Hudson Surgical Design Inc v. Biomet Inc
Filing
194
OPINION AND ORDER: The Court GRANTS in part and DENIES in part Biomet's Motion for Judgment on the Pleadings. [DE 114] The Court hereby DISMISSES Puget's allegations relating to claims 1, 2, 5-13, 21-30, 32, 41-44, 46, and 48 of the 541 p atent, without prejudice. The Court also DISMISSES Puget's allegations relating to claims 45 and 47 of the 541 patent, with prejudice. The Court lastly DISMISSES Puget's allegations of direct infringement of claims 31 and 33 of the 541 pate nt as conceded by Puget. The Court DENIES all other requested relief. In sum, this case is now limited in scope to Puget's allegations that Biomet willfully induced and contributed to the infringement of claims 31 and 33 of the 541 patent. Signed by Judge Jon E DeGuilio on 7/2/18. (ksp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
PUGET BIOVENTURES, LLC,
Plaintiff,
v.
BIOMET ORTHOPEDICS LLC, and
BIOMET MANUFACTURING, LLC,
)
)
)
)
)
)
)
)
)
Case No. 3:10-CV-465 JD
Defendants.
OPINION AND ORDER
Hudson Surgical Design, Inc. initiated this lawsuit against Biomet Orthopedics LLC and
Biomet Manufacturing, LLC (collectively, “Biomet”) in the Northern District of Illinois on July
19, 2010, alleging infringement of its patent for “Methods and Apparatus for Femoral and Tibial
Resection,” U.S. Patent No. 7,344,541 (the “‘541 patent”). Hudson Surgical filed its first
amended complaint two months later, in September (the “FAC”). [DE 17] Biomet answered the
FAC that same month. [DE 19] On motion, the case was then transferred to this Court in
November 2010 and then ordered stayed in December 2010, pending reexamination of the ‘541
patent before the United States Patent and Trademark Office. During the stay, Hudson Surgical
assigned ownership of the ‘541 patent to Puget Bioventures, LLC (“Puget”).
The stay was lifted in August 2017 following the reexamination, and the parties were
ordered to exchange contentions and proceed with claims construction. On November 3, 2017,
Biomet filed its Motion for Judgment on the Pleadings. [DE 114] For the reasons stated herein,
the Court will grant Biomet’s motion in part and deny in part.
1
FACTUAL ALLEGATIONS
The ‘541 patent issued to Hudson Surgical on March 18, 2008. Only four months later,
Hudson Surgical sent a letter to Biomet, informing Biomet of the ‘541 patent. The letter advised
Biomet that Hudson Surgical believed the ‘541 patent covered several of Biomet’s products.
Subsequent alerts issued in 2010, when Puget sent Biomet charts demonstrating how Biomet’s
products were purportedly infringing on the ‘541 patent. Despite these warnings, Biomet took no
steps to avoid infringement of the ‘541 patent. Specifically, Biomet designed, made, marketed,
provided, distributed, and sold potentially infringing products to hospitals and surgeons, and in
so doing, allegedly committed direct infringement of the ‘541 patent (specifically, patent claims
21-33 and 41-48). These products include Biomet’s MIS TKA instruments and techniques.
Furthermore, Biomet induced and contributed to infringement of the ‘541 patent by providing its
infringing products to hospitals and surgeons, and by training surgeons to use said products
(specifically, patent claims 1, 2, 5-13, 21-33, 41-48). Finally, Puget alleges that all of Biomet’s
purported direct and indirect infringement has been willful.
STANDARD
A motion for judgment on the pleadings under Rule 12(c) is subject to the same standard
of review as a motion to dismiss under Rule 12(b)(6). Gill v. City of Milwaukee, 850 F.3d 335,
339 (7th Cir. 2017). Therefore, the Court construes the complaint in the light most favorable to
the plaintiff, accepts the factual allegations as true, and draws all reasonable inferences in the
plaintiff’s favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A
complaint must contain only a “short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). That statement must contain sufficient factual matter,
accepted as true, to state a claim for relief that is plausible on its face, Ashcroft v. Iqbal, 556 U.S.
2
662, 678 (2009), and raise a right to relief above the speculative level. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). However, a plaintiff’s claim need only be plausible, not
probable. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012).
