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Acantha LLC v. Depuy Orthopaedics Inc

United States District Court, E.D. Wisconsin

April 25, 2018

ACANTHA LLC, Plaintiff,
v.
DEPUY ORTHOPAEDICS INC., et al., Defendants.

          DECISION AND ORDER GRANTING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT LIMITING DAMAGES BASED ON FAILURE TO MARK PURSUANT TO 35 U.S.C. § 287(A)

          William C. Griesbach, Chief Judge United States District Court

         In this action for patent infringement, Plaintiff Acantha LLC accuses Defendants DePuy Synthes Sales, Inc., DePuy Synthes Products Inc., DePuy Synthes Inc., Johnson & Johnson Inc., Synthes Inc., Synthes USA LLC, DePuy Orthopaedics Inc., and DePuy Spine LLC of infringing its patent, U.S. Reissued Patent No. RE43, 008 (the ‘008 Patent). In particular, Acantha asserts Defendants' Vectra and Zero-P VA products infringe on the ‘008 Patent. Presently before the court is Defendants' motion for partial summary judgment limiting damages based on Plaintiff's failure to mark pursuant to 35 U.S.C. § 287(a). For the following reasons, the motion will be granted.

         BACKGROUND

         The patent-in-suit initially issued as U.S. Patent No. 6, 261, 291 (the ‘291 Patent) on July 17, 2001 but was later reissued as U.S. Patent No. RE43, 008. In March 2002, David Talaber, one of the patent's inventors, sent letters to several medical device companies, including several defendant entities and their predecessors, notifying them of Acantha's intellectual property as well as the types of products it covered and inquiring into their interest in licensing the technology. Pl.'s Proposed Findings of Fact (PPFOF) ¶ 28, ECF No. 176. In subsequent discussions with product development personnel at Synthes Spine and DePuy Orthopaedics that lasted through May 2002, Talaber expressed Acantha's interest in licensing the patent. Nisra Thongpreda and Kelly Baker as well as Dr. Jorge Ochoa participated in these meetings on behalf of Synthes Spine and DePuy Spine, respectively. Id. ¶ 30. Both entities did not plan to use the invention at that time. Id. Thongpreda subsequently attended a meeting to brainstorm a new “rotational” plate system with Synthes' anterior cervical spine team in May 2002. This system later became Defendants' Vectra product and was submitted for patent clearance in December 2002. Id. ¶¶ 31-32.

         In 2003, Acantha entered into an exclusive license agreement for the ‘291 Patent, including any reissue of that patent, with Stryker Spine SA. Pursuant to the agreement, Acantha allowed Stryker to manufacture and sell products under the patent. The agreement only identified Stryker's Reflex product as a licensed product. Stryker agreed to mark the covered product's packaging: “Beginning . . . after the execution of this Agreement and at all time s thereafter, the Licensed parties shall place, in a conspicuous location on the packaging for the Products . . . the words ‘U.S. Patent No(s).' followed by the number(s) corresponding to the relevant U.S. Letter(s) Patent, subject to the reasonable approval of Licensor.” Id. ¶ 37.

         David Talaber and Dr. James Lloyd, the inventors of the patent, held numerous meetings with DePuy Spine personnel in 2006, to discuss the patent, how a license could benefit DePuy's spinal products, and the reissue proceedings for the patent. During one of the meetings, a DePuy executive noted that DePuy believed the Vectra product manufactured by Synthes infringed Acantha's intellectual property. Dr. Lloyd confirmed that Acantha was aware of that product. Id. ¶ 34. At this time, DePuy Spine was a division of Johnson & Johnson but had not yet merged with Synthes. Id. ¶ 33. On April 26, 2011, Johnson & Johnson and Synthes executed a merger agreement to combine DePuy and Synthes. The merger was finalized on June 14, 2012. Id. ¶ 35.

         In 2013, Acantha and Stryker amended the license agreement so that Stryker had a nonexclusive license, rather than an exclusive license, for the patent. The parties reaffirmed Stryker's obligation to mark the products that were subject to the agreement. Id. ¶ 47. This agreement not only identified Reflex as a licensed product but also listed several other products as licensed products, including the Reflex Hybrid, the Reflex Zero-Profile, and the Dynatran. On March 19, 2014, Olivia Luk, an attorney representing Acantha, wrote to attorneys for Defendants and provided representative claim charts asserting that Defendants' Vectra and Zero-P VA products were covered by the claims of the ‘008 Patent. Defs.' Proposed Findings of Fact (DPFOF) ¶ 25, ECF No. 157.

         In their motion for partial summary judgment, Defendants argue that Acantha is limited to recovering damages as of March 19, 2014, the date Defendants received claim charts asserting their products violated Acantha's patent. Defendants assert that they did not receive “actual notice” of infringement until that date and that they did not receive “constructive notice” of infringement because Acantha and Stryker did not mark the patented products or their packaging labels in accordance with 35 U.S.C. § 287(a). In response, Acantha maintains that it expected Stryker, a sophisticated company experienced in licensing, to comply with this provision. PPFOF ¶ 38. Acantha states that one or more Acantha members met with Stryker representatives in person regularly and had telephone conversations with them occasionally about Stryker's marking obligations. Stryker confirmed multiple times that it complied with the agreement's marking provisions. Id. ¶ 40. As early as 2004, Stryker listed Acantha's patent number on the surgical technique guides for the licensed Reflex products. Id. ¶ 42. These technique guides, Acantha notes, are distributed to hospitals and at trade shows and are published on Stryker's website. Surgeons view and use the technique guides during the surgeries in which the device is used. Id. ¶ 43. Acantha states it reviewed the technique guides, noted the guides contained the Acantha patent number, and confirmed Stryker's oral representations that the licensed products were being marked. Id. ¶ 46.

         In addition, Acantha states that the Reflex Zero-Profile, the Reflex Hybrid, and the Dynatran were updated with marking on their packaging at least as of July 31, 2013. Id. ¶ 50. Defendants acknowledge that the label change was approved on July 31, 2013 but contend there is no evidence that all packaging on the products being sold was upDated: that time. Defendants also argue that the Aviator, which was released in 2010, and the Anchor-C, which was released in 2011, were covered products that Stryker had an obligation to mark but failed to do so. Acantha denies that these products were covered by the patent and, therefore denies that Stryker was never required to mark them.

         LEGAL STANDARD

         Summary judgment is appropriate when the moving party shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). All reasonable inferences are construed in favor of the nonmoving party. Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir. 2004). The party opposing the motion for summary judgment must “submit evidentiary materials that set forth specific facts showing that there is a genuine issue for trial.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010) (citations omitted). “The nonmoving party must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. Summary judgment is properly entered against a party “who fails to make a showing sufficient to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial.” Parent v. Home Depot U.S.A., Inc., 694 F.3d 919, 922 (7th Cir. 2012) (internal quotations omitted).

         ANALYSIS

         Defendants argue that Acantha and its licensee, Stryker, failed to mark substantially all of the products covered by the ‘008 Patent or their packaging with the patent number in accordance with 35 U.S.C. § 287(a). The marking statute provides:

Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or by fixing thereon the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that ...

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