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QUICKIE, LLC v. MEDTRONIC

January 14, 2004.

QUICKIE, LLC, Plaintiff, -v- MEDTRONIC, INC., Defendant


The opinion of the court was delivered by: GERARD E. LYNCH, District Judge

OPINION AND ORDER

On May 23, 2000, the Patent and Trademark Office issued to Quickie, LLC ("Quickie"), as assignee of the inventors, United States Letters Patent No. 6,066,160 ("`160 Patent"), entitled "Passive Knotless Suture Terminator For Use in Minimally Invasive Surgery and to Facilitate Standard Tissue Suturing." Quickie filed this patent infringement action on February 13, 2002, claiming that Medtronic, Inc. ("Medtronic"), with whom it had previously entered into an agreement for the "mutual exchange of confidential information . . . regarding the development, manufacture, and marketing of technologies in the field of heart valve surgery and repair" (Def Mem. at 2), infringed the `160 Patent by selling a device for retaining sutures. The case is scheduled for trial on May 3, 2004. Page 2

Medtronic now moves separately (1) to dismiss "all claims for relief, express or implied, under the parties' license agreement," and (2) for partial summary judgment "on damage claims for non-accused, non-infringing products." The motions will be denied.

  DISCUSSION

 I. Motion to Dismiss

  Medtronic moves to "dismiss" "implied" claims that both parties agree have not been made. The complaint contains no claims for breach of contract, and Quickie represents to the Court that it has no intention of trying such a claim, or of offering testimony that Medtronic breached the parties' now terminated agreement. (Pl. Opp. 13.)

  The motion, in reality, is a motion in limine that asks the Court to exclude evidence at trial. Exactly what evidence Medtronic would like excluded, however, is far from clear. Its initial memorandum, couched as a motion to dismiss the phantom "contract" claim, pointed to only one potentially prejudicial evidentiary submission: arguing that Quickie sought "to implicitly present a breach of contract claim or theory to the jury . . . in order to evoke in the jury sympathy, or a sense of wrong to be righted" (Def. Mem. 1), Medtronic asserted that "Quickie's [e]xperts [may] not [t]estify [t]hat Medtronic [b]reached [t]he [l]icense [a]greement." (Def. Mem. 7.) After Quickie disclaimed any intention of offering such testimony, Medtronic advised in its reply brief that Quickie should be prevented "from arguing the scope and status of the Agreement at trial." (Def. R. Mem. 1; emphasis in original.) Though Medtronic helpfully italicizes these words, it completely fails to indicate what it means by them. Medtronic concedes that "the parties are free to point to the Agreement . . . as an example of a comparable license covering medical technology between the parties, and opine on the royalty rate in the Agreement Page 3 and its import (if any) on a royalty calculation in this case." (Def. R. Mem. 3.) How the parties can debate the comparability of the Agreement to a hypothetical license for the allegedly infringing device without discussing the scope of the Agreement is left unexplained. Nor does Medtronic explain how a jury is to understand the relevance or irrelevance of the Agreement without knowing its status, to wit, terminated.

  Moreover, contrary to Medtronic's argument, the fact that the parties had a prior relationship that arguably involved the very technology at issue in this case is plainly relevant to the issue of willful infringement. Medtronic is correct that it cannot have willfully infringed Quickie's patent before the patent was issued. (Def. R. Mem. 5, citing State Industries, Inc. v. A. 0. Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1985).) But evidence that Medtronic had access to plaintiff's claimed invention even before the patent was obtained, and was aware of the patent or the plan to obtain it, is clearly relevant to assessing the willfulness of Medtronic's behavior after the patent was issued. To see why, one need only hypothesize a comparable action against an alleged infringer who claimed never to have heard of Quickie or its technology. A claim of willful infringement against such a defendant would be impossible, and evidence that the defendant had in fact had access to the technology and was aware of the intention to seek a patent would significantly bolster plaintiff's case.

  The Court neither has nor expresses any opinion about whether the device in question was in fact within the scope of the Agreement or whether the accused product in fact infringes plaintiff's patent, let alone whether any infringement was willful. These are issues of fact for trial. Nor is this the time for definitive resolution of the scope of any evidence that will be permitted on this subject, or the fairness of any argument that might be drawn from such Page 4 evidence. All that the Court holds is that Medtronic's motion to dismiss a non-existent contract count is denied; that plaintiff has authoritatively disavowed any intention to assert that the Agreement was breached, and will be held to that disavowal; and that Medtronic's vague and premature effort to preclude any testimony about the "scope and status" of the Agreement is denied.

 II. Motion for Partial Summary Judgment

  The accused infringing device (whether styled as a "suture guide," as defendant would have it, or as a "suture holding insert," as plaintiff insists, see Pl. Mem. 2 n. 6) is intended to be used in connection with other medical instruments manufactured by Medtronic in certain forms of cardiac surgery. It is undisputed that these other instruments were developed and marketed by Medtronic before either Quickie obtained its patent or Medtronic developed the allegedly infringing device. It is evident that these instruments perform different functions than Quickie's patented idea, and Quickie does not contend that these instruments in themselves infringe the patent.

  Nevertheless, Quickie argues both (a) that it should be entitled to royalties on Medtronic's sales of various of these instruments on the "entire market value" theory; and (b) that the utility of its device in enhancing the value of Medtronic's other instruments is relevant to calculating the hypothetical royalty rate that would be the measure of recovery here, Medtronic does not appear to dispute the latter point, but argues vigorously, citing Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995) (en banc), that as a matter of law, even if Quickie can establish that the allegedly offending device infringed its patents, it may not recover royalties on the sale of the separate non-infringing instruments with which the suture guide/insert is sold Page 5 (Def. Mem. 20 ff.)

  Under the "entire market value rule," a patentee may seek damages on unpatented components sold with a patented apparatus, if the patented apparatus "was of such paramount importance that it substantially created the value of the component part." Marconi Wireless Telegraph Co. v. United States, 53 USPQ 246, 250 (Ct. Cl. 1942), aff'd in part and vacated in part, 320 U.S. 1 (1943). In Rite-Hite, the en banc Federal Circuit noted that the rule "has typically been applied to include in the compensation base unpatented components of a device when the unpatented and patented components are physically part of the same machine." 56 F.3d at 1549. The rule may be applied to include "physically separate unpatented components normally sold with the patented components," but only where "the unpatented and patented components together were considered to be components of a single assembly or parts of a complete machine," or "together constituted a functional unit." Id. at 1550.

  Medtronic argues that Quickie will be unable to meet this test as to the various instruments at issue on this motion. Medtronic argues that there is no functional relationship between the unchallenged instruments and the accused suture guide/insert, since the former can be sold and used without the allegedly infringing device. (Def. Mem. 20.) Supporting its position with elaborate descriptions, color schematic drawings, and digital video of beating heart surgery using the devices, Medtronic points out that several of its instruments (the Octopus, Starfish and Urchin) are essentially designed to stabilize and hold in position portions of the heart during surgery, permitting operations to be conducted on a beating heart (rather than with the heart stopped and its functions taken over by artificial heart and lung machines). Another Medtronic device (marketed under the brand ...


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