Evaluating whether a plaintiff’s claim is sufficiently plausible to survive a motion to dismiss is
“‘a context-specific task that requires the reviewing court to draw on its judicial experience and
common sense.’” McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting
Iqbal, 556 U.S. at 678).
DISCUSSION
Biomet argues for dismissal on three grounds. First, and most briefly, Biomet submits
that many of the patent claims alleged in the FAC should be dismissed as unenforceable because
they were cancelled during reexamination. Biomet also argues that claims 45 and 47 of the ‘541
patent are patent ineligible, and therefore Puget cannot allege that Biomet infringed on those
claims. Finally, Biomet maintains that the allegations of infringement are insufficiently pled.
A.
Cancelled Claims
The following claims of the ‘541 patent were cancelled during the reexamination: 1-30,
32, 34, 41-44, 46, 48, 53, and 54. [DE 118-5] Because of this, Biomet argues that Puget’s
infringement allegations regarding claims 1, 2, 5-13, 21-30, 32, 41-44, 46, and 48 should all be
dismissed because those claims are unenforceable. The Court agrees. The Federal Circuit has
made clear that “when a claim is cancelled, the patentee loses any cause of action based on that
claim, and any pending litigation in which the claims are asserted becomes moot.” Fresenius
USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1340 (Fed. Cir. 2013). So, Puget’s infringement
allegations based on any of the cancelled claims are moot and must be dismissed for lack of
jurisdiction. See SHFL Entm’t, Inc. v. DigiDeal Corp., ---Fed. App’x---, 2018 WL 2049238, at
3
*3 (Fed. Cir. May 2, 2018) (“Suits based on cancelled claims must be dismissed for lack of
jurisdiction, however.”) (citing Target Training Int’l, Ltd. v. Extended Disc N. Am., Inc., 645
Fed. App’x 1018, 1023 (Fed. Cir. 2016) (upholding the district court’s dismissal for lack of
jurisdiction because Fresenius rendered the suit moot as to the claims cancelled after
reexamination)); see also CFTC v. Bd. of Trade of City of Chicago, 701 F.2d 653, 656 (7th Cir.
1983) (“[A] dismissal for mootness is a dismissal for lack of jurisdiction ….”). Puget does not
oppose the dismissal of its allegations related to the ‘541 patent’s cancelled claims in response to
the instant motion. The Court will therefore dismiss these moot allegations for lack of
jurisdiction, without prejudice.
B.
Patent Eligibility of Claims 45 and 47
Biomet contends that claims 45 and 47 of the ‘541 patent are patent ineligible under 35
U.S.C. § 101. Congress has defined which inventions are patentable in § 101 of the Patent Act,
which states in its entirety:
Whoever invents or discovers any new and useful process, machine, manufacture,
or composition of matter, or any new and useful improvement thereof, may obtain
a patent therefor, subject to the conditions and requirements of this title.
The Patent Act defines the term “process” as “process, art or method, and includes a new use of a
known process, machine, manufacture, composition of matter, or material.” 35 U.S.C. § 100.
“Laws of nature, natural phenomena, and abstract ideas are not patentable.” Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012).1 Whether a patent’s
claims are patent ineligible involves a two-part inquiry. First, the Court must “determine whether
the claims at issue are directed to a patent-ineligible concept,” such as an abstract idea. Alice
Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014). If this first determination is met,
1
Laws of nature and natural phenomena are not at play here – only the concept of “abstract ideas.”
4
the Court must then “consider the elements of each claim both individually and ‘as an ordered
combination’ to determine whether the additional elements ‘transform the nature of the claim’
into a patent-eligible application.” Id. (quoting Mayo, 566 U.S. at 77-78).
The first Alice step requires the Court to consider the claims “in their entirety to ascertain
whether their character as a whole is directed to excluded subject matter.” Internet Patents Corp.
v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015). For clarity’s sake, the “entirety”
of claims 45 and 47 is not limited to the language contained at 44:16-24 and 44:30-38 of the ‘541
patent. As dependent claims, claims 45 and 47 include all of the limitations of the claims from
which they depend. See Markman v. Westview Instruments, Inc., 52 F.3d 967, 1000 (Fed. Cir.
