United States District Court, D. Colorado
C5 MEDICAL WERKS, LLC and COORSTEK MEDICAL, LLC, Plaintiffs and Counter-Defendants,
CERAMTEC GMBH, Defendant and Counter-Plaintiff.
FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER OF
Brooke Jackson United States District Judge.
case was tried to the Court from August 29, 2016 to September
8, 2016 and from October 3, 2016 to October 5, 2016.
FINDINGS OF FACT
Defendant/counter-plaintiff CeramTec GmbH
(“CeramTec”) is a company that produces
pink-colored ceramic hip implant components sold under the
name BIOLOX Delta. See Trial Tr. 619:1-10; DX-399.
CeramTec sells these products to Original Equipment
Manufacturers (“OEMs”). DX-1095. OEMs incorporate
BIOLOX Delta products into hip implant systems that the OEMs
in turn sell to hospitals for use by surgeons in orthopedic
surgeries. Id.; Tr. 1618:19-1619:3. CeramTec
currently controls roughly 95% of the ceramic hip implant
market in the United States. Tr. 1617:21-25.
Plaintiff/counter-defendant C5 Medical Werks, LLC
(“C5”), which later became CoorsTek Medical, LLC
(“CoorsTek”), was founded in 2005 to produce
ceramic products, including ceramic hip implant components,
for sale in the orthopedic market. Tr.149:19- 151:25, 153:3-17,
Timeline of Events.
July 2, 1996 CeramTec applied for a utility patent on a
ceramic cutting tool. DX-423 at 1. This application asserted
that CeramTec had solved a pre-existing problem with certain
ceramic composites known as zirconia-toughened alumina or
“ZTA” ceramics whereby the introduction of
zirconium used to toughen the material caused a drop in the
material's hardness. See Tr. 657:16-658:5;
PX-190 (Applicant's April 15, 1997 Response to Patent
Office). CeramTec claimed that through the introduction of
chromium in a specific molar ratio with other components of
ZTA ceramics, namely zirconium dioxide, Tr. 657:19-25;
see also PX 190 at 216, it could achieve hardness
scores for ZTA ceramics that had never been achieved with
corresponding zirconium dioxide contents, Tr: 657:19-658:8;
PX-190 at 216. Hardness is an important characteristic of
ceramic materials because it affects the ceramic's wear
properties, which influence performance. Tr. 219:12-16,
Although an existing patent already taught the use of
chromium in ZTA ceramics, see Tr. 656:20-657:7 (describing
the “Ekstrom” patent), the Patent Office issued
CeramTec a patent on November 3, 1998 (the ‘816
patent). DX-423 (the ‘816 patent). CeramTec overcame a
contrary office action based in part on the company's
insistence that it had discovered that a small and specific
ratio of chromium improved ZTA ceramic hardness values
dramatically. Tr. 656:20-659:10; DX-423; PX-190.
Around the same time that it obtained the ‘816 patent,
CeramTec developed BIOLOX Delta. See DDX-1017; Tr.
1016:20-1017:15; 1018:20-23. In producing BIOLOX Delta, which
is a ZTA ceramic product, CeramTec practices at least claim 3
of the ‘816 patent. ECF No. 247 at 2, ¶4 (joint
pretrial stipulations). The chromium added to BIOLOX Delta
gives it a light pink color. DX-228; DX-281.
the early 2000s, CeramTec began to market BIOLOX products
September of 2002 CeramTec obtained another patent for ZTA
ceramics (the ‘957 patent). PX-142. Like the ‘816
patent, the ‘957 patent claimed the use of chromium in
ZTA ceramics. PX-142 (the ‘957 patent), claims 1-4 and
at 4:37-56, 5:12-51, 7:14-27. Echoing the ‘816 patent,
the ‘957 patent also explained that the introduction of
chromium in a specific ratio with zirconium counteracted a
drop in hardness. PX-142 at 5:41-44 (“[T]he chromium
addition counteracts any drop in the hardness values when the
proportion of zirconium dioxide rises.”). CeramTec does
not specifically practice the ‘957 patent in producing
BIOLOX Delta products. Tr. 394:4-10. This patent is still in
CeramTec owns an additional patent on ZTA ceramics (the
‘970 patent) and a pending patent application (U.S.
Patent Publ. No. 2012/0142237 or the ‘554 Appl.) that
similarly teach the use of chromium to improve the properties
of ceramic materials. PX-550 (the ‘970 patent), claims
1 and 20; PX-551 (the ‘554 Appl.), claim 8; Tr.
April of 2004 CeramTec made two submissions to the Food &
Drug Administration (“FDA”) in which the company
represented that the addition of chromium in its composite
material counteracts a drop in hardness caused by an
increasing amount of zirconia. See PX-79 at 6; PX-86
2006 CeramTec produced research that suggested that chromium
did not increase hardness. Tr. 1100:18-1101:4.
