NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
SMITH & NEPHEW INCORPORATED,
JOHN O. HAYHURST, M.D.,
Plaintiffs-Appellees
v.
ARTHREX, INCORPORATED,
Defendant-Appellant
______________________
2014-1691, 2014-1694
______________________
Appeals from the United States District Court for the
District of Oregon in No. 3:04-cv-00029-MO, Judge Mi-
chael W. Mosman.
______________________
Decided: March 18, 2015
______________________
JOHN MICHAEL SKENYON, Fish & Richardson, P.C.,
Boston, MA, argued for plaintiffs-appellees. Also repre-
sented by MARK JOSEPH HEBERT, I.
CHARLES W. SABER, Dickstein Shapiro LLP, Washing-
ton, DC, argued for defendant-appellant. Also represent-
ed by SALVATORE P. TAMBURO, MEGAN S. WOODWORTH, S.
GREGORY HERRMAN.
______________________
2 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
Before LOURIE, DYK, and TARANTO, Circuit Judges.
Opinion for the court filed by Circuit Judge TARANTO.
Opinion concurring in part and dissenting in part filed by
Circuit Judge DYK.
TARANTO, Circuit Judge.
Smith & Nephew, Inc. (S&N) sued Arthrex, Inc. for
infringement of U.S. Patent No. 5,601,557 in January
2004. In 2009, we affirmed a summary judgment reject-
ing the invalidity challenge but required a new infringe-
ment trial because of an error in the initial claim
construction. In 2013, reversing a JMOL that had been
entered in Arthrex’s favor, we reinstated a jury verdict
finding that Arthrex had infringed the ’557 patent. On
remand to the district court, Arthrex sought to relitigate
the ’557 patent’s validity on the ground that our 2013
decision materially broadened the construction of a claim
term. The district court denied the request. It also de-
nied Arthrex’s substantial-evidence-based challenge to
the jury’s finding of lost-profits damages, and it awarded
S&N supplemental damages for post-verdict infringe-
ment. Arthrex appeals. We affirm.
BACKGROUND
This litigation has included three trials and two pre-
vious appeals. See Smith & Nephew, Inc. v. Arthrex, Inc.,
355 F. App’x 384 (Fed. Cir. 2009) (S&N I); Smith &
Nephew, Inc. v. Arthrex, Inc., 502 F. App’x 945 (Fed Cir.
2013) (S&N II). The same patent was also at issue in an
earlier appeal in separate litigation. See Smith & Neph-
ew, Inc. v. Ethicon, Inc., 276 F.3d 1304 (Fed. Cir. 2001).
The ’557 patent claims a method used by surgeons to
anchor a suture in bone, thereby helping to attach (or
reattach) tissue to the bone. The surgeon drills a hole
through the hard, outer shell of a patient’s bone and
SMITH & NEPHEW INCORPORATED v. ARTHREX, 3
INCORPORATED
presses an anchor into the drilled hole. S&N II, 502 F.
App’x at 946. Beyond the hard outer shell of bone lies
softer, cancellous bone, and the anchor of the claimed
method has resilient legs that compress as they are
inserted through the hole in the hard bone but expand
once they reach the softer bone. Id. The expanded legs
catch against the hard outer bone, lodging the anchor in
place. Id. Claim 1 of the ’557 patent reads as follows:
1. A method for anchoring in bone a member and
attached suture, comprising the steps of:
forming a hole in the bone;
attaching a suture to a member;
lodging the member within the hole by pressing
the member with attached suture into the
hole; and
attaching tissue to the suture so that the tissue is
secured against the bone.
’557 patent, col. 11, lines 2–10. This case involves S&N’s
allegation that Arthrex indirectly infringed by selling
certain SutureTak and PushLock anchors having at-
tached sutures (“suture anchors”) that surgeons use to
perform the claimed methods.
An initial trial in 2007 resulted in a hung jury. The
district court then held a second trial in 2008, limited to
the issues that the parties had raised in the first trial.
After the jury found for S&N, Arthrex appealed. In 2009,
we reversed the district court’s construction of a claim
term “resile”—which appears in claim 2 but had been
held, in an unappealed ruling, implicit in claim 1’s “mem-
ber” language. S&N I, 355 F. App’x at 385–87 & n.1. We
held that the anchor’s “intrinsic resiliency” alone “must be
sufficient to lodge the anchor” in the bone. Id. at 386. We
vacated the jury verdict and remanded for a new trial on
infringement. Id. at 387–89. We also affirmed the sum-
mary judgment rejecting Arthrex’s validity challenge. Id.
4 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
In 2011, after remand, a new trial (the third) pro-
duced a verdict of infringement as well as an award of
damages consisting of lost profits on sales lost to Ar-
threx’s Bio-SutureTak anchors ($67,793,868) plus a
reasonable royalty for the patented invention’s use where
S&N did not lose sales ($16,987,556). The district court,
however, granted Arthrex JMOL of non-infringement
after concluding that it had given the jury an incorrect
construction of “lodging” and that no reasonable jury
could find infringement under the correct construction.
On S&N’s appeal, we reversed the district court’s JMOL
construction of “lodging.” S&N II, 502 F. App’x at 948–49.
