Boston Scientific Corp. et al v. Nevro Corp.
Filing
785
MEMORANDUM OPINION Signed by Judge Colm F. Connolly on 9/20/2021. (nmf)
Case 1:16-cv-01163-CFC-CJB Document 785 Filed 09/20/21 Page 1 of 15 PageID #: 36345
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
BOSTON SCIENTIFIC CORP. and
BOSTON SCIENTIFIC
NEUROMODULATION CORP.,
Plaintiffs,
Civil Action No. 16-1163-CFC
CONSOLIDATED
v.
NEVRO CORP.,
Defendant.
Brian Farnan, Michael Farnan, FARNAN LLP, Wilmington, Delaware; Michael
Kahn, Caitlin Olwell, Erica Holland, Andrew Schreiber, Svetlana Pavlovic, Brooks
Kenyon, AKIN GUMP STRAUSS HAUER & FELD LLP; New York, New York;
Anthony Pierce, C. Rash, Rachel Elsby; AKIN GUMP STRAUSS HAUER &
FELD LLP; Washington, District of Columbia; Steven Maslowski, Jason Weil,
AKIN GUMP STRAUSS HAUER & FELD LLP, Philadelphia, Pennsylvania;
Matthew Wolf, Edward Han, Marc Cohn, Amy DeWitt, ARNOLD & PORTER
KA YE SCHOLER LLP, Washington, District of Columbia; Dina Hayes,
ARNOLD & PORTER KAYE SCHOLER LLP, Chicago, Illinois; Thomas
Carmack, ARNOLD & PORTER KA YE SCHOLER LLP, Palo Alto, California
Counsel for PlaintiffBoston Scientific Corp. and Boston Scientific
Neuromodulation Corp.
Rodger Smith, Michael Flynn, Lucinda Cucuzzella, MORRIS, NICHOLS, ARSHT
& TUNNELL LLP, Wilmington, Delaware; Bradford Badke, Ching-Lee Fukuda,
Sona De, Sharon Lee, Ketan Patel, Julie Hsia, SIDLEY AUSTIN LLP, New York,
New York; Thomas Broughan, SIDLEY AUSTIN LLP, Washington, District of
Columbia; Erik Fountain, SIDLEY AUSTIN LLP, Dallas, Texas; Nathan
Greenblatt, SIDLEY AUSTIN LLP, Palo Alto, California
Counsel for Defendant Nevro Corp.
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MEMORANDUM OPINION
September 20, 2021
Wilmington, Delaware
11
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COLM
~
OLLY
CHIEF JUDGE
Plaintiffs Boston Scientific Corporation and Boston Scientific
Neuromodulation Corporation (collectively, Boston Scientific) accused Defendant
Nevro Corporation in both the original Complaint (D.I. 1) and the operative First
Amended Complaint (D.I. 13) of infringing, among other patents, U.S. Patent
Numbers 7,437,193 (the # 193 patent) and 8,644,933 (the #933 patent). The
asserted claims of the# 193 patent, titled "Microstimulator Employing Improved
Recharging Reporting And Telemetry Techniques," cover certain electronic
medical devices that are configured to be implanted beneath a patient's skin for
tissue stimulation to prevent and/or treat various disorders. The asserted claims of
the #933 patent, titled "Techniques For Controlling Charging Of Batteries In An
External Charger And An Implantable Medical Device," cover technology for
controlling the charging of batteries used with such devices. Boston Scientific
alleges that Nevro's Senza System, a high frequency spinal cord stimulator, and
Nevro's inducement of health care providers and patients to use that system
infringe the asserted c laims of the asserted patents. Boston Scientific also alleges
that Nevro's infringement was and is willful. Pending before me is Nevro's
motion for "summary judgment of no willfulness with respect to the alleged
infringement" of the # 193 and #933 patents. D.I. 673 .
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I.
LEGAL STANDARDS
A.
