Medical Device Lawsuit Watch - May 2009

This summary of key lawsuits affecting medical device companies is provided by the Health Care Law Group of Crowell & Moring LLP, in collaboration with the firm's Torts, Antitrust, Commercial Litigation, and Intellectual Property Groups. 

Cases in this issue:

• Cordis Corp. v. Boston Scientific Corp. and Scimed Life Sys., Inc.
• Veteran Medical Products, Inc., et al., v. Bionix Development Corp., et al.
• St. Jude Medical S.C., Inc. v. Ord and Boston Scientific Corp.
• (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com. de Equip. Medico
• Lexion Medical, LLC v. Northgate Techs., Inc., et al.
• Gomez v. Lincare, Inc.
• Mullin v. Guidant Corp.

 

Cordis Corp. v. Boston Scientific Corp. and Scimed Life Sys., Inc. No. 08-1003, -1072 (Fed. Cir. Mar. 31, 2009)

Considering the latest in a line of stent patent disputes, the Court of Appeals for the Federal Circuit ("CAFC"), with one exception, affirmed the holdings of the U.S. District Court for the District of Delaware, after examining claim construction, prior art and jurisdiction issues.

Cordis Corporation ("Cordis") and Boston Scientific Corporation ("Boston Scientific") each own patents relating to intravascular stents (Cordis owns U.S. Patent Nos. 4,739,762 and 5,895,406 and Boston Scientific Scimed Inc. ("Scimed") owns U.S. Patent No. 5,922,021). The district court held that Boston Scientific infringed claims of the '762 and the '406 patent and that Cordis infringed claims of the '021 patent. The district court also held that the claims at issue from all three patents were valid. Cordis appealed, and Boston Scientific cross-appealed.

As to Cordis's appeal, the CAFC affirmed that Cordis infringed claims of the '021 patent, holding that the district court properly excluded a claim construction argument from the jury because the "risk of confusing the jury is high when the experts opine on claim construction." The CAFC declined to construe a "wherein" clause to exclude certain stent designs, stating that an "unclear prosecution history" did not provide a clear and unmistakable disclaimer. The CAFC stressed that claim construction was an issue of law to be reviewed without deference. The CAFC affirmed the denial of Cordis's motions for judgment as a matter of law ("JMOL") and for a new trial on the infringement of the '021 patent, concluding that Cordis's argument that the claim construction used in a different case should apply here was newly raised and thus too late.

As to Boston Scientific and Scimed' s cross-appeal, the CAFC affirmed the holding that certain monographs were not prior art printed publications under 35 U.S.C. § 102(b), even though the author of the monographs had distributed the monographs to academic colleagues and to commercial entities. The CAFC noted that academic norms give rise to an expectation that disclosure to a limited number of individuals will remain confidential. As to distribution of the monographs to commercial entities, the CAFC reasoned that this distribution also did not render the monographs prior art printed publications because the evidence supported an expectation of confidentiality.

The CAFC upheld the district court's grant of Cordis's summary judgment motion that the claims of the '762 patent were not invalidated by the monographs and affirmed the denial of Boston Scientific's motion for JMOL that the claims of the '406 patent were anticipated and invalid.

Addressing anticipation, the CAFC held that a jury can properly find that functional language in a claim is a limitation that bars a finding of anticipation by a reference that discloses all elements of the claim except the functional language.

The district court had dismissed one of Cordis's infringement claims without prejudice on grounds that it had no jurisdiction over the claim because the accused device lacked a "nexus to the United States." The CAFC held that the dismissal should have been made with prejudice because Cordis failed to present evidence of a nexus in its case-in-chief.

Veteran Medical Products, Inc., et al., v. Bionix Development Corp., et al. No. 05-655 (W.D. Mich. Mar. 31, 2009)

The U.S. District Court for the Western District of Michigan held that Bionix Development Corporation ("Bionix"), the manufacturer of a plastic ear curette, was entitled to judgment as a matter of law on the claims that it had engaged in unfair competition in violation of the federal Lanham Act and Michigan state law. The district court also held that this was an "exceptional case" warranting the award of attorneys' fees to the plaintiffs.

Plaintiff Veteran Medical Products ("Veteran") sells a plastic double-ended ear curette, which is used to remove wax from ears. One of Bionix's employees contacted one of Veteran's suppliers and told the supplier that the ear curettes it was manufacturing for Veteran infringed Bionix's patent. Veteran and others sued, seeking a declaratory judgment that they did not infringe Bionix's patent and did not misappropriate trade secrets from Bionix. Veteran asserted three causes of action: unfair competition in violation of the Lanham Act; violation of the Michigan common law of unfair competition; and tortious interference with business relationships. Bionix filed counterclaims for patent infringement, misappropriation of trade secrets in violation of Michigan law and willful and malicious misappropriation.

