Medical Device Lawsuit Watch - September 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:

• Cardiac Pacemakers, Inc., et al. v. St. Jude Medical, Inc., et al.
• Chism v. Ethicon Endo-Surgery, Inc., et al.
• William Beaumont Hospital, et al. v. Medtronic, Inc.
• Arthrex, Inc. v. DePuy Mitek, Inc.
• Guidance Endodontics, LLC v. Dentsply Int’l and Tulsa Dental Products, LLC
• Fresenius USA, Inc., et al. v. Baxter Int’l, Inc., et al.

 

Cardiac Pacemakers, Inc., et al. v. St. Jude Medical, Inc., et al. No. 2007-1296, 2007-1347 (Fed. Cir. Aug. 19, 2009)

The U.S. Court of Appeals for the Federal Circuit ("CAFC"), sitting en banc and overturning its previous holdings, limited the scope of 35 U.S.C. § 271(f), finding that the language and legislative history of Section 271(f) and the presumption against extraterritorial application of U.S. law prevented the application of the statute to method and process claims.

Section 271(f) provides a cause of action for patent infringement when a defendant "supplies" for assembly outside of the U.S. the "components" of a patented invention. Pursuant to Section 271(f), Cardiac Pacemakers, Inc. ("Cardiac") sued St. Jude Medical, Inc. and Pacesetter, Inc. (collectively, "St. Jude") in the U.S. District Court for the Southern District of Indiana alleging that St. Jude infringed patents covering implantable cardioverter defibrillators.

After years of litigation, including a jury trial, appeals to the CAFC, and a new trial, the parties filed post-trial briefs, including cross-motions for summary judgment. The defendants also filed a motion to limit damages.

In response to St. Jude's motion to limit plaintiffs' damages, the district court held that under Section 271(f), the plaintiffs could recover damages that included the sale of infringing devices supplied from the United States to other countries. The defendants appealed.

The Federal Circuit Court held that Section 271(f) does not apply to method claims. The court first considered the language of the statute. The Court explained that under the statute, a method or process claim has "components" in the form of the steps of the process, and that an apparatus for performing the steps of a method is a "component" of that method under the statute. Accordingly, the Court reasoned that for Section 271(f) to apply to process and method claims, a patentee would have to show that an intangible step of the process was "supplied" to other countries.

The Court considered the meaning of the term "supplied," concluding that this term referred to the physical transfer of an object. The Court then reasoned that since it would be impossible to "supply" the steps of a method, Section 271(f) "cannot apply to method or process patents."

In holding that Section 271(f) does not apply to method claims, the Court also considered the legislative history. The Court explained that the statute is meant to close a loophole that allows infringers to ship an unassembled patented product outside of the U.S. Thus, the Court reasoned that extending Section 271(f) to method claims is prohibited by the presumption against the extraterritoriality application of U.S. law.

Based on its holding that Section 271(f) does not apply to method claims, the CAFC reversed the district court's judgment of infringement under Section 271(f) against St. Jude.

 

Chism v. Ethicon Endo-Surgery, Inc., et al. No. 4:08-CV-00341 (E.D. Ark. Aug. 27, 2009)

The U.S. District Court for the Eastern District of Arkansas denied Ethicon Endo-Surgery, Inc.'s ("Ethicon's") summary judgment motion because there existed questions of fact as to whether the medical device in question was used during the plaintiff/patient's surgery. The court rejected Ethicon's argument that the plaintiff had failed to rule out other causes for her injury as an improper basis for imposing summary judgment against the plaintiff.

The plaintiff, Sharon Chism, underwent gastric bypass surgery during which the surgeon used a cutter/stapler to create a smaller stomach for the plaintiff. The day after the surgery, the plaintiff had an accelerated heart rate and was diagnosed with a leak resulting from the previous day's surgery.

The plaintiff sued Ethicon, alleging that one of Ethicon's staplers was used during the surgery and had "malfunctioned resulting in a failed staple line, and an open bowel." The plaintiff brought claims for negligence, strict liability design defect and breach of warranty.

Ethicon moved for summary judgment, arguing that the plaintiff (1) failed to establish that Ethicon's device was used during the plaintiff's surgery and (2) failed to "negate other possible causes" of her injury. The court rejected Ethicon's arguments.

The court found that there was at least an existing question of fact as to whether Ethicon's stapler was used during the surgery. While the surgeon's notes did not specifically reference Ethicon's stapler, the surgeon testified that he used Ethicon's stapler during the plaintiff's surgery. The court also rejected Ethicon's arguments on causation, concluding that issues of causation were "better suited for cross-examination, rather than summary judgment." As a result, the court denied Ethicon's motion for summary judgment in its entirety.

