March 24, 2009

Annual Review of Medical Device Patent Litigation

Major patent litigation took place across the medical device industry last year. Once again drug-eluting stent technology produced large verdicts and pitted major industry players against one another. Significant litigation also occurred in several other fields, including spinal surgery and catheter technologies.

Individual doctors enjoyed significant successes against major manufacturers, including an award exceeding $500 million.

A large portion of the patent litigation involving medical devices took place in the Eastern District of Texas. However, that trend may soon change due to a recent decision from the Federal Circuit.

Endovascular Stent Litigation

Patents on endovascular stents were a popular target for litigation in 2008. Some of the largest awards and most significant developments occurred in this area of medical device technology. In one case, an individual doctor won a total jury verdict exceeding $400 million. This doctor has now turned his sights towards another industry leader, asserting the same patent against Cordis. The Federal Circuit also ended the long-running lawsuit Cordis filed against Medtronic and Boston Scientific by affirming a large judgment for Cordis.

Saffran v. Boston Scientific Ends in Judgment for Plaintiff

The biggest development surrounding drug-eluting stents was the Saffran v. Boston Scientific case, in which Dr. Saffran received a judgment of $432 million plus $69 million in pretrial interest. Although the Saffran patent is primarily directed to drug-eluting fabrics for bone repair, its claims were found to cover Boston Scientific's Taxus Express and Liberte lines of drug-eluting stents. The district court rejected all of Boston Scientific's post-trial motions related to damages, but Boston Scientific is appealing the case.

Dr. Saffran's success may encourage more doctor-versus-manufacturer litigation. While marked with inconsistency in the past, these types of claims have also resulted in some of the largest patent recoveries, including Dr. Michelson's $1.4 billion settlement with Medtronic in 2005.

Dr. Saffran is currently asserting the same patent against Cordis' drug-eluting endovascular stents before the same judge in the Eastern District of Texas.

Cordis Receives Favorable Rulings

Cordis received several favorable rulings in a case that has been pending for more than a decade. In January, the Federal Circuit upheld a jury verdict finding that both Boston Scientific and Medtronic infringed Cordis' patents on bare metal coronary stents. In September, the Supreme Court declined to hear Boston Scientific's appeal of the Federal Circuit decision. In the meantime, the District of Delaware entered a $1.2 billion judgment against key competitors Medtronic and Boston Scientific after the Federal Circuit's decision. Both defendants have appealed this judgment award.

Another long-running dispute between Cordis and Boston Scientific over stent technology also reached a final resolution, with the Canadian Federal Court dismissing a patent case the companies had been litigating since 1997.

Stent Litigation Trend Will Continue

Significant litigation related to endovascular stents will continue this year. Several major trials loom on the horizon, including Medtronic's suit against Boston Scientific and Abbott over drug-eluting stents and Spectralytics' suit against Cordis and Norman Noble related to stent manufacturing methods. Medtronic and W.L. Gore will also head to trial over self-expanding stent technology after Judge Ronald M. Whyte of the Northern District of California rejected Gore's bid for summary judgment.

Catheter-Related Litigation

One of the most legally significant decisions of the year involved catheter products and clarified the interaction between injunctions and patent term extensions. The Federal Circuit also upheld several judgments won by individual inventors against manufacturers. Medtronic may have been the biggest winner, however, receiving a $250 million jury verdict for angioplasty tool patents.

Abbott Denied Injunction Extension

Abbott Labs was unsuccessful in its bid to extend a 2000 injunction against Medtronic relating to rapid-exchange catheters. This case clarifies the relationship between Hatch-Waxman patent term extensions and injunctive relief in light of the eBay factors. The Northern District of California modified an injunction so that it ends on the patent's pre-extension expiration date.

Although the patent-at-issue received a term extension because of the FDA's review of a product that included the patented rapid-exchange catheter at issue, the patented article had been available for commercial use for some time. The court applied the eBay four-factor test in evaluating the scope of the injunction and found that no irreparable harm arose from an early termination of the injunction because money damages would be available for any future infringement.