Before trial, the court determined that Veteran's device did not infringe Bionix's patent, granted Veteran's request for a declaratory judgment to this effect and dismissed Bionix's patent infringement counterclaim. The unfair competition claims against Bionix, however, were allowed to go to a jury, which found for the plaintiffs and awarded them nearly $2 million. Bionix then moved for judgment as a matter of law, claiming that the evidence introduced at trial did not support the jury's verdict.

The court granted the motion for judgment as a matter of law on Veteran's Lanham Act claim. A trade libel or product disparagement claim under the Lanham Act is premised on statements made in the marketplace to a company's customers. Veteran presented no evidence, however, that the defendants had contacted any of Veteran's customers or potential customers.

The court next addressed the standing of some of the plaintiffs to bring an unfair competition claim under Michigan common law. An unfair competition claim requires that the plaintiffs and the defendants be in competition. The only plaintiff that actually competed with Bionix, however, was Veteran, the entity that sold plastic ear curettes. The other plaintiffs, Tillman Industries and its employees, only manufactured the ear curettes for Veteran. The court therefore granted Bionix's motion for judgment as a matter of law on standing for the unfair competition claims asserted by these plaintiffs.

The court also granted Bionix's motion for judgment as a matter of law on Veteran's unfair competition claim. This claim "was premised on an allegation of corporate defamation as the unfair trade practice at issue." Corporate defamation claims do not require proof of the fact of damage as an element of the claim. However, Veteran still had the burden of establishing the amount of damages in a manner that may not "be based upon mere speculation, guess, or conjecture." Veteran failed to meet this standard because it presented no actual sales history or cost analysis from which the jury could have determined lost profits. Rather, Veteran attempted to rely upon the sales goals contained in a speculative marketing plan, and Bionix's sales information for its ear curettes. The court concluded that while Veteran was the prevailing party on its claim of corporate defamation constituting unfair competition, there was no evidence of actual damages, and the jury's award must be set aside.

Finally, the court addressed Veteran's motion for a finding that Bionix's patent infringement counterclaim constituted an "exceptional case" that warranted the award of attorneys' fees. The court held that the "defendants' infringement suit was baseless and brought in bad faith." According to the court, the differences between the designs of the Veteran ear curette and the Bionix ear curette were "startling" and "no ordinary observer would be confused." The court found that Bionix was aware of these differences from the beginning of the lawsuit but nevertheless continued with the litigation in two federal courts over the course of two years, even after Veteran received its own patent for its ear curette. The court therefore found that Bionix's "aggressive posturing constituted 'vexatious, unjustified, or frivolous litigation' in support of defendants' desire to keep plaintiffs' product off the shelves" and concluded that this was an exceptional case warranting the award of attorneys' fees to the plaintiffs.

St. Jude Medical S.C., Inc. v. Ord and Boston Scientific Corp. No. 09-738 (D. Minn. Apr. 10, 2009)

The U.S. District Court for the District of Minnesota held that the scope of a non-competition clause in a non-compete agreement was not limited to customers that the former employee had contacted more than three times in the past year.

St. Jude Medical S.C., Inc. ("St. Jude") asserted claims for breach of contract and unjust enrichment against Mark Ord, a former employee, and Boston Scientific Corporation ("Boston Scientific"), his new employer. St. Jude asked the court to enjoin Ord from violating the non-compete provision within his employment agreement with St. Jude.

Ord argued that, although the non-competition agreement stated that the former salesperson could not approach customers he had contacted within the previous year for his new employer, the industry understanding was that the limitation only applied to customers with whom the salesperson had more than three contacts before joining the competitor.

The district court held that, although the industry may use the "more-than-three-contacts" understanding, it was contrary to the plain language of the agreement. The court refused to ignore the plain language without strong evidence of the intentions of the contracting parties. The court also found the agreement was "reasonable and enforceable on its face."

Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com. de Equip. Medico No. 08-1279 (Fed. Cir. Apr. 17, 2009)

In a patent infringement action involving a bone plating system, the Court of Appeals for the Federal Circuit ("CAFC") reversed the district court's dismissal for lack of personal jurisdiction. The CAFC held that, although the district court was correct in ruling that it did not have general jurisdiction over the defendant GM. Dos Reis Jr. Ind. Com. De Equip Medico ("GMReis"), a Brazilian corporation, it erred in its ruling that it lacked specific jurisdiction. The CAFC noted that GMReis had purposefully directed its activities at parties in the United States and that the infringement claim against GMReis arose out of its activities in the United States.