Summary Judgment
A court must grant summary judgment "if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law." Fed. R. Civ. P. 56(a). Material facts are those "that could affect
the outcome" of the proceeding. Lamont v. New Jersey, 631 F.3d 177, 181 (3d Cir.
2011). "[A] dispute about a material fact is genuine if the evidence is sufficient to
permit a reasonable jury to return a verdict for the non-moving party." Id. (internal
quotation marks omitted). A non-moving p~rty asserting that a fact is genuinely
disputed must support such an assertion by: "(A) citing to particular parts of
materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations, ... admissions, interrogatory
answers, or other materials; or (B) showing that the materials cited [by the
opposing party] do not establish the absence ... of a genuine dispute .... " Fed. R.
Civ. P. 56(c)(l). The non-moving party's evidence "must amount to more than a
scintilla, but may amount to less (in the evaluation of the court) than a
preponderance." Williams v. Borough of West Chester, Pa., 891 F.2d 458, 460-61
(3d Cir. 1989).
B.
Willful Infringement
Section 284 of the Patent Act "gives district courts the discretion to award
enhanced damages against those guilty of patent infringement." Halo Elecs., Inc.
2
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v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1935 (2016). The statute provides that "the
court may increase the damages up to three times the amount found or assessed."
35 U.S.C. § 284. Although the Court in Halo intentionally "eschew[ ed] any rigid
formula for awarding enhanced damages under§ 284," 136 S. Ct. at 1934, the
Court held that the legal principles "developed over nearly two centuries of
application and interpretation of the Patent Act ... channel the exercise of [the
district court's] discretion" and "limit[] the award of enhanced damages to
egregious cases of misconduct beyond typical infringement," id. at 1935. Thus,
enhanced damages awards under § 284 are available only in "egregious cases" of
misconduct that involve more than "typical" infringement. Id. As the Court
explained, the enhanced damages award provided by § 284 was "designed as a
'punitive' or 'vindictive' sanction for egregious infringement behavior ... [that]
has been variously described in [the Court's] cases as willful, wanton, malicious,
bad-faith, deliberate, consciously wrongful, flagrant, or-indeed-characteristic of
a pirate." Id. at 1932.
Although "§ 284 allows district courts to punish th[is] full range of culpable
behavior," id. at 1933, in the vast majority of patent cases filed today, claims for
enhanced damages are sought based on allegations of willful misconduct-so
much so that, even though the words "willful" and "willfulness" do not appear in
§ 284, plaintiffs and courts more often than not describe claims for enhanced
3
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damages brought under§ 284 as "willful infringement claims." Indeed, some
parties and courts refer to such claims as willful infringement "causes of action"
even though § 271 of the Patent Act, which creates causes of action for direct,
induced, and contributory infringement, does not mention or suggest such a thing
as "willful infringement." 1
The fact that willfulness is the most common type of misconduct alleged by
plaintiffs who invoke§ 284 makes sense, as willful conduct "serve[s] as [the] floor
for culpable behavior that may incur enhanced damages." Robert L. Harmon,
Cynthia A. Homan & Laura A. Lydigsen, Patents and the Federal Circuit, §
17.3(a), at 1378 (13th ed. 2017). It also explains the Court's statement in Halo that
enhanced damages under § 284 "should generally be reserved for egregious cases
typified by willful misconduct." 136 S. Ct. at 1934 (emphasis added).
In assessing the egregiousness of a defendant's conduct for § 284 purposes,
1
See, e.g., Viilinge Innovation AB v. Halstead New Eng. Corp., 2018 WL 2411218,
at *5 (D. Del. May 29, 2018); Milo & Gabby, LLCv. Amazon.com, Inc., 12 F.
Supp. 3d 1341, 1353 (W.D. Wash. 2014); Trs. of Univ. ofPa. v. St. Jude
Children's Research Hosp., 982 F. Supp. 2d 518, 529-30 (E.D. Pa. 2013);
MONEC Holding AG v. Motorola Mobility, Inc., 897 F. Supp. 2d 225,236 (D. Del.
