Medtronic, Inc. v. Mine Safety Appliances Co.

• Decision Date: 04 April 1979
• Docket Number: No. 4-77-Civ. 201.,4-77-Civ. 201.
• Citation: 468 F. Supp. 1132
• Parties: MEDTRONIC, INC., Plaintiff, v. MINE SAFETY APPLIANCES COMPANY and Catalyst Research Corporation, Defendants.
• Court: U.S. District Court — District of Minnesota

468 F. Supp. 1132

MEDTRONIC, INC., Plaintiff, v. MINE SAFETY APPLIANCES COMPANY and Catalyst Research Corporation, Defendants.

No. 4-77-Civ. 201.

United States District Court, D. Minnesota, Fourth Division.

April 4, 1979.

COPYRIGHT MATERIAL OMITTED

Richard B. Solum, Henson & Efron, Minneapolis, Minn., Robert O. Vidas, Schroeder, Siegfried, Ryan & Vidas, Minneapolis, Minn., for plaintiff.

Benno F. Wolff, Oppenheimer, Wolff, Foster, Shepard & Donnelly, St. Paul, Minn., for defendants.

MEMORANDUM ORDER

LARSON, Senior District Judge.

This is an action for declaratory relief brought pursuant to 28 U.S.C. §§ 2201 and 2202. Plaintiff Medtronic, Inc. (Medtronic) seeks a declaratory judgment that two patents held by defendant Catalyst Research Corporation (CRC) pertaining to the lithium-iodine (Li/I) batteries used in cardiac pacemakers are invalid and not infringed by plaintiff. Plaintiff Medtronic is a Minnesota corporation and a leading manufacturer of cardiac pacemakers. Defendant Mine Safety Appliances Company (MSA) is a Pennsylvania corporation licensed to do business in Minnesota which manufactures and sells industrial safety devices. Defendant CRC is a wholly owned subsidiary of MSA with its principal place of business in Maryland. Most importantly for purposes of this litigation, however, CRC is the sole owner of the two patents in dispute: United States Letters Patent No. 3,660,163 for "Solid State Lithium-Iodine Primary Battery" (the Moser Patent) and No. 3,674,562 for "Primary Cells and Iodine Containing Cathodes Therefor" (the Schneider Patent).

In response to plaintiff's complaint, both defendants have moved for dismissal. Specifically, defendant CRC has moved to dismiss on grounds that this Court lacks subject matter jurisdiction (Fed.R.Civ.P. 12(b)(1)) and the complaint fails to state a claim upon which relief can be granted (Fed.R.Civ.P. 12(b)(6)) because at the time the complaint was filed there did not exist a justiciable controversy between the parties. Defendant CRC has also alleged that plaintiff has failed to present facts sufficient to sustain the exercise of personal jurisdiction over CRC under either of Minnesota's two long arm statutes, M.S.A. §§ 303.13 and 543.19. Defendant MSA has moved to dismiss on grounds of lack of subject matter jurisdiction asserting that no actual controversy exists between plaintiff and MSA since the patents in question are owned by CRC alone and are not subject to MSA's control.

With respect to CRC's motion to dismiss for lack of personal jurisdiction, Medtronic has filed a counter motion seeking an award of the attorneys' fees incurred in opposing CRC's motion. Medtronic contends that attorney's fees are appropriate because CRC's claim is so groundless, given prevailing case law, as to constitute harassment of plaintiff and a waste of this Court's time.

The Court will address the motions before it seriatim beginning with defendant CRC's motion to dismiss for lack of a justiciable controversy.¹ The existence of an "actual controversy" between the parties is, of course, more than simply a requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201; it is essential to sustain jurisdiction under the Constitution. Sherwood Medical Industries, Inc. v. Deknatel, Inc., 512 F.2d 724, 726 (8th Cir. 1975); Mine Safety Appliance Co. v. Energetics Science, Inc., 416 F.Supp. 530, 531 (S.D.N.Y.1976). The fundamental question to be asked in any declaratory judgment action is whether the facts reflect the existence of a concrete dispute between adverse parties of such immediacy that a judicial declaration of rights is warranted. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed. 826 (1941); Medtronic, Inc. v. American Optical Corporation, 327 F.Supp. 1327, 1330 (D.Minn.1971). Whether or not such a dispute or controversy exists is necessarily a question of degree, highly dependent on the facts of each case. Clearly, hypothetical or abstract questions are not suitable for declaratory judgment. At the same time, it is not essential that there be an explicit threat of litigation. While it has generally been held that an actual controversy exists in patent cases only when the defendant-patentee in a declaratory judgment action has expressly or impliedly charged the plaintiff with infringement, the requirement of a charge of infringement has been liberally construed. Sherwood Medical Industries, Inc. v. Deknatel, Inc., supra, at 727; Sweetheart Plastics, Inc. v. Illinois Tool Works, Inc., 439 F.2d 871, 874 (1st Cir. 1971); Muller v. Olin Mathieson Chemical Corp., 404 F.2d 501, 504 (2d Cir. 1968). In Sherwood Medical Industries, Inc. v. Deknatel, Inc., the Eighth Circuit indicated that a charge of infringement sufficient to invoke the Declaratory Judgment Act may be inferred from:

"any conduct or course of action on the part of the patentee which would lead a reasonable man to fear that he or his customers face an infringement suit or the threat of one if he continues or commences the activity in question." 512 F.2d at 728.

