Endotach LLC v. Cook Med. Inc.

• Decision Date: 13 January 2014
• Docket Number: No. 1:13-cv-01135-LJM-DKL,1:13-cv-01135-LJM-DKL
• Parties: ENDOTACH LLC, Plaintiff, v. COOK MEDICAL INCORPORATED, Defendant.
• Court: U.S. District Court — Southern District of Indiana

ENDOTACH LLC, Plaintiff, v. COOK MEDICAL INCORPORATED, Defendant.

No. 1:13-cv-01135-LJM-DKL

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA INDIANAPOLIS DIVISION

Date: January 13, 2014

ORDER ON DEFENDANT'S MOTION TO DISMISS

This cause is now before the Court on Defendant Cook Medical Incorporated's ("Cook's") Motion to Dismiss for Lack of Subject Matter Jurisdiction: No Standing ("MTD"). Dkt. No. 67. This is the second time that Cook has alleged that Plaintiff Endotach, LLC, does not have the legal right to make accusations of infringement of the patents-in-suit, U.S. Patent Nos 5,122,154 (the "'154 patent") and 5,593,417 (the "'417 patent") (collectively, the "Rhodes patents"). In an earlier-filed suit styled Endotach, LLC v. Cook Medical Incorporated, 1:12-cv-01630-LJM-DKL ("Endotach I"), Cook alleged that an assignment agreement between the inventor's widow, Mrs. Brenda Rhodes ("Mrs. Rhodes") and Endotach was insufficient to transfer any rights to the Rhodes patents to Endotach; the Court agreed. Endotach I, Dkt. No. 158. In the instant matter, Cook contends that the new 2013 assignment agreement between co-trustees of the trust created by the inventor, Dr. Valentine Rhodes ("Dr. Rhodes"), and Endotach was also insufficient to transfer any rights in the Rhodes patents to Endotach because during his lifetime Dr. Rhodes granted exclusive rights to the patents to Johnson & Johnson Interventional Systems Co. ("JJIS") and efforts made by Mrs. Rhodesindependent of the trust did not effectively extinguish those rights. See, generally, Dkt. No. 70-1. Endotach asserts that a written document from JJIS evidences its intent to disavow any rights in the Rhodes patents or the license and, even if it did not, the co-trustees had the right to proceed with an infringement suit; therefore, their transfer of that right to Endotach was valid. See, generally, Dkt. No. 89.

The Court has considered the parties' arguments and the relevant documents and concludes that Endotach has standing to bring suit. For the reasons stated herein, Cook's MTD is DENIED.

I. FACTUAL & PROCEDURAL BACKGROUND

The background for the instant motion is, in part, dependent upon the facts Cook's Motion to Dismiss filed in Endotach I, therefore, relevant portions of the factual background from the Court's order on Cook's prior motion are also set forth here.

As previously stated, Dr. Rhodes is the inventor of the Rhodes patents; the '154 patent issued on June 16, 1992, Dkt. No. 1-1, '154 Patent, at 2 of 13; the '417 patent issued on January 14, 1997, Dkt. No. 1-2, '417 Patent, at 2 of 10. The patents are directed to intraluminal and endovascular grafts for placement within a blood vessel, duct or lumen to hold it open. '154 Patent, Abstract; '417 Patent, Abstract. Applying the relevant portions of 35 U.S.C. § 154, the '154 patent expired on August 15, 2010; the '417 patent will expire on November 27, 2015. See 35 U.S.C. §§ 154(a)(2) & (c)(1); '154 Patent, at 1; '417 Patent, at 1.

In November 1995, Dr. Rhodes and JJIS executed a licensing agreement ("JJIS Agreement"). Dkt. No. 70-3, Rhodes/JJIS License Agreement. The JJIS Agreement states, in relevant parts:

JJIS wishes to received from RHODES an exclusive worldwide license to his proprietary information, including patents and patent applications in the Field (as defined below);

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1.4 "Field of the Agreement" (also "Field") shall mean devices a portion of which is placed within a lumen of the body to maintain the patency of the lumen, and more particularly stents, and grafts associated with their use, and the manufacturing methods of such stents and stent grafts.

1.5 "Improvements" shall mean all modifications, variations, revisions, and new models of the Technology (as later defined) or the subject matter and claims of Licensed Patents, or any part thereof, as well as all processes, machines, manufacturing methods or compositions of matter which RHODES may conceive, discover, or develop.

1.6 "Licensed Patents" shall mean U.S. Patent 5,122,154 and any patent application previously or hereafter filed on behalf of RHODES claiming Technology or Improvements, and any United States or foreign patent now issued or hereafter issuing on any such patent application, including but not limited to the list of RHODES patent applications and patents attached hereto and periodically updated as Appendix A.

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1.12 "Technology" shall mean

(i) all inventions, know-how, technical data, desing, flow charts, models, concepts, ideas, methods, processes, machines, manufactures, compositions of matter, software, firmware and discoveries owned by RHODES related to the creation and development of a device for use in the Field, and such devices for use in the Field, and related manufacturing technology; and

(ii) any of such technology as described in the foregoing clause (i) that is acquired by RHODES subsequent to the Effective Date.