Agreeing with S&N, we held that the construction given
to the jury was correct and that the jury could reasonably
find infringement under that construction. We reversed
the JMOL, reinstated the verdict, and “remand[ed] to the
[district] court for further proceedings not inconsistent
with [our] opinion.” Id. at 950.
On remand, Arthrex filed two motions seeking to relit-
igate the issue of validity. Arthrex rested its motions on
the contention that the construction of “lodging” we
adopted in 2013, S&N II, 502 F. App’x at 949, was mate-
rially broader than the construction under which the
invalidity challenge was originally rejected, a ruling we
affirmed in 2009, S&N I, 355 F. App’x at 387–89. The
district court rejected Arthrex’s requests, concluding that
this court’s 2013 decision did not “meaningfully broaden[ ]
claim construction.” J.A. 35556.
Arthrex also renewed its post-trial motion challenging
the lost-profits award, a motion it had originally filed
after the second jury verdict. The district court denied
the motion, stating that our mandate in S&N II prohibit-
ed it from reconsidering the lost-profits issue and that, in
any event, “substantial evidence support[ed] the verdict.”
J.A. 35553–55. In September 2013, the court entered a
judgment for the above-stated lost-profits and royalty
amounts plus $3,533,450 in prejudgment interest.
SMITH & NEPHEW INCORPORATED v. ARTHREX, 5
INCORPORATED
Finally, S&N moved for supplemental damages to
compensate for Arthrex’s infringing sales made between
the 2011 trial and March 2013. The district court granted
S&N the requested supplemental damages. The court’s
December 2013 order added to the amounts already
awarded $6,775,893 in supplemental damages plus
$174,618 in pre-judgment interest.
Arthrex appeals. We have jurisdiction under 28
U.S.C. § 1295(a)(1).
DISCUSSION
A. Invalidity
In S&N I, we affirmed the district court’s grant of
summary judgment rejecting Arthrex’s challenges to the
validity of the ’557 patent. 355 F. App’x at 387–89. Our
mandate issued on January 15, 2010. In S&N II, we
finally decided all issues of infringement, 502 F. App’x at
947–50, and our mandate issued on April 12, 2013.
S&N II involved S&N’s appeal from a judgment of non-
infringement based on a claim construction of “lodging.”
In defending that judgment, Arthrex invoked what this
court had said about “lodging” in S&N I’s invalidity
discussion; but it did not argue that judicial estoppel, see
New Hampshire v. Maine, 532 U.S. 742, 749 (2001), or the
general principle that the same construction must be used
for validity and infringement determinations, see Ama-
zon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343,
1351 (Fed. Cir. 2001), should preclude this court from
adopting the construction that S&N was urging us to
adopt in S&N II. See Arthrex’s Br. at 32–34, S&N II, 502
F. App’x 945 (Fed. Cir. 2013) (No. 2012-1265). Arthrex
also did not request a remand for reconsideration of the
earlier validity judgment if we adopted S&N’s construc-
tion. Id.
Despite the finality of resolution as to validity ordi-
narily inherent in that course of proceedings, Arthrex
6 SMITH & NEPHEW INCORPORATED v. ARTHREX,
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argues that, on remand in 2013, it was entitled to reliti-
gate the validity of the ’557 patent. Its premise is that
our construction of “lodging” in S&N II actually is incon-
sistent with, i.e., broader than, the construction used to
reject its invalidity position earlier. 1 Arthrex relies on
Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d
1348 (Fed. Cir. 2009) (en banc), which notes that, in some
circumstances, “a changed claim construction may permit
new anticipation [or other invalidity] arguments” con-
sistent with the mandate rule, insofar as the arguments
involve “directly related new issue[s]” raised by the
changed construction. Id. at 1356.
We need not decide whether Arthrex is now precluded
from making its broadening argument either because
S&N II implicitly rejected it (based on Arthrex’s invoca-
1 The construction of “lodging” we approved in
S&N II, and under which we decided infringement, was
the construction given to the jury in the third trial. That
construction is identical to the construction given to the
jury in the first two trials, and used to affirm the sum-
mary judgment regarding validity, except that the third-
trial instruction adds a paragraph stating that “lodging”
need only render the anchor secure enough to stay in the
bone initially, until a surgeon applies tension to the
suture (which causes the legs of the anchor to dig into the
bone and renders the anchor more secure, ’557 patent, col.
3, lines 4–6). Compare Smith & Nephew Inc. v. Arthrex,
Inc., No. 3:04-cv-00029-MO (D. Or. June 22, 2011) (Jury
Instruction No. 13), with Smith & Nephew Inc. v. Arthrex,
Inc., No. 3:04-cv-00029-MO (D. Or. June 10, 2008) (Jury
Instruction No. 14). Arthrex argues that, without that
added paragraph, the construction required “lodging” to
render the anchor secure enough to remain in the bone
throughout surgery, even without the surgeon’s applica-
tion of tension.
SMITH & NEPHEW INCORPORATED v. ARTHREX, 7
INCORPORATED
tion of S&N I) or because Arthrex forfeited it by not
invoking judicial estoppel or the same-construction-for-
infringement-and-validity principle in S&N II. We also
assume arguendo that our 2013 construction of “lodging”
involved some broadening of the term’s scope. But we
still reject Arthrex’s argument for reopening invalidity.
