United States District Court, D. Delaware
ZIMMER SURGICAL, INC., and DORNOCH MEDICAL SYSTEMS. INC., Plaintiffs,
v.
STRYKER CORPORATION and STRYKER SALES CORPORATION, Defendants.
REPORT AND RECOMMENDATION
Mary
Pat Thynge Chief U.S. Magistrate Judge
I.
INTRODUCTION
On
August 8, 2016 Zimmer Surgical, Inc. ("Zimmer") and
Dornoch Medical Systems, Inc. ("Dornoch")
[hereinafter referred to as "Plaintiffs"] filed
this action against Defendants, Stryker Corporation
("Stryker") and Stryker Sales Corporation
("Striker Sales") [hereinafter referred to as
"Defendants"], alleging infringement of U.S. Patent
No. RE44, 920 (the "'920 Reissue Patent"),
titled "High Volume Liquid Waste Collection and Disposal
System."[1] Plaintiffs seek the following: a
declaration and final judgment that Defendants infringe the
'920 Reissue Patent under 35 U.S.C. § 271(a), (b),
and/or (c), and a final judgment incorporating the same; an
injunction for said infringement; an injunction for
contributory infringement and inducement to infringe; a
declaration or order finding willful infringement; an award
of damages, including enhanced damages pursuant to 35 U.S.C.
§ 284; and a judgment that this is an exceptional case
under 35 U.S.C. § 285, warranting recovery for
Plaintiffs' reasonable attorney fees, costs, and
expenses.[2]
Pending
before this court is Defendants' motion to dismiss the
complaint in its entirety for failure to state a claim of
direct infringement, indirect infringement, willful
infringement and/or infringement of specific dependant claims
pursuant to Fed.R.Civ.P. 12(b)(6).[3] This court has subject
matter jurisdiction pursuant to 28 U.S.C. §§ 1331
and 1338(a), [4] and jurisdiction over all parties because
they have availed themselves of Delaware corporate
law.[5]
Venue is proper under 28 U.S.C. §§ 1391(c) and
1400(b).[6]This Report and Recommendation is issued
pursuant to 28 U.S.C. §§ 636(b)(1)(B); Fed.R.Civ.P.
72(b)(1); D Del. LR 72.1.[7] For the reasons stated below, it is
recommended that Defendants motion to dismiss be granted in
part and denied in part.
II.
BACKGROUND
A.
Parties
Zimmer
is a Delaware corporation with a principle place of business
located in Dover, Ohio.[8] Zimmer is a research and design
manufacturer of customizable surgical and operating room
solutions.[9] Dornoch is an Illinois corporation with
its principle place of business in Riverside,
Missouri.[10] It specializes in designing and
manufacturing fluid waste management solutions for operating
room environments.[11]
Plaintiffs
have a business relationship, as Zimmer is the exclusive
licensee of the '920 Patent, which Dornoch obtained as an
assignee.[12] Thus, Zimmer holds the exclusive right
to manufacture, use, sell, offer for sale, and import all
consumables and accessories covered by the '920 Reissue
Patent.[13]
Defendants
Stryker and Stryker Sales are interrelated Michigan
corporations, having their principle place of business in
Kalamazoo Michigan.[14] Defendants, together, also research,
design, manufacture, and sell products used to manage medical
wastes.[15]
B.
Patents-in Suit
1.
Plaintiffs'System
The
'920 Reissue Patent was obtained by Dornoch under 35
U.S.C. § 251, [16] It is a reissued version of the 420
Patent.[17] Among the fluid waste management
solutions that Dornoch designed and manufactured and is
allegedly covered by the patent is the "Transposal®
UltrafleX Fluid Waste Management System" [hereinafter
referred to as "UltrafleX”], which
"simplifies fluid collection in operating rooms by
safely using on-board regulated suction and class-leading
fluid capacity."[18] UltrafleX utilizes "fluid carts,
associated 'Ultra Evac Station' fluid disposal units,
and 'consumables, '" such as "single-use
canister lids, single-use cart manifolds, manual IV poles,
powered IV poles, smoke filters, specimen traps, and clot
busters."[19]
Dornoch
manufactures and sells the UltrafleX fluid carts and
associated Ultra Evac Station fluid disposal units, while
Zimmer makes and exclusively distributes the consumables used
with the fluid carts.[20]
2. Defendants' System
Defendants' original patented system related to this suit
was released in 2000.[21]The Neptune 2 Waste Management System
[hereinafter referred to as "Neptune 2"], is a
refined version of the original system and was released in
2007.[22] In 2016, the Neptune 3 Waste Management
System [hereinafter referred to as "Neptune 3"] was
released.[23]Both parties agree that there are no
differences in the Neptune 2 and Neptune 3 systems relevant
to this action.[24] Plaintiffs' claims are based upon
the Neptune system in both currently used versions, Neptune 2
and Neptune 3.