1995) (“An extensive body of law, statutory and judgemade, governs the construction and legal
effect of patent claims; for example … that a dependent claim includes all of the limitations of
the independent claim[.]”). Claim 45 depends directly from independent claim 24, and claim 47
depends solely from claim 46, which itself depends solely from independent claim 24. Therefore,
when the Court addresses claims 45 and 47, it addresses them in their “entirety,” which includes
the language of claim 24 and (when applicable) claim 46.
The second Alice step requires the Court to “examine the elements of the claim to
determine whether it contains an inventive concept sufficient to transform the claimed abstract
idea into a patent-eligible application.” Alice, 134 S. Ct. at 2357 (internal quotation marks
omitted). “Step two is ‘a search for an inventive concept—i.e., an element or combination of
elements that is sufficient to ensure that the patent in practice amounts to significantly more than
a patent upon the ineligible concept itself.’” Intellectual Ventures I LLC v. Symantec Corp., 838
F.3d 1307, 1314 (Fed. Cir. 2016) (quoting Alice, 134 S. Ct. at 2355).
5
The operative language of patent claims 45 and 47 and the parties’ arguments before the
Court mirror the claim language and issues recently ruled on in the Court’s Order granting in part
and denying in part Biomet’s Motion to Dismiss in the parallel litigation, N.D. Ind. Case No.
3:17-cv-502. [ECF No. 34] To avoid unnecessary duplication here, the Court will adopt its
analysis and holding from that prior Order. The Court has independently verified that patent
claims 45 and 47 are directed to the abstract idea of “providing” instrumentation and information
on how to perform a medical procedure, and that they contain no inventive concept that
transforms their nature into a patent-eligible application of that abstract idea. Because of this, the
Court finds them ineligible under 35 U.S.C. § 101. Puget’s allegations of infringement related to
patent claims 45 and 47 will therefore be dismissed, with prejudice.
C.
Sufficiency of the Pleadings
Based on all of the above, Puget’s allegations of infringement will be dismissed except
for those relating to claims 31 and 33 of the ‘541 patent. So, the Court lastly turns to whether
Puget has sufficiently pled the remaining allegations in its FAC. As to its allegations of direct
infringement, Puget concedes that those charges do not relate to patent claims 31 and 33. [DE
118 at 29] Thus, the scope of Puget’s lawsuit at this point can be even further limited to the
allegations that Biomet willfully induced and contributed to the infringement of claims 31 and 33
(indirect infringement). Biomet urges the Court to dismiss these allegations as well, for various
reasons. First, Biomet argues that the amendments proposed during the reexamination of the
‘541 patent negate any mens rea for indirect infringement. Second, Biomet maintains that Puget
has not pled all the necessary elements for induced and contributory infringement. Third, Biomet
suggests that Puget’s allegation of willful infringement fails under the Supreme Court’s recent
ruling in Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016).
6
1.
The Reexamination’s Impact on Mens Rea
Puget alleges that Biomet committed two forms of indirect infringement: induced and
contributory infringement. Each of these forms involve a level of mens rea. To bring a claim of
induced infringement, “[t]he patentee must also show that the alleged infringer possessed the
requisite intent to induce infringement, which [the Federal Circuit has] held requires that the
alleged infringer knew or should have known his actions would induce actual infringements. Eli
Lilly & Co. v. Teva Parenteral Medicines, Inc., 845 F.3d 1357, 1363-64 (Fed. Cir. 2017)
(internal citations and quotations omitted). As for contributory infringement, a plaintiff must
show that the defendant “‘knew that the combination for which its components were especially
made was both patented and infringing ….’” Cross Med. Prods., Inc. v. Medtronic Sofamor
Danek, Inc., 424 F.3d 1293, 1312 (Fed. Cir. 2005) (quoting Golden Blount, Inc. v. Robert H.
Peterson Co., 365 F.3d 1054, 1061 (Fed. Cir. 2004)).
To support the required mens rea, Puget alleges that Biomet was put on notice by letter
dated July 14, 2008 [DE 17 ¶ 13], and then again in March and June 2010 when Hudson Surgical
sent Biomet charts comparing the ‘541 patent against the accused products. Id. ¶ 14. Biomet
argues that, as a matter of law, it could not have had the mens rea to commit indirect
infringement because, by January 2011, Puget chose to submit amended claims during the
reexamination of the ‘541 patent. According to Biomet, proposing an amendment to avoid
invalidity during reexamination “voids the original claim and an accused indirect infringer
cannot intend to induce or contribute to infringement of an invalid claim that no longer exists.”