Arthrex has not met its burden of showing that any such
broadening is material, or therefore directly related, to
the validity determination.
In the district court, Arthrex argued several grounds
for reopening invalidity, but in this court, its only argu-
ment relates to prior-art grounds for invalidity. It asserts
that it presented “at least six new prior art references to
the district court” that “would not have invalidated under
the district court’s 2007 Construction . . . but may invali-
date under the revised construction.” Arthrex’s Br. at 29.
It contends that each such reference “disclose[s] a device
that stays in the hole, by resilience, when it is first insert-
ed into the hole, just as the broadened claim construction
requires. For each of those references, however, another
force must be applied (unrelated to the device’s resilience)
which keeps the device in the hole more permanently.”
Id.
In its briefs in this court, however, Arthrex has wholly
failed to explain, or persuasively show, how the assumed
broadening of claim construction newly made relevant
any of the six references it cited in the district court. In
the district court, Arthrex discussed in detail only one
new reference: a published British patent application GB
2017503. It stated that the GB 2017503 reference dis-
closes a “medical plug that is inserted into a preformed
bone hole” with “resilient rings around its circumference
that are bent upwards during insertion to maintain the
plug in the bone hole.” J.A. 34196. But that assertion
does not address why another force is required to keep the
device in the bone throughout surgery. Thus, as Arthrex
itself did not dispute, GB 2017503 would have been
8 SMITH & NEPHEW INCORPORATED v. ARTHREX,
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relevant even under Arthrex’s conception of the “narrow-
er” claim construction. J.A. 34195–96.
Nothing in Cardiac Pacemakers permits invocation of
a new ruling to upset finality on a previously settled issue
without a concrete showing of how the new ruling changes
the resolution of the settled issue. Principles of finality
embodied in law of the case and the mandate rule require
at least that much. But Arthrex did not make such a
showing in the district court. And it has done even less on
appeal. “He who seeks to have a judgment set aside
because of an erroneous ruling carries the burden of
showing that prejudice resulted.” Palmer v. Hoffman, 318
U.S. 109, 116 (1943); SmithKline Diagnostics, Inc. v.
Helena Labs. Corp., 859 F.2d 878, 892 (Fed. Cir. 1988)
(“On appeal it is [Appellant’s] burden to show not only
that the district court erred, but also to persuade this
court that had such error not occurred the result might
have been different.”). We therefore decline to disturb the
district court’s judgment that Arthrex is not entitled to
relitigate the issue of validity.
B. Lost Profits
1. The district court erred in concluding that, in the
2013 remand proceedings, it was barred by the appellate
mandate in S&N II from considering the merits of the
challenge to the lost-profits award that Arthrex had
raised after the last trial. Our mandate in S&N II did not
resolve those issues, expressly or by implication.
In Laitram Corp. v. NEC Corp., 115 F.3d 947 (Fed.
Cir. 1997), we addressed the scope of our mandate in a
situation similar to the one here. The jury rendered a
verdict against defendant NEC, which moved for JMOL
on infringement, willfulness, and claim identicality. Id.
at 949. The district court granted JMOL of non-
infringement and deemed the other two issues moot. Id.
On appeal, this court reversed and “remanded ‘with
instructions to reinstate the jury’s verdict.’ ” Id. (quoting
SMITH & NEPHEW INCORPORATED v. ARTHREX, 9
INCORPORATED
Laitram Corp. v. NEC Corp., 62 F.3d 1388, 1395 (Fed.
Cir. 1995)). We held that our mandate in that earlier
appeal did not preclude the district court, on remand,
from considering the previously unaddressed JMOL
contentions regarding willfulness and claim identicality.
Id. at 956. In the present case, Arthrex challenged the
jury verdict in several respects, including the lost-profits
award, but the district court did not reach the lost-profits
issue because it granted JMOL of non-infringement,
making it unnecessary to decide the damages dispute.
When we reinstated the verdict of infringement on appeal,
the damages dispute again mattered. Under Laitram, our
mandate in S&N II left the district court able, indeed
obliged, to address the challenge to the lost-profits award.
S&N contends that Arthrex forfeited its challenge to
the lost-profits award by not filing a cross-appeal present-
ing the issue to this court in S&N II. That contention is
incorrect under Laitram, which ruled that NEC was not
required to cross-appeal because “there were no rulings on
the merits against its motions” and because “argu-
ments . . . directed to [the motions denied as moot] were
neither themselves on appeal nor relevant to the sole
issue that was: infringement.” Id. at 954. S&N’s argu-
ment is also wrong under the general standard for cross-
appeals. Arthrex’s lost-profits challenge, if meritorious,
would give it less relief than the judgment of non-
infringement it was defending in S&N II. A cross-appeal
for such a challenge is unnecessary and, in fact, improper.
