Boston Scientific v. Wall Cardiovascular Tech.

• Decision Date: 24 August 2009
• Docket Number: Civ. No. 08-489-SLR.
• Citation: 647 F.Supp.2d 358
• Parties: BOSTON SCIENTIFIC CORPORATION and Boston Scientific Scimed, Inc., Plaintiffs, v. WALL CARDIOVASCULAR TECHNOLOGIES, LLC, and Cardio Holdings LLC, Defendants.
• Court: U.S. District Court — District of Delaware

Page 358

647 F.Supp.2d 358

BOSTON SCIENTIFIC CORPORATION and Boston Scientific Scimed, Inc., Plaintiffs, v. WALL CARDIOVASCULAR TECHNOLOGIES, LLC, and Cardio Holdings LLC, Defendants.

Civ. No. 08-489-SLR.

United States District Court, D. Delaware.

August 24, 2009.

COPYRIGHT MATERIAL OMITTED

Josy W. Ingersoll, Esquire, John W. Shaw, Esquire, and Adam W. Poff, Esquire, of Young Conaway Stargatt & Taylor, LLP, Wilmington, DE. Counsel for Plaintiffs. Of Counsel: John M. Desmarais, Esquire, Peter J. Armenio, Esquire, and Young J. Park, Esquire, of Kirkland & Ellis LLP, New York, NY.

Francis DiGiovanni, Esquire, and Chad S.C. Stover, Esquire, of Connolly Bove Lodge & Hutz LLP, Wilmington DE. Counsel for Defendant. Of Counsel: Stephen D. Susman, Esquire, M ax L. Tribble, Jr., Esquire, Vineet Bhatia, Esquire, and Stephen Schlather, Esquire, of Susman Godfrey L.L.P., Houston, TX, Stephen Shackleford, Jr., Esquire, of Susman Godfrey L.L.P., Dallas, TX, Michael F. Heim, Esquire, and Russ Chorush, Esquire, of Heim, Payne & Chorush, L.L.P., Houston, TX, Franklin Jones, Jr., Esquire, of Jones and Jones, Inc., P.C, Marshall, TX, and Otis Carroll, Esquire, of Ireland, Carroll & Kelly P.C, Tyler, TX.

MEMORANDUM OPINION

SUE L. ROBINSON, District Judge.

I. INTRODUCTION

Plaintiffs Boston Scientific Corporation ("BSC") and Boston Scientific Scimed, Inc. ("Scimed") (collectively, "plaintiffs") brought this suit against defendant Wall Cardiovascular Technologies, LLC ("WCT") on August 6, 2008, seeking declaratory judgment of noninfringement, invalidity, and unenforceability of United States Patent No. 6,974,475 ("the '475 patent"). (D.I. 1) On October 9, 2008, WCT filed a motion to dismiss, arguing, inter alia, a lack of personal jurisdiction. (D.I. 9) On January 2, 2009, after taking jurisdictional discovery, BSC amended its complaint to, inter alia, add Cardio Holdings LLC ("Cardio Holdings") as a defendant. (D.I. 16)

WCT and Cardio Holdings (collectively, "defendants") move to dismiss the amended complaint, principally arguing that the court: (1) lacks personal jurisdiction over WCT because WCT has insufficient contacts with Delaware and cannot have Cardio Holding's contacts attributed to it under an alter ego theory; (2) lacks subject matter jurisdiction over the declaratory judgment claims against Cardio Holdings because Cardio Holdings does not own the '475 patent and is not party to an actual controversy with respect to the '475 patent; and (3) should dismiss the suit pursuant to the "first to file" rule because the same parties are already litigating the same issues in an earlier filed suit in the Eastern District of Texas. (D.I. 21) For the reasons that follow, the court grants the motion.¹

II. BACKGROUND

A. The Parties

BSC is a Delaware corporation with its principal place of business in Natick, Massachusetts. (D.I. 16 at ¶ 1) Scimed is a Minnesota corporation with its principal place of business in Maple Grove, Minnesota. (Id. at ¶ 2) Plaintiffs manufacture, sell, and distribute drug-eluting stents under the trade names TAXUS EXPRESS® and TAXUS LIBERTE®. (Id. at ¶ 14) Pursuant to an agreement with Abbott Laboratories and Abbott Cardiovascular Systems, Inc. (collectively, "Abbott"), plaintiffs also sell Abbott's XIENCE® stents under the PROMUS® brand and have a license to directly manufacture and sell PROMUS® stents. (Id. at ¶¶ 7, 12-13)

WCT is a Texas limited liability company with its principal place of business in Marshall, Texas. (Id. at ¶ 3; D.I. 23, ex. 1 at 2) WCT has two members (D.I. 23 at ¶ 5): Cardio Holdings, which is a Delaware limited liability company with its principal place of business in Marshall, Texas (D.I. 16 at ¶ 5); and W.H. Wall Family Holdings, LLLP ("WFH"), which is a Georgia limited liability limited partnership (D.I. 11 at ¶ 3). Each member owns fifty percent of WCT. (D.I. 23 at ¶ 5) As initial capital contributions, Cardio Holdings contributed $2 million to WCT (id., ex. 1 at sched. A), while WFH assigned to WCT all rights and interests in the '475 patent (id.; D.I. 11 at ¶ 3). WCT used the initial $2 million to pay WFH for the assignment of the '475 patent. (D.I. 23, ex. 1 at § 2.2) Cardio Holdings must also contribute a total of $2 million more to WCT by November 2009 to be used as additional payments to WFH. (Id.) Cardio Holdings also funds WCTs payment of legal bills, employee salaries and rent costs. (D.I. 31, ex. 5 at 22-23) The main business goal of WCT is to assert and license its intellectual property. (D.I. 23, ex. 1 at § 1.6)

