Court Opinion

ID: 5135749
Source: CourtListenerOpinion
Date Created: 2021-12-16 22:00:43.155951+00
Date Added: 2024-06-11T08:23:50.948923
License: Public Domain

USCA11 Case: 20-10636        Date Filed: 12/16/2021   Page: 1 of 9

                                            [DO NOT PUBLISH]
                               In the
         United States Court of Appeals
                   For the Eleventh Circuit

                     ____________________

                           No. 20-10636
                     ____________________

HOLLISTER INCORPORATED,
an Illinois corporation,
                                                Plaintiff-Appellee,
versus
ZASSI HOLDINGS, INC.,
a Florida corporation
f.k.a. Zassi Medical Evolutions, Inc.,
PETER VON DYCK,
an individual,

                                           Defendants-Appellants.
USCA11 Case: 20-10636          Date Filed: 12/16/2021      Page: 2 of 9

2                       Opinion of the Court                   20-10636

                      ___________________

           Appeal from the United States District Court
                for the Middle District of Florida
            D.C. Docket No. 3:13-cv-00132-TJC-PDB
                    ____________________

Before WILLIAM PRYOR, Chief Judge, LAGOA, Circuit Judge, and
WATKINS,∗ District Judge.
PER CURIAM:
       In 2018, after a jury trial on liability and a bench trial on dam-
ages, we remanded this intellectual property case to reconsider the
award of damages. This second appeal involves issues from both
the liability and damages portions of the bifurcated trial. Because
the liability issues were not properly raised in the first appeal after
the liability verdict, only issues related to the second damages trial
are properly before us. After careful review, we affirm the district
court’s final judgment in favor of Hollister.
                                   I.
       This case has a complicated procedural history, but the ele-
mentary facts have long been resolved. In September 2006, Hollis-
ter Incorporated entered into an agreement with Zassi Holdings,
Inc., to purchase technology and patented intellectual property

∗Honorable W. Keith Watkins, United States District Judge for the Middle
District of Alabama, sitting by designation.
USCA11 Case: 20-10636        Date Filed: 12/16/2021     Page: 3 of 9

20-10636               Opinion of the Court                        3

rights to a bowel management system for bedridden medical pa-
tients. The parties formalized the terms in a written asset purchase
agreement.
        Unbeknownst to Hollister, Zassi had previously encum-
bered the same intellectual property in an agreement with a com-
petitor, ConvaTec, Inc. In settling a patent infringement dispute
between Zassi and ConvaTec, Zassi agreed to release ConvaTec
and its allegedly offending products from future claims of infringe-
ment of the Zassi technology, including the relevant intellectual
property in exchange for a payment of 5.9 million dollars from
ConvaTec. The 2005 release was not an assignment of the patent
or associated rights, but simply a “go away, leave us alone, and
don’t come back” release in favor of ConvaTec. ConvaTec paid
Zassi, in effect, for permission to continue its infringement without
recourse by Zassi.
       In 2010, Hollister noticed the same apparent infringement
by ConvaTec that Zassi had alleged in its 2005 dispute with Con-
vaTec. Unaware of the release, Hollister filed suit against Conva-
Tec and C.R. Bard in the Northern District of Illinois, claiming that
their products infringed the intellectual property that Hollister had
purchased from Zassi. ConvaTec responded by producing the set-
tlement agreement and release, and Hollister was thereby defeated
on a motion for summary judgment. Hollister then filed this suit
to recover damages from Zassi and Peter von Dyck, the chairman
and chief executive officer of Zassi.
USCA11 Case: 20-10636            Date Filed: 12/16/2021        Page: 4 of 9