See, e.g., TypeRight Keyboard Corp. v. Microsoft Corp.,
374 F.3d 1151, 1157 (Fed. Cir. 2004).
2. On the merits, however, we reject Arthrex’s con-
tention that the lost-profits award lacks substantial-
evidence support. See Lucent Techs., Inc. v. Gateway,
Inc., 580 F.3d 1301, 1310 (Fed. Cir. 2009) (applying
substantial-evidence review of factual findings within
methodologically proper damages determination).
10 SMITH & NEPHEW INCORPORATED v. ARTHREX,
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To establish entitlement to lost profits, “the burden
rests on the patentee to show a reasonable probability
that ‘but for’ the infringing activity, the patentee would
have made the infringer’s sales,” Crystal Semiconductor
Corp. v. TriTech Microelecs. Int’l, Inc., 246 F.3d 1336,
1353 (Fed. Cir. 2001), though not necessarily all of those
sales. S&N put on evidence to show (a) what products
constituted “acceptable noninfringing substitutes” for the
Arthrex Bio-SutureTak, Panduit Corp. v. Stahlin Bros.
Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978),
and (b) S&N’s percentage of sales of that class of accepta-
ble non-infringing substitutes (considering all sellers,
including Arthrex). It is not meaningfully disputed on
appeal that, if S&N was correct as to (a), then S&N,
having ample production capacity, was entitled to apply
the (b) percentage to Arthrex’s infringing sales and to
receive an award of the profits it would have made on that
number of sales. See Ericsson, Inc. v. Harris Corp., 352
F.3d 1369, 1377 (Fed. Cir. 2003) (citing State Indus., Inc.
v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1577–80 (Fed. Cir.
1989)) (endorsing a market-share approach). S&N’s
expert presented that calculation to the jury, which
adopted it.
The only aspect of the calculation meaningfully chal-
lenged by Arthrex on appeal is the identification of “ac-
ceptable non-infringing substitutes,” Panduit, 575 F.2d at
1156, by S&N’s expert as unduly narrow. We consider the
evidentiary support for the jury determination bearing in
mind that the object of the inquiry is to identify what
products those surgeons who actually bought Bio-
SutureTak anchors would have bought if Arthrex had not
sold that product. And we also recognize that the inquiry
typically “excludes alternatives to the patented product
with disparately different prices or significantly different
characteristics.” Crystal Semiconductor, 246 F.3d at
1356.
SMITH & NEPHEW INCORPORATED v. ARTHREX, 11
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S&N’s expert, Mr. Troxel, testified that the class of
acceptable non-infringing alternatives in this case con-
sisted of anchors that were (1) bioabsorbable, (2) pre-
mounted on an inserter, (3) pre-loaded with a suture, and
(4) inserted via a push-in or tap-in procedure. Arthrex’s
challenge is that the alternatives should not have been
limited to push-in anchors, but should also have included
anchors using other insertion methods. But S&N offered
substantial evidence from which the jury could find that
the S&N definition properly reflected the anchor features
that matter for the lost-profits inquiry, namely, the fea-
tures that mattered to the group of surgeons who in fact
chose to use (and therefore controlled the buying of) the
specific Arthrex product at issue. The jury could properly
find that the preference for particular anchor characteris-
tics revealed by the actual market behavior of those
surgeons determined where those surgeons would have
taken their business if they could not have purchased
what they in fact bought.
There was evidence that, while hospitals and surgical
centers are the direct purchasers of surgical anchors, it is
surgeons who are the decision makers, the ones who
choose which anchors to use in a given surgery. J.A.
18205, 18630. And there was evidence that the “push-in”
feature was a significant factor in surgeons’ choices gen-
erally. That evidence reinforces the fact that the specific
sales at issue for the lost-profits inquiry were of anchors
with the S&N-identified features that particular surgeons
chose over anchors with other features available in the
market.
Thus, Mr. Mahoney, S&N’s Director of Medical Edu-
cation, explained the selling points and drawbacks of each
insertion method—explaining, in particular, that screw-in
anchors, which require creating a “thread pattern” in the
bone hole to match the screw threads on the anchor, can
be troublesome for surgeons performing arthroscopic
surgery, who may have trouble keeping the hole they
12 SMITH & NEPHEW INCORPORATED v. ARTHREX,
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prepared within their field of view. J.A. 18640–41; see
J.A. 18641–42 (plastic screw-in anchors more likely to
break). Mr. Mahoney added that screw-in anchors and
push-in anchors “tend to be used for different techniques,
primarily,” and he denied that they were “competitive
products.” J.A. 18649. Dr. Diduch, an orthopedic sur-
geon, made a similar point about the features that affect
which anchor a surgeon is likely to select for a given
procedure. He testified that screw-in anchors “may hold
better in softer bone” but require an extra step for inser-
tion. J.A. 18204–05. He stated that toggle anchors
“work[] well in the softer bone with a hard shell,” J.A.
18207, and that press-in anchors would likely not hold as
well in less-solid bones. J.A. 18208. Thus, he explained, a
surgery where he had reason to believe a bone would be
less solid—such as a shoulder repair involving the hu-
meral head in an older, female patient—might prompt
him to select a toggle or screw-in anchor, rather than a
press-in anchor, whereas a surgery in hard bone like the
glenoid would permit him to use other anchor designs. Id.
