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Nevro Corp. v. Stimwave Technologies, Inc.

United States District Court, D. Delaware

July 24, 2019

NEVRO CORP., Plaintiff,
v.
STIMWAVE TECHNOLOGIES, INC., Defendant.

          Rodger D. Smith II, Lucinda C. Cucuzzella, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; Bita Rahebi, MORRISON & FOERSTER LLP, Los Angeles, California; Kenneth A. Kuwayti, MORRISON & FOERSTER LLP, Palo Alto, California; John R. Lanham, MORRISON & FOERSTER LLP, San Diego, California; Michael A. Jacobs, MORRISON & FOERSTER LLP, San Francisco, California Counsel for Plaintiff

          David E. Moore, Bindu A. Palapura, Clarissa R. Chenoweth, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Catherine Nyarady, Crystal Parker, Michael Milea, Kripa Raman, Joshua Reich, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP, New York, New York Counsel for Defendant

          MEMORANDUM OPINION

          COLM F.CONNOLLY UNITED STATES DISTRICT JUDGE.

         Plaintiff Nevro Corp. has filed a motion for a preliminary injunction to enjoin Defendant Stimwave Technologies, Inc. "from infringing two of Nevro's patents, U.S. Patent No. 8, 874, 222 ('the [#]222 patent') and U.S. Patent No. 9, 327, 127 ('the [#]I27 patent')[.]" D.I. 18 at 1. I have reviewed the parties extensive briefing, supporting declarations, and exhibits (see D.I. 19, 20, 21, 22, 23, 24, 41, 42, 43, 44, 48, 77, 78, 79, 80, 81, 82, 83, 84, 85, 87, 111, 112, 113, 114, 115, 116, 117, 118, 120, 121, 125, 126, 135, 137, 138, 139, 140, 141, 142, 143, 144, 145), and held a full-day evidentiary hearing on June 27, 2019 ("Tr.") in connection with the motion. For the reasons stated below, I will grant in part and deny in part the motion. This opinion constitutes my findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).

         I. BACKGROUND

         Nevro and Stimwave are medical device companies and direct competitors in the field of spinal cord stimulation ("SCŠ"), a technology used to treat pain by delivering short electrical pulses to the spinal cord through electrical leads implanted in the body. See D.I. 21 at ¶¶ 13, 18; D.I. 84 at ¶ 34. Although there are several types of SCS systems, they all have three main parts: (1) a pulse generator with a battery that creates an electrical signal; (2) leads on an implanted wire that deliver the signal to the spinal cord; and (3) a hand-held remote control that turns the pulse generator on and off and adjusts its settings. See D.I. 85 at ¶ 21.

         SCS technology is well-established; the oldest SCS systems date back to 1967. D.I. 20 at ¶ 24; D.I. 84 at ¶ 36. Innovations in SCS systems since that time have primarily focused on making the electrical devices smaller, more reliable, and more programmable. Id. at ¶ 29. The therapeutic strategy of SCS, however, remained largely unchanged until 2015, when Nevro introduced its "HF10" SCS therapy, which is covered by the patents asserted in this case. Id. at ¶¶ 29, 31, 43.

         Traditional SCS therapy delivers low frequency electrical stimulation, generally under 1.5 kHz, and induces paresthesia-a sensation usually described as tingling, pins and needles, or numbness-that masks the patient's pain. See Id. at ¶ 25; see also #222 patent at 1:47-52, 6:37-48; D.I. 21 at ¶ 15; Tr. 96:23-24. To ensure that the paresthesia overlays the area in which the patient has been experiencing pain, a mapping procedure is typically conducted at the time the leads are surgically implanted. Id.; see also #222 patent at 18:20-31. This process of paresthesia mapping involves changing the patient's level of sedation and conversing with him to determine his perceived sensations. See id; see also D.I. 21 at ¶¶ 14, 46. Based on the patient's description of the paresthesia, the physician may have to move the leads and a technician may need to adjust the programming of the SCS system to optimize paresthesia distribution and the patient's comfort. D.I. 21 at ¶ 14; see also #222 patent at 18:20-31.

         Although traditional SCS therapy provides sufficient pain relief for many patients, a significant number of patients dislike paresthesia. D.I. 20 at ¶ 30; see also #222 patent at 9:3-17. Nevro's HF10 SCS therapy solved that problem. D.I. 21 at ¶¶ 18-19.