Neptune
2 and Neptune 3 include a rover, a computerized mobile unit
used by physicians and medical staff.[25] The rover can
interact with a separate docking station and "the units
allow for controlled suction and collection of fluid waste
and surgical smoke."[26] After waste is collected in
the rover, it can be connected to a separate docking station
where the waste is emptied and the rover is
flushed.[27] This process utilizes consumables, such
as manifolds, filters, smoke tubing, detergent, and quick
trap specimen collectors.[28] The rover, docking station,
and consumables allegedly infringe on Plaintiffs'
'920 Reissue Patent based on their similarities with the
UltraFlex system components.[29]
D.
Position of the Parties
Plaintiffs
contend that Defendants have been infringing, contributing to
the infringement of, and/or actively inducing others to
infringe on the claims of Plaintiffs' '920 Reissue
Patent in this jurisdiction and elsewhere in the United
States.[30]
Plaintiffs
argue that Defendants have committed the following: (1)
direct infringement of the patent due to Defendants making,
using, selling, importing, and/or offering for sale of both
the Neptune 2 and Neptune 3 systems in the United States; (2)
indirect infringement by inducing and/or contributing to
third parties' alleged infringement by directing,
promoting, and encouraging the use of Defendants'
systems; (3) infringement upon the patent's dependent
claims (17-23, 25-28, 30, 32-38, 40, and 41) by allowing the
Neptune systems to meet every limitation of at least
independent claims 15 and 29, upon which the dependent claims
are based; and (4) willful and deliberate infringement
because Defendant knew or should have known of the '920
Reissue Patent's subject matter.[31]
Defendants
counter that no infringement occurred, and Plaintiffs fail to
meet the pleading standards required by Rule 8 of the Federal
Rules of Civil Procedure, and the United States Supreme Court
decisions in Iqbal and
Twombly[32] Specifically, they argue the following:
(1) that there is no adequate identification of the accused
products or basis to provide any plausible theory of direct
infringement; (2) that indirect infringement is conclusively
alleged and lacks a plausible theory of knowledge or specific
intent to infringe; (3) that the complaint fails to relate
any feature of the '920 Reissue Patent's dependant
claims to a feature of a Stryker system or product with any
of the limitations of the asserted dependent claims, as is
necessary to support an infringement theory; and (4) that the
allegations of willful infringement lack sufficient facts to
support this claim.[33]
Defendants
support their arguments by pointing to parallel facts - that
Plaintiffs "had"[34] waste management products in
the early 2000s and obtained specific patents by 2011, yet
none were initially asserted against
Defendants.[35] Defendants ask the court to infer that,
because no infringement arose prior to the issuance of the
'920 Reissue Patent, the present claims of infringement
could only be based upon new matter in the '920 Reissue
Patent that was not part of Plaintiffs' prior
patents.[36] Thus, no infringement could now be
asserted against them.
Moreover,
Defendants argue that, due to the insufficiency of the
pleadings, the complaint leaves Defendants without adequate
notice to respond, or as to why Plaintiffs' complaint
could potentially be successful.[37]
III. STANDARD OF REVIEW
Fed. R.
Civ. P. 12(b)(6) governs a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted.
The purpose of a motion under Rule 12(b)(6) is to test the
sufficiency of the complaint, not to resolve disputed facts
or decide the merits of the case.[38] "The issue is not
whether a plaintiff will ultimately prevail, but whether the
claimant is entitled to offer evidence to support the
claims."[39] A motion to dismiss may be granted only
if, after "accepting all well-pleaded allegations in the
complaint as true, and viewing them in the light most
favorable to the plaintiff, plaintiff is not entitled to
relief."[40] While the court draws all reasonable
factual inferences in the light most favorable to a
plaintiff, it rejects unsupported allegations, "bald
assertions, " and "legal
conclusions."[41]
To
survive a motion to dismiss, a plaintiffs factual allegations
must be sufficient to "raise a right to relief above the
speculative level. . ., "[42] Plaintiffs are therefore
required to provide the grounds of their entitlement to
relief beyond mere labels and conclusions.[43] Although
heightened fact pleading is not required, "enough facts
to state a claim to relief that is plausible on its
face" must be alleged.[44] A claim has facial
plausibility when a plaintiff pleads factual content
sufficient for the court to draw the reasonable inference
that the defendant is liable for the misconduct
alleged.[45] Once stated adequately, a claim may be
supported by showing any set of facts consistent with the
allegations in the complaint.[46] Courts generally consider only
the allegations contained in the complaint, exhibits attached
to the complaint, and matters of public record when reviewing
a motion to dismiss.[47]
IV. DISCUSSION
A. Whether Plaintiffs allegations are
sufficient
Whether the '920 Reissue Patent[48] includes new matter is
not to be addressed at this stage of the pleadings. "The
court is not prepared to engage in a claim construction
exercise at this stage of the proceedings . . . [t]he court
may address with the parties an early claim construction of
dispositive limitations, once a full and fair exchange of
fundamental documents has been
accomplished."[49] Regardless, Plaintiffs meet the pleading
standards required by Rule 8, Iqbal, and
Twombly. Plaintiffs did not merely plead legal
conclusions based upon implausible theories, as Defendants
assert.