4                         Opinion of the Court                     20-10636

       Hollister asserted a claim against Zassi for breach of war-
ranty of good and marketable title contained in the asset purchase
agreement entered into by Hollister and Zassi, as well as a claim
against Zassi and von Dyck individually for fraudulent induce-
ment. Hollister’s claims stem from the Defendants’ failure to dis-
close the release in the settlement agreement with ConvaTec dur-
ing the 2006 negotiations leading up to the asset purchase agree-
ment between Zassi and Hollister.
        The district court bifurcated the trial of the liability and dam-
ages issues. Liability was tried to a jury in February 2014. The jury
rendered a verdict for Hollister on both counts, finding that Zassi
breached the asset purchase agreement and that both Zassi and von
Dyck defrauded Hollister by failing to disclose its settlement agree-
ment with ConvaTec.1 In December 2015, the district court con-
ducted a bench trial on damages after the parties waived a jury trial
of that issue. See Hollister Inc. v. Zassi Holdings, Inc., 2016 WL
1238025, *3 (M.D. Fla. Mar. 30, 2016). The district court deter-
mined that, although ConvaTec’s products in fact infringed Hollis-
ter’s patent, Hollister had failed to prove it was entitled to any dam-
ages. See id. at *8, *16. Accordingly, the district court entered a
split-decision final judgment awarding Hollister no damages. See
id. at *16. Thus, Hollister won and lost, and Zassi lost and won in

1 A default was entered against Zassi on September 3, 2015, after its attorney
withdrew and it failed to retain new counsel. Von Dyck has consistently con-
tinued to defend the case.
USCA11 Case: 20-10636          Date Filed: 12/16/2021      Page: 5 of 9

20-10636                Opinion of the Court                           5

the bifurcated trials. That was the posture of the case before the
first panel.
       Hollister filed a timely appeal of the damages ruling, and a
panel of this Court reversed the district court and remanded the
case for a new trial on damages. See Hollister Inc. v. Zassi Hold-
ings, Inc., 752 F. App’x 888, 897 (11th Cir. 2018). We reversed on
two grounds—both relating solely to the damages portion of the
proceedings. First, pursuant to Florida law, the district court
should have calculated damages as of the time of the Defendants’
fraud, as opposed to the date of Hollister’s unsuccessful infringe-
ment action against ConvaTec. Id. at 893–95. Second, the district
court erred in finding that Hollister had failed to prove it was enti-
tled to any damages. Id. at 895–97.
        But that is not all that is relevant about the first appeal. Pur-
suant to Rule 28.1 of the Federal Rules of Appellate Procedure, von
Dyck filed a cross-appeal of Hollister’s appeal of the final judgment
of the damages trial. In a preliminary order, we dismissed von
Dyck’s cross-appeal sua sponte, noting that because no damages
were awarded to Hollister, von Dyck, as the prevailing party on
damages, lacked standing to cross-appeal. Hollister Inc. v. Zassi
Holdings, Inc., No. 16-17734-AA, slip op. at 3–4 (11th Cir. filed May
18, 2017). We did, however, indicate in our dismissal order that
the panel would consider “alternative bases on which to affirm the
[final] judgment.” Id. at 4. Indeed, we later addressed von Dyck’s
liability arguments in our opinion. See Hollister, 752 F. App’x at
896 n.10.
USCA11 Case: 20-10636         Date Filed: 12/16/2021    Page: 6 of 9

6                      Opinion of the Court                 20-10636

       On remand, the district court held the second bench trial on
damages in December 2019. The district court awarded Hollister
9.2 million dollars and again entered a final judgment, this time in-
cluding damages. Von Dyck and Zassi filed a timely appeal. That
second appeal is now before us.
                                 II.
      “Following a bench trial, we review legal conclusions de
novo and findings of fact for clear error.” Carithers v. Mid-Conti-
nent Cas. Co., 782 F.3d 1240, 1245 (11th Cir. 2015).
                                 III.
        The liability issues that Zassi and von Dyck present here
were either resolved by the first panel or, if not argued then, have
been forfeited. Though von Dyck’s cross appeal was dismissed for
lack of standing, that panel added: “Nonetheless, [von Dyck’s] re-
sponsive brief may seek to raise alternative bases on which to af-
firm the [2016 final] judgment, and we decide nothing about the
panel’s consideration of any such arguments.” Hollister, slip op. at
4 (11th Cir. filed May 18, 2017). In fact, some of the liability argu-
ments Zassi and von Dyck assert in this appeal were addressed and
rejected in the prior appeal. See Hollister, 752 F. App’x at 896 n.10
(“We may, of course, affirm the district court’s judgment for any
reason supported by the record, even if not relied upon by the dis-
trict court. But we are not persuaded that the record supports ei-
ther of von Dyck’s alternative arguments. First, von Dyck argues
that . . . he was entitled to judgment as a matter of law regarding
USCA11 Case: 20-10636         Date Filed: 12/16/2021     Page: 7 of 9

