FinancialSpine

Lost Profits Are Hard to Come By: Warsaw Orthopedic v. NuVasive Patent Litigation

By Melissa Davis

Addressing the issue of convoyed and related sales, the U.S. Court of Appeals for the Federal Circuit, even while affirming the district court with respect to its invalidity and infringement findings, remanded the case for a new trial on damages, concluding that the district court had improperly allowed damages on non-convoyed sales.  Warsaw Orthopedic, Inc. et al. v. NuVasive, Inc., Case Nos. 13-1576; -1577 (Fed. Cir., Mar. 2, 2015) (Dyk, J.).

Warsaw Orthopedic brought suit against NuVasive asserting infringement of two patents:  one directed to oversize spinal implants and the other to retracting tissue for minimally invasive spinal surgery.  NuVasive counterclaimed against Warsaw and its related companyMedtronic Sofamor Danek USA (MSD) asserting a patent related to neuromonitoring during surgery.  After a jury found liability on all three asserted patents, it awarded Warsaw over $100 million in total damages, indicating on the verdict form that was for “lost profits damages (with royalty remainder).”  The district court denied Warsaw’s post trial motion for supplemental damages and a permanent injunction.  The district court set an ongoing royalty rate at 13.75 percent for one of the Warsaw patents and 8.25 percent for the other.

Warsaw appealed, arguing that the district court erred in denying supplemental damages to compensate for NuVasive’s infringement between the close of discovery and trial and in declining to award a higher royalty rate.  Warsaw also appealed the determination that it infringed NuVasive’s patent.  NuVasive cross appealed challenging the validity determination, the infringement determination against it and the damages calculation for the patents it was found to infringe.

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