Applied Med. Res. Corp. v. Tyco Healthcare Grp. LP, SACV 11-01406 JVS (ANx)
| Decision Date | 11 July 2014 |
| Docket Number | SACV 11-01406 JVS (ANx),C/w SACV 12-00024 JVS (ANx),SACV 14-00087 JVS (ANx) |
| Court | U.S. District Court — Central District of California |
| Parties | APPLIED MEDICAL RESOURCES CORPORATION, Plaintiff, v. TYCO HEALTHCARE GROUP LP d/b/a COVIDIEN, Defendant. |
This matter was tried to the Court on March 11-13 and April 4, 2014. Consistent with the Court's practice in bench trials (see Docket No. 275), direct testimony was received by way of declaration. The declarant then stood for cross-examination and, in most cases, redirect and recross.
The operative pleadings are the Complaint of Gaya Limited, Covidien LP, and Covidien Sales's (collectively, "Gaya") seeking a determination with regard to inventorship concerning certain patents held by Applied Medical Resources Corporation ("Applied")1 and Applied's Answer.2
Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the Court now enters its findings of fact and conclusions of law.
As set forth in the Court's Pretrial Conference Order (Docket No. 293), the Court conducted a trial on the following issue: whether Gaya has shown by clear and convincing evidence that inventorship should be corrected on U.S. Patent Nos. 7,473,221 (the "'221 patent"); 7,481,765 (the "'765 patent"); 8,105,234 (the "'234 patent"); 8,016,755 (the "'755 patent"); and 8,496,581 (the "'581 patent") (collectively, "the Applied Patents"), including whether and which of MartinCaldwell ("Caldwell"), Donal Bermingham ("Bermingham"), Damien Rosney ("Rosney") and Christy Cummins ("Cummins") should be added as inventors and whether and which of the named Applied inventors have been improperly named.
The parties each reserved their right to have the Court determine whether this case should be deemed an exceptional case under 35 U.S.C. § 285 and whether the parties should be awarded their attorney fees.
1. Applied is a California corporation specializing in the development, manufacture, and marketing of various medical devices, including access devices. (Hilal, ¶ 1.)3
2. Applied developed "universal seal" technology for use with trocars in laparoscopic surgery. (Id., ¶ 5.) A "universal seal" refers to the ability of a single trocar to seal with different instrument sizes without requiring an adapter. (Id.)
3. Applied learned about the nascent hand-assisted laparoscopic surgery ("HALS") technology in 1995, when an Applied employee saw a presentation on HALS at a medical convention. (Id., ¶ 8.) Because the technology was so new, most surgeons had not yet accepted it and Applied did not pursue a product at that time. (Id.)
4. Gaya is an Irish patent holding company formed in 1994. (Caldwell, ¶ 2.) Medtech, a sister company of Gaya, was an entity licensed by Gaya to research, develop, and manufacture patented Gaya inventions. (Id., ¶ 3.) For ease of reference, the Court will refer the to two companies simply as "Gaya."
5. In 1997, Gaya developed a HALS device that it called the "Intromit." (Caldwell, ¶ 6.) The Intromit included an inner plastic sleeve and an outer plastic sleeve that were joined at their upper edges to form an inflatable chamber. (Hilal, ¶ 11; see also Ex. 933 (product); Ex. 934 (photos of product); Ex. 375 (Instructions for Use).) A passageway through the inner sleeve allowed a surgeon's hand to pass through. (Hilal, ¶ 11.) A "taut valve" at the lower end of the passageway acted as a zero seal, preventing air from escaping the abdomen when nothing passed through the device. (Id., ¶¶ 11-13.) A "feathered valve" or an elastic band at an end of the passageway sealed around the surgeon's arm when it was inserted through the passageway, opening the taut valve. (Id., ¶ 11.) The device attacheddirectly to the patient's abdomen with an adhesive flange. (Id., ¶ 12.)
6. From 1994 to 2001, Gaya focused its research and development efforts on HALS devices. (Caldwell, ¶ 4.) Gaya was a pioneer in the creation of HALS devices. (Caldwell, ¶ 4.)
7. Gaya's R&D team engaged in extensive research and development of next generation HALS devices. (Cummins, ¶ 5.) The R&D team included Caldwell, Rosney, Bermingham, and Cummins. (Id., ¶ 16.)
8. Caldwell joined Gaya in June 1995. (Caldwell, ¶¶ 1-2.) Caldwell's early work at Gaya involved the Intromit, Gaya's first-generation HALS access device. (Id., ¶ 2.) In view of the perceived shortcomings of the Intromit, in early 1998 Caldwell initiated a program to develop a next-generation HALS device. (Id., ¶ 14.)
9. Bermingham was a process and manufacturing engineer for Gaya from approximately mid-1997 through early 2001. (Bermingham, ¶ 1.) Bermingham's primary responsibilities at Gaya were developing and improving the manufacturing process for the Intromit and also for developing next-generation HALS devices. (Id.)