CeramTec refers to this as its first “data point”
that chromium might actually be a non-functional component of
BIOLOX Delta. See id.
However, despite that research and a few additional studies
in the late 2000s that reached similar results, see PX-554,
the company did not change its public stance that chromium
increased hardness. On the contrary, it maintained its
position that chromium increased hardness in additional
submissions to the FDA in September 2008, October 2008,
February 2012, October 2012, and June of 2013. PX-79; PX-86;
PX-87 at 26-27; PX-22 at 6; PX-82; PX-88; PX-84 at 26; PX-166
at 34. CeramTec also reiterated this stance, as well as the
fact that chromium turned the product pink, in numerous
training materials for its customers, research articles, and
marketing campaigns spanning this same time period. See,
e.g., Tr. 1151:4-14, 2029:1-9 (referencing an e-mail
chain involving the marketing “story” of chromium
increasing hardness that CeramTec adopted); DX-215 (e-mail
chain); Tr. 223:4-231:1; PX-429 (Summary of CeramTec
presentations); PX-40 (Training Guide); PX-129 (Research).
2009 C5 entered the ceramic hip component market and began to
compete with CeramTec with two products of its own: (1)
Cerasurf-p, a ceramic product that like BIOLOX Delta contains
chromium and is pink; and (2) Cerasurf-w, a white ceramic
product that does not contain chromium. DX-517; DX-090 at 91;
DX-90 at 118; DX-517; Tr. 297:4-12; DX-519 at 9; DX-065.
Initially, C5's internal testing revealed no difference
in hardness or strength between Cerasurf-p, which contains
chromium, and Cerasurf-w, which does not. See
DX-527. Nevertheless, additional testing C5 conducted
eventually showed statistically significant evidence that its
pink material was harder than its white material. See,
e.g., Tr. 1307:11-12, 1941:3-20. While the Cerasurf-p
product looks identical to CeramTec's BIOLOX Delta
product aside from the companies' logos engraved on these
products, C5 claims that it carefully designed its product so
that it did not infringe on CeramTec's ‘816 patent.
Tr. 923:1-13; Tr. 239:3-13.
Although BIOLOX Delta controlled the vast majority of the
ceramic hip implant market at this time, CeramTec soon grew
concerned when C5 entered the market. See PX-44 at
62; PX-68 at 2. The company subsequently took three actions
to preserve its market share. First, on April 9, 2013
CeramTec filed an application with the United States Patent
and Trademark Office (“USPTO”) seeking trade
dress protection on the pink color of chromium in BIOLOX
Delta on the principal register. DX-156; DX-157. In response
to questions, CeramTec asserted that the color pink was
not a functional component of BIOLOX Delta.
See DX-156 at 56-57, 65-66; DX-157 at 53-54, 61-62.
It informed the USPTO that “[t]he color pink is not a
natural byproduct of the manufacture of implants
generally, supported by the fact that none of
Applicant's competitors create pink implants.”
DX-156 at 56 (¶II.7), DX-157-53 (¶II.7) (emphasis
added). It added that the color pink is a result of
CeramTec's proprietary manufacturing process.
Id. Significantly, however, the response did not
explain that the color pink was a natural byproduct of the
chromium in CeramTec's implants or that CeramTec had for
many years claimed that the chromium was a functional
component of its BIOLOX Delta products. Id. The
USPTO nevertheless rejected CeramTec's application
because it found that CeramTec had not acquired secondary
meaning or distinctiveness, which is necessary in order to
register a color as trade dress. DX-156 at 29-30; DX-157 at
Second, having been rejected by the USPTO, CeramTec obtained
U.S. Supplemental Trademark Registration Nos. 4, 319, 095 and
4, 319, 096 (the ‘095 and ‘096 registrations) for
the pink color of chromium in hip implants. DX157 at 6; DX156
Third, on November 20, 2013 CeramTec sent a cease and desist
letter to C5 asserting that Cerasurf-p infringed on the
‘816 patent. PX-558 at 24-44. This became moot when the
‘816 patent expired that same year.
March 3, 2014 C5 took the offensive, initiating this lawsuit
against CeramTec. ECF No. 1 (Complaint). In its initial
Complaint, C5 sought to cancel CeramTec's ‘095 and
‘096 registrations and to obtain several other rulings
regarding C5's rights to manufacture and market
Cerasurf-p. Id. at ¶¶78-106.
CeramTec answered C5's Complaint on September 25, 2014
with numerous affirmative defenses and counterclaims of its
own, asserting among other things that Cerasurf-p infringed
on CeramTec's ...