Snyders Heart Valve LLC v. St. Jude Medical S.C., Inc. et al

REPLY to Response to Motion re MOTION for Partial Summary Judgment

E.D. Tex.January 3, 2018

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS SHERMAN DIVISION SNYDERS HEART VALVE LLC, Plaintiff, v. ST. JUDE MEDICAL S.C., INC., et al., Defendants. CIVIL ACTION NO. 4:16-cv-812 JURY TRIAL DEMANDED REPLY IN SUPPORT OF SNYDERS’ MOTION FOR PARTIAL SUMMARY JUDGMENT Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 1 of 14 PageID #: 8780 i TABLE OF CONTENTS I. INTRODUCTION ............................................................................................................1 II. SJM LACKS EVIDENCE SUFFICIENT TO ESTABLISH CERTAIN DEFENSES ....1 A. Equitable Estoppel ................................................................................................1 B. Laches For Equitable Relief ..................................................................................2 C. Acquiescence/Waiver ...........................................................................................3 D. Unclean Hands ......................................................................................................3 E. Patent Misuse ........................................................................................................4 F. Indefiniteness ........................................................................................................4 G. Written Description ...............................................................................................5 H. Enablement ...........................................................................................................5 1. Snyders Was Not Required To Enable The Accused Product ..................5 2. Snyders’ Patents Enable The Claimed Invention ......................................6 I. 271(e)(1) ...............................................................................................................7 III. CONCLUSION ...............................................................................................................10 Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 2 of 14 PageID #: 8781 1 I. INTRODUCTION SJM was required to come forward with sufficient evidence to establish a prima facie case on its affirmative defenses to survive summary judgment. SJM failed to do so. II. SJM LACKS EVIDENCE SUFFICIENT TO ESTABLISH CERTAIN DEFENSES A. Equitable Estoppel Most clearly, SJM must lose on equitable estoppel because it has no evidence that it ever relied to its detriment on anything that Dr. Snyders said or did (or that Dr. Snyders did not say or do). SJM argues that “[b]ecause there was never any indication that St. Jude may be infringing Dr. Snyders’ patents, St. Jude did not change its course of conduct with respect to Portico.” Opp. at 7. But SJM has no evidence that it would have “change[d] its course of conduct with respect to Portico” if Dr. Snyders had accused SJM of infringing his patents earlier. Indeed, SJM’s corporate, Rule 30(b)(6) deposition testimony on this issue was that it would be “pure speculation” whether SJM would have done anything differently. See Motion at 2-3 (citing testimony); see also Ex. 1 at 1-12 [Response to RFAs] (refusing to admit both (1) that it would have done something different and (2) that it would not have done something different). Nor can SJM’s afterthought regarding evidentiary prejudice save its equitable estoppel defense. See Opp. at 8. Vague assertions of evidentiary prejudice are insufficient to prevail on summary judgment. See, e.g., Meyers v. Asics Corp., 974 F.2d 1304, 1308 (Fed. Cir. 1992) (“Defendants also argue that they suffered evidentiary prejudice—loss of key witnesses and loss of documentary evidence. However, none of the defendants state exactly what particular prejudice it suffered from the absence of these witnesses or evidence. Conclusory statements that there are missing witnesses, that witnesses’ memories have lessened, and that there is missing documentary evidence are not sufficient.”) (emphasis added). Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 3 of 14 PageID #: 8782 2 Snyders is entitled to summary judgment because SJM has put forward no evidence that it actually relied to its detriment on Dr. Snyders’ “silence and inaction.” See, e.g., Ex. 2 at 11 [Eidos Display, LLC v. Chi Mei Innolux Corp., Case No. 6:11-cv-201-JRF-JDL (E.D. Tex. Dec. 8, 2017)] (concluding as a matter of law that the “enormous investment that’s been made by the company into these products” was insufficient because “no evidence of record connects that economic investment to any misleading conduct or silence” of the patentee). B. Laches For Equitable Relief As an initial matter, SJM does not dispute that there are no “extraordinary circumstances” that preclude an ongoing royalty. The Court should thus grant summary judgment that laches does not bar an ongoing royalty. See SCA Hygiene Prod. Aktiebolag v. First Quality Baby Prod., LLC, 807 F.3d 1311, 1315 (Fed. Cir. 2015) (holding that “laches will only foreclose an ongoing royalty in extraordinary circumstances”). SJM argues that the Supreme Court in SCA Hygiene “left undisturbed the application of laches to equitable relief.” Opp. at 10. But that does not mean that laches is a defense to equitable relief. Indeed, before Petrella, laches was understood not to apply to equitable relief at all. See SCA Hygiene, 807 F.3d at 1318-19 (explaining that the Federal Circuit had ruled in Auckerman “that laches prohibits recovery of pre-filing damages only”). It was only in SCA Hygiene that the Federal Circuit determined that it “must adjust the laches defense” in view of Petrella. See id. at 1315. In making this “adjustment,” the Federal Circuit said only that “laches in combination with the eBay factors may in some circumstances counsel against an injunction. . . . [C]ourts must weigh the facts underlying laches in the eBay framework when considering an injunction.” See id. at 1333. The Federal Circuit did not say that laches, if proven, would bar an injunction, let alone that it would bar attorney’s fees or enhanced damages. See Opp. at 11. Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 4 of 14 PageID #: 8783 3 C. Acquiescence/Waiver SJM does not address at all the Supreme Court’s decisions in SCA Hygiene and Petrella. For the same reasons that laches cannot bar damages in the statute-of-limitations period, acquiescence and waiver cannot bar them either. See SCA Hygiene Prod. Aktiebolag v. First Quality Baby Prod., LLC, 137 S. Ct. 954, 959 (2017); Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014). Moreover, SJM has no authority supporting its argument that the doctrines of acquiescence and waiver can apply because of Dr. Snyders’ alleged “silence and inaction.” Opp. at 9-10. The “primary difference between the estoppel analysis in implied license cases and the analysis in equitable estoppel cases is that implied license looks for an affirmative grant of consent or permission to make, use, or sell: i.e., a license.” Wang Labs., Inc. v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571, 1581 (Fed. Cir. 1997) (emphasis added). Because there is no evidence that Dr. Snyders ever said or did anything permitting SJM to use his patents, and also because there is no evidence that SJM relied on Dr. Snyders’ “silence and inaction,” the Court should grant summary judgment. See, e.g., Ex. 3 at 7-10 [Advanced Tech. Incubator, Inc. v. Sharp Corp., Case No. 2:07-cv-468, Dkt. No. 334 (E.D. Tex. Sept. 4, 2009)] (recommending grant of summary judgment of no acquiescence or waiver where there was no evidence of any assurances to the accused infringer, any reliance on such assurances, or any intent of the patent owner to relinquish his rights); Ex. 4 at 4-5 [Order Adopting Report]. D. Unclean Hands SJM has now confirmed that it is not accusing Snyders or its counsel of misconduct akin to bribery, perjury, or fabrication of evidence. Opp. at 11. That means that SJM should have dropped its defense of unclean hands. Instead, SJM quotes general language from Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 815 (1945) and argues that it is Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 5 of 14 PageID #: 8784 4 not required to show egregious misconduct. That is plainly wrong. As this Court has explained, Precision Instrument is one of a trio of Supreme Court cases that make clear that unclean hands requires “affirmatively fraudulent conduct such as perjury, bribery and the manufacturing of false documentation.” Golden Hour Data Sys. v. emsCharts, Inc., 2012 WL 3494366, *12 (E.D. Tex. Aug. 15, 2012), citing Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 245 (1944) (manufacturing evidence by drafting fake scholarly article to trick and defraud the PTO), Precision Instrument, 324 U.S. at 809-10 (purposely false statement in PTO proceedings, followed by perjurious testimony), Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 243, 246–47 (1933) (patentee bribed prior user