1.
Direct infringement
"A
plaintiff may have a plausible claim for direct infringement
'sufficient to withstand Iqbal/Twombly
scrutiny' by 'specifically identifying . . .
products' which 'perform the same unique function as
[the] patented system.'"[50] This court, in
DermaFocus, found the plaintiff's claim for
direct infringement sufficiently pled where it included
allegations that the defendant's system was used for
"non-invasive lifting and tightening of the skin using
focused ultrasound technology, " and independent claim 1
of the patent claimed a "method of rejuvenating human
skin" "comprising" "focusing ultrasound
energy in a dermis layer of the region of
skin."[51]
Here,
Plaintiffs argue that Defendants directly infringe the
'920 Reissue Patent by making, using, selling, importing,
and/or offering for sale the Neptune 2 and Neptune 3
systems.[52] Plaintiffs provide sufficient
information to meet the Iqbal/Twombly standard
similar to the plaintiff in DermaFocus. They allege
that the Neptune systems meet every limitation of at least
independent claims 15 and 19 of the patent.[53] Plaintiffs
contend that the Neptune systems are "intended to be
used in the operating room, pathology, surgical centers, and
doctor's offices to collect and dispose of surgical fluid
waste as well as collect smoke generated from electrocautery
or laser devices."[54]Additionally, they state the Neptune
systems' rover, docking station, and consumables are used
for the same purposes as the components of the '920
Reissue Patent's system, UltrafleX.[55] Plaintiffs
describe UltrafleX detail, specifically identifying the
product and its components.[56] They also describe the
components of the Neptune systems in similar detail, with
diagrams of the systems' components, demonstrating the
similarities between the Neptune systems and
UltrafleX[57]
Plaintiffs
provide further support by alleging that Defendants'
following actions demonstrate infringement: maintaining
offices or facilities where Defendants conduct product system
research and development activities for the Neptune systems;
giving demonstrations of the systems at annual trade shows in
the United States; testing the systems at Defendants'
facilities and facilities of third-party end users; and
providing "Installation, Operation, and Maintenance
Guide" manuals, as well as advertising training sessions
to end users of the Neptune systems.[58]
Defendants
argue that there is no adequate identification of the accused
products or sufficient basis to provide any plausible theory
of direct infringement.[59]They urge the court to find
Plaintiffs' definition of the accused products
impermissibly vague.[60] Specifically, they contend that the
allegedly infringing "consumables" have not been
identified, but rather, that Plaintiffs "[cast] a cloud
on Stryker's entire product line."[61] As explained
previously, Plaintiffs allege sufficient information to meet
the Iqbal/Twombly standard Thus, Defendants'
motion to dismiss the claim for direct infringement should be
denied.
2.
Indirect Infringement
To
sufficiently state a claim for either contributory
infringement or induced infringement, Plaintiffs must allege
that Defendants had "actual, " knowledge of the
matter infringed upon.[62] Determining whether actual knowledge
is sufficiently pled is the first prong of the two-prong test
for indirect infringement.
Here,
Plaintiffs allege that Defendants had the requisite knowledge
of the '920 Reissue Patent during two different time
periods, prior to and after the filing of the
complaint.[63] Plaintiffs do not plead
"actual" knowledge, prior to service of the
complaint; they only plead "constructive"
knowledge. Therefore, Plaintiffs' claims must be assessed
according to the time period of alleged knowledge.
a.