WCT is governed by a three-person Board of Directors, with WFH and Cardio Holdings each naming one Governing Director to the Board. (D.I. 23, ex. 1 at § 6.1) The third Director, whose purpose is to help resolve disputes between the Governing Directors, is chosen by agreement between the Governing Directors. (Id.) The Director that WFH appointed is Dr. W. Henry Wall ("Wall"), the inventor of the '475 patent and a partner in WFH. (Id.; D.I. 11 at ¶¶ 2, 3) The Director that Cardio Holdings appointed is William A. Marino ("Marino"), a director of Cardio Holdings. (D.I. 23 at ¶¶ 2,3)

As WCT's "Managing Director," Marino controls WCT's "day-to-day business, affairs, and properties ... in accordance with the [budget approved by the Board] and the general guidelines and policies established by the Board...." (D.I. 23, ex. 1 at § 6.1) Some of these duties include monitoring the work of WCT's outside counsel, reviewing legal invoices for WCT, and informing WFH of litigation notices and motions. (D.I. 31, ex. 5 at 22-23, 40-41) This authority does not extend to any actions requiring Board approval including inter alia, "the sale, disposition, acquisition or licensing of the Patents [owned by WCT] or rights therein," "any merger or consolidation of the Company," "the issuance of additional Membership Interests," "the incurrence of indebtedness," commencing legal action, the selection or termination of legal counsel, and "material decisions relating to strategy, venue, targets and other matters pertaining to any" legal proceeding. (D.I. 23, ex. 1 at § 6.1)

As WCT has not yet been successful in licensing its patent rights, it has not been able to generate any revenue of its own. (D.I. 31, ex. 5 at 26-27) Thus, Cardio Holdings has been the sole source of funding for WCT. (Id. at 41) When Cardio Holdings transfers funds from its own bank account to WCT's account, it does so by wire pursuant to specifications in WCT's governing document. (Id. at 37) If WCT does generate income in the future, both WFH and Cardio Holdings have a contractual right to receive additional payments. (D.I. 23, ex. 1, §§ 4.1, 5.1)

B. The Pending Texas Litigation

The '475 patent is currently the subject of two patent infringement cases pending in the United States District Court for the Eastern District of Texas. On November 16, 2007, WCT filed suit ("the first Texas suit") claiming infringement of the '475 patent by BSC and Johnson & Johnson ("J & J"). (D.I. 12, ex. 1) WCT alleged that "BSC has infringed and continues to infringe the '475 patent by its manufacture, use, sale and/or offer for sale of BSC's Taxus Express products, and other products and services related to coronary, carotid and peripheral stents. ..." (Id., ex. 1 at ¶ 12) (emphasis added) On February 1, 2008, WCT amended its complaint in the first Texas suit by adding as defendants Scimed and Cordis Corporation ("Cordis"), wholly owned subsidiaries of BSC and J & J, respectively. (Id., ex. 2 at ¶¶ 3, 5) The amended complaint mirrored the original, changing only the accused parties (adding Scimed and Cordis) and the accused products (expanding the description from "BSC's Taxus Express products" to the broader "BSC's Taxus products"). (Id., ex. 2 at ¶ 10) On March 13, 2008, WCT again amended the complaint in the first Texas suit by adding Medtronic, Inc., Medtronic USA, and Medtronic Vascular, Inc. (Id., ex. 3 at ¶¶ 6-8) Besides adding defendants, this second amended complaint is the same as the previous version. (Id., ex. 3 at ¶ 13)

On July 25, 2008, WCT filed another suit ("the second Texas suit") in the Eastern District of Texas based on the '475 patent. (Id., ex. 8) In that action, WCT alleged that "Abbott infringed and continues to infringe the '475 patent by its manufacture, use, sale and/or offer for sale of Abbott's XIENCE V Drug Eluting Stent Product...." (Id., ex. 8 at ¶ 8) After the two Texas suits illuminated BSC's possible infringement of the '475 patent based on its sale of Abbott's XIENCE® stents under the PROMUS® brand as well as its sale of drug-eluting stents under the trade name TAXUS LIBERTE®, BSC filed the pending action for a declaratory judgment of noninfringement, invalidity and unenforceablity of the '475 patent. The two stents at issue in this suit, the PROMUS® stent and the TAXUS LIBERTE® stent, were launched for sale in the United States by BSC in July 2008 and November 2008, respectively. (D.I. 30 at 11)

C. WCT's Contacts with Delaware

WCT negotiated with BSC and other Delaware entities over use of the '475 patent, including the following activities:

• In February 2005, Wall sent a letter to BSC attempting to license patent rights. (D.I. 31, ex. 3, at sched. 2.7(I)) • Throughout February 2005, WCT sent letters to companies incorporated in Delaware to discuss licensing patents, including LeMaitre Vascular, Inc., Endologix, Inc., CardioTech Int'l, Inc., W.L. Gore & Assocs., Inc. and Memry Corp.² (Id.)

• In May 2005, Wall's attorney met with BSC representatives in Georgia to discuss licensing patent rights. (Id., ex. 13)

• In September 2005, BSC proposed terms for a possible assignment of Wall's patent rights, although negotiations eventually fell through. (Id., ex. 14)

• In December 2005, Wall and Medtronic, a Delaware corporation, engaged in negotiations relating to licensing patent rights, including Medtronic's entering into a non-disclosure agreement with Wall and offering to...