Finally, Arthrex’s own witness, Mr. Benavitz, observed
that some surgeons have preferences based on insertion
method and that part of Arthrex’s motivation in launch-
ing its Bio-SutureTak product was “to be able to offer . . .
different anchors for the surgeons so they have their
choice to use what they’d like to use.” J.A. 19273.
The jury’s conclusion that surgeons chose anchors
based on their insertion methods (and therefore that only
press-in anchors were acceptable, non-infringing alterna-
tives here) is supported by substantial evidence. The jury
was free to disbelieve or discount Arthrex’s limited evi-
dence pointing the other way. See J.A. 19198 (Dr. Green-
leaf); J.A. 19314 (Mr. Carlozzi). Moreover, although
Arthrex cites the statement of S&N’s Dr. Warren that, if
S&N’s push-in anchor were unavailable, he “might use
somebody else’s screw-in device,” J.A. 19309–10, Dr.
Warren also said that he prefers the S&N product partly
SMITH & NEPHEW INCORPORATED v. ARTHREX, 13
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because of its insertion method, noting difficulties with
screw-in anchors, J.A. 19308–09. And Arthrex does not
point us to evidence of such significant price-feature
tradeoffs, or such distinctive brand loyalty (to Arthrex) or
aversion (to S&N), or any other overriding preferences,
that would require the jury to find that even the surgeons
who in fact chose the features they did would have given
up those features (still available in the market) in favor of
others if the Bio-SutureTak had been unavailable. Ar-
threx thus does not identify evidence that makes the
jury’s finding unreasonable as a matter of law.
In particular, Arthrex focuses at too high a level of
generality when it asserts that “suture anchors of various
insertion methods competed against each other in the
market for shoulder surgery throughout the period of
alleged infringement.” Arthrex’s Br. at 45 (footnote
omitted). For the lost-profits inquiry, “the mere existence
of a competing device does not necessarily make that
device an acceptable substitute.” Standard Havens
Prods., Inc. v. Gencor Indus., Inc., 953 F.2d 1360, 1373
(Fed. Cir. 1991). A broad range of products might com-
pete with each other in the sense that their sellers com-
pete to convince surgeons that some advantageous
features are better than others for a variety of surgeries.
But the question for the lost-profits analysis here is
narrower. It focuses on those buyers who (the jury could
find) established their preference for certain features by
actually selecting a product based on those features for
particular surgeries; and it asks what products those
buyers would have bought if Arthrex had not been selling
the product they actually bought. For this purpose, “if
purchasers are motivated to purchase because of particu-
lar features available . . . from the patented product,
products without such features—even if otherwise com-
peting in the marketplace—would not be acceptable
noninfringing substitutes.” Id.; see also Cohesive Techs.,
14 SMITH & NEPHEW INCORPORATED v. ARTHREX,
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Inc. v. Waters Corp., 543 F.3d 1351, 1372–74 (Fed. Cir.
2008).
Accordingly, the jury’s finding is not undermined by
internal S&N documents indicating an expectation that
the BioRaptor would be competing against a variety of
anchors other than push-in suture anchors. J.A. 33304,
33331–48. Those S&N documents can readily be under-
stood to indicate no more than that S&N would be trying
to persuade surgeons who were using any number of
different kinds of anchors for a variety of surgeries to
choose the push-in suture anchor (BioRaptor). That does
not imply that the group of surgeons that actually did
choose push-in suture anchors (from Arthrex) for certain
surgeries, in preference to non-push-in anchors, would
have chosen a product lacking the push-in features for
those surgeries just because Arthrex could not supply
those anchors though other sellers could. The jury could
properly find that those surgeons would have stuck with
the product features they had chosen, turning to other
sellers offering those features.
Finally, Arthrex argues that S&N should have ac-
counted for what Arthrex itself would have done in a “but
for” world where it could not sell the Bio-SutureTak.
Arthrex’s Br. at 49–50; see Grain Processing Corp. v. Am.
Maize-Prods. Co., 185 F.3d 1341, 1350–51 (Fed. Cir. 1999)
(“[A] fair and accurate reconstruction of the ‘but for’
market also must take into account, where relevant,
alternative actions the infringer foreseeably would have
undertaken had he not infringed.”). But the evidence is
scanty, certainly far from strong enough to set aside the
jury finding, as to what Arthrex itself would have done.
There was some suggestion that it might have increased
marketing for the “noninfringing” Bio-FasTak, Arthrex’s
Br. at 50, but the Bio-FasTak is a screw-in anchor, and
the jury had sufficient evidence, as already noted, to find
such an anchor not an acceptable alternative for current
purposes. J.A. 18627–28. Among the anchors Mr. Troxel
SMITH & NEPHEW INCORPORATED v. ARTHREX, 15
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identified as acceptable during the relevant period, the
only one offered by Arthrex was infringing. See Arthrex’s
Br. at 55. The jury could find, given the dearth of evi-
dence on the subject, that Arthrex would not have offered
an acceptable non-infringing substitute in the “but-for”
world. The jury’s lost-profits award therefore is supported
by substantial evidence.