2012); Inv. Tech. Grp., Inc. v. Liquidnet Holdings, Inc., 759 F. Supp. 2d 387,409
(S.D.N.Y. 2010); Powell v. Home Depot U.S.A., Inc., 715 F. Supp. 2d 1285, 1290
(S.D. Fla. 2010); Dura Glob. Tech., Inc. v. Magna Donnelly Corp., 665 F. Supp.
2d 787, 789 (E.D. Mich. 2009); Cognitronics Imaging Sys., Inc. v. Recognition
Research Inc., 83 F. Supp. 2d 689,691 (E.D. Va. 2000); Heil Co. v. Hartford
Accidentandlndem. Co.,937F. Supp.1355, 1361 (E.D. Wis.1996);Inre
Recombinant DNA Tech. Pat. and Contract Litig., 850 F. Supp. 769, 771 (S.D. Ind.
1994).
4
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"culpability is generally measured against the knowledge of the [defendant] at the
time of the challenged conduct." Id. at 1933. The Court in Halo rejected the
Federal Circuit's requirement announced in In re Seagate Technology, LLC, 497
F.3d 1360 (Fed. Cir. 2007) (en bane), that a patentee show "objective recklessness"
in order to prove willful misconduct for § 284 purposes. Id. The Court reasoned
that the "objective recklessness" test insulated many of the most culpable
infringers from § 284' s punitive sanctions because it made dispositive invalidity
and non-infringement defenses asserted at trial even if the infringer had not acted
on the basis of those defenses or was even aware of them. Id. In the Court's
words: "Under that standard, someone who plunders a patent-infringing it
without any reason to suppose his conduct is arguably defensible--can
nevertheless escape any comeuppance under§ 284 solely on the strength of his
attorney's ingenuity." Id. Thus, the Court held that, in cases where the asserted
basis for enhanced damages is willful misconduct, it is "[t]he subjective willfulness
of [the] patent infringer, intentional or knowing, [that] may warrant enhanced
damages, without regard to whether his infringement was objectively reckless."
Id.
The Court's "intentional or knowing" clause makes clear that willful
infringement is-at a minimum-knowing infringement. This standard is
consistent with the Supreme Court's holding in Global-Tech Appliances, Inc. v.
5
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SEB S.A., 563 U.S. 754(2011), that "induced infringement under§ 27l(b) requires
knowledge that the induced acts constitute patent infringement." Id. at 766. Since
§ 284 enhanced damages are available in cases of induced infringement, see, e.g.,
Barry v. Medtronic, Inc., 2019 WL 302886, at * 17 (Fed. Cir. Jan. 24, 2019);
SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365, 1385 (Fed. Cir. 2013); ACCO
Brand, Inc. v. ABA Locks Mfrs. Co., 501 F.3d 1307, 1314 (Fed. Cir. 2007);
Metabolite Labs., Inc. v. Lab. Corp. ofAm. Holdings, 370 F.3d 1354, 1371 (Fed.
Cir. 2004), and since, under Halo,§ 284's enhanced damages award is reserved
only for egregious cases, it would seem incongruous if not illogical to require a
lesser showing of culpability for enhanced damages under § 284 than for induced
infringement under§ 271(b). And, indeed, the Federal Circuit emphasized in SRI
International, Inc. v. Cisco Systems, Inc., 930 F.3d 1295 (Fed. Cir. 2019) that
under Halo enhanced damages are available only if a showing of something more
than intentional or knowing infringement is made:
As the Supreme Court stated in Halo, "[t]he sort of
conduct warranting enhanced damages has been
variously described in our cases as willful, wanton,
malicious, bad-faith, deliberate, consciously wrongful,
flagrant, or-indeed-characteristic of a pirate." While
district courts have discretion in deciding whether or not
behavior rises to that standard, such findings "are
generally reserved for egregious cases of culpable
behavior." Indeed, as Justice Breyer emphasized in his
concurrence, it is the circumstances that transform simple
"intentional or knowing" infringement into egregious,
sanctionable behavior, and that makes all the difference.
