IP Law Daily Medical device patent infringed by company that inventor formed to compete with assignee
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Wednesday, April 22, 2020

Medical device patent infringed by company that inventor formed to compete with assignee

By Cheryl Beise, J.D.

Assigner estoppel precluded inventor’s company from challenging validity of asserted claim.

The federal district court in Wilmington, Delaware, did not err in denying various post-trial motions after a jury found that Minerva Surgical, Inc. was liable for infringing two patents directed to procedures and devices for endometrial ablation owned by Hologic, Inc., the U.S. Court of Appeals for the Federal Circuit has held. Substantial evidence supported the jury’s damages award and the court’s supplemental damages award, despite the subsequent invalidation of the asserted claims of one patent following inter partes review. The district court correctly denied Hologic’s motions for a permanent injunction, enhanced damages, and ongoing royalties. Also affirmed was the district court’s summary judgment ruling that assignor estoppel bared Minerva from challenging the validity of the remaining valid patent claim. However, the case was remanded because the district court used the wrong date for calculating pre- and post-judgment interest on the supplemental damages award (Hologic, Inc. v. Minerva Surgical, Inc., April 22, 2020, Stoll, K).

Litigation history. In 2015, Hologic, Inc. and Cytyc Surgical Products, LLC (collectively, "Hologic") sued Minerva Surgical, Inc. for infringement of certain claims of its U.S. Patent Nos. 6,872,183 (the ’183 patent) and 9,095,348 (the ’348 patent), which relate to procedures and devices for endometrial ablation. Endometrial ablation is a treatment wherein the lining of the uterus is destroyed in order to treat menorrhagia, or abnormally heavy menstrual bleeding.

For its part, Minerva filed petitions for inter partes review, challenging the patentability of the asserted ’183 patent claims, as well as those of the ’348 patent, in view of prior art. The Patent Trial and Appeal Board denied review of the ’348 patent, but instituted review of the ’183 patent and found all challenged claims were invalid as obvious.

The district court denied Minerva’s request to dismiss as moot Hologic’s claim of infringement relating to the ’183 patent. The court reasoned that the PTAB decision was on appeal and did not have preclusive effect. The court also granted summary judgment of infringement to Hologic, finding that Minerva’s accused product infringed the asserted claims of the patents. The court additionally ruled on summary judgment that the doctrine of assignor estoppel barred Minerva from challenging the validity of the ’183 and ’348 patent claims. The court found that privity existed between Minerva and an individual who was an inventor of the patents asserted by Hologic.

In April 2019, the Federal Circuit affirmed ("Hologic I") the Board’s decision finding that the challenged claims of the ’183 patent were invalid as obvious.

The action proceeded to trial on the issues of willful infringement, damages, and certain of Minerva’s state law counterclaims. The jury found Hologic was entitled to damages for lost profits of roughly $4.2 million and for royalties not included in lost profits in the amount of $587,000 and that Minerva’s patent infringement was not willful. Over Minerva’s objection, the jury was not asked to separately apportion damages between the two patents. Hologic also prevailed on Minerva’s counterclaims at trial. In May 2019, the district court addressed the parties’ post-trial motions. The court denied Minerva’s renewed motion for a judgment as a matter of law, its motion for a new trial, and its motion for an injunction under the Delaware Deceptive Trade Practices Act (DTPA), as well as Hologic’s motions for attorney fees, enhanced damages, and a permanent injunction. Hologic’s motion for an accounting, supplemental damages, ongoing royalties, prejudgment interest, and post-judgment interest was granted in part and denied in part.

Both sides appealed adverse rulings below. The Federal Circuit addressed Minerva’s challenge to the district court’s estoppel ruling, Minerva’s challenge to the district court’s claim construction, Minerva’s challenge to the jury’s damages award, Hologic’s appeal of the district court’s supplemental damages award, and Hologic’s challenge to the district court’s award of pre- and post-judgment interest.

Assignor estoppel. The doctrine of assignor estoppel is an equitable doctrine that prevents a party who assigned a patent to another from later challenging the validity of the assigned patent in district court. The Federal Circuit noted that the patents-in-suit each presented a different assignor estoppel issue. For the first patent, the question was whether the district court erred in holding that assignor estoppel barred Minerva from relying on the Federal Circuit’s affirmance of the PTAB’s final decision invalidating the asserted patent claims in an inter partes review proceeding. For the second patent, the issue was whether the district court erred in finding on summary judgment that assignor estoppel barred Minerva from asserting invalidity. The Federal Circuit concluded that the district court did not err in either respect.

First, while Minerva was estopped from challenging the validity of the asserted patent claims before the district court, it was not barred from challenging the claims’ validity in an IPR proceeding. In Arista Networks, Inc. v. Cisco Sys., Inc., 908 F.3d 792, 803–04 (Fed. Cir. 2018), the Federal Circuit held that the doctrine of assignor estoppel does not bar an assignor from filing a petition for IPR. The court found that 35 U.S.C. § 311(a)—which provides that "a person who is not the owner of a patent" may file an IPR—meant that Congress intended that assignor estoppel does not apply in an IPR proceeding. The court affirmed the district court’s denial of Hologic’s motions for a permanent injunction, enhanced damages, and ongoing royalties for Minerva’s infringement of the ’183 patent claims because Hologic was collaterally estopped from asserting infringement of these claims. Because the ’183 patent claims are invalid, Hologic can no longer assert those claims or seek ongoing monetary or injunctive relief based on infringement, the court said.