C. Supplemental Damages
“[T]he amount of supplemental damages following a
jury verdict is a matter committed to the sound discretion
of the district court.” SynQor, Inc. v. Artesyn Techs., Inc.,
709 F.3d 1365, 1384 (Fed. Cir. 2013) (internal quotation
marks omitted). “A district court abuses its discretion
when it ma[kes] a clear error of judgment in weighing
relevant factors or exercise[s] its discretion based upon an
error of law or clearly erroneous factual findings.” Aqua
Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed.
Cir. 2014) (alterations in original, internal quotation
marks omitted). We reject Arthrex’s challenges to the
supplemental-damages award.
1. Arthrex argues that, as a matter of law, it could
not have had the knowledge required to indirectly in-
fringe during the period after the district court granted
JMOL to Arthrex (or perhaps even when, during the last
trial, it announced its belief that Arthrex was likely to
win the jury verdict or eventual JMOL) and before this
court reversed in S&N II. In considering this contention,
we apply the Supreme Court’s formulation: “induced
infringement under § 271(b) requires knowledge that the
induced acts constitute patent infringement.” Global-
Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068
(2011) (extending the knowledge requirement for contrib-
utory infringement under § 271(c) to induced infringe-
ment under § 271(b)).
Arthrex rests its argument entirely on the contention
that a good-faith belief in non-infringement negates the
16 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
required knowledge and is established as a matter of law
by the district court’s ruling (or pronouncement). But
such a good-faith belief presents a factual question. See,
e.g., Commil USA, LLC v. Cisco Systems, Inc., 720 F.3d
1361, 1368–69 (Fed. Cir. 2013), cert. granted in part, 135
S. Ct. 752 (2014); Fujitsu Ltd. v. Netgear Inc., 620 F.3d
1321, 1330 (Fed. Cir. 2010); cf. KangaROOS U.S.A., Inc.
v. Caldor, Inc., 778 F.2d 1571, 1573 (Fed. Cir. 1985)
(“Good faith, intent to deceive, scienter, [and] honest
mistake are all questions of fact.”). Whatever else may be
said about Arthrex’s argument, the district court’s ruling
and pronouncement could, at most, create a factual ques-
tion, not an entitlement to a no-knowledge finding as a
matter of law. But Arthrex does not request further
factual adjudication, only a judgment as a matter of law of
no indirect infringement for this period. We therefore
reject Arthrex’s contention, without the need to consider
more fully whether, as Arthrex suggests, liability for
indirect infringement can turn successively off and on,
based on the knowledge requirement, when a trial court
reaches one conclusion but the conclusion is then reversed
on appeal.
2. Arthrex challenges the district court’s basing of
supplemental damages on the same definition of what
products were acceptable non-infringing alternatives that
the jury used to calculate lost profits, contending that the
suture-anchor market has changed critically since the
2011 trial. Arthrex principally points to the emergence in
2010–2011 of so-called “all-suture” anchors. It argues
that it was entitled to discovery on whether the emer-
gence of all-suture anchors alters the required analysis of
“what surgeons may find acceptable as non-infringing
alternatives if Arthrex was no longer able to sell its Bio-
SutureTak anchor.” Arthrex’s Br. at 55, 57.
The evidence that Arthrex advances is not sufficient
to make the district court’s reliance on the 2011 lost-
profits analysis an abuse of discretion, even without
SMITH & NEPHEW INCORPORATED v. ARTHREX, 17
INCORPORATED
further discovery. The sales at issue were made to sur-
geons in 2011–13 who, despite the availability of all-
suture anchors Arthrex touts as newly significant since
2010–11, chose the particular push-in Arthrex anchors at
issue here. Lost-profits damages are awarded only for
those sales. The question is what that particular group of
surgeons would have chosen if the Arthrex suture anchors
at issue had not been available. What those surgeons
actually chose weighs heavily in answering that question.
And the district court could readily conclude that a con-
trary answer is not suggested by the only evidence Ar-
threx advanced regarding all-suture anchors, namely,
that surgeons as a whole, making purchases for a variety
of surgeries, were increasingly choosing all-suture an-
chors over the type of suture anchors at issue here.
Arthrex’s proffer regarding all-suture anchors thus did
not preclude the district court from carrying forward the
lost-profits calculation to award supplemental damages.
Nor did Arthrex’s secondary challenge, i.e., that two
“biocomposite” anchors—Arthrex’s BioComposite Suture-
Tak and DePuy Mitek’s Gryphon P anchors—should have
been included in the market-share calculations for the
2011–13 period. Arthrex’s Br. at 57. It is undisputed
that, as shown by the discussion in S&N’s expert report,
S&N’s damages calculation at trial excluded biocomposite
anchors (such as Arthrex’s BioComposite SutureTak),
which were on the market during the period covered by
the trial. J.A. 31041, 35794, 36032. And it is undisputed
that Arthrex never challenged the exclusion of biocompo-
site anchors at trial. In later opposing supplemental
damages, Arthrex simply did not present a strong enough
reason for the district court to conclude that newly avail-
able evidence required a different finding on this point
from the one Arthrex did not challenge at trial. At best,
Arthrex presents general evidence of growing popularity
of biocomposite anchors, but that evidence does no more
for Arthrex than its evidence regarding all-suture an-
18 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
chors. That evidence is insufficient for present purposes
even aside from the serious question about whether the
BioComposite SutureTak is actually non-infringing. See
S&N’s Br. at 60.
