Stryker and Zimmer In the Ring Again over Trade Secrets

Stryker Corp. and Zimmer Holdings Inc. are at it again.

The rival orthopedic companies have had a contentious few years that have played out in courtrooms. The latest bit of legal wrangling has to do with poached employees and stolen trade secrets—issues the two companies have battled about before.

In this most recent round, Zimmer accused a former employee and Stryker (for which the employee now works) of a plan to poach Zimmer employees and steal trade secrets, according to a suit filed in Indiana federal court. According to the lawsuit filed in U.S. District Court in northern Indiana, former Zimmer sales representative Cody Stovall breached his employment contract by leaving the company and conspired with Stryker to steal Zimmer’s customer relationships, Law360.com reported. Under the alleged agreement, Stovall would recruit sales reps from Zimmer by offering a guaranteed six-figure salary plus a $30,000 bonus for every $500,000 in business they convert from Zimmer customers.

“In an intentional effort to destroy near-permanent business relationships in Stovall’s assigned territory… Stryker recruited and hired Stovall, who was bound by the agreement and restrictive covenants with Zimmer, and has placed him or intends to place him in the same territory in which he worked for Zimmer to solicit business from Zimmer customers,” the complaint said.

Also according to Law360, the suit alleges that Stovall and Stryker conspired for Stovall to sell a Stryker biologic plasma spray product in an effort to place him into surgeries with his former Zimmer customers. Stovall then used that point of entry to sell “more lucrative” reconstruction business. Zimmer called the tactic a “Trojan horse” move.

Zimmer also alleges that Stovall assisted his new employer in developing relationships with his Zimmer customers, canceled Zimmer-scheduled surgeries and rescheduled those surgeries for Stryker, in the months prior to leaving Zimmer.

This isn’t the first time the companies have come to blows over this issue.

In August, Warsaw, Ind.-based Zimmer was ordered to pay Stryker approximately $228 million by a federal judge. Zimmer was found to be infringing upon Stryker’s patents for hand-held, battery-powered, disposable devices used to clean wounds and remove dead tissue during surgery. The Kalamazoo, Mich.-based orthopedic device company sued Zimmer in 2010 for its Pulsavac Plus wound-cleaning device. Stryker claimed Zimmer willfully copied its technology to create the Pulsavac.
In October, Stryker settled a suit accusing Zimmer of poaching employees and stealing trade secrets, putting the claims to bed just before a scheduled trial. In December, a New Jersey federal judge shot down Zimmer’s argument that it should be awarded $1.4 million for being wrongfully subjected to a restraining order in Stryker’s suit accusing it of poaching employees and stealing trade secrets.