36] Speaker 02:
I think Zimmer is looking for a very narrow read of that particular factor, but it's not intended to be so narrow.

[00:24:44] Speaker 02:
In fact, the read factor itself says whether a defendant attempted to conceal its misconduct, not whether the defendant attempted to conceal its sales.

[00:24:55] Speaker 02:
Further to that, this court, in writing a read in the first place, cited to a case called Russell Box v. Grant Paperbox.

[00:25:04] Speaker 02:
And in that case, the enhanced damages were supported in part by findings that the defendant had failed to preserve its records and failed to cooperate as it should at trial in the issue of damages.

[00:25:15] Speaker 02:
So in other words, it has nothing to do with concealing your sales or concealing your infringement.

[00:25:22] Speaker 02:
It's something else.

[00:25:22] Speaker 02:
It's read broader.

[00:25:24] Speaker 02:
Same thing in Arctic Catch.

[00:25:25] Speaker 04:
What about the double counting argument?

[00:25:29] Speaker 04:
I mean, basically, he said, this is exceptional.

[00:25:31] Speaker 04:
You get tribal damages.

[00:25:33] Speaker 04:
This is exceptional.

[00:25:33] Speaker 04:
You get attorney's fees.

[00:25:34] Speaker 04:
Why isn't that double counting?

[00:25:36] Speaker 02:
Well, it's not double counting because by arguing double counting, that's assuming that there's some specific value as to each particular circumstances.

[00:25:45] Speaker 02:
But for both 284 and 285, the court has been directed by the Supreme Court to look at the totality of circumstances.

[00:25:53] Speaker 02:
There's not anything that's been deleted from there.

[00:25:56] Speaker 02:
The Supreme Court isn't saying, well, if you look at one factor, then you can't consider it for something else.

[00:26:02] Speaker 02:
It's not a mathematical formula.

[00:26:05] Speaker 02:
And with respect to the trebling of the damages, the question is whether the district court abused its discretion in awarding treble damages, not whether some other amount could have been awarded.

[00:26:19] Speaker 02:
Here, contrary to Zimmer's argument,

[00:26:21] Speaker 02:
There's no long-standing mandate that says treble damages are only for the very worst possible offenders that you can imagine.

[00:26:29] Speaker 02:
There's nothing in Section 284 or in Halo that suggests that it's only for the worst of the worst.

[00:26:35] Speaker 02:
And in fact, this Court has recognized that and has affirmed several cases where treble damages have been awarded on less than all read factors.

[00:26:47] Speaker 02:
Most recently in Arctic Cat, that was seven of nine read factors.

[00:26:51] Speaker 02:
InnoVention toys, eight of nine read factors.

[00:26:54] Speaker 02:
Prior to HALO, I think on page 21 of Stryker's brief, we've listed several cases like Amstead, for example, I think was four read factors.

[00:27:05] Speaker 02:
So I think that shows that there's not some kind of formula that should be applied.

[00:27:10] Speaker 02:
This is a discretionary determination for the district court to make.

[00:27:16] Speaker 02:
Now, with respect to objective reasonableness,

[00:27:20] Speaker 02:
I think there's been an assumption that if you have an objectively reasonable defense, necessarily that means the case is close.

[00:27:29] Speaker 02:
And I don't think that's true.

[00:27:30] Speaker 02:
And I think that's what the district court was saying here when really considering what this court said in the first place about objective reasonableness, but then looking at that in the context of the entirety of the case.

[00:27:45] Speaker 02:
So looking at all, as Judge O'Malley raised earlier,

[00:27:50] Speaker 02:
looking at some of the terrible defenses that Zimmer raised that it abandoned on appeal.

[00:27:57] Speaker 02:
And then considering, this is a case with three patents, 21 asserted claims.

[00:28:04] Speaker 02:
Zimmer lost on claim construction on every single one of the claim construction disputes.

[00:28:11] Speaker 02:
Zimmer lost on summary judgment of 20 of 21 claims, literal infringement.

[00:28:18] Speaker 02:
So that's something that's fairly rare

[00:28:20] Speaker 02:
in a patent case.

