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Decision to Cancel Claims During IPR Proceeding Backfires for Arthrex; Will the Decision Also Disturb Their Previous $17.4 Million Jury Verdict Against Smith & Nephew?
Posted in Litigation, Patents

In a stinging decision that will impact its patent portfolio, Arthrex recently suffered a setback in a patent dispute over suture anchors with Smith & Nephew. The Federal Circuit upheld a PTAB judgment entering adverse judgment against claims 1-9 of Arthrex’s U.S. Pat. No. 8,821,541, which S&N challenged in a 2016 IPR. This decision will affect the related patent portfolio because of the estoppel provisions of 37 CFR 42.73.

In this most recent case, Arthrex abandoned its defense of claims 1-9 of the ‘541 Patent in an attempt to avoid 37 CFR 42.73, which ties an AIA proceeding loss on one patent to other related applications. The PTAB treated this abandonment as an adverse judgment against the ‘541 Patent and canceled the nine claims. 

The PTAB’s choice to enter adverse judgment is important because, in accordance with 37 CFR 42.73(d)(3), the adverse judgment bars Arthrex’s attempts to get other patents on claims not “patentably distinct” from the canceled claims. Thus, although the PTAB did not rule that newer claims that subsequently issued as patents were patentably indistinct, Arthrex would likely face such an argument if it asserts infringement of any patents after the ‘541 Patent. Arthrex currently has two issued patents (U.S. Patent Nos. 9,526,493 and 9,549,726) and one pending application (U.S. Pub. No. 2017/0164940) that claim priority to the ‘541 Patent. 

This decision comes on the heels of the E.D. of Texas finding in December 2016 that S&N infringed claims 10 and 11 of the ‘541 Patent to the tune of $17.4 million—$12.5 million of which was attributed to the ‘541 Patent. As noted in Justice Newman’s dissent in this most recent opinion impacting claims 1-9 of the ‘541 Patent, there is uncertainty by the parties whether this decision impacts the E.D. of Texas verdict. At the very least, it likely means more litigation to determine whether claims 10 and 11 of the ‘541 Patent are “patentably distinct” from claims 1-9.

The patent litigation between Arthex and Smith & Nephew traces its origins to 2004 and has involved trials in multiple courts.

Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.

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