Abbott is currently contemplating appeal, and a Federal Circuit ruling on the issue may once again change the way patent term extensions and permanent injunctions interact. For the time being, assessing the impact of Hatch-Waxman patent term extensions on the duration of an injunction requires an examination of whether the patented item could have been sold independently. In addition, the application of the traditional four-factor test to the modification, as well as the grant, of permanent injunctions requires close attention to the equitable factors, even for injunctions that preceded the eBay decision.

Hemostatic Valve Injunction Granted

Pressure Products Medical Supplies enjoyed success in its suit against Quan Emerteq regarding hemostatic valves. Pressure Products first won $1.1 million in damages from an Eastern District of Texas jury. Then Pressure Products received an injunction covering both the current and not-yet-launched Quan Emerteq product lines, as well as an award of over $100,000 in interest and fees. Due to the medical necessity of the valves, the injunction will be stayed, however, as long as Quan Emerteq deposits royalties into escrow for each sale. This case demonstrates how injunctions may be crafted to take into consideration the "public interest" factor of the eBay test.

Boston Scientific and Medtronic Clash Over Catheters and Balloons

Medtronic won a major jury verdict against Boston Scientific over catheters and balloons for angioplasty. A jury in the Eastern District of Texas found three Medtronic patents valid and infringed and awarded over $250 million in damages to Medtronic.

Boston Scientific and Medtronic will continue to clash over catheter balloon technology in 2009. Not only has Boston Scientific appealed the verdict in the above case, but Boston Scientific also filed its own suit in the Northern District of California in August accusing Medtronic's Stormer, Sprinter, and Endeavor Sprint products of infringing patents related to catheter balloons.

By entering into a licensing agreement, Medtronic ended its year-long dispute with Spectranetics over aspiration catheters.

Cardio Access Sues Over Cannulae Technology

In another major case to watch over the next year, Boston Scientific, Johnson & Johnson and Medtronic were sued by Cardio Access, a patent holding company based in Newport Beach, California. Cardio Access later added Edwards Life Sciences to the lawsuit. Cardio Access has accused all the defendants of willfully infringing the Cardio Access patents related to cannulae technology. This case is venued in the Eastern District of Texas.

Federal Circuit Affirms Inventors' Victories

Two individual inventors had their district court victories relating to catheter technologies affirmed by the Federal Circuit. In cardiologist Dr. Jan Voda's case against Cordis over guide catheters, the Federal Circuit affirmed the findings of validity and some findings of infringement, although it vacated the district court's finding of willful infringement. Damages awarded to Dr. Voda will be recalculated from the original award of $12 million. The Federal Circuit also affirmed a New York jury's determination that cardiologist Dr. Peter Rentrop's patents were valid and infringed by Spectranetics' excimer laser catheters.

Orthopedic Implant Litigation

In the past year patent litigation in the orthopedic implant field focused mainly on intervertebral implant technology. Synthes has been particularly aggressive in asserting its patent rights and was a party to much of the major litigation in this field. Spinal implants will likely continue to be a major area for patent litigation in the upcoming year due to the large market for these products and an ongoing suit between Medtronic and NuVasive.

Synthes at Center of Implant Litigation

Synthes filed suit against Spinal Kinetics in the District of Delaware over artificial spinal disks. It also sued Brazilian manufacturer GM Dos Reis for displaying implants featuring locking bone plates at the Brazilian Spinal Surgery Conference in New York. This suit was unsuccessful as the Southern District of California held that display of implants at a conference was not sufficient use by itself to trigger infringement liability.

Synthes also won a jury verdict against Medtronic Sofamor Danek. The jury found willful infringement and awarded lost profits and royalties totaling $7.4 million due to infringement by Medtronic's Maverick line of artificial spinal disks. The court may further enhance this award based on the jury's finding of willful infringement.

