Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01691/USCOURTS-ca13-14-01691-0/pdf.json

Parties Involved:
Arthrex, Incorporated
Appellant
John O. Hayhurst
Appellee
Smith & Nephew Incorporated
Appellee

Document Text:

NOTE: This disposition is nonprecedential.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 Michael W. Mosman.

______________________ 

Decided: March 18, 2015

______________________ 

 JOHN MICHAEL SKENYON, Fish & Richardson, P.C., 

Boston, MA, argued for plaintiffs-appellees. Also represented by MARK JOSEPH HEBERT, I. 

CHARLES W. SABER, Dickstein Shapiro LLP, Washington, DC, argued for defendant-appellant. Also represented by SALVATORE P. TAMBURO, MEGAN S. WOODWORTH, S.

GREGORY HERRMAN. 

______________________ 

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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 rejecting the invalidity challenge but required a new infringement 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 denied 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 infringement. Arthrex appeals. We affirm. 

BACKGROUND

This litigation has included three trials and two previous 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 & Nephew, 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 

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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 attached 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 “member” 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 summary judgment rejecting Arthrex’s validity challenge. Id. 

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In 2011, after remand, a new trial (the third) produced a verdict of infringement as well as an award of 

damages consisting of lost profits on sales lost to Arthrex’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 relitigate 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 materially 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 prohibited 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.

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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 noninfringement 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 Amazon.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 construction. Id. 

Despite the finality of resolution as to validity ordinarily inherent in that course of proceedings, Arthrex 

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argues that, on remand in 2013, it was entitled to relitigate the validity of the ’557 patent. Its premise is that 

our construction of “lodging” in S&N II actually is inconsistent 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” consistent 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 invoca1 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 summary judgment regarding validity, except that the thirdtrial 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 application of tension. 

 

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tion of S&N I) or because Arthrex forfeited it by not 

invoking judicial estoppel or the same-construction-forinfringement-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 argument 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 invalidate 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 inserted 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 discloses 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 

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relevant even under Arthrex’s conception of the “narrower” 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 noninfringement 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 

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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 presenting 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 “arguments . . . 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 argument is also wrong under the general standard for crossappeals. Arthrex’s lost-profits challenge, if meritorious, 

would give it less relief than the judgment of noninfringement 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 contention that the lost-profits award lacks substantialevidence 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). 

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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 acceptable 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 challenged by Arthrex on appeal is the identification of “acceptable 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 BioSutureTak 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. 

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S&N’s expert, Mr. Troxel, testified that the class of 

acceptable non-infringing alternatives in this case consisted of anchors that were (1) bioabsorbable, (2) premounted 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 features 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 characteristics 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 generally. 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 Education, 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 

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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 surgeon, 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 insertion. 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 humeral 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 launching 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 alternatives here) is supported by substantial evidence. The jury 

was free to disbelieve or discount Arthrex’s limited evidence pointing the other way. See J.A. 19198 (Dr. Greenleaf); 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 

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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. Arthrex 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 compete with each other in the sense that their sellers compete 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 particular features available . . . from the patented product, 

products without such features—even if otherwise competing in the marketplace—would not be acceptable 

noninfringing substitutes.” Id.; see also Cohesive Techs., 

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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 understood 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 accounted 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 

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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 evidence 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 infringe 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.” GlobalTech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 

(2011) (extending the knowledge requirement for contributory infringement under § 271(c) to induced infringement under § 271(b)). 

Arthrex rests its argument entirely on the contention 

that a good-faith belief in non-infringement negates the 

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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 question, 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 emergence 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 BioSutureTak 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 lostprofits analysis an abuse of discretion, even without 

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further discovery. The sales at issue were made to surgeons in 2011–13 who, despite the availability of allsuture 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 contrary answer is not suggested by the only evidence Arthrex advanced regarding all-suture anchors, namely,

that surgeons as a whole, making purchases for a variety 

of surgeries, were increasingly choosing all-suture anchors 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 SutureTak 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 biocomposite 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 available 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 

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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 required 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

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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 Michael 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 infringement, 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 appropriCase: 14-1691 Document: 69-2 Page: 19 Filed: 03/18/2015
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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 substitutes, (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 Processing, 185 F.3d at 1349 (citations omitted). “Reconstructing the market . . . requires the patentee to project 

economic results that did not occur. To prevent the hypothetical 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 suture 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 acceptable substitutes for the push-in anchors of the patented 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 prodCase: 14-1691 Document: 69-2 Page: 20 Filed: 03/18/2015
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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 characteristics 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 damages that Troxel calculated, and judgment was entered 

against Arthrex for that same amount. If other noninfringing alternatives had been considered, S&N’s market 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 

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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, noninfringing 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 performed when choosing the type of anchor to use and that 

different types of anchors have advantages and disadvantages. 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 

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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 circumstances, 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 alternatives should be limited to devices having the patented 

features. 

To the contrary, Arthrex’s expert Dr. Greenleaf testified that “the insertion method isn’t particularly important. 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 clinical 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 screwin 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 

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wise competing in the marketplace—would not be acceptable 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 proposition). 

The majority also relies on the fact that the patented 

product was purchased, stating that “actual market 

behavior of . . . surgeons determined where those surgeons 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 noninfringing substitutes recognizes that, even where consumers 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. 

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