6
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Id. (emphasis in original) (citations omitted). 2
II.
DISCUSSION
Nevro argues that the summary judgment it seeks is warranted because it
"lacked the pre-suit knowledge required for a finding that any alleged infringement
of the[#] 193 and [#]933 patents was willful." D.I. 675 at 2. I agree that there is
insufficient record evidence from which a rational juror could conclude that Nevro
willfully infringed either patent before this suit was filed. Accordingly, I will grant
Nevro's motion.
2
I am aware that in Arctic Cat Inc. v. Bombardier Recreational Products Inc., 876
F.3d 1350, 1371 (Fed. Cir. 2017), the Federal Circuit held that proof that a
defendant "should have known that its actions constituted an unjustifiably high risk
of infringement" was enough to establish willfulness under Halo. In so holding,
the Court expressly rejected the defendant's argument that this "'should have
known' standard contradicts Halo." Arctic Cat, 876 F.3d at 1371. Two other
Federal Circuit decisions issued after Halo held that a plaintiff can establish
willfulness for § 284 purposes with proof that "the defendant acted despite a risk of
infringement that was either known or so obvious that it should have been known."
WesternGeco L.L.C. v. Ion Geophysical Corp., 837 F.3d 1358, 1362 (Fed. Cir.
2016) (internal quotation marks and citations omitted), rev'd on other grounds, 138
S. Ct. 2129 (2018); see also WCM Indus., Inc. v. JPS Corp., 721 F. App'x 959,970
(Fed. Cir. 2018) (citing Arctic Cat, 876 F.3d at 1371) (holding that in reviewing
"under the new Halo standard" a district court's award of enhanced damages, "we
must determine whether the evidence, when viewed in the light most favorable to
[the plaintiff], was sufficient to prove by a preponderance of the evidence that [the
defendant] acted despite a risk of infringement that was either known or so obvious
that it should have been known to [the defendant]"). All three of these cases were
decided before SRI, and, in my view, cannot be reconciled with Halo. I will
therefore follow SRI.
7
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Boston Scientific makes two arguments in opposition to the motion. It
argues first that summary judgment cannot be granted because "it is undisputed
that Nevro knew about the [#] 193 patent prior to the [filing of the] Complaint."
D.I. 713 at 1. Knowledge of a patent, however, is not sufficient to establish willful
infringement of that patent. See Dynamic Data Techs., LLC v. Brightcove Inc.,
2020 WL 4192613, at *5 (D. Del. July 21, 2020) ("To state a claim for enhanced
damages based on willful infringement, ... [the plaintiff] must allege not only that
[the defendant] had knowledge of the asserted patents, but also that [the defendant]
had knowledge of its infringement of the asserted patents."). As noted above, at a
minimum, willful infringement is knowing infringement. Knowledge of a patent is
not the same thing as knowledge that a product or the use of that product infringes
the patent. Boston Scientific has identified no fact from which it could plausibly
be inferred that Nevro knew that its Senza System or the use of that system
infringed the asserted patents.
Boston Scientific' s second argument is that summary judgment is precluded
because "Nevro was put on notice of Boston Scientific's [#]933 and[#] 193 Patents
and its infringement of those patents at least as early as December 9, 2016, when
Boston Scientific filed its 2016 Complaint," and "[r]ather than make any effort to
design around Boston Scientific' s patents, Nevro launched two new infringing
products." D.I. 713 at 4 (emphasis in the original). But a claim for willfulness-
8
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based enhanced damages under§ 284 cannot be sustained "where the defendant's
alleged knowledge of the asserted patents is based solely on the content ofth[e]
[operative] complaint or a prior version of th[at] complaint filed in the same
lawsuit." ZapFraud, Inc. v. Barracuda Networks, Inc., 2021 WL 1134687, at *4
(D. Del. Mar. 24, 2021).