[DE 115 at 28] Under this theory, the proposed amendments here wiped out their corresponding
original patent claims, and so, Puget’s 2008 and 2010 notices (which pertained to the original
7
patent claims and not the amended claims) are irrelevant for the purpose of pleading the mens
rea needed for indirect infringement.
But Biomet’s position is squarely at odds with the established notion that amendments to
claims during the reexamination process “are not effective until the certificate issues.” Biomet
Orthopedics, LLC v. Puget Bioventures, LLC, 640 Fed. App’x 868, 870 (Fed. Cir. 2016). This is
black letter law. See 37 C.F.R. § 1.530(k) (“Although the Office actions will treat proposed
amendments as though they have been entered, the proposed amendments will not be effective
until the reexamination certificate is issued and published.”). No reexamination certificate issued
as a result of the proceedings before the Patent Office, and the parties do not dispute that fact.2
Nonetheless, Biomet essentially asks this Court to rule, as a matter of law, that once Puget
proposed amendments during reexamination, it signaled open season on the ‘541 patent’s
original claims. To hold otherwise, urges Biomet, “would work an enormous injustice and
undermine any public notice function in the patent examination process.” [DE 122 at 18]
However, those who read the very rules of patent examination procedure must know that a
patent’s original claims are not undone by the proposal of amendments; the Manual of Patent
Examining Procedure explicitly cautions that “amendments are not legally effective until the
reexamination certificate is issued and published.” MPEP § 2234. Submitting amendments
during reexamination does not have the legal effect that Biomet believes it does.
Moreover, even if the amendments had become legally effective by way of a
reexamination certificate, Biomet’s argument would still fail because it makes no effort to show
that the amendments here made substantive changes to the original claims. See Bloom Eng’g Co.
v. N. Am. Mfg. Co., 129 F.3d 1247, 1250 (Fed. Cir. 1997) (“[W]hen the reexamined or reissued
2
Indeed, Biomet itself cited the lack of a certificate in its motion. [DE 114 ¶ 5]
8
claims are identical to those of the original patent, they shall ‘have effect continuously from the
date of the original patent.’”) (quoting 35 U.S.C. § 252). Identical amendments here would
undermine Biomet’s mens rea argument: “Unless a claim granted or confirmed upon
reexamination is identical to an original claim, the patent can not be enforced against infringing
activity that occurred before issuance of the reexamination certificate.” Bloom Eng’g, 129 F.3d at
1250. The term “identical” in this context “does not mean verbatim, but means at most without
substantive change.” Id. (citing Seattle Box Co. v. Industrial Crating & Packing, Inc., 731 F.2d
818, 827-28 (Fed. Cir. 1984)).
While determining whether an amended claim is legally identical to an original claim
does not depend on any absolute rule, “[d]etermination of whether a claim change during
reexamination is substantive requires analysis of the scope of the original and reexamined claims
in light of the specification, with attention to the references that occasioned the reexamination, as
well as the prosecution history and any other relevant information.” Id. (citing Laitram Corp. v.
NEC Corp., 952 F.2d 1357, 1362-63 (Fed. Cir. 1991)). Here, Biomet’s motion offers no such
analysis, and its reply brief merely highlights the additional language of the amended claims and
states that Puget “did not merely correct a typo or clarify a word.” [DE 122 at 18-19] Without
more, such as an analysis of the amendments against the patent’s specification and other relevant
information, Biomet’s filings do not suffice, and the Court will not make arguments on its behalf.
For these reasons, Biomet’s legal argument on mens rea fails.3
3
Biomet’s motion also expresses concern that Puget is trying to hold Biomet liable for alleged
infringement that occurred after the ‘541 patent’s expiration in December 2015. But Puget’s response
makes clear that it is not seeking damages for willful infringement that may have occurred after the patent
expired. [DE 118 at 27]
9
2.
