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Hologic, Inc. v. Minerva Surgical, Inc.

United States District Court, D. Delaware

May 1, 2019

HOLOGIC, INC., and CYTYC SURGICAL PRODUCTS, LLC, Plaintiffs,
v.
MINERVA SURGICAL, INC., Defendant.

          MEMORANDUM AND ORDER

          Joseph F. Bataillon, Senior United States District Judge.

         This matter is before the Court on defendant Minerva Surgical Inc.'s (“Minerva”) renewed motion for judgment as a matter of law of no patent damages or, in the alternative, for a new trial for reasonable royalty (D.I. 521); Minerva's motion for a new trial for Lanham Act and breach of contract claims (D.I. 523); Minerva's motion for an injunction under the Delaware Deceptive Trade Practices Act, 6 Del. C. § 2532 (D.I. 525); plaintiffs Hologic, Inc.'s and CYTYC Surgical Products, LLC's (collectively, “Hologic”) motion for attorney fees and related nontaxable costs (D.I. 528); Hologic's motion for enhanced damages (D.I. 530); Hologic's motion for a permanent injunction (D.I. 532); and Hologic's motion for an accounting, supplemental damages, ongoing royalties, pre-judgment interest, and post-judgment interest (D.I. 534).

         I. BACKGROUND

         In this patent infringement action, Hologic alleged that Minerva infringed its patents involving a system and method to detect uterine perforations during uterine ablation. Hologic alleged that Minerva infringed U.S. Patent No. 6, 872, 183 (“the '183 Patent”), titled “System and Method for Detecting Perforations in a Body Cavity, ” filed May 24, 2004, and issued March 29, 2005, and U.S. Patent No. 9, 095, 348 (“the '348 Patent”), titled “Moisture Transport System for Contact Electrocoagulation, ” filed August 8, 2013, and issued August 4, 2015 (collectively “the Patents-in-Suit”). The '183 patent involves method claims and the asserted claim of the '348 patent is a system or apparatus claim.

         Prior to trial, the Court addressed cross-motions for summary judgment on invalidity and infringement and Hologic's motion for summary judgment on the issue of assignor estoppel. Minerva asserted the patent claims at issue were invalid for lack of written description and enablement. The Court found Minerva's invalidity defenses were barred by assignor estoppel.[1] The Court also stated that even if Minerva was not estopped from asserting the defense, its arguments lacked merit in that Minerva's Section 112 arguments rested on a flawed definition of the claims that ignored the Court's claim constructions, and Hologic had shown that the '183 and '348 patent disclosures adequately described the claims as construed by the Court (D.I. 407, at 25-26). The Court further found as a matter of law that, under the Court's claim construction, Hologic had shown that Minerva's accused product infringed the asserted claims of the patents. Id. at 26.

         The action proceeded to trial on the patent issues of damages and willfulness and on Minerva's counterclaims for false advertising and breach of contract. Those matters were tried to a jury from July 16, 2018, to July 27, 2018. The jury found Hologic was entitled to damages for lost profits in the amount of $4, 200, 529.75, and for royalties not included in lost profits in the amount of $587, 138.48.[2] The jury further found that Hologic's infringement was not willful. Hologic prevailed on Minerva's counterclaims-the jury rejected Minerva's counterclaims for breach of contract and false advertising under the Lanham Act violations (D.I. 498). The Court entered judgment on the verdict, subject to revision pursuant to any rulings on post-trial motions, on August 13, 2018 (D.I. 520).

         In its pending motions, Hologic argues that this case warrants enhanced damages and asks the Court to amend the judgment by doubling Hologic's damages award of $3, 752, 550. Hologic contends Minerva's failure to abide by the Court's claim construction justifies enhancement and argues that Minerva should have known that its proposed claim constructions were baseless, knew that owning its own patents was no defense to infringement of Hologic's patents, knew that the presence of additional features on its device was not a defense to infringement, and should have known that it had no invalidity defense. Hologic also points to other allegedly egregious conduct by Minerva such as its failure to take remedial action, infringement after entry of judgment, its copying of the NovaSure system, and its attempts to conceal its infringement of the '348 patent by adding false statements to its operator's manual. Hologic further argues that Minerva's size and financial condition also weigh in favor of enhancement of damages.