[00:28:22] Speaker 02:
Zimmer lost on all the remaining issues at trial.

[00:28:25] Speaker 02:
Zimmer lost on all 15 post-trial motions.

[00:28:30] Speaker 02:
So this is not a case of there's an improper scorecard, but certainly the district court was allowed to consider that Zimmer didn't prevail on a single issue in the case.

[00:28:41] Speaker 02:
The case was not close.

[00:28:49] Speaker 02:
With

[00:28:49] Speaker 02:
With respect to motivation for harm, Mr. Waxman, again, was looking at this factor in a very narrow way.

[00:28:58] Speaker 02:
The district court wasn't just saying, hey, these guys are competitors, therefore there should be trouble damages.

[00:29:06] Speaker 02:
Obviously, these factors should not be viewed in a vacuum, but rather as part of the totality of the circumstances.

[00:29:14] Speaker 02:
Here, Zimmer wasn't just a competitor.

[00:29:17] Speaker 02:
We know that right from the start, as I said, Zimmer noticed that Stryker had a pioneering invention.

[00:29:24] Speaker 02:
It was a market innovator.

[00:29:27] Speaker 02:
It tried to come out with its own product.

[00:29:29] Speaker 02:
It failed and it decided to copy.

[00:29:32] Speaker 02:
Copying is not legitimate competition.

[00:29:34] Speaker 02:
That was not appropriate behavior by Zimmer, and that factor does support a substantial enhancement.

[00:29:42] Speaker 02:
So here, the district court carefully followed

[00:29:46] Speaker 02:
the Supreme Court's directive.

[00:29:47] Speaker 03:
Would you recognize, do you not, this goes to kind of the policy question that Mr. Waxman threw out there, that under the abuse of discretion standard, there could have been a district court judge somewhere else or even in the same district that would have looked at this and just doubled the award, right?

[00:30:04] Speaker 03:
I think that's certainly possible.

[00:30:07] Speaker 03:
Yeah, and if you came in and tried to challenge that, it's not likely that we would reverse and say, no, you need three times.

[00:30:14] Speaker 03:
So we're left with the situation under an abuse of discretion standard where it's not a perfect world that every potential infringer or someone can go to the courthouse and, you know, those might be good goals so that everybody can know what the likely outcome is at the end of the day.

[00:30:31] Speaker 03:
There's a lot of money at stake.

[00:30:33] Speaker 03:
But you agree, right?

[00:30:36] Speaker 03:
I mean, your view is that that's just not the way the system's set up, that we're invariably going to have district different amounts

[00:30:43] Speaker 03:
a variation in terms of the amounts applied, even in very similar circumstances.

[00:30:50] Speaker 02:
I think so.

[00:30:51] Speaker 02:
And I think that it's probably quite rare that you'd ever have circumstances that are precisely the same from case to case.

[00:30:58] Speaker 02:
And that's the whole point of the Supreme Court saying that the district court is really in the best position to make that determination, because it's been living with the case for a long period of time.

[00:31:08] Speaker 02:
And so there could be a situation where someone is just as egregious as Zimmer

[00:31:13] Speaker 02:
But maybe they're very small.

[00:31:14] Speaker 02:
And there's a determination that, well, we don't want them to go bankrupt.

[00:31:19] Speaker 02:
So we're not going to, even though they are the worst of the worst, we're not going to trouble damages because of that.

[00:31:24] Speaker 02:
So there's certainly factors that the district court, in its discretion, is allowed to make that determination.

[00:31:31] Speaker 03:
And is that the case where the Supreme Court said that they should look at their own experience or comparable experience in other cases?

[00:31:37] Speaker 02:
Absolutely.

[00:31:38] Speaker 02:
The Supreme Court did say that in the concurrence.

[00:31:42] Speaker 03:
Right.

[00:31:43] Speaker 03:
Court is going to have different experiences against which to compare, right?

[00:31:46] Speaker 02:
Yes.

[00:31:47] Speaker 02:
I think so.

[00:31:49] Speaker 02:
So if this court does not have any further questions.