The Remaining Elements of Indirect Infringement
Apart from mens rea, Biomet argues that Puget’s FAC still fails to set forth facts
supporting the basic elements of induced and contributory infringement. Induced infringement
occurs when a party “actively induces infringement of a patent.” 35 U.S.C. § 271(b). This
requires a plaintiff to “show that the accused inducer took an affirmative act to encourage
infringement ….” Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 843 F.3d 1315,
1332 (Fed. Cir. 2016). Biomet argues that the FAC lacks factual allegations as to this element.
However, the FAC clearly alleges that Biomet provided implants and the accused products “to
hospitals and surgeons throughout the United States” and additionally trained surgeons on how
to use them. [DE 17 ¶¶ 16-17] Biomet offers no reason as to why these allegations do not
describe affirmative acts undertaken to encourage infringement, and so its argument as to this
element of induced infringement falls short.
Contributory infringement occurs when a party sells “a component of a patented
machine … constituting a material part of the invention, knowing the same to be especially made
or especially adapted for use in an infringement of such patent, and not a staple article or
commodity of commerce suitable for substantial noninfringing use ….” 35 U.S.C. § 271(c). This
claim requires a plaintiff to show that “defendant’s components have ‘no substantial noninfringing uses.’” Cross Med., 424 F.3d at 1312 (quoting Golden Blount, 365 F.3d at 1061).
Puget alleges that Biomet designed, made and adapted, marketed, provided, distributed, and sold
its Biomet MIS TKA instruments and techniques (the accused products), and that those products
“are not staple articles or commodities of commerce suitable for substantial non-infringing use.”
[DE 17 ¶¶ 10-11] Biomet argues that the lack of alleged facts explaining how the accused
products have no non-infringing use should prevent the contributory infringement claims from
10
proceeding further. In support, Biomet cites Bill of Lading for the proposition that Puget must
“plead facts that allow an inference that the components sold or offered for sale have no
substantial non-infringing uses.” [DE 115 at 31 (quoting In re Bill of Lading Transmission &
Processing Sys. Patent Litig., 681 F.3d 1323, 1337 (Fed. Cir. 2012))]
While Puget’s allegations might come off as conclusory, “many courts post-Iqbal have
not demanded detailed factual allegations that the defendants’ products lack substantial
noninfringing uses.” Crypto Research, LLC v. Assay Abloy, Inc., 236 F. Supp. 3d 671, 688
(E.D.N.Y. 2017) (citing Conair Corp. v. Jarden Corp., No. 13-cv-67020, 2014 WL 3955172, at
*4 (S.D.N.Y. Aug. 12, 2014) (collecting cases)). The reason being the obvious difficulty
plaintiffs would face in pleading a negative without the benefit of discovery. Iron Gate Sec., Inc.
v. Lowe’s Cos., No. 15-cv-8814, 2016 U.S. Dist. LEXIS 34061, at *11 (S.D.N.Y. Mar. 16,
2016). The Court does not believe Bill of Lading’s language requires Puget to plead a null set
under the plausibility standard of Iqbal and Twombly. See Driessen v. Sony Music Entm’t, No.
2:09-cv-0140, 2013 U.S. Dist. LEXIS 120309, at *7 (D. Utah Aug. 22, 2013) (concluding the
same). To hold otherwise would be to require Puget to plead with specificity something that
allegedly does not exist. See id.
Because claims for induced and contributory infringement cannot survive absent an
underlying act of direct infringement, the Court must still address whether the FAC contains
sufficient allegations of direct infringement. Bill of Lading, 681 F. 3d at 1333 (“It is axiomatic
that ‘[t]here can be no inducement or contributory infringement without an underlying act of
direct infringement.’”) (quoting Linear Tech. Corp. v. Impala Linear Corp., 379 F.3d 1311, 1326
(Fed. Cir. 2004)). The Court concludes that it does. “To state a claim for indirect infringement …
a plaintiff need not identify a specific direct infringer if it pleads facts sufficient to allow an
11
inference that at least one direct infringer exists.” Id. at 1336 (emphasis in original). In addition,
direct infringement in the inducement and contributory contexts may be pled through allegations
of the sale of the accused product together with defendant’s instructions on how to use it. Susan
McKnight, Inc. v. United Indus. Corp., 273 F. Supp. 3d 874, 886-87 (W.D. Tenn. 2017) (citing
Tinnus Enters., LLC v. Telebrands Corp., 846 F.3d 1190, 1204 (Fed. Cir. 2017) and Cascades
Computer Innovation, LLC v. Samsung Elecs. Co., 77 F. Supp. 3d 756, 767 (N.D. Ill. 2015)).