Second, the district court did not abuse its discretion in holding that assignor estoppel precluded Minerva from challenging the validity of claim 1 of the ’348 patent. Minerva argued that the Federal Circuit should abandon application of assignor estoppel as inconsistent with the Supreme Court decision in Lear, Inc. v. Adkins, 395 U.S. 653, 666 (1969), which abolished application of the doctrine of licensee estoppel. To date, the Federal Circuit has continued to recognize the doctrine of assignor estoppel. Moreover, in this case, the equities weighed in favor of application of the doctrine. The inventor of the applications that matured into the patents-in-suit had executed a broad assignment of his rights to a company he founded and later sold to Hologic for $325 million. The inventor then founded Minerva to produce the accused products in direct competition with Hologic. The Federal Circuit affirmed the district court’s grant of summary judgment of no invalidity as to claim 1 of the ’348 patent.

Claim construction. The Federal Circuit next found that the district court did not err in construing two terms in claim 1 of the ’348 patent. The district court construed the term "applicator head" to mean "[a] distal end portion of an ablation device that applies energy to the uterine tissue." It construed the term "indicator mechanism" in claim 1 of the ’348 patent to mean "[a] mechanism configured to indicate a dimension." Both the claim and the specification supported the district court’s constructions.

Damages award. Minerva argued that the district court erred in awarding damages to Hologic based on Minerva’s infringement of claim 1 of the ’348 patent alone, where the jury verdict did not apportion damages between the ’348 and ’183 patents and where the ’183 patent claims were held invalid following the jury verdict.

The Federal Circuit discerned no error in this decision. The Federal Circuit has held that a single damages award can be sustained, despite the fact that some of the asserted claims were held invalid or not infringed subsequent to the award, if "undisputed evidence" demonstrated that the sustained patent claim was necessarily infringed by all of the accused activity on which the damages award was based. In this case, substantial evidence supported the district court’s determination that the jury verdict on damages was "adequately supported by the finding of infringement of Claim 1 of the ’348 patent." The jury was free to credit Hologic’s damages expert’s testimony that the same royalty rate would apply to either the ’183 patent or ’348 patent, "individually or the two patents collectively," since they "both cover the entire procedure and device respectively."

Enhanced damages. Hologic’s assertion that the district court erred in denying its requests for (1) additional supplemental damages based on all of Minerva’s infringing sales prior to the expiration of the ’348 patent, (2) an increase in the royalty rate for post-verdict infringing sales, and (3) an enhancement of that rate under 35 U.S.C. § 284. The Federal Circuit concluded that the district court did not abuse its discretion in declining Hologic’s requests. The district court correctly excluded sales of Minerva’s design-around product from its supplemental damages award. The court noted that enhanced damages are generally only appropriate in egregious cases of misconduct, such as willful, wanton, or malicious behavior. The jury found that Minerva’s infringement was not willful and there was no other evidence of misconduct.

Interest award. The Federal Circuit did find that the district court erred by using an incorrect judgment date in its calculation of pre- and post-judgment interest on the supplemental damages award. The district court’s final judgment specifies August 13, 2018 as the date for awarding pre- and post-judgment interest for supplemental damages for the ’348 patent. However, the district court should have used June 3, 2019—the date of the final judgment—as the relevant date for awarding pre- and post-judgment interest.

Separate views. Circuit Judge Kara Stoll wrote separately to address the "odd situation" presented in this case and caused by Federal Circuit precedent, where an assignor can circumvent the doctrine of assignor estoppel by attacking the validity of a patent claim in the Patent Office, but cannot do the same in district court. "[I]t’s time for this court to consider en banc the doctrine of assignor estoppel as it applies both in district court and in the Patent Office," Judge Stoll said. "We should seek to clarify this odd and seemingly illogical regime in which an assignor cannot present any invalidity defenses in district court but can present a limited set of invalidity grounds in an IPR proceeding."

This case is Nos. 19-2054 and 19-2081.

Attorneys: Matthew Wolf, Jennifer Sklenar, and Marc A. Cohn (Arnold & Porter Kaye Scholer LLP) for Hologic, Inc. and Cytyc Surgical Products, LLC. Robert N. Hochman, Jillian Stonecipher, and Caroline A. Wong (Sidley Austin LLP) and Vera Elson, Olivia M. Kim, and Edward Poplawski (Wilson, Sonsini, Goodrich & Rosati, PC) for Minerva Surgical, Inc.

Companies: Hologic, Inc.; Cytyc Surgical Products, LLC; Minerva Surgical, Inc.

MainStory: TopStory Patent GCNNews FedCirNews

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