As I explained in Zapfraud:
District courts across the country are divided over whether
a defendant must have the knowledge necessary to sustain
claims of indirect and willful infringement before the
filing of the lawsuit.
Current and recent judges of this District have also taken
different views on the issue. Neither the Federal Circuit
nor the Supreme Court has addressed the issue.
I have held in prior opinions that the complaint itself
cannot be the source of the knowledge required to sustain
claims of induced infringement and willfulness-based
enhanced damages. See VLSI Tech. LLC v. Intel Corp.,
2019 WL 1349468, at *2 (D. Del. Mar. 26, 2019)
(dismissing willfulness-based enhanced damages claim
where the plaintiff had alleged that the defendant gained
"knowledge of the [patent] at least since the filing of this
complaint"); Dynamic Data Techs., LLC v. Brightcove
Inc., 2020 WL 4192613, at *3 (D. Del. July 21, 2020)
(dismissing induced infringement claims where the
plaintiff had alleged that the defendant became "aware that
its accused products allegedly infringe as of the filing of
the Complaint"). Though not without doubts, I am "not
persuaded by Plaintiff{'s] contention that the requisite
knowledge can be established by the filing of the
Plaintiff{'s] Complaint." Mallinckrodt, Inc. v. E-Z-Em
Inc., 670 F. Supp. 2d 349,354 n.l. (D. Del. 2009) (Farnan,
J.).
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"The purpose of a complaint is to obtain relief from an
existing claim and not to create a claim." Helios
Streaming, LLC v. Vudu, Inc., 2020 WL 3167641, at *2
n. l (D. Del. June 15, 2020). ZapFraud has identified, and
I know of, no area of tort law other than patent
infringement where courts have allowed a plaintiff to
prove an element of a legal claim with evidence that the
plaintiff filed the claim. The limited authority vested in
our courts by the Constitution and the limited resources
made available to our courts by Congress counsel against
encouraging plaintiffs to create claims by filing claims. It
seems to me neither wise nor consistent with principles of
judicial economy to allow court dockets to serve as notice
boards for future legal claims for indirect infringement and
enhanced damages. I agree with Judge Andrews's
statement in Cal/wave Communications LLC v. AT & T
Mobility LLC, 2014 WL 5363741, at* 1 (D. Del. Jan. 28,
2014), that "[t]here is a benefit to society if [a] matter is
resolved without a suit." As Judge Andrews observed in
Cal/wave, a pre-suit notice letter could very well lead "the
patent holder and the asserted infringer [to] exchange
information, and the asserted infringer might then take a
license, or the patent holder might learn of reasons why
suit should not be filed." Id.; see also Proxyconn Inc. v.
Microsoft Corp., 2012 WL 1835680, at *5 (C.D. Cal. May
16, 2012) ("[R]equiring a Plaintiff to plead knowledge
based on facts other than the filing of the present lawsuit
furthers judicial economy and preserves parties' resources
by encouraging resolution prior to filing a lawsuit. Prelitigation attempts at resolution are especially desirable in
patent cases, which are often expensive and thus resolved
by settlement.").
The policies that govern our patent system make the
requirement of pre-suit knowledge of the asserted patents
especially warranted for enhanced damages claims. Direct
infringement is a strict liability tort. Enhanced damages
under § 284 "are not to be meted out in a typical
infringement case, but are instead designed as a 'punitive'
10
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or 'vindictive' sanction for egregious infringement
behavior." Halo Elecs., Inc. v. Pulse Elecs., lnc.,-U.S.
- , 136 S. Ct. 1923, 1932, 195 L.Ed.2d 278 (2016).