         The two distinguishing features of Nevro's SCS therapy-high frequency stimulation, typically at a rate of 10 kHz, and the absence of paresthesia-bucked conventional wisdom. D.I. 22 at ¶ 13. SCS practitioners generally did not see any benefit in high frequency stimulation and many questioned whether stimulating the spinal cord at frequencies like 10kHz-more than one hundred times higher than traditional frequencies-could be safe. D.I. 20 at ¶ 36. For its part, paresthesia was generally deemed "an absolute requirement" for reliable, effective pain relief. D.I. 22 at ¶ 11; see also D.I. 24, Ex. 3 at 0002 (2007 article stating that "[p]atient-perceived concordant paresthesia overlapping the area of pain is essential for success of [SCS] therapy") (emphasis added).

         Not surprisingly, then, Nevro's HF10 SCS therapy initially faced skepticism and criticism, D.I. 21 at ¶ 53; and the FDA required Nevro to test its SCS therapy in a randomized controlled trial, D.I. 22 at ¶ 14. That trial, referred to as the "SENZA-RCT," consisted of a head-to-head comparison between Nevro's HF10- based SCS system and a commercially available low-frequency, paresthesia-based SCS system. Id. The results of SENZA-RCT showed that Nevro's SCS system with HF10 therapy was twice as effective as the traditional SCS system in providing pain relief and could be administered safely. Id. at ¶ 15; see also D.I. 24, Ex. 2 at 856-57. As a result of SENZA-RCT, on May 8, 2015, the FDA approved Nevro's SCS system and HF10 therapy with a "superiority" labeling. Id.

         Nevro's superior and differentiated HF10 therapy enabled it to capture relatively quickly a significant share of what both parties call a "sticky" (or change resistant) SCS market historically dominated by three large medical device companies. See D.I. 21 at ¶¶ 57-61; D.I. 22 at ¶ 17; D.I. 85 at ¶¶ 23, 81. The SCS market is sticky because physicians are generally reluctant to change their medical device providers. See Id. Nonetheless, by 2017-only two years after the FDA approved Nevro's HF10 therapy-Nevro had garnered approximately 16% of the U.S. SCS market. D.I. 23 at ¶ 24.

         There can be little doubt that Nevro's market gains are attributable to its high frequency therapy. See, e.g., D.I. 24, Ex. 36 at 2, Ex. 47 at 1, Ex. 51 at 2. Although Nevro's commercial embodiment of its invention can operate at traditional lower frequencies, about 97% of patients using Nevro's SCS systems receive therapy at 10 kHz. D.I. 117, Ex. 112 at 106:10-107:24; see also Tr. 100:14-20. There likewise can be little doubt that Nevro's economic success (indeed, its existence) is traceable to its high frequency therapy. Nevro's SCS systems are its only products, and they all utilize Nevro's proprietary HF10 therapy. D.I. 22 at ¶ 16.

         Shortly after Nevro received FDA approval for its 10 kHz SCS therapy, the FDA granted approval for Stimwave to market its Freedom-4A and Freedom 8-A SCS systems at frequencies up to 1.5 kHz. D.I. 79, Ex. 29. The distinguishing feature of Stimwave's systems is the absence of an implanted pulse generator (and battery). D.I. 82 at ¶ 12. Unlike traditional SCS systems and Nevro's SCS system, Stimwave's SCS systems use an external "Wearable Antenna Assembly" that transmits wirelessly stimulus parameters and power to an implanted receiver which relays the signals and power to a stimulator that sends the signal to the spinal cord. Id; see also D.I. 83 at ¶ 48.

         Stimwave touts the wireless nature of its systems as a significant competitive advantage because it requires the surgical implantation of only 5% of the material that must be implanted in traditional SCS systems and thereby reduces the invasiveness and risks associated with traditional SCS therapy. Id. at ¶¶ 6, 9, 14. It has enjoyed, however, only limited success with this marketing approach; perhaps because patients view the prospect of carrying an external power source as a significant drawback. D.I. 20 at ¶ 49.[1]Stimwave's share of the U.S. SCS market stands at only 0.4%. D.I. 85 at ¶ 34.

         On January 16, 2019, Stimwave issued a press release notifying the public that the FDA was reviewing "[t]he safety and effectiveness of the Freedom SCS system's high frequency stimulation parameters" for market clearance. D.I. 1 at ¶ 31. Stimwave also began reporting to the industry that FDA approval was imminent and that it intended to begin commercially marketing its SCS systems for high frequency, paresthesia-free therapy in the United States upon receiving FDA approval. Id. at ¶¶ 32-33.

         In light of these public statements, Nevro filed the present action on February 14, 2019, alleging, among other things, infringement of the #222 and #127 patents. See id at ¶¶ 84-109.

