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CONMED CORP. v. ERBE ELECTROMEDIZIN GMBH

March 7, 2001

CONMED CORPORATION, AND ASPEN LABORATORIES, INC., A WHOLLY-OWNED SUBSIDIARY OF CONMED CORPORATION, PLAINTIFFS,
v.
ERBE ELECTROMEDIZIN GMBH, AND ERBE USA, INC., DEFENDANTS.



The opinion of the court was delivered by: Hurd, District Judge.

AMENDED MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

On June 22, 2000, plaintiffs Conmed Corporation ("Conmed") and Aspen Laboratories, Inc. ("Aspen") (collectively "plaintiffs") commenced the instant action against defendants ERBE Electromedizin GmbH and ERBE USA, Inc. (collectively "ERBE" or "defendants") pursuant to 28 U.S.C. § 2201, 2202 and 1338, and the Patent Laws of the United States, Title 35 of the United States Code, and various state laws. Plaintiffs are asserting seven causes of action for (1) a declaratory judgment of non-infringement of patent; (2) a declaratory judgment of invalidity of patent; (3) a declaratory judgment of unenforceability of patent; (4) tortious interference with contractual relations; (5) tortious interference with prospective business relations; (6) false advertising and unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125; and (7) common law unfair competition. The complaint seeks compensatory and punitive damages, attorneys' fees and costs, and injunctive relief.

Defendants move to dismiss the first, second, and third causes of action pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, and the four remaining causes of action pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a cause of action. Plaintiffs oppose.

Oral argument was heard on January 12, 2001, in Utica, New York. Decision was reserved. For the reasons that follow, the motion will be denied.

II. FACTS

This action arises out of an alleged threat by ERBE's CEO, Christian Erbe, to seek an injunction to halt the marketing of a flexible argon probe by Conmed. The following are the undisputed facts in this case, and — where noted — the disputed facts as alleged by the nonmoving plaintiffs.

Conmed and ERBE are rival manufacturers of surgical devices, accessories, and support equipment. Each sells a comparable argon gas-assisted gastrointestinal coagulation probe in the United States. Conmed's product line is known as the "Argon Beam Coagulation" ("ABC®") series of products. The principal product in this series is the Conmed System 7500TM Electrosurgical Generator with ABC® technology (the "ABC generator"), which is manufactured by Aspen. The ABC generator is fully protected under patents owned by the plaintiffs. This generator has various attachable accessories for use in different surgical procedures. These attachments are generally not compatible with other units. One such accessory, which is the specific product at issue in this lawsuit, is the ABC® Flex Gl Probe (the "Gl probe").

ERBE manufactures and markets a rival system — the ERBE APC300TM "Argon Plasma Coagulator" (the "APC 300"). Just as with Conmed's system, the ERBE APC 300 system offers an argon gas-assisted Gl probe as an accessory. Defendants' probe is protected by United States Patent No. 5,720,745 (the "'745 patent"). The availability of such a probe is an important factor to customers considering the purchase of either Conmed's or ERBE's electrosurgical generators. In addition, the probes are disposable attachments, and are not intended to be reused. Because the probes are disposable, their continued availability is a relevant consideration to potential customers.

The complaint alleges that in the fall of 1999, the parties were engaged in settlement negotiations over an unrelated litigation when ERBE suggested that Conmed needed to take a license of the '745 patent in order to continue selling its Gl probe. Conmed responded to this request with a detailed response from its patent counsel, setting forth the reasons why the Gl probe did not infringe the defendants' '745 patent. At that time, plaintiffs believed that the defendants were satisfied with this response, and that the matter was resolved.

Conmed alleges that in February 2000, it subsequently learned from a sales representative in California that ERBE was implying in written marketing materials that plaintiffs' Gl probe infringed the '745 patent. These materials contained a head-to-head comparison of the argon gas-assisted Gl probes of the two companies, and emphasized the superiority of the ERBE probe through material misrepresentations and falsehoods — including a purported advantage based on ERBE's superior patent protection. Conmed received similar reports from other sources over the next several months.

This course of deceptive and unlawful marketing culminated in the above-referenced statement of Christian Erbe, which predicated the instant lawsuit. This statement — that defendants were moving rapidly to halt plaintiffs' manufacturing of flexible argon probe devices — was repeated to a potential customer of plaintiffs in a letter written by Steve Cramton, an authorized dealer of ERBE products (the "Cramton letter").

Conmed also alleges that it learned of the Cramton letter — and Christian Erbe's threat of patent litigation — when a customer asked one of its sales representative if the parties were currently engaged in patent litigation. In addition, plaintiffs assert that ERBE's provision of competitive patent-related information to a sales representative is consistent with industry practice because "[i]n the medical device industry, distributors and sales representatives for manufacturers typically do not have familiarity with patents and generally rely on statements and materials provided by manufacturers on such issues." See Plaintiffs' Opposition at 5 n. 3. This practice, in plaintiffs' view, made the purported threat by Christian Erbe more credible, and led to the development of an apprehension by plaintiffs that patent litigation was imminent.

Shortly after learning of the contents of the Cramton letter, Conmed commenced the instant action. A letter from plaintiffs' general counsel, Daniel S. Jonas ("Jonas"), accompanied service of the complaint upon the defendants. This letter stated, in part, that

It appears to us at this time, however, that ERBE either believes that CONMED and Aspen infringe ERBE's United States Patent 5,720,745, or ERBE believes that it is acceptable in ERBE's commercial marketing, to imply that CONMED's products may become unavailable as a result of patent litigation that ERBE has no intention of commencing.

Exhibit "A" to Defendants' Motion to Dismiss the Complaint (the "Jonas letter") (emphasis added). This letter was marked "For Settlement Purposes Only" and contained an invitation by Jonas to contact him to discuss settlement of this action. The instant motion followed.

III. DISCUSSION

A. 12(b)(1) Motion to ...


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