to sign false affidavit, which patentee then filed with the PTO). SJM has no evidence that Snyders or its counsel engaged in any misconduct, let alone egregious misconduct like perjury, bribery, or fabrication of evidence. E. Patent Misuse SJM’s sole argument in support of its patent-misuse defense is that Snyders is “impermissibly broadening the physical scope of the patents-in-suit to anticompetitive effect, by continuing to assert claims of infringement based on patents it knows or should know to be invalid (at least based on Dr. Snyders’ admissions).” Opp. at 13. That does not add up to patent misuse. See, e.g., L-3 Comm. Corp. v. Jaxon Eng. & Maint., Inc., 69 F.Supp.3d 1136, 1146-47 (D. Col. 2014). Moreover, SJM has not alleged that Snyders is engaged in sham litigation. Under the Noerr-Pennington doctrine, that means that SJM’s “patent misuse” defense is barred by the First Amendment. F. Indefiniteness SJM argues that it has not waived its defense of indefiniteness. But on summary judgment, SJM was obligated to come forward with prima facie evidence sufficient to make out Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 6 of 14 PageID #: 8785 5 its defense. SJM did not even try to do so. Indeed, it is impossible to tell what SJM believes is indefinite from its opposition. SJM cites its invalidity contentions. Opp. at 14. Those are not admissible evidence. SJM also asserts that “as Plaintiff admits, St. Jude’s expert, Dr. Yoganathan, addressed indefiniteness in his opening expert report.” Opp. at 14. But all Snyders “admitted” was that Dr. Yoganathan’s report, despite having a legal section that discussed the law of indefiniteness, failed to set forth any opinions or analysis regarding indefiniteness. Motion at 7. SJM’s argument that indefiniteness “may be based on underlying factual issues” and that it could be decided on a motion for judgment as a matter of law, see Opp. at 15, cannot absolve SJM of its failure to put forward evidence sufficient to survive summary judgment. G. Written Description SJM relies on the opinion of Dr. Brown that “the specifications would not have demonstrated to a person of ordinary skill in the art that the patentee was in possession of (i) a native-type prosthetic valve with a tubular stent and three independent leaflets, or (ii) a native- type prosthetic valve with a tubular stent that has valve tissue/material attached all the way around the circular opening of the frame but does not have valve tissue/material attached to a central structural frame portion located at a position on the central axis of the valve.” Opp. at 16. Even accepting that as true, it still would not mean that Dr. Snyders’ patent claims are not adequately described. There is no need to satisfy the written description requirement for (i) or (ii) because the claim of the patents-in-suit do not require (i) or (ii). H. Enablement Neither of SJM’s two enablement theories are sufficient to survive summary judgment. 1. Snyders Was Not Required To Enable The Accused Product SJM first argues that “the specifications do not enable a person of ordinary skill to make Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 7 of 14 PageID #: 8786 6 and use a tubular stented valve with three independent leaflets.” Opp. at 21 (emphasis in original). Even accepting that as true, that still would not matter because SJM’s claims do not require a tubular stented valve with three independent elements. SJM argues that this would matter because it is “not arguing that the specifications must enable someone to make and use the Portico device.” Opp. at 21. But that very sentence appears under the following heading: “The Specifications Do Not Enable the Scope of the Claims if They Are Construed Broadly Enough to Cover the Accused Products.” Id. And it is immediately followed by this statement: “In other words, the specifications do not enable a valve with fundamental design features like in the Accused Products.” Id. SJM may not be demanding that every aspect of the accused Portico product be enabled. But just as Dr. Snyders was not required to enable the accused Portico products, he was not required to enable their “fundamental design features.” 2. Snyders’ Patents Enable The Claimed Invention SJM no longer contends that the patents-in-suit fail to disclose a three-flap embodiment. That was a plain error. See Ex. 5 at B8-B10 [Prov. App.]