In short, Arthrex did not present evidence that re-
quired the district court to launch additional litigation on
whether the calculation of supplemental damages had to
depart from the calculation used for the lost-profits
award. Without such evidence, the district court could
properly rely on that calculation and bring it forward to
the post-trial period.
CONCLUSION
For the foregoing reasons, we affirm the judgment of
the district court.
AFFIRMED
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
SMITH & NEPHEW INCORPORATED,
JOHN O. HAYHURST, M.D.,
Plaintiffs-Appellees
v.
ARTHREX, INCORPORATED,
Defendant-Appellant
______________________
2014-1691, 2014-1694
______________________
Appeals from the United States District Court for the
District of Oregon in No. 3:04-cv-00029-MO, Judge Mi-
chael W. Mosman.
______________________
DYK, Circuit Judge, concurring-in part and dissenting-in
part.
I join the majority opinion with the exception of the
majority’s decision sustaining the lost profits award.
I
“To recover lost profits, the patent owner must show
‘causation in fact,’ establishing that ‘but for’ the infringe-
ment, he would have made additional profits.” Grain
Processing Corp. v. Am. Maize–Prods. Co., 185 F.3d 1341,
1349 (Fed. Cir. 1999) (citing King Instruments Corp. v.
Perego, 65 F.3d 941, 952 (Fed. Cir. 1995)). The appropri-
2 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
ate framework is provided by Panduit Corp. v. Stahlin
Bros. Fibre Works, 575 F.2d 1152, 1156 (6th Cir. 1978).
Under Panduit, “[t]o obtain as damages the profits on
sales he would have made absent . . . infringement, . . . a
patent owner must prove: (1) demand for the patented
product, (2) absence of acceptable noninfringing substi-
tutes, (3) his manufacturing and marketing capability to
exploit the demand, and (4) the amount of the profit he
would have made.” Id. Here, the parties contest the
second factor. Arthrex, Inc. (“Arthrex”) argues that Smith
& Nephew Inc. (“S&N”) failed to meet its burden as to the
absence of acceptable non-infringing substitutes. In that
respect, patentee S&N bore the burden at trial “to show a
reasonable probability that [it] would have made the
asserted sales ‘but for’ the infringement.” Grain Pro-
cessing, 185 F.3d at 1349 (citations omitted). “Recon-
structing the market . . . requires the patentee to project
economic results that did not occur. To prevent the hypo-
thetical from lapsing into pure speculation, this court
requires sound economic proof of the nature of the market
and likely outcomes with infringement factored out of the
economic picture.” Id. at 1350.
II
All of the asserted claims are to methods where a su-
ture anchor is pressed into a bone, and the resilience of
the anchor holds it in place in the bone. This method
contrasts, for example, with using a screw-in anchor or a
toggle-fit anchor. Here the issue is whether types of
anchors that do not have the features of the patented
methods (i.e., screw-in and toggle-fit anchors) are ac-
ceptable substitutes for the push-in anchors of the patent-
ed methods.
At trial, S&N presented expert testimony by Richard
Troxel that S&N was entitled to a lost profits award as a
result of lost sales. Troxel testified that lost profits were
properly calculated by looking only to a market of prod-
SMITH & NEPHEW INCORPORATED v. ARTHREX, 3
INCORPORATED
ucts containing the patented features. Troxel defined the
relevant market as suture anchors “inserted by a push-in
or tap-in procedure—as contrasted . . . to a screw-in or a
toggle fit,” “preloaded with a suture,” and “premounted on
an inserter.” J.A. 18715. In other words, he excluded
anchors which screw in or toggle fit. Troxel testified that
he limited the market to only devices with those charac-
teristics because “it seem[ed] to [him] that a surgeon has
to make a specific decision as to the anchor . . . that he or
she is going to use in a particular procedure” and that “it
seems to be a very explicit decision by the surgeon as to
which item is appropriate for that particular surgery in
that particular patient.” J.A. 18716. Based on market
share, Troxel calculated that, using the year 2008 as an
example, S&N would have made 87.5 percent of Arthrex’s
sales of the accused devices, had Arthrex not infringed.
The jury verdict awarded the amount of lost profit dam-
ages that Troxel calculated, and judgment was entered
against Arthrex for that same amount. If other non-
infringing alternatives had been considered, S&N’s mar-
ket share would have been reduced below that which
Troxel calculated for a given year.
The problem is that Troxel had no basis for excluding
screw-in and toggle-fit anchors. Troxel admitted that he
“did not speak to any surgeons,” and that he did not
conduct any surveys of surgeons. J.A. 18797. He further
stated that he did not “recall any literature that ever
addressed [the] issue” of what type of anchor a surgeon
would turn to if the surgeon were unable to purchase the
accused product. J.A. 18798. Troxel testified that he had
not studied what the market would have been like were
the infringing device never introduced, stating, “that
would be completely a speculation.” J.A. 18781.
