Rebotix Repair LLC v. Intuitive Surgical, Inc.

Decision Date10 August 2022
Docket Number8:20-cv-2274-VMC-TGW
PartiesREBOTIX REPAIR, LLC, Plaintiff / Counterclaim Defendant, v. INTUITIVE SURGICAL, INC., Defendant / Counterclaim Plaintiff.
CourtUnited States District Courts. 11th Circuit. United States District Court of Middle District of Florida
ORDER

VIRGINIA M. HERN ANDEZTOVINGTON, UNITED STATES DISTRICT JUDGE.

This matter comes before the Court upon consideration of the cross Motions for Summary Judgment filed by Plaintiff Rebotix Repair, LLC and Defendant Intuitive Surgical, Inc. (Doc. ## 108, 117). Both Motions have been fully briefed. (Doc. ## 141, 147, 148, 152). For the reasons that follow, both Motions are denied, and this case will proceed to trial.

I. Background
A. Intuitive's and Rebotix's business models

Defendant Intuitive designs, manufactures, and sells minimally invasive surgical robots (known as da Vinci Surgical Systems (“da Vincis”)) along with accompanying instruments and accessories, to hospitals and surgery centers worldwide. (Doc. # 117 at ¶ 1; Doc. # 1 at ¶¶ 1, 6). The surgical instruments used in da Vinci surgeries (e.g., graspers, forceps, scissors, etc.) are called “EndoWrists.” (Doc. # 117 at ¶ 1; Doc. # 1 at ¶ 1). EndoWrists attach to the da Vinci's mechanical arms, and doctors use hand controls at the surgeon's console to manipulate EndoWrists to perform surgery. (Doc. # 117 at ¶ 2). It is undisputed that Da Vinci surgeries have improved outcomes and present fewer complications than alternative healthcare options. (Id. at ¶ 3). Only surgical instruments made by Intuitive (the EndoWrists) are compatible with da Vinci robots. (Doc. # 1 at at ¶¶ 11, 32).

Intuitive has developed four “generational platforms” of the da Vinci - the standard, the S, the Si, and the X / Xi. (Doc. # 117 at ¶ 4; Doc. # 117-56 at 5). All EndoWrists include a programmed memory chip that communicates with the da Vinci robot and counts each time an EndoWrist is used in surgery (the “use counter”). (Doc. # 117 at ¶ 6). After an EndoWrist is used the specified number of times, the use counter causes the EndoWrist to become nonoperational. (Id.).

The parties disagree as to whether the da Vincis and EndoWrists are sold, marketed, and/or tested as a single product. (Doc. # 117 at 6-7; Doc. # 147 at 1). It is undisputed, however, that when customers buy a da Vinci, they sign a Sales, Licensing and Service Agreement (“SLSA”) acknowledging that EndoWrists will be purchased via “separate orders placed by [the] Customer to Intuitive from time to time in accordance with” certain terms and conditions. (Doc. # 117 at ¶ 9). The SLSAs require customers to use EndoWrists consistent with Intuitive's “documentation” (e.g., manuals, labeling, and instructions for use) and, under the agreements, may not repair, refurbish, or recondition EndoWrists in a manner inconsistent with that documentation. (Id.). The SLSAs require customers to adhere to the EndoWrist use limits. (Id.).

The SLSAs also provide customers with a system warranty, which promises that the da Vinci robot “will be free from defects in material and workmanship and will conform in all material respects to the Documentation when used in accordance with the Documentation and Intuitive's instructions.” (Id. at ¶ 10). The warranty is void, however, with respect to any claims (1) due to any misuse of the system; (2) to the extent the customer has not operated, repaired, or maintained the system in accordance with Intuitive documentation; and (3) to the extent that the customer has used the system with surgical instruments not approved by Intuitive. (Id. at ¶ 10).

According to the complaint, Plaintiff Rebotix “repairs” EndoWrists. (Doc. # 1 at ¶ 2). Hospitals that perform surgery with da Vinci robots will hire Rebotix to inspect and repair the EndoWrists. (Id.) . As Rebotix stated in its complaint, because its business would be rendered “obsolete” by the EndoWrist use counter installed by Intuitive, it invested “substantial time, resources, and money (millions of dollars) to develop a workaround.” (Id. at ¶ 51). Specifically, [w]hen Rebotix repairs the EndoWrists, Rebotix includes a Rebotix Interceptor, which resets the counter[.] (Id.). Rebotix admits that it installs the Interceptor as part of its “repair” process so that customers' EndoWrist instruments can continue to be used after they reach the maximum use limit imposed by Intuitive. (Doc. # 61 at 3). It is undisputed that the Interceptor does not work on the newer X or Xi models. (Doc. # 1 at ¶ 52; Doc. # 117 at ¶ 52).