Medtronic Sues NuVasive

Medtronic also asserted its patent portfolio relating to spinal surgery technologies, bringing suit against NuVasive on twelve patents related to devices and implants used in minimally invasive spinal surgeries. In its complaint filed in the Southern District of California, Medtronic accused several NuVasive product lines, including both implants and surgical systems, of infringing the Medtronic patents.

Stryker and AcuMed Battle Over Nail Products

Stryker was also involved in several cases concerning orthopedic implants. AcuMed won two victories against Stryker concerning nails used to repair broken humerus bones. The District of Oregon permanently enjoined Stryker from selling its T2 proximal humeral nail, and the Federal Circuit affirmed the injunction despite Stryker's argument the public interest favored denying the permanent injunction. Stryker contended that its product was safer and superior to the non-infringing alternatives on the market. However, the Federal Circuit found that the district court did not abuse its discretion in finding that Stryker failed to present sufficient objective evidence of the problems associated with Acumed's product.

AcuMed was also allowed to move forward with another infringement suit relating to Stryker's T2 Long nail, with the Federal Circuit overturning a district court ruling that the first Stryker suit precluded a second suit accusing the long nail of infringement.

Lastly, Stryker will also face a trial for its alleged infringement of TriMed's patent on repairing fractures. The Federal Circuit vacated an earlier decision from the trial court that the Stryker product did not infringe Trimed's patent.

Other Major Medical Device Patent Litigation

Several major decisions regarding other medical technologies, including imaging technologies and vascular grafts, also took place during the last year. These case discussed such key legal issues as the amount of use sufficient to satisfy the requirements for personal jurisdiction and the calculation of damages for future activities.

Jury Determination of Future Damages Being Tested

Cases from the Eastern District of Texas—including a case between SciCo Tech GmbH and Boston Scientific—are being used to test a jury's determination of future damages for patent infringement. Future damages were traditionally calculated by the judge, but Judge Ron Clark, citing concerns of judicial economy and the overlap of issues regarding past and future damages, issued an order requiring parties to prepare the issue of future damages for the jury. Parties coming before Judge Clark should have their experts prepared to testify on royalty rates going forward and be ready to have the issue determined at the jury trial, rather than subsequent proceedings before the court.

Trade Show Display Was Not an Offer to Sell

The Federal Circuit found that displaying an allegedly infringing device at a trade show is not always an "offer to sell" that creates personal jurisdiction. In dismissing Medical Solutions' suit against C Change Surgical the Federal Circuit found that a price term is an essential element of an offer to sell, and a trade show display, even one that leads eventually to potentially infringing sales, does not provide personal jurisdiction in the state where the display was made.

The key factors identified in this case were absence of a price term, indirect nature of the resulting sales and the inability to purchase the product through the defendant's web site. The ruling clarifies the legal consequences of displaying potentially infringing devices at trade shows and increases the freedom for manufacturers to demonstrate their products without exposing themselves to suit in distant venues.

Will Universities Behave More Like Patent-Holding Companies?

Universities were active—although not always successful—litigants in 2008.

The Los Angeles Biomedical Research Institute of the University of California received a new trial in its dispute over ownership of vascular graft-related patents. The case involves the assignment agreements signed by L.A. Biomed's researchers and relates to their work bench testing an already-designed product. This case may clarify the scope of these kinds of assignment agreements.

Johns Hopkins University suffered a loss when the Federal Circuit overturned a 2007 jury verdict finding Datascope infringed three patents related to vascular grafts.

The University of California settled a case against medical device manufacturer ev3 in exchange for over $11 million, ending its lawsuit in the Northern District of California over brain aneurism treatments.

The California Institute of Technology filed suit in the Eastern District of Texas against six companies for violating its patents on imaging technology. Caltech's suit is notable for its scope and chosen venue. While most universities file suit in their home venue, Caltech has sued a large number of defendants in the plaintiff-favorite forum, exhibiting behavior more common to patent-holding companies. If Caltech is successful, more university systems may be drawn to the plaintiff-friendly courts as they assert their patent rights more vigorously.