[00:31:53] Speaker 02:
Thank you.

[00:31:53] Speaker 02:
Thank you.

[00:32:01] Speaker 00:
I just have a few quick points.

[00:32:03] Speaker 00:
Counsel is underscoring the fact that, well, this wasn't a close case because we lost on all issues.

[00:32:09] Speaker 00:
That's the price of admission.

[00:32:11] Speaker 00:
to the enhanced damages question.

[00:32:13] Speaker 00:
If you don't lose on your issues, we're not going to have a question of enhancing damages.

[00:32:18] Speaker 00:
On the notion that this wasn't a close case because we lost all of our claim construction issues,

[00:32:25] Speaker 00:
This court has already written two opinions on this.

[00:32:28] Speaker 04:
I'm not trying to understand that point.

[00:32:29] Speaker 04:
Because you could win a lot of claim construction points.

[00:32:32] Speaker 04:
You could even win a summary judgment and end up losing a trial in faith of willfulness findings.

[00:32:39] Speaker 04:
So you could still face enhanced damages.

[00:32:41] Speaker 00:
My point is, yes, you have to lose on the issues first in order to.

[00:32:48] Speaker 03:
But not on all.

[00:32:49] Speaker 00:
But not on every single issue.

[00:32:51] Speaker 00:
But just to take the issues, for example,

[00:32:53] Speaker 00:
You know, the fact that we lost on our 10 claim construction issues.

[00:32:57] Speaker 00:
One of them, this court is familiar with, was the motor, which is in the knob of the barrel of this, in fact, in the handle between the top of the handle and the bottom.

[00:33:09] Speaker 00:
The other, which was a focus of the oral argument the first time this case was here, is whether, in fact, we have a device that has a distal end capable of receiving

[00:33:23] Speaker 00:
the suction and water tubes, when we argued that, and this court's opinion actually said, we have the opposite front end, where we have two male nozzles, not a female receptacle, as in striker's device.

[00:33:37] Speaker 00:
The second point I want to make is, yes, we acknowledged that we knew of, at least a paralegal in the company, knew of the 329 and the 807 patents.

[00:33:48] Speaker 00:
Knowledge of a patent is not the same as knowing infringement, and there was no finding

[00:33:53] Speaker 00:
by the court or by the jury that we ever knew or thought that we were infringing these patents.

[00:34:02] Speaker 00:
Thinking about duration of the misconduct, right after we were sued, we propounded our defenses.

[00:34:09] Speaker 00:
This court has recognized twice that as to every single asserted claim in all three patents, we had reasonable defenses.

[00:34:18] Speaker 00:
At a minimum,

[00:34:20] Speaker 00:
It was wrong for the court to enhance our damages over that two-year period between the time that we asserted in good faith defenses that this court has twice said were reasonable and the time that we ultimately lost this case.

[00:34:38] Speaker 04:
But didn't the Supreme Court have handled saying that if we're looking at willfulness, we should be looking at the period before the case is filed?

[00:34:46] Speaker 00:
The point here is what this, what the Supreme Court said in Willfulness in Halo is that you do have to take account of the defendant's culpability against the knowledge that the defendant had at the time of the challenge conduct.

[00:35:05] Speaker 00:
Now, there's an issue

[00:35:07] Speaker 00:
between the time we started selling this device and they tested it and we were sued.

[00:35:12] Speaker 00:
That's that 10-year period when there's no finding that we knew we were infringing or thought we were infringing.

[00:35:18] Speaker 00:
And then a few months after the complaint was filed in this case, which is the very first time we were on notice of any allegation or suggestion of infringement, we propounded defenses which this Court has twice said

[00:35:33] Speaker 00:
although unsuccessful, were reasonable.

[00:35:36] Speaker 00:
And at a minimum, the imposition of enhanced damages during that period is an abuse of discretion and an error of law.

[00:35:45] Speaker 00:
Now I see my time really has expired.

[00:35:47] Speaker 00:
So thank you.

[00:35:48] Speaker 03:
Thank you.

[00:35:48] Speaker 03:
We thank both sides in the case system.