Between 2019 and 2021, Rebotix sold its EndoWrist “repair” service to at least 17 customers with then-existing contracts with Intuitive. (Doc. # 117 at ¶¶ 40-41). Rebotix does not dispute that it had knowledge of these contracts but claims that it believed the contracts to be void and unenforceable. (Id. at ¶ 41; Doc. # 147 at ¶ 41) . Rebotix arranged for hospitals to ship used EndoWrists to Rebotix's facility in Florida, where the Interceptor was installed, and Rebotix then shipped the “repaired” EndoWrist back. (Doc. # 117 at ¶ 42). Rebotix priced its repaired EndoWrists 40-50% lower than Intuitive's list prices for new EndoWrists. (Doc. # 108 at ¶ B.5).

Intuitive did not want hospitals to use Rebotix to “repair” EndoWrists because they felt it was unsafe. (Doc. # 147-24 at 279). Rebotix customers received notices from Intuitive warning them that if they used EndoWrists beyond the designated number of uses, Intuitive would void the warranty, terminate the contract, and would no longer service the hospital's da Vinci system. (Doc. # 147-23 at 224; Doc. # 147-25 at 126-27). As Rebotix's corporate representative testified, “The customers that we gained received notices from Intuitive that if they used us, they would cancel the service contracts on their robots, which frightened the customers to death.” (Doc. # 117-26 at 33). Without ongoing service from Intuitive, the da Vinci robot will eventually become nonoperational. (Doc. # 147-27 at 76-77). Neither Intuitive nor Rebotix could point to any hospital that continued to use Rebotix's services after receiving these notices from Intuitive. (Doc. # 117-26 at 33, 238; Doc. # 147-23 at 226).

B. FDA History

By way of background, federal law requires that medical devices receive certain approvals from the United States Food and Drug Administration (“FDA”). The FDA approval process at issue in this case is called Section 510(k) clearance.[1]

In 2014, Rebotix's predecessor company submitted an application for Section 510(k) clearance to the FDA for “Remanufactured EndoWrist instruments.” (Doc. # 117 at ¶ 27; Doc. # 147 at ¶ 27). In 2015, the FDA sent a deficiency letter to the predecessor company and requested additional information. (Doc. # 117 at ¶ 30; Doc. # 147 at ¶ 27). In December 2015, the predecessor company withdrew its Section 510(k) application, and since that time neither Rebotix nor the predecessor company have resubmitted a Section 510(k) application for the Interceptor technology. (Doc. # 117 at ¶¶ 33-34).

The parties disagree as to whether Rebotix's services and/or products require Section 510(k) clearance from the FDA. While the cross motions for summary judgment were pending, Rebotix informed the Court that the FDA, as of April 2022, had determined that Rebotix's activities constitute "remanufacturing," which requires Section 510(k) review and approval.[2] (Doc. # 172). Specifically, Rebotix submitted email correspondence from a “Team Lead” at the FDA stating as follows:

As mentioned during our call, the Agency believes that the activities of Rebotix constitute remanufacturing and would require FDA review and clearance (e.g. 510(k) / de Novo). We therefore request that Rebotix stop engaging in the current activities until an application is reviewed and cleared/granted. The instruments in question no longer maintain the same safety and effectiveness profile as cleared with the original manufacturer's own submission. During premarket review, FDA reviews test data to the labeled number of reuse cycles. This includes, but is not limited to, items such as electrical safety, reprocessing, software, and general performance testing. By extending the number of uses and modifying the instrument with a new chip, the prior information is no longer valid and requires additional review to the new labeled usage limit in order to establish safety and effectiveness. This is therefore different than returning the device to its original condition.

(Doc. # 172-1 at 2).

Recently, Rebotix submitted additional correspondence with the FDA from July 2022 in which that same FDA Team Lead wrote that the FDA had not made an “official regulatory determination,” but had instead conducted a “preliminary informal assessment.” (Doc. # 180-1 at 2).

C. Procedural History

Rebotix alleges that Intuitive “uses its dominance in the market for minimally invasive surgical robots to monopolize a separate market: the market for replacements and repairs of EndoWrists.” (Doc. # 1 at ¶ 30). According to Rebotix, Intuitive's anticompetitive behavior has prevented Rebotix from repairing EndoWrists and has therefore “almost eradicat[ed] Rebotix's business. (Id. at ¶ 3) . In its complaint, Rebotix brings four antitrust claims against Intuitive: (1) anticompetitive tying, in violation of Section 1 of the Sherman Act (Count I); (2) exclusive dealing, in violation of Section 1 of the Sherman Act (Count II); (3) market monopolization, in violation of Section 2 of the Sherman Act (Count III); and (4) attempted market monopolization, in violation of Section 2 of the Sherman Act (Count IV) . See generally (Id.) . In March 2021, the Court dismissed those portions of Counts III and IV based on the usage counter, but otherwise allowed the claims to proceed. (Doc. # 52).

Intuitive for its...

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