Here, Puget alleges that Biomet indirectly infringed the ‘541 patent by selling the accused
products in this District and elsewhere in the United States, training surgeons on how to use
them, and that the subsequent use of these products indeed infringed on the ‘541 patent. [DE 17
¶¶ 34-35] Taken together, these allegations sufficiently set forth direct infringement in the
induced and contributory infringement contexts. See Susan McKnight, 273 F. Supp. 3d at 886-87
(denying motion to dismiss induced and contributory infringement claims where plaintiff alleged
sale of infringing products along with defendant’s instructions for use, thereby sufficiently
alleging the required direct infringement). Moreover, all of the above allegations support the
inference that “at least one direct infringer exists,” Bill of Lading, 681 F. 3d at 1336, and Puget
collectively identified “surgeons” who infringed the ‘541 patent by using Biomet’s accused
products. [DE 17 ¶ 16]
For all of these reasons, the Court will deny Biomet’s request to dismiss Puget’s claims
of indirect infringement. Further supporting the Court’s decision are this District’s Local Patent
Rules, which require the parties to exchange specific infringement contentions and documents at
the outset of a case. See N.D. Ind. L.P.R. 3-1; see also Personal Audio, LLC v. Google, Inc., No.
1:15-cv-350, 2017 U.S. Dist. LEXIS 122635, at *11 (E.D. Tex. May 15, 2017) (“The court
refuses to require the detail that Google demands, especially in light of this district’s Local
12
Patent Rules, which require that a Plaintiff serve infringement contentions that must detail the
accused devices and put Google on sufficient notice shortly after pleadings.”); Palmer Hamilton,
LLC v. AmTab Mfg. Corp., No. 16-cv-522, 2016 U.S. Dist. LEXIS 157735, at *3 (“[T]his court
requires standardized pretrial disclosures that force both sides to lay out their core contentions
element-by-element early in the case. Given that both sides will have to put their cards on the
table relatively early in the case, motions attacking the pleadings are generally a waste of
resources for the parties and the court.”). These local provisions should help alleviate, if not
eliminate, Biomet’s specificity concerns. Requiring another amended complaint at this juncture
appears especially unnecessary, as contentions have already been exchanged.
3.
Willful Infringement
Puget alleges that Biomet’s infringement in this case has been willful such that enhanced
damages may apply. [DE 17 ¶ 20] Under the Patent Act, the district court, at its discretion, “may
increase the damages up to three times the amount found or assessed.” 35 U.S.C. § 284; see also
Halo, 136 S. Ct. at 1926 (“A patent infringer’s subjective willfulness, whether intentional or
knowing, may warrant enhanced damages, without regard to whether his infringement was
objectively reckless.”). “In applying this discretion, district courts are ‘to be guided by [the]
sound legal principles’ developed over nearly two centuries of application and interpretation of
the Patent Act.” Halo, 136 S. Ct. at 1935 (quoting Martin v. Franklin Capital Corp., 546 U.S.
132, 139 (2005)). “Those principles channel the exercise of discretion, limiting the award of
enhanced damages to egregious cases of misconduct beyond typical infringement.” Halo, 136 S.
Ct. at 1935.
As the Supreme Court noted in Halo, “[t]he sort of conduct warranting enhanced
damages has been variously described in [its] cases” not only as “willful” and “egregious,” but
13
also as “wanton, malicious, bad faith, deliberate, consciously wrongful, flagrant, or—indeed—
characteristic of a pirate.” 136 S. Ct. at 1932. Citing Halo, Biomet urges the Court to dismiss
Puget’s allegations of willful infringement for being bereft of any facts supporting egregious or
wanton behavior. [DE 115 at 33] Halo’s effect on the pleading standard for willful infringement,
however, remains unclear. Compare John Keeler & Co. v. Heron Point Seafood, Inc., No. 14
Civ. 1652, 2016 WL 6839615, at *4 n.2 (N.D. Ohio July 8, 2016) (“[Halo], in which the
Supreme Court abrogated the two-part test for proving willful infringement, may also affect the
pleading standard.”), with Nanosys, Inc. v. QD Vision, Inc., No. 16 Civ. 01957, 2016 WL
4943006, at *8 (N.D. Cal. Sept. 16, 2016) (“Halo did not address pleading standards at the
motion to dismiss stage.”); see also Bio-Rad Labs. Inc. v. Thermo Fisher Sci. Inc., 267 F. Supp.