Suits Related to Syringe Technology, Heated Surgical Tools Are on the Horizon

Several other large verdicts punctuated the year in medical device patent litigation, including the following:

  • Siemens AG won a $52 million jury verdict against Saint-Gobain Ceramics and Plastics related to medical imaging scanners.
  • The Federal Circuit settled a long and drawn out dispute between what was originally Guidant and St. Jude Medical over implantable cardiac defibrillators, finding the Guidant patents valid and remanding the case for a determination of damages. The Federal Circuit, however, did not reinstate the original jury award of $140 million.
  • Smith & Nephew won $14 million from Arthrex over a patent on suture anchors.
  • A jury found that Covidien AG did not infringe Applied Medical's patents on trocar seal technology.

Safety syringe technology will see several suits in 2009, including Retractable Technologies' suit against Safety Medical International in the Eastern District of Texas. Another case to watch is Thermal Scalpel's suit against a number of defendants, including Medtronic, Boston Scientific and Smith & Nephew, in the Eastern District of Texas on patents covering heated surgical cutting tools.

Eastern District Of Texas Was A Popular Venue—But That May Change

With the Saffran cases against Cordis and Boston Scientific, Medtronic's $250 million jury verdict, and the Cardio Access and Caltech suits against major manufacturers, the Eastern District of Texas reinforced its status as a popular and plaintiff-friendly docket for medical device patent cases. In recent years this venue has attracted established manufacturers, universities, individual inventors and patent holding companies alike.

The popularity of the Eastern District may soon be blunted, however, by the mandamus order issued by the Federal Circuit in In re TS Tech, which transferred a patent case from the Eastern District of Texas to the Southern District of Ohio.

Relying on recent 5th Circuit law on venue and transfer, the Federal Circuit found access to witnesses and physical evidence to be critical factors and reduced the weight given to the plaintiff's choice of forum. This decision will make it easier for defendants to transfer out of the Eastern District to a more favorable venue and perhaps limit the popularity of that district for patent cases that lack substantial connections to Texas.

Conclusion

Massive awards in medical device litigation marked 2008, most notably the more than $500 million awarded in Saffran v. Boston. And Dr. Saffran is not done yet—another suit over the same patent is pending against Cordis.

Other individual inventors also had success with the Federal Circuit affirming several jury verdicts in favor of those inventors. The major manufacturers also squared off several times, including Medtronic's $250 million award against Boston Scientific.

Medical device litigation also touched on several important legal topics, especially the interaction between permanent injunctions and patent term extensions related to FDA regulation.

Significant litigation over medical devices—including endovascular stents, catheter balloons and cannulae—will continue in 2009. It will bear watching how the Eastern District of Texas responds to the decision in In re TS Tech and whether transfer out of that venue becomes easier. This may shift the preferred geographic location for some patent litigation plaintiffs, including those asserting patents related to medical device technology.

Epilogue

As this article went to press, developments occurred in several cases discussed here.

The jury in Spectralytics' suit against Cordis and Norman Noble returned a $22 million verdict for the plaintiff, subject to further enhancement, as the jury found willful infringement of the Spectralytics patent. At the beginning of 2009, the Federal Circuit overturned a 1997 jury verdict finding that Cordis infringed a Boston Scientific patent on expandable, non-thrombogenic stents. In that case, the Federal Circuit invalidated Boston Scientific's patent based on obviousness.

Cardio Access and Edwards Lifesciences reached a settlement, but Cardio Access' suit against the rest of the industry continues.

Medtronic and Boston Scientific settled two patent disputes, including the catheter balloon case in the Eastern District of Texas, when the parties agreed to reduce damages to $19 million and stand down in three others, including some of the cases discussed above relating to catheter balloons, stents and other endovascular devices.

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