10. Rosney was a production manager for Gaya from approximately 1996 to2001. (Rosney, ¶ 2.) In that capacity, Rosney had overall responsibility for manufacturing the Intromit and was also involved in research and development of next generation HALS devices. (Id., ¶¶ 4-5.)
11. Cummins was employed as a research and development consultant for Gaya from October 1998 to September 1999. (Cummins, ¶ 1.) Cummins' primary responsibilities were to make improvements to the Intromit, and to design and develop the next generation of Gaya HALS devices. (Id., ¶ 15.)
12. In 1999, Gaya approached Applied to discuss licensing the Intromit. (Hilal, ¶ 15.) The parties entered into a Secrecy Agreement in September 1999 to facilitate further discussions regarding rights to the Intromit. (Id., ¶ 18; Ex. 735 (Secrecy Agreement).) In February 2000, Applied and Gaya entered into a Patent License and Option Agreement under which Applied received a license from Gaya to sell the Intromit product. (Ex. 737 (Patent License and Option Agreement).) Applied also obtained an option to certain patents owned by Encoret (another patent holding company related to Gaya) ("Encoret Option"). (Id.) Gaya had represented that Encoret patents could be asserted to restrict HALS activity by competitors, such as Dexterity and Smith & Nephew, if Gaya (through Encoret) prevailed in a patent interference proceeding with Dexterity. (See Hilal, ¶¶ 26-27, 41.) Gaya's claims in the interference proceeding were rejected. (Id., ¶ 41.) As aresult, Applied never considered exercising the Encoret Option. (Id., ¶¶ 39-41.)
13. In connection with its negotiations with Gaya, Applied gathered additional information regarding existing HALS technologies on the market and reviewed issued patents for HALS devices. (Brustad, ¶ 12.) This included reviewing Gaya's patents on the Intromit and obtaining copies of more than sixty issued patents related to HALS technology. (Id., ¶ 15.)
14. Applied also discussed HALS technology with surgeons and other companies operating in the field. (See id., ¶ 9.) For example, on December 3, 1999, a Urologist named Dr. Clayman met with Applied engineers to discuss product needs and future development concepts for HALS devices. (Id.) Dr. Clayman brought with him a liquid-filled toroid bladder that he suggested could act as a possible sealing concept for trocar or HALS applications. (Id.) Following the visit, Applied evaluated possible concepts using an inverting toroid seal. (Id., ¶ 10.) On December 30, 1999, Applied prepared an invention disclosure - naming Dr. Clayman as one of the inventors - that used this concept for both HALS and trocar seals. (See Ex. 988.) However, Applied ultimately determined that the concept did not work, and Applied did not pursue it further. (Brustad, ¶ 11.)
15. In January 2000, Applied employees Nabil Hilal ("Hilal) and John Brustad ("Brustad") visited the facilities of Dexterity, a company that was producing and selling a HALS device. (Id., ¶ 28; Hilal, ¶ 34.) At the time,Dexterity was the leading company with a HALS device in the U.S. market. (Hilal, ¶ 30.) Hilal and Brustad discussed HALS devices and the HALS market with individuals from Dexterity. (Id., ¶ 34.)
16. Applied began selling the Intromit in March 2000. (Hilal, ¶ 42.) At the time, Gaya was manufacturing the Intromit in Ireland. (Johnson, ¶ 10.) Applied's preferred option was to transfer the manufacturing and assembly of the Intromit to Applied's facilities in Orange County, California in order to respond more quickly to the evolving needs of surgeons. (Id.) Applied had not ruled out the possibility of setting up a permanent manufacturing facility in Ireland, however. (Id., ¶ 12.)
17. Two Applied engineers, Gary Johnson ("Johnson") and Scott Taylor ("Taylor"), visited Gaya's facilities in Ireland on March 23 and 24, 2000 to learn about the Intromit manufacturing process and to explore the options for a permanent manufacturing site for the Intromit. (Johnson, ¶¶ 12-14; Taylor, ¶¶ 6-7; see also Ex. 806 (Agenda).) They were hosted by Gaya employees Bermingham and Rosney. (Johnson, ¶ 15; Taylor, ¶ 10.) As discussed more fully below, no proprietary Gaya information was disclosed, and the March 23-24 meeting does not support any claim of co-inventorship.
18. On the morning of the first day of the visit, Johnson and Taylorreviewed Intromit design and manufacturing documentation. (Johnson, ¶ 17; Taylor, ¶¶ 12-13.) That afternoon, they inspected the actual manufacturing equipment. (Johnson, ¶ 19; Taylor, ¶ 15.)
19. On the second day of the visit, Johnson and Taylor spent the morning reviewing product labeling and shipping logistics with Gaya personnel. (Johnson, ¶ 21; Taylor, ¶ 17.) They also discussed shipping the manufacturing equipment to Applied's facilities. (Johnson, ¶¶ 23-24; Taylor, ¶¶ 18-19.)
20. Also that morning, Caldwell showed Taylor and Johnson a prototype of a trocar concept called the "Introcar." (Johnson, ¶ 23; Taylor, ¶ 18.) Caldwell wished to discuss the Introcar...
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