Prior to the Complaint
In
Monec, this court found the plaintiff's
allegation, that mobile telephone providers
"participated in the same market" as the patent
owner, insufficient to allege that the providers had the
requisite actual knowledge.[64] The court stated, "it is
well-established that mere knowledge of one patent in a
patent family . . . does not establish actual knowledge of a
different patent in that family. . ., "[65]
With
respect to whether Defendants had the requisite knowledge of
the patent itself prior to filing of the complaint,
Plaintiffs theorize that Defendants knew, or should have
known, of the '920 Reissue Patent's existence since
the parties are competitors in the two-competitor field of
manufacturing and selling waste management
systems.[66] In support, Plaintiffs present evidence
of Defendants' Patent No. 7, 621, 898, which explicitly
refers to the '420 Patent.[67] In other words, Plaintiffs
argue that Defendants' reference to Plaintiffs' older
patent in Defendants' own patent demonstrates that
Defendants knew or should have known of the matter in the
'920 Reissue Patent.
Defendants
urge that Plaintiffs' "competitor theory"
cannot infer the requisite actual knowledge.[68] Further,
Defendants argue that they did not have (and could not
plausibly have had) knowledge of the subject matter of the
'920 Reissue Patent if it contained new
matter.[69]
The
court agrees that the competitor theory fails because
Plaintiffs have not pled actual knowledge. Similar to the
finding in Monec, Defendants' reference to the
'420 Patent is insufficient to infer the requisite
knowledge of the '920 Reissue Patent. Plaintiffs'
contention is analogous to that of the plaintiff in
Monec, who attempted (unsuccessfully) to establish
that mere knowledge of one patent in a patent family is
sufficient for actual knowledge of another patent in the same
family.
In
light of these findings, the court need not assess the second
prong of indirect infringement, whether induced or
contributory, for that time period.
b
(i). After Filing the Complaint - Inducement
Under
35 U.S.C.A. § 271 (b), to sufficiently plead inducement
of patent infringement, a claimant must demonstrate that the
alleged infringer had knowledge, of the patent and the
allegedly infringing nature of the asserted
conduct.[70] As this court found in
Fairchild:
If a complaint sufficiently identifies, for purposes of [the]
rule governing notice pleading, the patent at issue and the
allegedly infringing conduct, a defendant's receipt of
the complaint and decision to continue its conduct despite
the knowledge gleaned from the complaint satisfies
requirement of proof of knowledge that the induced acts
constitute patent infringement.[71]
Plaintiffs
contend that even if Defendants did not have pre-suit
knowledge of the '920 Reissue Patent, they gained such
knowledge through the complaint.[72] This allegation is
sufficient under Fairchild. Therefore, the
first-prong for indirect infringement is met.
"To
demonstrate inducement of patent infringement, patentee must
establish, first, that there has been direct infringement,
and, second, that alleged infringer had knowledge that
induced acts constitute patent
infringement."[73] "Inducement of patent infringement
requires evidence of culpable conduct, directed to
encouraging another's infringement."[74]
To
adequately plead induced infringement, Plaintiffs must allege
that Defendants had knowledge, not only of the '920
Reissue Patent, but also of the infringing conduct by third
parties. Plaintiffs filed the complaint on August 8, 2016. As
this court acknowledged in Fairchild, receipt of the
complaint and a defendant's decision to continue its
conduct thereafter, despite information in the complaint,
satisfies the knowledge element for inducement.[75] This analysis
of the knowledge requirement was reiterated in
Raindance, where the court found, "for indirect
infringement, Defendant's knowledge of the patents is
established at least of the filing of the
lawsuit."[76] Therefore, Plaintiffs sufficiently
allege actual knowledge as of August 8, 2016.
As a
result, Defendants' motion to dismiss the claim for
indirect infringement in the inducement, should be granted as
it relates their conduct prior to filing of the complaint.
However, it should be denied regarding their conduct after
filing of the complaint.
b
(ii). After Filing Complaint - Contributory
Infringement
Under
35 U.S.C. § 271 (c), a claimant of contributory
infringement must demonstrate the following: the alleged
contributory infringer has sold, offered to sell, or imported
into the United States, a component of an infringing product;
and the infringer knows "the same to be especially made
or especially adapted for use in an infringement of such
patent, and not a staple article or commodity of commerce
suitable for substantial non-infringing
use."[77]
This
court found, in Walker Digital,
Patentee's allegations that on-line retailers were aware
of its patents . . . that infringing apparatuses comprised
software or hardware and software that provided their
customers ability to receive benefit in connection with
purchase via cross-promotion, and that their products were
not staple articles or commodities of commerce suitable for
substantial noninfringing use were sufficient to state
contributory patent infringement claims.[78]
The
element being met is undisputed - Defendants admittedly sold,
offered to sell, or imported components of allegedly
infringing ...