Stack v. Abbott Labs., Inc.

• Decision Date: 21 October 2013
• Docket Number: No. 1:12CV148.,1:12CV148.
• Citation: 979 F.Supp.2d 658
• Parties: Richard S. STACK, M.D., Plaintiff, v. ABBOTT LABORATORIES, INC. et al., Defendants.
• Court: U.S. District Court — Middle District of North Carolina

979 F.Supp.2d 658

Richard S. STACK, M.D., Plaintiff,

v.ABBOTT LABORATORIES, INC. et al., Defendants.

No. 1:12CV148.

United States District Court, M.D. North Carolina.

Oct. 21, 2013.

A. Charles Ellis, Joseph A. Schouten, Ward and Smith, P.A., Greenville, NC, Lee Michael Whitman, Samuel A. Slater, Wyrick Robbins Yates & Ponton, L.L.P., Raleigh, NC, Donalt James Eglinton, Ward and Smith, P.A., New Bern, NC, for Plaintiff.

Nash E. Long, III, Hunton & Williams LLP, Charlotte, NC, Andrew E. Smith, Matthew A. Campbell, Winston & Strawn LLP, Washington, DC, Jim Hurst, Winston & Strawn LLP, Raj N. Shah, Raja Gaddipati, DLA Piper LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This is an action by Plaintiff Dr. Richard S. Stack (“Stack”) to recover the payment of royalties. Before the court is the motion of Defendants Abbott Laboratories, Inc., Abbott Vascular, Inc., Abbott Vascular Solutions, Inc., and Abbott Cardiovascular Systems, Inc. to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 13.) For the reasons set forth below, Defendants' motion will be granted in part and denied in part.

I. BACKGROUND

The complaint, viewed in the light most favorable to Stack, alleges the following:

Stack is a prominent interventional cardiologist who has been a leader in developing stent technology. (Doc. 1 ¶ 1.) He is currently Professor Emeritus of Medicine in Cardiology at Duke Medical School. ( Id. ¶ 27.) Beginning in 1985, he worked with Advanced Cardiovascular Systems, Inc. (“ACS”), and its successors as a consultant. ( Id. ¶¶ 37–38.) In 1991, Stack signed a “Consultant and Know–How Agreement” with ACS, providing ACS with exclusive access to his consulting services, particularly in relation to the development of technology for bioabsorbable stents. ( Id. ¶¶ 47–48.) The parties renewed this agreement in 1994 because Stack had made considerable progress; at that time, ACS agreed to pay Stack a consulting fee and royalties to begin developing non-bioabsorbable stent technology. ( Id. ¶¶ 59–64.) Between 1995 and 2001, Stack and ACS collaborated on research and development related to non-bioabsorbable stent technology. ( Id. ¶ 68.) During this span, ACS was acquired by and became a subsidiary of Guidant Corporation (“Guidant”). ( Id. ¶¶ 85–86.)

By 2001, Stack had become an “internationally renowned leader” in the field of stent technology. ( Id. ¶ 88.) On January 1, 2001, Stack and Guidant entered into a Consulting Agreement (the “Agreement”) that superseded the prior agreements between Stack and ACS. ( Id. ¶¶ 89–90.) In return for exclusive access to Stack's services, Guidant agreed to pay Stack a consulting fee as well as royalties for the development of certain patents and technology. ( Id. ¶¶ 91–92.) In particular, the Agreement called for Stack to receive a royalty for each “Royalty Bearing Product,” specifically including three types of “royalty bearing technology”: “Bioabsorbable Stent Technology; Drug Delivery Technology; and Peripheral Technology.” ( Id. ¶¶ 94–95, 97.) The Agreement required Guidant to pay royalties amounting to 1.25 percent of net sales on products utilizing Bioabsorbable Stent Technology ( id. ¶ 99), 0.75 percent on products utilizing Drug Delivery Technology ( id. ¶ 101), and 0.5 percent on products utilizing Peripheral Technology ( id. ¶ 104). All royalties under the agreement were due within 45 days of the end of each calendar quarter in which an obligation occurred. ( Id. ¶ 105.) In addition, Guidant was required to pay Stack a “Launch Payment” of $480,000 within six months of full commercial launch of any product utilizing Drug Delivery Technology, with the exception of a heparin-coated stent. ( Id. ¶ 107.)

Stack alleges that the Agreement did not take effect until May 2002, when he received a letter from John M. Capek (“Capek”), President of Guidant, assuring him that the definitions of “Royalty Bearing Product” and “Drug Delivery Technology” were broad enough to include a particular type of drug-eluting stent called paclitaxel-coated stents. ( Id. ¶¶ 111–13.) It was only at this point that Stack signed the Agreement. ( Id. ¶ 123.) The term of the Agreement was through December 31, 2010. ( Id. ¶ 106.)

