Puget Bioventures, LLC v. Biomet Orthopedics LLC

• Decision Date: 11 June 2018
• Docket Number: Case No. 3:17-CV-502 JD
• Court: U.S. District Court — Northern District of Indiana
• Parties: PUGET BIOVENTURES, LLC, Plaintiff, v. BIOMET ORTHOPEDICS LLC, and BIOMET MANUFACTURING, LLC, Defendants.

PUGET BIOVENTURES, LLC, Plaintiff, v. BIOMET ORTHOPEDICS LLC, and BIOMET MANUFACTURING, LLC, Defendants.

Case No. 3:17-CV-502 JD

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF INDIANA SOUTH BEND DIVISION

June 11, 2018

OPINION AND ORDER

Plaintiff Puget BioVentures, LLC and Defendants Biomet Orthopedics LLC and Biomet Manufacturing, LLC (collectively, "Biomet") are no strangers to one another. The two are currently locked in litigation before this Court in Case No. 3:10-cv-465 (the "2010 case"). Hudson Surgical Design, Inc. initiated that lawsuit in the Northern District of Illinois on July 19, 2010, alleging infringement of its patent for "Methods and Apparatus for Femoral and Tibial Resection," U.S. Patent No. 7,344,541 (the "'541 patent"). It amended the complaint two months later, in September. On motion, the case was then transferred to this Court in November 2010 and then ordered stayed in December 2010, pending reexamination of the '541 patent by the United States Patent and Trademark Office. The stay was lifted in August 2017.

While the 2010 case remained stayed, several important events occurred. First, the Patent Office issued a continuation patent to Hudson Surgical, entitled "Methods and Apparatus for Orthopedic Implants," U.S. Patent No. 7,967,822 (the "'822 patent"), on June 28, 2011. The '541 patent is the "parent" of the '822 patent. Second, in January 2013, Hudson Surgical assigned ownership of the '541 patent to Puget. At some point, Puget also obtained right, title, and interest in the '822 patent from Hudson Surgical.¹ [DE 1 ¶ 7] And third, Puget filed the instant lawsuit against Biomet on June 26, 2017, alleging that Biomet has and continues to infringe upon the '822 patent.

Before the Court is Biomet's Motion to Dismiss Puget's complaint. [DE 23] For the reasons stated herein, the Court will grant Biomet's request to dismiss Puget's claims relating to patent claims 2, 6, and 15 as ineligible. The Court will deny all other requested relief.

FACTUAL ALLEGATIONS

As stated above, the '822 patent issued to Hudson Surgical on June 28, 2011. The '822 patent covers a surgical procedure and related apparatuses that seek to reduce the margin of error associated with using oscillating sawblade-based resection systems in total knee replacements. [DE 1-1 at 49 (the '822 patent)] In a nutshell, the invention is meant to take the pressure off the surgeon with an apparatus that positions a cutting guide in such a way that the surgeon need only make a single resection of the bone. Id. Only a few days after its issuance, Hudson Surgical identified the '822 patent to Biomet in a letter. [DE 1-2] The letter advised Biomet that Hudson Surgical believed the '822 patent covered several of Biomet's products, and that Biomet would need a license to continue making, providing, offering, selling, or assisting in the use of said products. Id.

Despite the warning in Hudson Surgical's letter, Biomet did not acquire or obtain a license to any rights in the '822 patent. [DE 1 ¶¶ 28, 55] Instead, Biomet continued to manufacture, offer, sell, or otherwise make its potentially infringing products available, and in so doing, allegedly committed direct infringement of the '822 patent (specifically, patent claims 2,6, and 15). Id. ¶ 35. These products include Biomet's Vanguard and Microplasty knee replacement systems. Id.

Furthermore, and with knowledge of the '822 patent, Biomet provided manuals, surgical guides, written instructions, and other training materials in conjunction with the sale of its Vanguard and Microplasty products. Id. ¶¶ 37, 38. Puget alleges that this conduct represents an intentional effort to induce orthopedic surgeons to directly infringe on the '822 patent (specifically, patent claims 1, 5, and 14). Id. The surgeons themselves then indeed followed Biomet's instructions, which allegedly recite claim 5 of the '822 patent, in order to perform knee surgeries in a manner that directly infringes upon the '822 patent. Id. ¶¶ 40-46.

Puget additionally alleges that Biomet, again with knowledge of the '822 patent, committed contributory infringement by making, offering, and selling a component of the '822 patent: the tibial resection block. Id. ¶¶ 47-49. Surgeons then used the tibial resection block to directly infringe on the '822 patent. Id. ¶ 48. Finally, Puget alleges that all of Biomet's purported direct and indirect infringement has been willful. Id. ¶ 51.