         Minerva argues in response that a finding of willfulness is a prerequisite to awarding enhanced damages under Section 284. Further, it argues that even if the Court were to consider enhancement, the evidence would not support imposition of enhanced damages under 35 U.S.C. § 284.

         Hologic also moves for an award of supplemental damages from the date of the last sales records produced (April 1, 2018) to the date of judgment based on an effective royalty rate of 16.1%. It seeks an accounting and an ongoing royalty for post-judgment infringing sales at the rate of 20% plus a 10% enhancement. It also seeks prejudgment interest calculated at the prime rate compounded quarterly from the dates of infringement through the date of judgment ($270, 533) and post-judgment interest at the legal rate under 28 U.S.C. § 1961.

         Minerva opposes the motion for supplemental damages and argues Hologic's calculation is not supported by any evidence. Though it concedes that Hologic is entitled to recover prejudgment interest, it urges the Court to apply the treasury bill rate. It does not challenge Hologic's right to postjudgment interest at the legal rate.

         Minerva also renews its motion for JMOL, it contends the Court should award no damages to Hologic, contending that none were proven at trial. It contends the award of lost profits was improper and is not supported by evidence. It also argues Hologic failed to prove its reasonable royalty damages because the jury was not instructed to apportion the damages to reflect the infringing features of the product. Alternatively, it moves for a new trial on reasonable royalty.

         Minerva also moves for a new trial on its Lanham Act and breach of contract claims. It argues that Hologic violated Federal Rule of Civil Procedure 26(e) and withheld highly relevant evidence relating to Minerva's counterclaims. It also contends the Court erred in striking and precluding testimony on the quantum of Minerva's harm resulting from false advertising and an intertwined breach of a Non-disclosure Agreement. Further, it contends the Court erred in dismissing Minerva's state-law counterclaim that Hologic falsely advertised the efficacy rates for its product. It argues that the Court's rulings made it impossible for Minerva to fully present its case on its complicated claims involving Hologic's continuous scheme to attack Minerva as a competitor with misleading efficacy rates for products and “Scorched Earth” campaign to prevent competition.

         Minerva also seeks a permanent injunction under the DTPA.[3] It seeks an order enjoining Hologic from engaging in conduct that disparages Minerva's Endometrial Ablation System (“Minerva's EAS”) through their false and misleading representations about Minerva's characteristics and safety. Specifically, it moves for (1) an injunction prohibiting Hologic from disparaging the safety of Minerva's EAS, including prohibiting the use of the 20-year old liver videos that have nothing to do with Minerva's technology, and (2) a corrective disclosure to the market explaining Hologic's false and misleading use of the videos.

         In response, Hologic argues that because all of Minerva's counterclaims were rejected by the jury or the Court, there is no basis for granting Minerva any equitable relief. It contends that, although the Court reserved ruling on an equitable remedy, that issue became moot when the jury returned a verdict in favor of Hologic on Minerva's Lanham Act claim.

         As a threshold matter, the Court of Appeals for the Federal Circuit has now affirmed the finding by the United States Patent and Trademark Office, Patent Trial and Appeal Board (“PTAB”) on inter partes review (“IPR”) that claims 1-15 of the '183 are invalid as obvious. (D.I. 614-1, Ex. A, Federal Circuit Opinion) The claims challenged in the IPR include all claims of the '183 patent Hologic asserted at trial. Minerva argues that Hologic no longer has any cause of action based on the '183 patent, and any pending litigation with respect to that patent is moot. Hologic argues that the matters are not moot unless and until the Patent Office cancels the patent.[4]

         The Court finds the Federal Circuit's determination does not affect the jury verdict in this case. The jury was asked to assess damages for infringement of the asserted claims of both the '183 patent and the '348 patent, without separately apportioning damages between the asserted claims of the two patents. The jury's damages determination can be adequately supported by the finding of infringement of Claim 1 of the '348 patent. The infringement of the '348 patent apparatus claim and the '183 patent method claims were interrelated, but a finding that the method claims are not valid does not affect the finding of infringement as to the apparatus claim. In other words, one can infringe the apparatus claim even if the method claims are invalid.