20-10636                Opinion of the Court                         7

liability on the fraud claim . . . .” (internal citation omitted) (em-
phasis added)). Those arguments are foreclosed by the law-of-the-
case doctrine, which “bar[s] relitigation of issues resolved explicitly
or by necessary implication in an earlier appeal.” CSX Corp. v.
United States, 18 F. 4th 672, 678 (11th Cir. 2021). And new argu-
ments that Zassi and von Dyck advance in this appeal—but that
were not advanced in the previous appeal—are forfeited because
issues not raised in a responsive brief by appellees are forfeited. See
Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318–19
(11th Cir. 2012); see also Young v. Grand Canyon Univ., Inc., 980
F.3d 814, 821 n.4 (11th Cir. 2020).
      The issue of liability is simply not before us in this appeal.
The jury’s verdict on liability stands, and only damages issues will
be considered.
                                 IV.
       Zassi and von Dyck argue that, under Florida law, Hollister
is precluded from recovering damages that Hollister failed to miti-
gate in the ConvaTec litigation. See Syst. Components Corp. v.
Fla. Dep’t of Transp., 14 So. 3d 967, 982 (Fla. 2009). Appellants
specifically assert that Hollister failed to mitigate its damages be-
cause it did not argue that the ConvaTec release was void for fail-
ure to properly record it pursuant to 35 U.S.C. § 261. Appellants’
position is that a recording under section 261 would have com-
pletely mitigated and avoided any damage Hollister sustained as a
result of Zassi’s breach of contract and Zassi and von Dyck’s fraud-
ulent misrepresentations.
USCA11 Case: 20-10636         Date Filed: 12/16/2021      Page: 8 of 9

8                       Opinion of the Court                  20-10636

        As Hollister notes, this issue was not raised at the second
bench trial on damages and was therefore not preserved. “A fed-
eral appellate court will not, as a general rule, consider an issue that
is raised for the first time on appeal.” CSX Transp., Inc. v. Gen.
Mills, Inc., 846 F.3d 1333, 1336 (11th Cir. 2017) (quoting In re Pan
Am. World Airways, 905 F.2d 1457, 1462 (11th Cir. 1990)). Appel-
lants have not provided evidence from the record that these issues
were ever presented to the district court below, despite three ap-
pearances and trials there. Based on this record, we conclude that
Appellants have not preserved the issue for appeal.
        Even if the issue were preserved, Appellants would have
failed to meet their burden of proof. The defense of mitigation of
damages is an affirmative defense. See Boca Golf View, Ltd. v.
Hughes Hall, Inc., 843 So. 2d 992, 993 (Fla. Dist. Ct. App. 2003)
(explaining that failure to mitigate damages is an affirmative de-
fense that must be specifically pled). A defendant bears the burden
of proving an affirmative defense at trial. Maxfly Aviation, Inc. v.
Gill, 605 So. 2d 1297, 1300 (Fla. Dist. Ct. App. 1992) (citing Juvenile
Diabetes Rsch. Found. v. Rievman, 370 So. 2d 33 (Fla. Dist. Ct.
App. 1979) for the proposition that “mitigation of damages issue
. . . must be . . . proved at trial by greater weight of the evidence”).
Here, Appellants would have had to prove that recording would
have mitigated, or avoided, Hollister’s damages. And Appellants
could not have satisfied their burden of proof because they did not
offer any evidence that would have supported such a defense.
USCA11 Case: 20-10636         Date Filed: 12/16/2021    Page: 9 of 9

20-10636               Opinion of the Court                         9

       Finally, Appellants fundamentally mischaracterize section
261 on the merits. Section 261 does not establish a requirement to
record releases of claims of patent infringement. It establishes an
ownership recordation mechanism for “the assignment, grant or
conveyance” of patents, allowing assignees to be assured that they
are purchasing a valid interest. Section 261 specifically states that
any “assignment, grant or conveyance” will be void if notice is not
“recorded in the Patent and Trademark Office within three months
from its date . . . .” 35 U.S.C. § 261. Notably absent in section 261
is any mention of releases. In fact, none of the cases that Appellants
cite mention the recordation of releases under section 261.
       For a multitude of reasons, Appellants’ mitigation of dam-
ages argument fails.
                                 V.
       We AFFIRM the district court’s award of damages to Hollis-
ter Incorporated in the amount of 9.2 million dollars.