"The sort of conduct warranting enhanced damages has
been variously described ... as willful, wanton, malicious,
bad-faith, deliberate, consciously wrongful, flagrant, orindeed-characteristic of a pirate." Id. The purpose of
enhanced damages is to punish and deter bad actors from
egregious conduct, not to provide a financial incentive for
opportunistic plaintiffs to spring suits for patent
infringement on innocent actors who have no knowledge
of the existence of the asserted patents. As the Federal
Circuit noted in Gustafson, Inc. v. lntersystems Industrial
Products, Inc., 897 F .2d 508 (Fed. Cir. 1990),
[i]n our patent system, patent applications are
secret, and patentees are authorized to sue
"innocent" manufacturers immediately after
their patents issue and without warning. To
hold such patentees entitled to increased
damages or attorney fees on the ground of
willful infringement, however, would be to
reward use of the patent system as a form of
ambush.
Id. at 511.
Accordingly, in the absence of binding authority to the
contrary from the Federal Circuit and Supreme Court, I
will adopt the rule that the operative complaint in a lawsuit
fails to state a claim for indirect patent infringement where
the defendant's alleged knowledge of the asserted patents
is based solely on the content of that complaint or a prior
version of the complaint filed in the same lawsuit. And I
conclude that the operative complaint in a lawsuit fails to
state a claim for willfulness-based enhanced damages
under § 284 where the defendant's alleged knowledge of
the asserted patents is based solely on the content of that
complaint or a prior version of the complaint filed in the
same lawsuit.
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2021 WL 1134687, at *3-*4 (footnotes omitted) (alterations in the original). 3
Boston Scientific argues that "Nevro's launch of new products with
knowledge of the[#] 193 and [#]933 Patents is conduct that distinguishes this case
3
I noted in Zap.fraud and repeat here that
[n]either of these rules prevents a plaintiff from filing in the future a
new lawsuit alleging that the knowledge requirement is established
based on the defendant's awareness of the previous lawsuit.
Proxyconn, 2012 WL 1835680, at *6. I do not believe that requiring a
plaintiff to bring a second suit as opposed to obtaining leave to
supplement its complaint pursuant to Federal Rule of Civil Procedure
15(d) will necessarily result in inefficiencies. See Fed. R. Civ. P.
15(d) (providing that "[o]n motion and reasonable notice, the court
may, on just terms, permit a party to serve a supplemental pleading
setting out any transaction, occurrence, or event that happened after
the date of the pleading to be supplemented"). The results of the first
suit and estoppel doctrines would likely reduce substantially the scope
of the second suit. In addition, having a second suit will avoid thorny
privilege and attorney work product issues that arise when a defendant
relies on the opinions of its trial counsel to form its own opinion about
whether it infringes the asserted patents. Cf In re Seagate Tech.,
LLC, 497 F.3d 1360, 1374 (Fed. Cir. 2007), abrogated on other
grounds by Halo Elecs., Inc. v. Pulse Elecs., Inc., U.S.--, 136
S. Ct. 1923, 195 L. Ed. 2d 278 (2016) (en bane) (noting that
"[b]ecause willful infringement in the main must find its basis in
prelitigation conduct, communications of trial counsel have little, if
any, relevance warranting their disclosure, and this further supports
generally shielding trial counsel from the waiver stemming from an
advice of counsel defense to willfulness").
2021 WL 1134687, at *4 n.4.
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from Zapfraud." D.I. 713 at 5. But it does not explain why this discrepancy
matters; and indeed, the discrepancy is the proverbial distinction without a
difference.
III.
CONCLUSION
For the reasons discussed above, I find that Boston Scientific has presented
insufficient evidence to support a finding that Nevro willfully infringed the # 193
and #933 patents. Accordingly, I will grant Nevro's motion for summary
judgment (D.I. 673).
The Court will issue an Order consistent with this Memorandum Opinion.
13
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