On August 28, 2006, Stack was informed by letter that Guidant had sold ACS and that, effective April 21, 2006, the Abbott family of companies had acquired Guidant's interests in ACS and its Vascular Intervention and Endovascular Solutions businesses. ( Id. ¶ 128.) The letter, attached to Stack's complaint and incorporated by reference, stated that Defendants Abbott Cardiovascular Systems, Inc. and Abbott Vascular Solutions, Inc. assumed all rights and responsibilities in relation to the Agreement. (Doc. 1–2 at 2.) ¹

Stack alleges that since Defendants took over ACS's operations, they have breached the Agreement in various respects. Specifically, Defendants have marketed a product known as Xience V in Europe since 2006, which Stack alleges is a Royalty Bearing Product utilizing Drug Delivery Technology. (Doc. 1 ¶¶ 134, 157–58.) Stack was personally involved in the development of Xience V for Guidant ( id. ¶ 160), and Defendants did not change any of the product's vital characteristics ( id. ¶¶ 173, 175, 177, 179, 181, 183). In fact, Defendants were developing their own competitor to Xience V, called “ZoMaxx,” but stopped the development once they acquired Guidant. ( Id. totaled “in excess of $2,500,000,000,” and that Defendants have collected royalties “in excess of $50,000,000” from Boston Scientific in return for a license to manufacture Xience V. ( Id. ¶¶ 195–98.) Stack also alleges that Xience V had a full commercial launch in 2006, entitling him to a payment of $480,000 pursuant to the Agreement. ( Id. ¶¶ 199–200.) To that end, he claims that Capek, who had become Chief Executive Officer of one of the subsidiary Defendants, admitted to him over the phone in 2006 that Defendants owed Stack the Launch Payment for Xience V. ( Id. ¶ 200.) Finally, Stack claims that Defendants have sold additional products fitting the definitions contained of the Agreement, entitling him to royalties in excess of $50,000,000. ( Id. ¶ 206.)

Stack also claims that Defendants took several steps in an attempt to conceal his involvement in the development of Xience V and other products. With respect to Xience V, he alleges that in the product packaging Defendants intentionally removed a reference to United States Patent No. 6,753,071 (the “Pacetti Patent”), which directly refers to United States Patent No. 5,059,211, a patent for one of Stack's bioabsorbable stents. ( Id. ¶¶ 209–10.) He also alleges that Defendants systematically excluded his name as an inventor on several patent applications, in violation of the Agreement and with the intent to diminish his value to competitors by damaging his reputation. ( Id. ¶ ¶ 215–24.)

In his complaint, Stack alleges two causes of action: breach of contract; and violation of North Carolina's Unfair and Deceptive Trade Practices Act (“UDTPA” or “the Act”), N.C. Gen.Stat. § 75–1.1 et seq. He contends that Defendants breached the Agreement by failing to pay the $480,000 Launch Payment for Xience V, failing to pay royalties for Xience V and other products, and removing Stack's name as an inventor on several patent applications. He also contends that Abbott's removal of the Pacetti Patent from the product packaging of Xience V and its removal of Stack's name from the list of inventors on several Abbott patent applications, separately and in conjunction with the breach of the Agreement, constitute unfair and deceptive trade practices in violation of North Carolina's UDTPA.

Defendants move to dismiss on several grounds. (Docs. 12–13.) First, Defendants move to dismiss both claims in their entirety as against Abbott Laboratories, Inc. and Abbott Vascular, Inc. on the ground that the complaint implicates neither Defendant in wrongdoing. Second, Defendants contend that Stack's claims are time-barred to the extent they seek to reach back more than four years. Third, Defendants move to dismiss all contract claims relating to products other than Xience V because those products were not specifically identified in the complaint. Fourth, Defendants argue the complaint fails to state a claim under the UDTPA. Each argument will be addressed in turn.

II. ANALYSISA. Standard of Review

The pleading standards are well known and need be identified only briefly. Federal Rule of Civil Procedure 8(a)(2) provides that a complaint must contain a short and plain statement of the claim showing that the pleader is entitled to relief. Under Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient factual matter ... to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

B. Motion to Dismiss Abbott Laboratories, Inc. and Abbott Vascular, Inc.

Defendants argue that Defendants Abbott Laboratories, Inc. (the parent company), and Abbott Vascular, Inc. have not been implicated in any wrongdoing in the complaint and thus should be received from the assistant secretary and senior counsel of Defendants ACS and Guidant Endovascular Solutions, Inc. demonstrates that Abbott Laboratories, Inc. and Abbott Vascular, Inc. have liability. (Doc. 20 at 24–25.) The letter states in relevant part:

On behalf of Advanced Cardiovascular Systems, Inc. (“ACS”) and Guidant Endovascular Solutions, Inc. (“GES”), I am writing to notify you that effective April 21,...