         Hologic's motion for a permanent injunction against Minerva's continued infringement of the '183 patent, however, will be rendered moot by the Federal Circuit decision. Similarly, Hologic's motions for supplemental and/or enhanced damages and ongoing royalties for infringement of the '183 patent will be moot. Any supplemental or enhanced damages for infringement of the '348 patent can be awarded only up the date of expiration of the '348 patent.[5] The Federal Circuit's findings as to the '183 patent (method claims) do not affect the Court's findings of assignor estoppel on the asserted claim of the '348 patent.[6]

         The Court held oral argument on the present motions on February 26, 2019. The Court has considered the record in this case, the substantial evidence in the record, the parties' post-trial submissions, and the applicable law, and finds as follows.

         II. LAW

         A. Standard of Review

         The law of the regional circuit-here the Third Circuit-governs the standards for deciding motions for JMOL under Fed.R.Civ.P. 50(b) and new trial under Fed.R.Civ.P. 59(a). See WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1325 (Fed. Cir. 2016); Leader Techs., Inc. v. Facebook, Inc., 678 F.3d 1300, 1305 (Fed. Cir. 2012). Under Rule 50(b), in ruling on a renewed motion, “the court may: (1) allow judgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct the entry of judgment as a matter of law.” Fed.R.Civ.P. 50(b). A judgment as a matter of law is appropriate when “the verdict is not supported by legally sufficient evidence.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993). In the Third Circuit, a “court may grant a judgment as a matter of law contrary to the verdict only if ‘the record is critically deficient of the minimum quantum of evidence' to sustain the verdict.” Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211 (3d Cir. 2009) (quoting Gomez v. Allegheny Health Servs., Inc., 71 F.3d 1079, 1083 (3d Cir.1995)).

         “In considering that issue the court ‘may not weigh the evidence, determine the credibility of witnesses, or substitute its version of the facts for the jury's version.'” Id. (quoting Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir.1993)). “Entry of judgment as a matter of law is a ‘sparingly' invoked remedy, granted only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability.” Marra v. Phila. Hous. Auth., 497 F.3d 286, 300 (3d Cir. 2007) (citation omitted). A renewed post-verdict JMOL motion under Federal Rule of Civil Procedure Rule 50(b) “may not be made on grounds not included in the earlier [Rule 50(a)] motion.” Duro-Last, Inc. v. Custom Seal, Inc., 321 F.3d 1098, 1105 (Fed. Cir. 2003).

         Federal Rule of Civil Procedure 59(e) expressly recognizes a court's authority to alter or amend its judgments. Fed.R.Civ.P. 59(e). “Consistently with this original understanding, the federal courts generally have invoked Rule 59(e) only to support reconsideration of matters properly encompassed in a decision on the merits[, ]” and legal issues collateral to the main cause of action. White v. New Hampshire Dep't of Emp't Sec., 455 U.S. 445, 451 (1982). The principal limitation on that discretion is that a motion to amend “may not be granted where to do so would undermine the jury's fact-finding role and trample on the defendant's Seventh Amendment right to a jury trial.” Robinson v. Watts Detective Agency, Inc., 685 F.2d 729, 742 (1st Cir. 1982). Specifically, Rule 59(e) has been invoked to correct damage awards that were improperly calculated, and to include prejudgment interest to which a party was entitled. See Lubecki v. Omega Logging, Inc., 674 F.Supp. 501 (W.D. Pa. 1987), aff'd, 865 F.2d 251 (3d Cir. 1988); 11 Wright and Miller, Federal Practice and Procedure, § 2817 n. 28-29.

         The rule governing motions to alter or amend judgment is the proper basis for bringing a request for prejudgment interest. J.A. McDonald, Inc. v. Waste Sys. Int'l Moretown Landfill, Inc., 247 F.Supp.2d 542, 546 (D. Vt. 2002). The method used to calculate amount of judgment and prejudgment interest involves matters of law and is based on undisputed facts, and therefore is appropriately resolved by way of a motion to amend judgment. ...


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