STANDARD

In reviewing a motion to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6), the Court construes the complaint in the light most favorable to the plaintiff, accepts the factual allegations as true, and draws all reasonable inferences in the plaintiff's favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A complaint must contain only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). That statement must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and raise a right to relief above the speculativelevel. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). However, a plaintiff's claim need only be plausible, not probable. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). Evaluating whether a plaintiff's claim is sufficiently plausible to survive a motion to dismiss is "'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Iqbal, 556 U.S. at 678).

DISCUSSION

Biomet argues for dismissal on three grounds. Most broadly, it contends that Puget is precluded altogether from bringing the instant lawsuit because Puget impermissibly split its claims with those in the 2010 case. Biomet also argues that claims 2, 6, and 15 of the '822 patent are patent ineligible, and therefore Puget cannot allege that Biomet directly infringed on those claims. Finally, Biomet maintains that the allegations of infringement are insufficiently pled.

A. Claim Splitting

Biomet believes that Puget has impermissibly engaged in "claim splitting" and urges the Court to preclude Puget from bringing this case. But because Biomet does not persuade the Court that the '822 and '541 patents contain "essentially the same" claims, its argument fails.

Claim preclusion, as a general concept, applies where: (1) the parties are the same; (2) there has been a final judgment on the merits of a claim; and (3) the second claim is based on the same set of "transactional facts" as the first claim. See Jet, Inc. v. Sewage Aeration Sys., 223 F. 3d 1360, 1362 (Fed. Cir. 2000) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5 (1979)). Similarly, "[t]he prohibition against claim splitting is application of familiar claim preclusion principles to two actions that are pending simultaneously but neither has reached final judgment." Trading Techs. Int'l, Inc. v. BCG Partners, Inc., 2011 U.S. Dist. LEXIS 81640, *19(N.D. Ill. July 26, 2011) (emphasis added and citing Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 4406 (2d ed. 2011) (noting that dismissals based on claim splitting are driven by docket management considerations)). "Courts will dismiss a second suit pending between the same parties for claim splitting if the second suit would be barred by claim preclusion if it is assumed the first suit reached final judgment." Id. (citing as examples Single Chip Sys. Corp. v. Intermec IP Corp., 495 F. Supp. 2d 1052, 1059 (S.D. Cal. 2007); Kim v. Sara Lee Bakery Grp., Inc., 412 F. Supp. 2d 929, 941-42 (N.D. Ill. 2006) ("It is well established, under the doctrine of claim splitting, that a party cannot avoid the effects of res judicata by splitting her cause of action into separate grounds of recovery and then raising the separate grounds in successive suits. Rather, a party must bring in one action all legal theories arising out of the same transaction or series of transactions.")).

In the patent context, claim preclusion largely hinges on the similarity of the patents at issue in the two parallel litigations. As such, regional circuit law applies to general principles of claim preclusion or claim splitting, whereas Federal Circuit precedent governs "[w]hether two claims for patent infringement are identical" because it is a question "particular to patent law." Acumed LLC v. Stryker Corp., 525 F.3d 1319, 1323 (Fed. Cir. 2008); see also Hallco Mfg. Co. v. Foster, 256 F.3d 1290, 1294 (Fed. Cir. 2001) (applying Federal Circuit precedent to question of claim preclusion under patent law).

Biomet argues that Puget's current lawsuit impermissibly splits Puget's causes of action because the accused products in this lawsuit overlap with those at issue in the 2010 case. [DE 24 at 20-24] According to Biomet, "[t]he '822 patent is ... a direct continuation of the previously asserted '541 patent, and they share the same specification." Id. at 23. Under the Federal Circuit's transactional test for comparing two causes of action for preclusion purposes, Biometinsists that the patent claims here relate to the same set of transactions as those litigated in the 2010 case and should therefore be barred. To support its theory, Biomet relies heavily on the filing of a terminal disclaimer during the prosecution of the '822 patent as indicative that the claims asserted here are "similar in every meaningful way" to those involved in the 2010 case. Id. Biomet cites extensively to SimpleAir, Inc. v. Google Inc., 204 F. Supp. 3d 908 (E.D. Tex. 2016). Therein, the district court held that claim preclusion barred the plaintiff from bringing its action based predominantly on the filing of terminal disclaimers. Id. at 913-14 ("The factual overlap between this and the prior...