 

William Beaumont Hospital, et al. v. Medtronic, Inc. No. 09-CV-11941 (E.D. Mich. Aug. 31, 2009)

The U.S. District Court for the Eastern District of Michigan refused to dismiss contribution claims brought by a hospital and anesthesia group against medical device maker Medtronic, Inc., ("Medtronic") seeking to require Medtronic to pay a share of a settlement resolving a tort lawsuit brought by an injured patient.

Plaintiffs William Beaumont Hospital and South Oakland Anesthesia Associates PC sued Medtronic for contribution under Michigan law after settling a tort claim with a patient. The patient was injured when a "catheter access kit," accidentally supplied as a free sample by Medtronic to the hospital's anesthesia department, was inadvertently used as a "pain pump refill kit" designed for use in refilling Medtronic's implantable pain pump.

Medtronic moved to dismiss the complaint, arguing that the plaintiffs failed to plead sufficient facts establishing Medtronic's joint liability in the underlying tort action. Medtronic also argued that the plaintiffs failed to give Medtronic reasonable notice of the pending settlement negotiations and an opportunity to participate in those negotiations.

The court denied Medtronic's motion, finding first that the complaint contained sufficient allegations under which Medtronic could be found jointly liable with the plaintiffs who settled with the patient. The complaint alleged that Medtronic was negligent in mistakenly delivering the device that injured the patient.

While acknowledging that Medtronic lacked a direct relationship with the injured patient, the court held that "there is a sufficient connection between [them] because Medtronic supplied the samples with the intention that the samples be used on the hospital's patient." The court considered that a Medtronic pain pump had been implanted in the patient at an earlier date. Based on this fact, the court found that it was "reasonable to impose a duty on Medtronic to not take actions which would harm patients regarding future procedures involving its previously implanted devices."

In light of these duties, the court found that plaintiffs alleged sufficient facts suggesting a breach "based on their allegation that the catheter access kit should never have been delivered to an anesthesiology department and that Medtronic's agent represented that the kits were for use in a refill procedure." While acknowledging that negligence by a nurse or anesthesiologist might prove to be a superseding cause, the court ruled that determination could not be made on a motion to dismiss.

The court also rejected Medtronic's attempt to characterize the plaintiffs' contribution claim as a time-barred negligent misrepresentation claim or as a preempted "inadequate warning" claim. The court found that the plaintiffs adequately alleged that they gave Medtronic reasonable notice of the settlement of the patient's claims and that they wrote to Medtronic inviting the company to participate in the settlement negotiations.

 

Arthrex, Inc. v. DePuy Mitek, Inc. No. 2:04-CV-328 (M.D. Fla. Sept. 4, 2009)

In the third patent infringement case involving Arthrex, Inc.'s ("Arthrex's") TransFix® surgery method, the United States District Court for the Middle District Court of Florida granted Arthrex's motion for summary judgment of infringement against DePuy Mitek, Inc. ("DePuy Mitek").

The patent at issue is a successive patent originating from Arthrex's TransFix anterior cruciate ligament ("ACL") surgical repair method, which has been in use since 1997. In 1999, Defendant DePuy Mitek's predecessor, Innovasive Devices, began marketing its Slingshot™ system, an ACL repair method similar to the TransFix method. Arthrex sued for patent infringement. In an April 2000 settlement, Innovasive Devices agreed to cease using the infringing method.

Shortly thereafter, Mitek Products acquired Innovasive Devices. Mitek Products then modified and reintroduced the Slingshot. After Arthrex sued Mitek Products for infringement, Mitek Products resolved the case by agreeing to stop using the modified Slingshot. Mitek Products also signed a licensing deal to use certain aspects of Arthrex's patent.

In July 2003, immediately after the license agreement expired, Mitek Products' successor-in-interest, Defendant DePuy Mitek, began marketing another modified version of the Slingshot. Arthrex brought this third claim for infringement and moved for summary judgment of its claim.

The court found that DePuy Mitek's modified Slingshot method infringed Arthrex's patent and granted Arthrex's motion for summary judgment. The court further admonished DePuy Mitek for its culpable behavior, noting that " defendant and its predecessors ha [d] twice agreed to stop practicing this method in response to suits and demands to cease its wrongful infringing behavior. Each time, it ha [d] plunged right back into the conduct it agreed to avoid."

The court ordered a hearing to be scheduled to determine the appropriate injunctive and monetary relief in accordance with 35 U.S.C. §§ 283-84 .

 

Guidance Endodontics, LLC v. Dentsply Int’l and Tulsa Dental Products, LLC No. 08-cv-1101 (D.N.M. Sept. 9 and 11, 2009) Sept. 9 Ruling, Sept. 11 Ruling

The U.S. District Court for the District of New Mexico refused to dismiss Guidance Endodontics, LLC's ("Guidance's") claims for Lanham Act violations and unfair competition against two competitors based on statements the defendants made to Guidance's customers and internal e-mails coordinating an attack on Guidance.