         On March 29, 2019, the FDA granted approval for Stimwave to market its SCS systems for sale at frequencies up to 10 kHz in the United States. D.I. 80 at Ex. 39. Two days later, Stimwave issued a press release announcing that "FDA cleared [its] waveforms to 10, 000 Hz available commercially in USA." D.I. 24 at Ex. 9. Stimwave followed its announcement with the dissemination of marketing materials that touted its high frequency therapy, see, e.g., D.I. 24 at Ex. 16, and by congratulating individual providers on social media for programming Stimwave's SCS systems to treat patients at 10 kHz, see D.I. 24 at Exs. 10-15.

         On April 17, 2019, Nevro filed its motion for a preliminary injunction, D.I. 18, as well as a motion to expedite discovery, D.I. 15. On April 23, 2019, 1 granted Nevro's motion to expedite discovery. D.I. 28. On June 27, 2019, 1 held a hearing for the parties to adduce evidence and make oral argument as they saw fit.

         II. DISCUSSION

         Pursuant to 35 U.S.C. § 283, a court in a patent case "may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." 35 U.S.C. § 283.[2]To obtain a preliminary injunction the moving party has the burden of showing (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm if the injunction is not granted, (3) that the balance of equities between the parties tips in its favor, and (4) that an injunction is in the public interest. See Winter v. Nat Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); see also Tinnus Enters., LLC v. Telebrands Corp., 846 F.3d 1190, 1202 (Fed. Cir. 2017). I find that Nevro has met its burden of showing all four of these factors.

         A. Likelihood of Success on the Merits

         "[T]o demonstrate a likelihood of success on the merits, the patentee must demonstrate that it will likely prove infringement of one or more claims of the patents-in-suit, and that at least one of those same allegedly infringed claims will also likely withstand the validity challenges presented by the accused infringer." Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1351 (Fed. Cir. 2001). I find that Nevro has shown that it will very likely prove Stimwave infringed claims 24 and 28 of the #222 patent and that those claims will also likely withstand Stimwave's invalidity challenges.

         In light of this conclusion, I find it unnecessary to address whether Nevro would likely succeed on the merits with respect to claims 22 and 23 of the #127 patent. The answer to that question would not affect my weighing of the other three factors I must consider in deciding whether to issue a preliminary injunction; and an injunction to enjoin Stimwave from infringing claims 24 and 28 of the #222 patent would have the same practical effect as an injunction enjoining Stimwave from infringing the #127 patent. I note that the two asserted claims of the #127 patent appear to present issues involving claim construction, inducement, and joint infringement that I need not address in my review of the asserted claims of the #222 patent. I also have doubts about whether the expedited and abbreviated briefing and evidentiary record afford me a sufficient basis on which to make informed decisions about those issues.

         1. Infringement

         In evaluating whether Nevro is likely to succeed in proving infringement of the asserted claims of the #222 patent, I employ the same two-step process used to determine infringement at trial. See Oakley, Inc. v. Sunglass Hut lnt'l, 316 F.3d 1331, 1339 (Fed. Cir. 2003) ("An assessment of the likelihood of infringement, like a determination of patent infringement at a later stage in litigation, requires a two-step analysis."). First, I must ascertain the meaning and scope of the asserted claims. Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995) (en banc), a ff'd, 517 U.S. 370 (1996). Second, I must compare the accused device to the properly construed claims. Id.

         Claim 45 of the #222 patent, from which claim 48 depends, recites as follows:

A method for configuring a signal generator to deliver a therapy signal to a patient's spinal cord via an implantable signal delivery device, wherein the implantable signal delivery device is implantable in the patient's epidural space, the method comprising:
programming the signal generator to generate and deliver a therapy signal to the patient's spinal cord, via the implantable signal delivery device, wherein at least a portion of the therapy signal has
a frequency in a frequency range of from about 1.5 kHz to about 50 kHz,
a current amplitude in an amplitude range of from about 0.1 mA to about 6 mA,
a pulse width between about 10 microseconds and about 333 microseconds, and
at least partially reduces the patient's sensation of pain without generating paresthesia.

         Claim 48 recites "[t]he method of claim 45, wherein the frequency range is from about 3 kHz to about 20 kHz and the pulse width is between about 25 microseconds and about 166 microseconds."

         Nevro presented no evidence that a patient who received Stimwave's SCS treatment experienced a reduction in the patient's "sensation of pain." It therefore failed to establish a likelihood of proving infringement of the last claim limitation of claim 45, and thus failed to establish a likelihood of proving infringement of claim 48 of the #222 patent.

         Claims 24 and 28 of the #222 patent depend from independent claim 23, which teaches

[a] method for configuring a signal generator to deliver a therapy signal to a patient's spinal cord, the method comprising:
programming the signal generator to
(1) generate a non-paresthesia-producing therapy signal, wherein at least a portion of the therapy signal has a frequency in a frequency range ...

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