. Rather, SJM now argues that the claims are not enabled because the specifications “do not disclose even a single working embodiment.” Opp. at 20. SJM cannot survive summary judgment based on this argument. Neither Dr. Snyders nor SJM’s expert, Dr. Yoganathan, ever said that Dr. Snyders’ four- flap embodiment was inoperative, i.e., that it would not work to repair a damaged heart valve at all. SJM does not dispute that Dr. Snyders’ testimony was only that his four-flap embodiment would not work to open fully to the midline, and thus would not allow as much blood flow as his three-flap embodiment. Opp. at 23. Instead, SJM caricatures this point, arguing that “merely something that fits in the hole where the damaged valve was” is not enough to enable the claimed invention. Id. But that of course is not Snyders’ point. Rather, Snyders’ point is that Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 8 of 14 PageID #: 8787 7 SJM must lose on summary judgment because there is no evidence of record that Dr. Snyders’ four-flap embodiment is “merely something that fits in the hole where the damaged valve was.” SJM relies on the expert report of Dr. Yoganathan. But that report does not say anything like what SJM argues it says. In his report, Dr. Yoganathan merely made the same point that Dr. Snyders’ made—that a four-flap embodiment would not work to open fully to the midline. See Motion Ex. 7 at ¶¶ 135-36 [Yoganathan Report]. Dr. Yoganathan’s report never says that Dr. Snyders’ four-flap embodiment amounts to “merely something that fits in the hole where the damaged valve was.” And Dr. Yoganathan’s report never states that Dr. Snyders’ four-flap embodiment would not work at all. Dr. Yoganathan’s opinions thus fail to establish any genuine dispute whether the four-flap embodiment is operative. For that reason alone, SJM loses on summary judgment. SJM also loses on summary judgment because it has no evidence that the three-flap embodiment disclosed by Dr. Snyders’ patents is inoperative. SJM’s entire argument is based on Dr. Snyders’ testimony, but Dr. Snyders never testified that a three-flap embodiment would not work at all without a valve element that is formed as a right circular cone. Nor does SJM put forward any opinion from its expert, Dr. Yoganathan, that a three-flap embodiment would not work at all without a valve element formed as a right circular cone. On that issue—the issue that matters for SJM’s enablement defense—SJM has no evidence. I. 271(e)(1) SJM does not dispute that it makes infringing Portico valves in its factory in Woodridge, Minnesota. SJM does not dispute that in and from the same facility, and at the same time, SJM makes and sells identical Portico valves for multiple uses. SJM does not dispute that some are for clinical use, but that some are for commercial use that have no relationship to seeking FDA Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 9 of 14 PageID #: 8788 8 approval whatsoever. Given these undisputed facts, SJM has not made and sold the accused Portico products “solely for uses reasonably related” to seeking FDA approval. So once it started making and selling its products for commercial use, SJM lost the exemption under section 271(e)(1). Neither of the two cases cited by SJM support its theory that the section 271(e)(1) exemption can be considered separately for each individual valve that it makes and sells, or that the word “solely” in section 271(e)(1) can simply be ignored. SJM first relies on Amgen Inc. v. Int’l Trade Comm’n, 565 F.3d 846, 852 (Fed. Cir. 2009) and quotes a portion of it stating that “each of the accused activities must be evaluated separately to determine whether the exemption applies.” Opp. at 27. SJM takes this quote out of context, conflating infringing activities with the uses those activities are for. In Amgen, Amgen filed an action in the ITC to prohibit imports of EPO by Roche. Id. Amgen did so after Roche completed its submission of information to the FDA for approval to sell EPO, but before approval was granted. Id. Amgen argued that Roche’s infringing activities could not be for uses reasonably related to seeking FDA approval since the application for that approval had already been submitted. The ITC however assumed that “all otherwise infringing activities are exempt if conducted during the period before regulatory approval is granted.” The Federal Circuit reversed, holding that “each of the accused activities must be evaluated separately to determine whether the exemption applies.” Nothing in Amgen says, or even suggests, that an infringer can engage in an activity— such as selling an accused product—for both commercial