III
The majority appropriately does not rely on Troxel’s
testimony as supporting the absence of non-infringing
4 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
alternatives. Rather, the majority relies on the testimony
of fact witnesses, which it says shows that “surgeons
chose anchors based on their insertion methods (and
therefore that only press-in anchors were acceptable, non-
infringing alternatives here) . . . .” Maj. Op. at 12. But
these witnesses did not testify that a surgeon would not
substitute a screw-in anchor or a toggle anchor had the
infringing product not been on the market.
Much of the testimony that the majority relies on only
establishes that, for certain surgeries, some surgeons may
prefer a toggle-fit or screw-in anchor over a press-in
anchor. This hardly shows that toggle-fit or screw-in
anchors are not substitutes for press-in anchors. By
contrast, the evidence addressing why surgeons would
choose a press-in anchor over other types of anchors is
meager. Mr. Mahoney, the patentee’s Director of Medical
Education, only described the various characteristics of
the different types of suture anchors, stating that S&N’s
product is the closest competitor of Arthrex’s infringing
product, that screw-in devices were not competitive
products, and that a toggle product “would be closer than
the screw-in, but . . . not a direct competitor.” J.A. 18649.
This type of conclusory testimony is exactly what Grain
Processing held to be insufficient. 185 F.3d at 1350. S&N’s
witness Dr. Diduch, an orthopedic surgeon, merely stated
that he would consider the type of surgery being per-
formed when choosing the type of anchor to use and that
different types of anchors have advantages and disad-
vantages. And Arthrex’s witness, Mr. Benavitz, testified
only that some surgeons prefer push-in anchors, some
prefer screw-in anchors, and some prefer either type, and
that the accused infringer launched the infringing product
so that surgeons would have their choice of what to use.
Indeed, Benavitz testified that the different types of
anchors—screw-in anchors, toggle anchors, resilient
anchors, and push-in anchors—all compete with one
another and are used for the “same indications” and that
SMITH & NEPHEW INCORPORATED v. ARTHREX, 5
INCORPORATED
he had “seen cases where a surgeon will use two different
types of anchors in the same case.” J.A. 19250–51. While
witness testimony may suggest that some individual
surgeons may prefer press-in anchors in certain circum-
stances, there was no attempt to quantify what proportion
of surgeons would not choose a screw-in or toggle-fit
anchor. None of the testimony establishes under the
Grain Processing standard that the market for alterna-
tives should be limited to devices having the patented
features.
To the contrary, Arthrex’s expert Dr. Greenleaf testi-
fied that “the insertion method isn’t particularly im-
portant. What’s important is that the anchor do its
job . . . . The mechanism of that per se isn’t particularly
important.” J.A. 19198. There was also evidence from fact
witnesses that other types of anchors could serve as
substitutes for the infringing push-in suture anchor.
Arthrex’s witness Mr. Carlozzi testified that “[i]n a clini-
cal setting, whether you tap [i.e., push in an anchor] or
screw it in, it really doesn’t matter, as long as once it’s in,
it stays there and holds into the bone.” J.A. 19314. Dr.
Warren, S&N’s witness, testified that if he could not use
S&N’s push-in product, he might use the push-in anchor
of another brand, or he “might use somebody else’s screw-
in device.” J.A. 19309–10. He also stated that, while he
liked using S&N’s push-in product, someone could use a
screw-in anchor and “wouldn’t have any problem with it”
because “[t]here is more than one way to skin a cat.” J.A.
19308. S&N’s own documents indicate that it saw its
primary competition as coming from a toggle anchor and a
screw-in anchor. Cases like Standard Havens Products,
Inc. v. Glencor Industries, Inc., 953 F.2d 1360, 1373 (Fed.
Cir. 1991), do not suggest that evidence of competing
products is irrelevant. Standard Havens merely holds
that “if purchasers are motivated to purchase because of
particular features available only from the patented
product, products without such features—even if other-
6 SMITH & NEPHEW INCORPORATED v. ARTHREX,
INCORPORATED
wise competing in the marketplace—would not be ac-
ceptable infringing substitutes.” Id.; see also Cohesive
Techs., Inc. v. Waters Corp., 543 F.3d 1351, 1373 (Fed.
Cir. 2008) (quoting Standard Havens for the same propo-
sition).
The majority also relies on the fact that the patented
product was purchased, stating that “actual market
behavior of . . . surgeons determined where those sur-
geons would have taken their business if they could not
have purchased what they in fact bought.” Maj. Op. at 11.
But the fact that surgeons purchased the infringing
anchor cannot establish the absence of non-infringing
alternatives. The Panduit factor pertaining to non-
infringing substitutes recognizes that, even where con-
sumers have purchased the infringing device, those
consumers may have chosen a non-infringing alternative
were the infringing device not on the market.
To limit the market to devices containing the patented
features, S&N had the burden of showing that buyers
specifically want a product having the advantages of the
patent. See Slimfold Mfg. Co. v. Kinkead Indus., Inc., 932
F.2d 1453, 1458 (Fed. Cir. 1991). It failed to meet its
burden at trial and with respect to the supplemental
damages calculation. Because S&N failed to meet its
burden on the lost profits issue, I respectfully dissent.