The touchstone then is a "reasonable apprehension" on the part of the plaintiff that should he proceed with the activity in question, the defendant-patentee will institute legal action against him. Japan Gas Lighter Association v. Ronson Corp., 257 F.Supp. 219, 237 (D.N.J.1966). See also Medtronic, Inc. v. American Optical Corp., supra, at 1333; Owatonna Manufacturing Co. v. Melroe Co., 301 F.Supp. 1296, 1299 (D.Minn. 1969). In determining whether a charge can be reasonably inferred from a defendant-patentee's conduct, Sherwood instructs that a court must examine the "entire course of action and all of the defendant's relevant conduct." 512 F.2d at 728 Emphasis in original. The court's judgment, furthermore, must be "pragmatic" and indicate an awareness of the "business realities" in the case before it. Id.

It is with the Sherwood standard in mind that this Court has examined the facts presented in the instant case.

The facts relevant to defendant CRC's Rule 12(b)(1) and 12(b)(6) motions date back to the early 1970's. At that time, CRC, seeking entrance into the cardiac pacemaker industry for its lithium iodine (Li/I) power sources began to use Wilson Greatbatch Ltd. (Greatbatch) as its exclusive sales agent for the medical market. In 1972 Greatbatch was granted an exclusive license by CRC under the two patents at issue here. Subsequently Greatbatch called on Medtronic at Medtronic's offices in Minneapolis several times each year to promote the application of CRC's Li/I cells to Medtronic's products and to discuss the possibility of technical assistance from Medtronic relative to this application (Fester Affidavit at ¶ 2). Medtronic was clearly a giant in the pacemaker industry at this time and the deposition testimony and affidavits contained in the record abundantly reflect CRC's great interest in promoting and perpetuating an ongoing vendor/vendee relationship with Medtronic.

The initial purchases by Medtronic of Li/I cells from Greatbatch eventually resulted in direct contractual undertakings between Medtronic and CRC. In August 1974 the parties entered into a non-disclosure agreement encompassing technology exchanges in furtherance of developing Li/I cells for pacemaker use (Knapp Affidavit at ¶ 2). Subsequently, in 1975, the parties entered into a second agreement — a joint research and development agreement concerning the production of specially designed Li/I batteries for possible use in Medtronic Pacemakers.

As a result of the technological exchanges between Medtronic and CRC, Medtronic became convinced that the Li/I power source was so critical to pacemaker development that it was necessary for Medtronic to achieve internal manufacturing control over it (Mahle Affidavit at ¶ 2). Medtronic's determination that it could not be dependent on an outside vendor for its Li/I cells and its desire to achieve internal manufacturing capability were made known to MSA/CRC personnel as early as the fall of 1974. In October 1974 Mr. Norm Dann, then vice president of Medtronic, met with Mr. Milton Hulme, president of CRC and a vice president of MSA, and Mr. Frederick Tepper, general manager of CRC, in Pittsburgh, Pennsylvania, (MSA's corporate headquarters) to discuss Medtronic's possible acquisition of CRC, or at least the lithium-iodine portion of the business. Subsequently, MSA/CRC informed Medtronic that an acquisition did not appear to be in their best interests (Dann Deposition at 22). In connection with the discussions preceding this decision, however, Mr. Tepper assured Mr. Dann that CRC's patents were valid and strong and that he had written them himself (Dann Deposition at 21). Mr. Hulme has acknowledged in deposition testimony that during this time period he and Mr. Tepper discussed the relationship between Medtronic's expressed intent to develop its own capacity to manufacture Li/I cells and the protection afforded CRC by the Mosser-Schneider patents (Hulme Deposition at 138-39).

During 1975 various meetings occurred between Medtronic officials and representatives of CRC or MSA at which it was made clear to the CRC/MSA representatives that Medtronic was interested in manufacturing the Li/I cells which Greatbatch was then selling to Medtronic and the specially designed Li/I cell which CRC and Greatbatch had been developing for Medtronic. Both cell models were ones over which CRC purported to have patent protection (Mahle Affidavit at ¶ 4). In the summer of 1975 Medtronic and CRC began a series of patent license negotiations culminating in a proposal by Mr. Tepper that Medtronic take a paid-up license under the Moser-Schneider patents. Contemporaneously with these discussions, Medtronic began to investigate the validity of the Moser-Schneider patents (Mahle Affidavit at ¶ 3).

In September 1975 Messrs. Tepper, Hulme and Kulp, all officers and employees of CRC, visited Medtronic in Minneapolis to...