Synthes had sued GMReis in the U.S. District Court for the Southern District of California for infringement of U.S. Patent No. 7,128,744, directed to a bone plating system and methods of fracture fixation of a bone. The district court dismissed the suit for lack of personal jurisdiction over the Brazilian company. Neither Synthes nor GMReis disputed the district court's acceptance that GMReis was not subject to personal jurisdiction in any forum in the United States.

On appeal, the CAFC applied a due process analysis under Federal Rule of Civil Procedure 4(k)(2), which is the federal long-arm statute allowing a district court to exercise jurisdiction over a foreign defendant whose contacts with the United States, and not the forum state, meet the requirements of due process.

The CAFC found that the activities and contacts of GMReis with the United States included attendance at trade shows, purchases of parts and a machine, the sale of a product for a veterinary application to one customer and consultations about product development. Representatives of GMReis had brought locking bone plates into the United States from Brazil and mounted displays at trade shows as part of its international sales effort. GMReis did not have approval from the Food and Drug Administration ("FDA") for the sale or use of its medical devices in the United States and prominently displayed that fact in its displays and brochures.

The CAFC affirmed the district court's finding that it did not have general jurisdiction based on these facts, as these contacts were not enough to constitute "continuous and systematic general business contacts" as required to confer general jurisdiction.

On the issue of specific jurisdiction, the district court had concluded that GMReis did not purposefully avail itself of the United States because it "expressly discouraged the forum residents from purchasing its products" by noting the lack of FDA approval in the United States. The CAFC, however, held that it did not matter that GMReis had discouraged United States residents from buying their products by highlighting the lack of FDA approval. The fact that GMReis had brought the bone plates into the United States and displayed them at trade shows supported the finding of purposeful availment.

The CAFC reversed the holding of the district court and remanded the case to the district court for further proceedings.

Lexion Medical, LLC v. Northgate Techs., Inc., et al. No. 1:04-cv-05705 (N.D. Ill. Apr. 27, 2009)

Based on the claim construction of the Court of Appeals for the Federal Circuit ("CAFC"), the U.S. District Court for the Northern District of Illinois, on remand, granted plaintiff Lexion Medical, LLC's ("Lexion's") motion for summary judgment of literal infringement and denied defendant Northgate Technologies, Inc.'s ("Northgate's") motion for summary judgment of no literal infringement.

Lexion sued Northgate because Northgate's Humi-Flow™ product allegedly infringed Lexion's patented invention for heating and humidifying gas used to inflate a patient's abdomen during laparoscopic surgery. A jury entered a verdict against Northgate, finding that claims 11 and 12 of Lexion's United States Patent No. 5,411,474 ("the '474 patent") were valid and infringed by Northgate. Northgate subsequently appealed the verdict as to infringement and validity of the '474 patent.

The CAFC considered the prior claim construction, vacated the jury's verdict, and remanded the case. Each party then moved for summary judgment on: (1) the "means for heating" and "means for humidifying" limitations; and (2) the delivery of gas "within 2°C of the predetermined temperature" limitation.

On the "means for humidifying" limitation, the CAFC found that the trial court erroneously concluded that Lexion disclaimed a means for humidifying that was not in the path of travel of the gas as well as a means for heating not disposed within the humidification means. The district court then held that since it was undisputed that the Humi-Flow has a "means for humidifying" and there was no evidence to refute Lexion's proof of literal infringement absent the disclaimer defense, summary judgment of literal infringement of the "means for humidifying" element was appropriate. Though Northgate asserted that the reverse doctrine of equivalents precluded summary judgment in favor of Lexion, the district court further held that Northgate's assertions did not raise a factual issue regarding whether the Humi-Flow performs the same function in a substantially different way.

Regarding the "means for heating" limitation, the CAFC found that the prosecution arguments that the heating means be "within the humidification means" was incorrect. The CAFC held that on remand the district court should consider the "means for heating" element without application of prosecution disclaimer. The district court then held that since it is undisputed that the Humi-Flow contains an electrical heating element consistent with the "means for heating" construction, and Northgate proffered no evidence to contradict Lexion's assertion, summary judgment of infringement as to the "means for heating" limitation was appropriate.

As to the limitation "heating the gas to a temperature within a predetermined range," Northgate did not offer any evidence to dispute Lexion's arguments of infringement. Instead, it conceded that the Humi-Flow heater heats gas to a set point and that the gas temperature correlates to the heater temperature. Northgate neither raised the non-infringement defense on appeal nor offered any countervailing evidence to Lexion's present assertions. The district court therefore denied Northgate's motion for summary judgment of non-infringement on this claim.

On the limitation "within 2°C of the predetermined temperature," Northgate failed to identify any claim language to support its argument that the '474 patent requires that the condition always be met. Since the '474 patent disclosed that the temperature range will, at times, fluctuate outside of the four- degree range, and Northgate proffered no evidence to the contrary, the district court found that Northgate's non-infringement defense failed and entered summary judgment against Northgate.