Guidance purchased endodontics products—used for root canals and repair of significant tooth decay—from the Defendants Dentsply International, Inc. ("Dentsply") and Tulsa Dental Products, LLC ("Tulsa"). Guidance also competed with the defendants to sell these products to dentists, dental practices, health maintenance organizations and similar buyers.

In November 2008, Guidance filed suit against Dentsply and Tulsa claiming that the defendants had violated, among other laws, the Lanham Act, the Delaware Unfair Practices Act and the New Mexico Unfair Practices Act. Guidance also claimed that the defendants had tortiously interfered with its existing and prospective contractual relations. Guidance claimed that Dentsply and Tulsa engaged "in an effort to harass, harm, sanction and eliminate a successful competitor." Specifically, Guidance alleged that the defendants had misrepresented to Guidance's existing and potential customers that Guidance had lost a "major lawsuit" and was no longer able to supply endodontics products. The defendants moved for summary judgment of Guidance's claims.

The court upheld Guidance's claims under the Lanham Act and the New Mexico Unfair Practices Act. The court rejected Dentsply and Tulsa's arguments that the unfair business practices claims should be thrown out because Guidance relied on employee declarations which the defendants argued were inadmissible hearsay. Although the court largely agreed on the hearsay issue, the court found that Guidance also presented non-hearsay evidence of internal e-mails between the defendants and other statements supporting Guidance's allegations that defendants' sales representatives told them that Guidance lost a lawsuit to the defendants and could no longer supply endodontic products. Based on the combined evidence, the court found that Guidance had put forth sufficient proof to survive summary judgment of its Lanham Act claim and its claim under the New Mexico Unfair Practices Act.

The court, however, agreed with the defendants that Guidance's claims under Delaware law and for tortious interference with existing and prospective contractual relations should be dismissed. The court held that it did not have jurisdiction over Guidance's Delaware Unfair Practices Act. Finally, the court found "no evidence that Guidance had any contractual relationships with which defendants could interfere" and that "Guidance's 'existing contracts' [we]re merely repeat purchasers with no contractual obligation to purchase again in the future."

 

Fresenius USA, Inc., et al. v. Baxter Int’l, Inc., et al. No. 2008-1306, 2008-1331 (Fed. Cir. Sept. 10, 2009)

On September 10, 2009, the U.s. Court of Appeals for the Federal Circuit ("CAFC") affirmed-in-part, reversed-in-part, vacated-in-part and remanded the judgment of the U.S. District Court for the Northern District of California holding that Fresenius USA, Inc. and Fresenius Medical Care Holdings, Inc. (collectively, "Fresenius") infringed patents held by Baxter International, Inc. and Baxter Healthcare Corporation (collectively, "Baxter"), U.S. Patents No. 5,247,434, No. 5,744,027, and No. 6,284,131. These patents relate to a hemodialysis machine integrated with a touch screen user interface.

The district court held that Fresenius failed to present substantial evidence, supporting invalidity, that non-touch-screen limitations of the asserted claims were present in the prior art. The district court also found that Fresenius did not present substantial evidence of a motivation to combine the elements of the prior art to achieve the invention claimed in the "131 and "434 patents. Baxter moved for judgment as a matter of law ("JMOL"), arguing that certain claims contained means-plus-function limitations, all of which require a "means for delivering the dialysate to a dialysate compartment of a hemodialyzer." Baxter argued that Fresenius failed to show that the means limitation directed to delivering dialysate was present in the prior art The district court agreed, granting Baxter"s motion for JMOL.

On appeal, the CAFC found that Fresenius failed to present any evidence that the structure corresponding to the means for delivering dialysate limitation, or an equivalent thereof, was present in the prior art. With regard to means-plus-function claims, the CAFC held that a structural analysis is required and that a functional analysis alone is not sufficient. The Court held that just as a party seeking to prove infringement must provide a structural analysis by demonstrating that the accused device has the identified corresponding structure or an equivalent structure, a party who seeks to demonstrate that a means-plus-function limitation was present in the prior art must prove that the corresponding structure, or an equivalent thereof, was present in the prior art. Fresenius had failed to meet this burden.

The Court also noted that all of the claims on appeal were directed to a hemodialysis machine integrated with a touch screen user interface, which Baxter contends was novel and nonobvious at the time the relevant patent applications were filed. Fresenius argued that that touch screens were well-known in the prior art and had been widely employed. The CAFC stated "if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill." Accordingly, the Court held that the district court"s grant of judgment as a matter of law was inappropriate.

Finally, the Court held that while the district court did not abuse its discretion when it permanently enjoined plaintiffs, the Court vacated for reconsideration the injunction as well as the royalty award.

 

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This material was prepared by Crowell & Moring LLP attorneys Matthew Fornataro, Amy S. Lee, Rogelyn McLean, April Ross, Christine Sommer, Nicole S. Thompson, Deborah Yellin, and Angela Yu. 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.