Krauser v. Biohorizons, Inc.

• Decision Date: 01 October 2012
• Docket Number: Case No. 10–80454–CIV.
• Parties: Jack T. KRAUSER, D.M.D., an individual, Plaintiff, v. BIOHORIZONS, INC. a Delaware corporation, Biolok International, Inc., a Delaware corporation and BioHorizons Implant Systems, Inc., a Delaware corporation, Defendants.
• Court: U.S. District Court — Southern District of Florida

903 F.Supp.2d 1337

Jack T. KRAUSER, D.M.D., an individual, Plaintiff,

v.BIOHORIZONS, INC. a Delaware corporation, Biolok International, Inc., a Delaware corporation and BioHorizons Implant Systems, Inc., a Delaware corporation, Defendants.

Case No. 10–80454–CIV.

United States District Court, S.D. Florida.

Oct. 1, 2012.

Ronald Matthew Gache, Scott Adam Simon, Shapiro, Fishman & Gache, LLP, Boca Raton, FL, for Plaintiff.

Gary A. Woodfield, Haile, Shaw & Pfaffenberger, North Palm Beach, FL, Christopher N. Sipes, Joseph Scott St. John, Michael N. Kennedy, Covington & Burling, LLP, Washington, DC, Richard Gervase, Seth Goldman, Timur E. Slonim, Mintz Levin Cohn Ferris Glovsky & Popeo PC, New York, NY, for Defendants.

OPINION AND ORDER

KENNETH A. MARRA, District Judge.

This cause is before the Court upon Defendants' Corrected Motion for Summary Judgment (DE 140). The motion is fully briefed and ripe for review. On July 6, 2012, the Court held oral argument on the motion. The Court has carefully considered the motion and is otherwise fully advised in the premises.

I. Background

The facts, as culled from affidavits, exhibits, depositions, answers, answers to interrogatories and reasonably inferred therefrom in a light most favorable to the non-moving party, for the purpose of this motion, are as follows:

Plaintiff Dr. Jack Krauser (“Plaintiff” “Krauser”) is a periodontist. (Second Am. Compl. ¶ 17.) BioLok International, Inc. (“BioLok”) is a Delaware corporation formerlyknown as American Bio–Dental Corporation. Biolok is the corporate successor to Minimatic Implant Technology, Inc (“Minimatic”), a Florida corporation which merged into BioLok in or around 1997. BioLok is presently owned by BioHorizons, Inc. (“BHI”). (Roy Steven Boggan Decl. ¶ 3, DE 128.) BHI is the indirect parent company of BioLock. ( Id. at ¶ 5.) BioHorizons Implant Systems, Inc. (“BioHorizons”) is a Delaware corporation involved in the design and manufacture of dental implants and related products, as well as medical products unrelated to dental implants. ( Id. at ¶ 4.)

Plaintiff did “design work” from about 1988 to 1993, and some consulting work beginning in 1991, for Minimatic. (Pl. Dep. 38, Ex. F, DE 125.) Plaintiff created a dental implant system, in or around 1987, which Minimatic made and eventually distributed. ( Id. at 439, 449–50, 475; Krauser Aff. ¶ 3.) In 1988, Plaintiff retained Minimatic for the purpose of producing drawings and manufacturing prototypes of his system, including implants, attachments and related products. ( Id. at ¶ ¶ 4–8.) Later, in 1991, Minimatic proceeded to manufacture and sell Plaintiff's system. ( Id. at ¶ ¶ 9–12.)

Plaintiff and Minimatic's relationship was based on an agreement dated March 14, 1991. The agreement provides that Plaintiff would be a consultant and collaborator with Minimatic. (March 1991 Agreement, Ex. C, DE 125; Pl. Dep. 35–36, 386–87.) The agreement also stated that the “[d]rawings and 510(k)s are the property of Minimatic and its stockholders.” (March 1991 Agreement ¶ 2.K.) On June 19, 1992, Plaintiff filed a patent application which subsequently issued as U.S. Patent No. 5,316,476 (“the '476 Patent”) on May 31, 1994. ('476 Patent, Ex. G, DE 125.) That patent expired on May 31, 1998 for failure to pay maintenance fees. (U.S. PTO Bibliographic Data, Ex. U, DE 125.)

In 1993 and 1994, Plaintiff filed several lawsuits against Minimatic, American BioDental Corp., and Leon Shaw, the president and chief executive officer of Minimatic. The lawsuits asserted ownership of the dental implant system and infringement of the '476 patent. ( Krauser v. Shaw, No. CL–93–5862–AJ (15th Jud. Cir. Palm Beach Cty, June 28, 1994), Ex. H, DE 125; Krauser v. Minimatic Implant Tech., Inc., No. CL–94–8521 (S.D.Fla. Dec. 7, 1994), Ex. I, DE 125; Krauser Dep. 47–48.) Minimatic filed a petition for relief under Chapter 11 of the Bankruptcy Code on January 10, 1996. (Final Decree In re Minimatic Implant Tech. Inc., No. 96–30109 (Bankr.S.D.Fla. Jan. 23, 1998), Ex V, DE 125). American BioDental Corp. filed a petition for relief pursuant to Chapter 11 of the Bankruptcy Code on April 2, 1996. (Final Decree In re American Bio–Dental Corp., No. 96–31318 (Bankr.S.D.Fla. Jan. 23, 1998), Ex. V, DE 125.)

