Digest of Smith & Nephew Inc. v. Arthrex, Inc.No. 2014-1691, -1694 (Fed. Cir. Mar. 18, 2015) (nonprecedential). On appeal from D. Or. Before Lourie, Dyk, and Taranto.

Procedural Posture: Following two previous appeals (“S&N I and S&N II”), on remand, the district court denied Arthrex’s request to relitigate the validity of the subject patent, denied Arthrex’s substantial-evidence-based challenge to the jury’s finding of lost-profits damages, and awarded Smith & Nephew Inc. (“S&N”) supplemental damages for post-verdict infringement. Arthrex appealed. CAFC affirmed.

  • Invalidity: CAFC rejected Arthrex’s argument for reopening the issue of invalidity because Arthrex did not meet its burden of showing that any assumed broadening of the scope of a claim term in S&N II was material, or therefore directly related, to the validity determination. Arthrex failed to explain how the assumed broadening of claim construction made relevant any of the six references it newly cited in the district court.
  • Lost Profits: CAFC rejected Arthrex’s argument that the district court’s lost-profits award lacked substantial evidence support. CAFC held that the jury’s conclusions that surgeons chose anchors based on their insertion methods was supported by substantial evidence, and given the dearth of evidence offered by Arthrex, a jury could find that Arthrex would not have offered an acceptable non-infringing substitute in the “but-for” world.
  • Indirect Infringement: Arthrex argued that it could not have had the knowledge required for indirect infringement during the period after the district court granted JMOL to Arthrex and before CAFC reversed in S&N II because a good-faith belief in non-infringement negated the required knowledge and was established as a matter of law by the district court’s ruling (or pronouncement). CAFC rejected this argument, stating that such a good-faith belief presented a factual question.
  • Supplemental Damages: CAFC held that the district court did not abuse its discretion when it calculated supplemental damages relying on the same analysis used to calculate lost profits because Arthrex did not present evidence that required the district court to launch additional litigation on whether the supplemental damages calculation had to depart from the lost-profits calculation.

Dyk, concurring-in part and dissenting-in part:

  • Lost Profits: Dyk joined the majority opinion with the exception of the majority’s decision sustaining the lost profits award because S&N did not meet the burden of showing that buyers specifically wanted a product having the advantages of the patent. The evidence did not establish that a surgeon would not substitute other types of anchors had the infringing push-in anchor not been on the market.