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2.1 Worldwide Exclusive License. RHODES hereby grants to JJIS, and JJIS accepts, upon the terms and conditions set forth in this Agreement, a worldwide exclusive license, under Technology, Improvements and Licensed Patents, in each case, within the Field, to make, have made, use and sell Licensed Products within the Field to sue the name RHODES, and, subject to Paragraph 2.2, to grant non-exclusive Sublicenses to others within the Field to have Licensed Products made for JJIS in the event JJIS is unable to meet the need for such Licensed Products.

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4.1 Technology and Improvements. All Technology and Improved conceived and/or reduced to practice by RHODES shall be the property of RHODES throughout the world, subject to all licenses granted to JJIS hereunder.

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5.1 RHODES and JJIS shall each give prompt notice to one another of any infringement of a Licensed Patent by Third Parties as may come to their knowledge.

5.2 JJIS shall have the right to pursue legal action against infringement of a Licensed Patent by Third Parties. RHODES shall have the right to thereafter participate equally (monetarily), upon written request to JJIS, although JJIS shall conduct the conduct of the litigation. . . .

5.3 If JJIS as not, within six months of notice provided under Paragraph 5.1, brought suit for infringement, RHODES may, at his option, bring suit for infringement. If RHODES brings such suit, he shall bear his own costs but JJIS shall thereafter have the right to participate equally (monetarily) in the litigation, which shall then be controlled by RHODES. . . .

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7.4 Term. Unless terminated earlier under other provisions of this Agreement, this Agreement shall remain in effect for the later of the duration of the Licensed Patents or until the Technology becomes publicly known.

7.5 Termination. JJIS may terminate the exclusive license granted under this Agreement by giving sixty (60) days' prior written notice to RHODES. Upon such termination, the licenses granted to JJIS in this Agreement will become non-exclusive.

Id.

Later in November 1995, Dr. Rhodes filed the application that matured into the '417 patent. '417 Patent, at 1. The '417 patent specification states, "The graft of my aforementioned ['154] patent makes use of some anchoring means . . . . While such anchoring means are believed effective for their intended purpose, they never the lessappear to be amenable to improvement insofar as graft retention is concerned." Id. col. 3, ll. 21-27. That specification also states, "[T]he subject invention makes use of anchoring means . . . which offer an improvement in retention over the 'protuberances' disclosed in my aforementioned ['154] patent." Id. col. 5, ll. 13-17.

On July 29, 1999, Dr. Rhodes executed in Florida a Last Will and Testament (the "Will"). Endotach I, Dkt. No. 132-5. Although the Will bequeaths all "tangible personal property" to his wife, Brenda Rhodes ("Mrs. Rhodes"), there is no specific bequest of the Rhodes patents or mention of any intangible property.¹ Id. The Will names Mrs. Rhodes as Dr. Rhodes' Personal Representative. Id. The Will's residuary clause bequeaths "all the residue of [Dr. Rhodes'] estate, real and personal" to a Trust, of which he and Mrs. Rhodes were Trustees, "for the uses and purposes and subject to the terms and provisions thereof . . . ." Id. at 4.

The Trust is also dated July 29, 1999, and provides that any property added to it "by bequest" or other method "shall be covered by the provisions of this Trust, the same as if originally included hereunder." Endotach I, Dkt. No. 125-2, ¶ 2. Among the powers granted to the Trustees of the Trust are powers "to sell, transfer, exchange, or lease any real or personal property of the trust estate . . .; . . . to execute and deliver any deeds, leases, assignments or other instruments as may be necessary to carry out the provisions of [the] Trust; . . ." and "to do all such acts, take all such proceedings and to exercise all rights and privileges . . . with relation to any such property, as if the absolute owners thereof and in connection therewith to make, execute and deliver any instruments and to enter into any covenants or agreements binding any trust createdhereunder." Id. ¶ 13. The Trust provides that upon Dr. Rhodes' death, his daughters, Josette J. Carroll ("Josette") and Amanda J. Rhodes-Finley ("Amanda"), would become Co-Trustees with Mrs. Rhodes. Id. ¶ 16(A).

Dr. Rhodes died in 2000. Endotach I, Dkt. No. 1, Compl. ¶ 10.

On March 10, 2001, in her capacity as Personal Representative, Mrs. Rhodes signed an Inventory, under the penalties of perjury, of "all the property of the estate." Endotach I, Dkt. No. 132-6. There is no mention of the Rhodes patents and it lists "Miscellaneous tangible personal property" in the amount of $1,000.00. Id. at 4.

On November 20, 2009, Mrs. Rhodes executed a document entitled "Exclusive License Agreement," (hereinafter, "Endotach License Agreement") as "patent owner." Dkt. No. 89-13, at 12. The agreement purports to transfer an exclusive license to the '417 patent to Acacia...