Plaintiff, Minimatic and American BioDental Corp. (both companies now known as BioLok) executed a settlement agreement dated May 28, 1996 (“the May Settlement Agreement”) which sought to settle the 1993 and 1994 lawsuits. (May Settlement Agreement, Ex. M, DE 125; Pl. Dep. 53; Boggan Decl. ¶ ¶ 3, 12.) The May Settlement Agreement was submitted to the bankruptcy court for approval. (Pl. Dep. 53.) However, the debtors Minimatic and BioLok subsequently moved to withdraw their motion to approve the settlement agreement. The bankruptcy court then vacated the settlement agreement and it was never approved. (September 12, 1996 Order Granting Motion to Withdraw Debtors' Motion to Approve Settlement Agreement with Krauser et al. and Request to Vacate Settlement Agreement, Ex. R, DE 125.) Among other provisions, ¹the May Settlement Agreement stated that if the bankruptcy court did not approve the agreement, the parties could not enforce it, other than the specific representations they expressly agreed would survive in the event the court did not approve it. (May Settlement Agreement ¶ 30.²)

Plaintiff, Minimatic and American BioDental Corp. executed a new settlement agreement dated October 16, 1996. (October 1996 Settlement Agreement, Ex. N, DE 125; Pl. Dep. 71–72; Boggan Decl. ¶ ¶ 3, 12.) The October Settlement Agreement was approved by the bankruptcy court on November 26, 1996. (Order Granting Debtors' Motion to Approve, In re Minimatic Implant Tech., Inc., No. 96–30109 (Bankr.S.D.Fla. Nov. 26, 1996), Ex. W, DE 125.) On February 12, 1997, the bankruptcy court entered an order confirming the debtors' joint plan of reorganization and incorporated the October Settlement Agreement. (Order Confirming Joint Second Amended Plan of Reorganization, In re Minimatic Implant Tech., Inc., No. 96–30109, at 5 (Bankr.S.D.Fla. Feb. 12, 1997), Ex. X, DE 125.) The October 1996 Settlement Agreement settled Plaintiff's 1993 and 1994 lawsuits. (October Settlement Agreement, Ex. N, DE 125.)

Paragraph two states in part:

As consideration for their performance under this Settlement Agreement, Krauser will conditionally grant to the Debtors an exclusive license by separate document, a copy of which is attached hereto as “Exhibit A,” any and all rights he may have in the Patent and the dental implant system currently being manufactured by the Debtors....

(October Settlement Agreement ¶ 2.)

Paragraph three states in part:

As payment to Krauser for the Debtors' continued sale of the dental implant products that comprise their dental implant system, which Krauser maintains he has rights in and to but which Krauser is willing to forego for so long as said payments are fully and timely made, the Debtors will pay to Krauser the following sums in the following manner:

...

(i) 0% of the total net sales of Debtors ... between zero and $1,750,000.00 of all dental implant products set forth and described in the Debtors' current product catalog, a copy of which is attached hereto as Exhibit “B,” as well as any other dental implant products of any kind or nature whatsoever which are designed and/or used for dental implantalogy which are sold by the Debtors ... now or in the future ...

(October Settlement Agreement ¶ 3.)

Paragraph seven states:

“Events of default” as referenced herein shall include, but shall not be limited to, the following: (1) The failure of Minimatic or ABC to pay to Krauser, at the time said payments are due, or in the amount called for herein, any of the sums required by this Settlement Agreement to be paid to him, however, Minimatic/ABC shall be entitled to five (5) business days' written notice thereof by telecopier at (954) 698–9925 and/or regular mail to Minimatic/ABC's business premises to cure any such default; (2) The failure of Minimatic or ABC to comply with any of the provisions of this Settlement Agreement or the terms of the Debtors' Amended Plan as it pertains to Krauser, and in the case of their failure to comply with a non-monetary provision of this Settlement Agreement, their failure to cure such non-compliance following ten (10) business days after their receipt of written notification by telecopier at (954) 698–9925 and or regular mail to Minimatic/ABC's business premises from Krauser specifying the non-compliance; (3) The conversion to, or a voluntary filing of, a Chapter 7 or Chapter 11 proceeding in bankruptcy by either Minimatic or ABC, or any parent corporation thereof, or successor to either of them by merger or acquisition, at any time while any monies are then owed or will be owed in the future to Krauser; or (4) A judicial or other dissolution of either Minimatic or ABC—other than the merger and/or consolidation of one of them into the other.

(October Settlement Agreement ¶ 7.)

Paragraph eight of the October Settlement Agreement states as follows:

In the event of a default (as defined above) by either or both of the Debtors, Krauser's conditional license of his Patent shall terminate. In addition, Krauser shall have the option, but not the obligation, to institute suit against Debtors for money damages and/or declaration of his rights in and to the dental implant system currently being manufactured by the Debtors, as well as any and all 510(k) filings, related documents and drawings of the Debtors.

(October Settlement Agreement ¶ 8.)

Paragraph twelve of the October Settlement Agreement states as follows:

Upon this Settlement Agreement being approved, the parties to this Settlement Agreement will exchange releases as to any and all claims or causes of action between them, subject only to the terms, obligations and reservations of rights imposed under this Settlement Agreement, in the forms attached as Exhibits “D,” “E,” “F...