U.S. Surgical Corp. v. Orris, Inc.
| Decision Date | 29 April 1998 |
| Docket Number | Civil Action No. 96-2300-GTV. |
| Citation | 5 F.Supp.2d 1201 |
| Parties | UNITED STATES SURGICAL CORP., Plaintiff, v. ORRIS, INC., et al., Defendant. |
| Court | U.S. District Court — District of Kansas |
Joel K. Goldman, John K. Power, Bruce A. Moothart, Michael L. Matula, Husch & Eppenberger, Kansas City, MO, John C. Andres, Basam E. Nabulsi, Carolyn H. Blankenship, Norwalk, CT, Terry R. Woodard, Central Islip, NY, for U.S. Surgical Corp.
Michael B. Hurd, Joseph G. Matye, Scott B. Strohm, James R. Eiszner, Shook, Hardy & Bacon L.L.P., Kansas City, MO, Patrick Lysaught, Polsinelli, White, Vardeman & Shalton, Kansas City, MO, Raymond G. Hofker, Houston, TX, for Orris, Inc., Brett Hoskins, Paul Lovoi, Advantage Medical Products, Nancy English and Crystal Medical Technologies, Inc.
Plaintiff United States Surgical Corporation (U.S.Surgical) brings this action claiming that Orris, Inc.'s (Orris)1 process of cleaning, resterilizing, and resharpening medical instruments constitutes trademark infringement under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125(a), patent infringement under 35 U.S.C. § 271, common law unfair competition, and tortious interference with contract and business expectancy. The case is before the court on Orris' motion (Doc. 174) for summary judgment and U.S. Surgical's motion (Doc. 168) for partial summary judgment. For the reasons set forth below, Orris' motion for summary judgment is granted and U.S. Surgical's motion for partial summary judgment is denied as moot.
The following facts are either uncontroverted or are based on evidence submitted in summary judgment papers viewed in a light most favorable to the nonmoving party. Immaterial facts and facts not properly supported by the record are omitted.
U.S. Surgical manufactures medical surgical instruments and markets the instruments to hospitals. U.S. Surgical registered trademarks on its own name and its products' names and registered patents on its products. The corporation has expended substantial time, effort, and money to develop and promote customer recognition of its trademarks and exercises stringent quality control methods to assure that its customers receive a superior quality product.
U.S. Surgical enters into contracts with its customers for the sale of its disposable instruments. It also enters into contracts with distributors who in turn sell its disposable instruments. The customers submit individual orders by telephone, fax, mail, or electronic data interchange for the purchase of products. The orders are received in Connecticut and entered into U.S. Surgical's computer system in Connecticut. Within twenty-four hours of shipment of each individual order, U.S. Surgical sends the customer an invoice which includes Standard Terms and Conditions of Sale, including specific modifications of terms as negotiated between U.S. Surgical and the customer. The invoice states that the contract shall be governed by and construed under the laws of the State of Connecticut. Each product shipment also includes a shipping document.
The packaging for U.S. Surgical's disposable medical instruments is labeled "for single use only." As an example, one label contains the following language: The instruction booklets contain similar language in the "Cautions" section:
Orris provides a service to the hospitals that purchase U.S. Surgical's disposable instruments. After the hospitals use or open the instruments, Orris cleans, resterilizes, and/or resharpens the instruments for future use and returns them to the hospitals from which they came. In the past, Orris marketed its service by indicating that the reprocessed instruments have "restored original quality" and are "as good as new." Presently, Orris only suggests that the instruments will function as the manufacturer intended.
After a hospital requests Orris' service, Orris conducts in-service training to inform hospital personnel about the service it provides. Orris also meets with surgeons at the hospitals to inform them of its service. Orris then arranges to collect the instruments that a hospital wishes to have reprocessed. After Orris reprocesses the instruments, each is returned in packaging with a label displaying Orris' name and location and noting that the instrument was reprocessed by Orris. No change in ownership of the instruments takes place between Orris and the hospitals.
U.S. Surgical admits that Orris may resterilize opened but unused instruments notwithstanding the "do not resterilize" language. The Food and Drug Administration requires the "single use only" or similar language on the labels of instruments that U.S. Surgical designates as disposable. The same or similar "single use only" language is also used on U.S. Surgical's non-patented disposable instruments. The only significant difference between U.S. Surgical's labels for its patented and non-patented instruments are that the labels for the patented instruments contain the U.S. patent number. Beginning in November 1995, U.S. Surgical began asserting that reprocessing, repackaging and reuse of its disposable instruments constituted a violation of its patent and trademark rights.
U.S. Surgical offers the survey evidence of Jacob Jacoby, Ph.D. Dr. Jacoby conducted a survey to determine if surgeons could differentiate between new instruments and reprocessed instruments. Although the survey indicated that fifty-four percent of the surgeons surveyed whose hospitals use Orris' services did not know that the hospital was using Orris' services, the survey expert did not verify that any of the hospitals were actually using Orris' services. U.S. Surgical offered the affidavits of two physicians, and the deposition testimony of another, at one hospital who were unaware of the hospital's use of Orris' services.
Although Orris returns the reprocessed instruments in properly marked packaging, surgeons generally do not see the packaging. Surgeons fill out "preference cards" regarding the instruments that they wish to use in a surgical procedure. Prior to surgery, operating room personnel gather, lay-out, and generally remove the packaging from instruments that may be used. Hospitals, however, are able to keep records of whether new or reprocessed instruments are used in surgery.2
Orris returns the used, reprocessed medical instruments to the hospitals with U.S. Surgical's trademarks still emblazoned on them. Orris does not place any permanent mark of its own on the reprocessed instruments. The reprocessed instrument appears identical to a brand new instrument. The instruments' sterility cannot be judged visually. The hospitals utilizing Orris' services also continue to purchase new instruments from U.S. Surgical. Surgeons and hospitals recognize that U.S. Surgical's trademarks signify superior quality of goods, the source of which is U.S. Surgical. If a used, reprocessed disposable instrument is not sterile, the instrument could cause a patient to suffer an infection or a foreign body reaction, either of which could have fatal consequences.
Additional facts will be provided as necessary.
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The requirement of a "genuine" issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52, 106 S.Ct. 2505.
The party moving for summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be met by showing that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial. Anderson, 477 U.S. at 256, 106 S.Ct. 2505. "A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Id. Thus, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. The court must consider the record in the light most favorable to the party opposing the motion. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir.1984).
U.S. Surgical requests summary judgment on its patent and trademark infringement claims. Orris requests summary judgment on all of U.S. Surgical's claims.
"Whoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). "Liability for either active inducement of infringement or for contributory infringement is dependent upon the existence of direct infringement." Joy Tech., Inc. v. Flakt, Inc., 6 F.3d 770, 774 (Fed.Cir.1993) (citing Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 526, 92 S.Ct. 1700, 32 L.Ed.2d...
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