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Zimmer Told to Pay Stryker $228 Million in Patent Case

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Aug. 8 (Bloomberg) -- Zimmer Holdings Inc., which lost a February trial against Stryker Corp. over a surgical device, was told to pay more than $228 million -- three times the jury award plus other costs -- and stop selling its products.

The increase in the jury award was appropriate because Zimmer intentionally infringed Stryker patents to build its business for pulsed lavage, a technique that removes damaged tissue and cleans bones during joint-replacement surgery, U.S. District Judge Robert Jonker said in an order issued yesterday. He also ordered Zimmer to stop selling its Pulsavac Plus device.

A federal jury in Grand Rapids, Michigan, in February sided with Stryker and awarded $70 million in damages. The dispute is over devices that use pulsing liquid, such as water or saline solution, to loosen debris from a surgical site and remove it by suction.

“A $70 million verdict sounds large in the abstract, but in context, it may not be enough, without enhancement, to deter infringing conduct,” Jonker wrote in his opinion. Tripling the award is appropriate “given the one-sidedness of the case and the flagrancy and scope of Zimmer’s infringement.”

The $228 million figure is more than the second-quarter profit for either company. Kalamazoo, Michigan-based Stryker reported $213 million in net income on sales of $2.2 billion. Zimmer, based in Warsaw, Indiana, reported $152 million net income on $1.17 billion in sales.

‘High-Risk Strategy’

The judge awarded $210 million after tripling the $70 million jury award, then added another $7 million for infringing sales that weren’t covered by the verdict, $11.2 million for interest, as well as attorney’s fees, said Stryker lawyer Greg Vogler of McAndrews Held & Malloy in Chicago.

The judge’s 58-page opinion outlines Stryker’s innovation in coming up with a portable lavage device to replace bulky machines that were wheeled around a hospital. Zimmer was losing market share, so hired someone to “make one for us,” which resulted in a product that looked and functioned like Stryker’s.

Zimmer recouped some market share until it was forced to pull its product from the market in 2007 because of technical problems and complaints, the judge said. It reentered the market in December 2008, he said.

“Zimmer chose a high-risk/high-reward strategy of competing immediately and aggressively in the pulsed lavage market and opted to worry about the potential legal consequences later,” the judge said.

While judges can increase damages by as much as three times based on a finding of intentional infringement, a tripling of the award rarely happens.

“This is clearly one of those cases where it’s appropriate,” Vogler said in an interview. “Stryker came up with a pioneering invention that made all prior products for this procedure obsolete. Zimmer thought they couldn’t live without it and copied it.”

Officials with Zimmer didn’t immediately return messages seeking comment.

The case is Stryker Corp. v. Zimmer Inc., 10cv1223, U.S. District Court for the Western District of Michigan (Grand Rapids).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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