Gomez v. Lincare, Inc. No. 05CC00109 (Cal. App. 4th Dist. Apr. 29, 2009)

The California Court of Appeal for the Fourth District reversed the state trial court's grant of summary judgment in favor of a medical device company defendant, finding that the company had not met its burden of proof regarding the applicability of the motor carrier employee exemption.

Lincare, Inc. ("Lincare") provides respiratory services, including oxygen systems, respiratory care, infusion therapy, and medical equipment setup to patients in their homes. Plaintiffs Jose Gomez, Daniel Gutierrez and Donny Talbot, all former Lincare employees who worked as Lincare "service representatives," were required to, among other things, transport hazardous materials developed by Lincare to its patients. After completing a forty-hour workweek Monday through Friday, the plaintiffs were also required to be "on-call" during nights and weekends to provide both telephonic and in-person assistance to Lincare's patients.

Under Title 13 of the California Code of Regulations, commonly known as the "motor carrier exemption," employees who transport hazardous materials can be exempt from receiving overtime pay for all hours worked in excess of eight hours per day, or forty hours per week, as set forth in Labor Code section 510. Because the jobs at issue entailed transporting hazardous materials, Lincare classified the plaintiffs as exempt employees, and thus did not compensate the plaintiffs at the overtime pay rate for all hours the plaintiffs were "on-call." Alleging misclassification of exempt status, the plaintiffs filed suit against Lincare and sought recovery for unpaid overtime compensation for all "on-call" hours worked.

The trial court granted Lincare's motion for summary judgment and concluded that because the plaintiffs were regularly transporting hazardous materials, Lincare had properly classified the plaintiffs as exempt employees and thus did not violate any pay wage regulations.

The appellate court overturned the trial court's ruling and held that Lincare failed to establish that the regular duties of the plaintiffs consisted of transporting hazardous materials and did not fall under any other category of work. Due to Lincare's inability to present sufficient evidence showing that each plaintiff drove a vehicle containing hazardous materials for some period of time on each and every workday, which is required for an employee to be properly classified as exempt under the motor carrier exemption, the court found that there was a triable issue of material fact.

Mullin v. Guidant Corp. AC29829, slip op. (Conn. App. Ct. May 12, 2009)

The Connecticut Appellate Court reversed the state trial court's holding that federal preemption under the Medical Device Amendments of 1976, 21 U.S.C. § 360c et seq. ("MDA") deprives the state court of subject matter jurisdiction and held that a device manufacturer is entitled to summary judgment on state law product liability claims imposing safety requirements that exceed the premarket approval process of the Food and Drug Administration ("FDA").

After suffering ventricular fibrillation arrest, plaintiff Leslie Mullin received an implantable cardioverter defibrillator device manufactured by Guidant Corporation ("Guidant"). After the device malfunctioned and was replaced, Mullin filed a two-count complaint in Connecticut Superior Court against Guidant seeking damages under the Connecticut Product Liability Act and common law tort claims. The complaint contained allegations relating to the product's safety, design, manufacture and distribution. Guidant moved for summary judgment. The trial court found that because the MDA preempted Mullin's causes of action, the court lacked subject matter jurisdiction to hear the case. Mullin appealed.

The Connecticut Appellate Court reversed the trial court, holding that the "MDA's preemptive effect does not implicate [state] courts' subject matter jurisdiction." The court reasoned that because the subject matter jurisdiction requirement can never be waived, the ability of a party to waive a preemption defense by failing to plead it property implies that federal preemption is not jurisdictional.

After reviewing the history of the MDA and its preemption provisions, the appellate court went on to hold that the Supreme Court's decision in Riegel v. Medtronic, Inc., 128 S. Ct. 999 (2008), was controlling and required that summary judgment be granted in favor of Guidant. While recognizing that the Supreme Court's recent decision in Wyeth v. Levine, 129 S. Ct. 1187 (2009) holding that federal law and FDA approval do not preempt state tort claims relating to prescription medication "could be read as being at odds with both Riegel and [the court's] disposition of the present case," the court nonetheless found Wyeth distinguishable in that "the MDA contains an express preemption provision… whereas there is no equivalent provision for prescription drugs." The appellate court reversed and remanded the action with instructions to grant Guidant's motion for summary judgment.

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This material was prepared by Crowell & Moring LLP attorneys Asaf Batelman, Patricia Freshwater, April Nelson Ross, Dani Nguyen, Bernadette Stafford, Nicole S. Thompson, and Deborah Yellin. It is made available on the Crowell & Moring website for information purposes only, and should not be relied upon to resolve specific legal questions. If you have questions or want additional information, please call your regular Crowell & Moring contact or you may contact the editor of Medical Device Lawsuit Watch.