uses having nothing to do with seeking FDA approval and for clinical uses for the purpose of seeking FDA approval—and still enjoy the exemption under section 271(e)(1). In Amgen, every infringing activity had to be evaluated Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 10 of 14 PageID #: 8789 9 separately to determine whether the exemption might be lost. SJM next relies on NeoRx Corp. v. Immunomedics, Inc., 877 F. Supp. 202, 206 (D.N.J. 1994). Opp. at 27. But the NeoRX court did not hold that an infringer could make and sell infringing products for both uses related to seeking FDA approval and uses unrelated to seeking FDA approval and still enjoy the exemption under section 271(e)(1). True, the parties disputed, and the court ruled on, whether various allegedly infringing uses were reasonably related to seeking FDA approval. See id. at 206. (For example, and pertinent here, the NeoRx court held that “making [accused products] in the United States and then shipping them abroad to regulatory agencies is not reasonably related to the submission of data to the FDA and as such is a nonexempt infringing activity.”) But the NeoRx court simply did not address—and apparently was not asked to address—whether the exemption under 271(e)(1) could apply to an infringing activity that was for both clinical and commercial use. SJM’s theory of how section 271(f) and 271(e)(1) interact is equally flawed. SJM does not dispute that supplying components under section 271(f) is not itself one of the infringing activities that is potentially exempt under section 271(e)(1). Rather, SJM argues (correctly) that it is liable under section 271(f) only if it supplied components for combination outside of the United States “in a manner that would infringe the patent if such combination occurred in the United States.” Opp. at 27. SJM then argues (incorrectly) that the hypothetical combination required to be considered under section 271(f) would be exempt under section 271(e)(1) because it would be for clinical activities reasonably related to seeking FDA approval. Id. Why does SJM think that it is allowed to decide for itself that the hypothetical combination required to be considered under section 271(f) would be for a clinical use? Nothing about section 271(f) allows SJM to decide for itself what uses the combination would be for, and Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 11 of 14 PageID #: 8790 10 thus what affirmative defenses might apply. (If it did, SJM might equally well decide, for example, that the combinations in the United States would be made for a licensed entity, and that the combinations would thus not infringe because they would be licensed.) To ask this question is to answer it. In determining whether the hypothetical combination would infringe, the relevant question is whether the combination would be an act of infringement if made in the United States, not whether SJM would have certain affirmative defenses if the combination were made in the United States for certain uses. III. CONCLUSION For the foregoing reasons, the Court should grant Snyders’ motion for partial summary judgment. Dated: January 3, 2018 Respectfully submitted, /s/ Matthew J. Antonelli Matthew J. Antonelli Texas Bar No. 24068432 matt@ahtlawfirm.com Zachariah S. Harrington Texas Bar No. 24057886 zac@ahtlawfirm.com Larry D. Thompson, Jr. Texas Bar No. 24051428 larry@ahtlawfirm.com Michael D. Ellis Texas Bar No. 24081586 michael@ahtlawfirm.com ANTONELLI, HARRINGTON & THOMPSON LLP 4306 Yoakum Blvd., Ste. 450 Houston, TX 77006 (713) 581-3000 Stafford Davis State Bar No. 24054605 sdavis@stafforddavisfirm.com THE STAFFORD DAVIS FIRM The People’s Petroleum Building Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 12 of 14 PageID #: 8791 11 102 North College Avenue, 13th Floor Tyler, Texas 75702 (903) 593-7000 (903) 705-7369 fax Sarah J. Ring THE RING LAW FIRM, PLLC Texas Bar No. 24056213 sring@ringipfirm.com 9654 C Katy Frwy., Box 263 Houston, Texas 77055 Telephone: (281) 772-6541 Katherine Jochim Van Gunst PO Box 17730 San Diego, CA 92177 858-245-3981 katherine.vangunst.esq@gmail.com Attorneys for Snyders Heart Valve LLC Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 13 of 14 PageID #: 8792 12 CERTIFICATE OF SERVICE I hereby certify that on the 3rd day of January, 2018, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to all counsel of record. /s/ Matthew J. Antonelli Matthew J. Antonelli Case 4:16-cv-00812-ALM-KPJ Document 253 Filed 01/03/18 Page 14 of 14 PageID #: 8793