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Medtronic, Inc. v. Boston Scientific Corporation

United States District Court, D. Delaware

May 27, 2015

MEDTRONIC, INC., Plaintiff,


SUE L. ROBINSON, District Judge.

At Wilmington this 27th day of May, 2015, having reviewed plaintiff's motion for attorney fees pursuant to the parties' agreement (D.I. 283), and the papers filed in connection therewith; the court issues its decision based on the following reasoning:

1. Background. Plaintiff Medtronic, Inc. ("Medtronic") filed this complaint on December 17, 2007, against Boston Scientific Corporation ("BSC"), Guidant Corporation ("Guidant"), and Mirowski Family Ventures LLC ("MVF, " collectively "defendants") for declaratory judgment of non-infringement and invalidity of United States Reissued Patent Nos. RE 38, 119 ("the '119 patent") and RE 39, 897 ("the '897 patent, " collectively "the reissue patents").[1] (D.I. 1) The court held a five-day bench trial on January 25-28 and March 13, 2010. After post-trial briefing, the court concluded on March 30, 2011 that defendants did not prove that Medtronic infringed the asserted claims. (D.I. 256; D.I. 257) After a lengthy appeal process, the Federal Circuit affirmed the court's finding of non-infringement. Medtronic Inc. v. Boston Scientific Corp., 558 F.Appx. 998 (Fed. Cir. 2014).

2. From 1973 to 2004, Ely Lilly & Co. ("Lilly") held an exclusive license to the MVF patents. (D.I. 289 at 2) Lilly entered into a license agreement[2] with Medtronic in 1991 ("the 1991 Agreement"), which included a sublicense to the MVF patents, including the '119 and '897 patents. (D.I. 285, ex. A) The 1991 Agreement provided in part that if Lilly or MVF believed a new Medtronic device infringed the MVF patents and Medtronic did not pay royalties, "Lilly shall notify Medtronic of such infringement." ( Id. at 6) If Medtronic then failed to pay the royalties during the cure period, "Lilly shall have the right to terminate the sublicense as to that MVF Patent(s)." ( Id. )

If Medtronic pays the royalty, Medtronic shall, while maintaining its sublicense under the License Agreement, have the right to challenge the validity and enforceability of any patent under the [MVF] license... and shall have the right to challenge Lilly's assertion of infringement of any [MVF] patents through a Declaratory Judgment action.

( Id. )

The 1991 Agreement also provided:

In any such litigation, the losing party shall pay all reasonable attorneys' fees and court costs for the winning party and, if Medtronic is the winning party, all royalties paid from the date Medtronic files suit shall immediately be refunded to Medtronic.... In any such litigation if Medtronic is found not to have any royalty obligations with respect to the products in dispute then it shall be considered the winning party.

( Id. ) In 2004, MVF consented to Lilly's assignment of all its rights and obligations under the prior agreements to Guidant. BSC acquired Guidant in 2006, at which time Guidant became a wholly-owned subsidiary of BSC. (D.I. 289 at 4 & n.3)

3. In 2003 and 2004, Medtronic, Guidant, Lilly and MVF entered into separate agreements to govern two litigations, which each included a provision that, notwithstanding the 1991 agreement, the parties would bear their own costs and fees. (D.I. 284 at 3; D.I. 288 at 4-5; D.I. 285, ex. C-D) In 2006, the parties entered into a Litigation Tolling Agreement[3] ("LTA"), which controlled the litigation at bar. (D.I. 284 at 4-5; D.I. 285, ex. E) The LTA provided in part that Guidant (as Lilly's successor in interest to the reissue patents) or MVF may notify Medtronic of infringement of the '119 patent and any subsequent reissue patents. (D.I. 285, ex. Eat 5, ¶ 7(c)) Medtronic would distribute the royalties accumulated in a specified account consistent with the decision in the declaratory judgment action. ( Id., ex. Eat 7-8, ¶¶ 10-11) If a dispute arose over the distribution of royalties and the court ruled in favor of MVF, "Medtronic shall reimburse Guidant and/or [MVF] for all of [its] or their attorney's fees and other costs incurred in prosecuting such action." ( Id., ex. E at 8, ¶ 11) The LTA further states that:

Except for the August 28, 2003 Settlement Agreement, the [1991] Agreement, and the Amended Original Agreement, this Agreement constitutes the entire agreement and understanding of the Parties with regard to the subject matter hereof and merges and supersedes all prior discussions, negotiations, understandings and agreements among the Parties concerning the subject matter hereof. The [1991] Agreement shall be considered to be amended as necessary to conform with this Agreement.

( Id. at 8, ¶ 15)

4. On October 3 and November 20, 2007, MVF notified Medtronic of infringement pursuant to ¶ 7(c) of the 2006 LTA. (D.I. 290, ex. 3) Medtronic then filed this action for declaratory judgment on December 17, 2007 under the terms of the LTA. (D.I. 1 at ¶ 23; D.I. 108 at ¶ 25) The complaint requests attorney fees pursuant to the 1991 agreement and 35 U.S.C. § 285. (D.I. 108 at 9) In the pre-trial order, Medtronic stated that "[t]he Court must determine whether Medtronic is entitled to attorneys' fees... because this is an exceptional case under 35 U.S.C. § 285." (D.I. 177, ex. 4 at 13; D.I. 288 at 6) The court entered a judgment for Medtronic as to non-infringement of the '119 and '897 patents on March 30, 2011. (D.I. 257; D.I. 258) As MVF's counterclaim under the separate '288 patent was still pending, Medtronic and MVF jointly moved for certification of the March 30, 2011 judgment under Fed.R.Civ.P. 54(b). (D.I. 262) The court directed entry of a final judgment under Rule 54(b) on April 12, 2011. (D.I. 263) The parties then stipulated to the dismissal with prejudice of MVF's counterclaim under the '288 patent on May 18, 2011. (D.I. 268)

5. Timeliness. The Federal Rules of Civil Procedure provide that "[a] claim for attorney's fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages, " which motion must "be filed no later than 14 days after the entry of judgment." Fed.R.Civ.P. 54(d)(2)(A), (8). The Advisory Committee notes specify that "[a]s noted in subparagraph (A), " the provisions of paragraph (2) do "not, however, apply to fees recoverable as an element of damages, as when sought under the terms of a contract; such damages ...

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