499, 501 (D. Del. 2017) (citing Halo and stating “[a]t the pleading stage, it is not necessary to
show that the case is egregious”).
But what is clear is that, “[a]t a minimum, the discretion that Halo confers on district
courts to award enhanced damages based on the nature of the specific misconduct in a given case
counsels hesitation before dismissing allegations of willfulness at the pleading stage.” Bobcar
Media, LLC v. Aardvark Event Logistics, Inc., No. 16-cv-885, 2017 U.S. Dist. LEXIS 1243, at
*12 (S.D.N.Y. Jan. 4, 2017). To illustrate, the Supreme Court made clear that, “[a]s with any
exercise of discretion, courts should continue to take into account the particular circumstances of
each case in deciding whether to award damages, and in what amount.” Halo, 136 S. Ct. at 1933
(emphasis added). Allowing allegations of willful infringement to advance past the current stage
appears prudent, given that, in the opening round of litigation, the full extent of the
circumstances accompanying a given case will seldom be readily apparent to the Court.
14
Biomet cites two cases in which district courts dismissed allegations of willful
infringement along the lines of Justice Breyer’s concurring opinion in Halo, which added that
“the Court’s references to ‘willful misconduct’ do not mean that a court may award enhanced
damages simply because the evidence shows that the infringer knew about the patent and nothing
more.” 136 S. Ct. at 1936 (Breyer, J., concurring) (emphasis in original). In both Susan
McKnight, 273 F. Supp. 3d. 874, and CG Tech., 2017 WL 662489 at *4 (D. Nev. Feb. 17, 2017),
plaintiffs based their allegations of willful infringement and the requisite knowledge solely on
the fact that they had sent a letter to defendants, notifying defendants of their allegedly infringing
conduct. See generally, id. The allegations that defendants continued to manufacture or sell the
accused products after receiving the letters did not sufficiently allege willful infringement. Id.
This case is distinguishable. Here, not only did Hudson Surgical send Biomet a letter in
July 2008 alerting Biomet to the ‘541 patent, potential infringement thereof, and purported need
for a license [DE 17-2], but Hudson Surgical alerted Biomet to its potential infringement twice
more in 2010, by providing it with a letter4 detailing Biomet’s ongoing infringement and
demonstrative charts applying the ‘541 patent’s claims to Biomet’s accused products. [DE 17 ¶
14] Taken together, the Court finds this information to exceed that involving mere knowledge of
the patent and “nothing more” envisioned by Justice Breyer. According to the allegations,
Biomet was repeatedly warned of infringement, yet it carried on with business as usual.
4
The letter itself was not mentioned in the FAC but was attached to Biomet’s response to the instant
motion. [DE 118-4] Nonetheless, the Court may consider the letter as supportive of plausibility because it
is consistent with the allegations. See Lifetime Indus. v. Trim-Lok, Inc., Case No. 3:16-cv-559, 2017 U.S.
Dist. LEXIS 114581, at *11 (N.D. Ind. July 24, 2017) (“Because those additional statements are
consistent with and expound on the materials in the complaint, the Court may consider them even at the
pleading stage, and they suffice to allege completion of this step as well.”) (citing Echols v. Craig, 855
F.3d 807, 811 (7th Cir. 2017)); see also John Roe I v. Bridgestone Corp., 492 F. Supp. 2d 988, 1007 (S.D.
Ind. 2007) (“Such documents are not evidence, but they provide a way for a plaintiff to show a court that
there is likely to be some evidentiary weight behind the pleadings the court must evaluate.”).
15
Given the need to account for the particular circumstances of this case in deciding
whether enhanced damages should apply under § 284, the Court will deny Biomet’s request to
dismiss Puget’s allegations of willful infringement. See Bobcar, 2017 U.S. Dist. LEXIS 1243, at
*13 (“It is possible that further development of the facts of this case may reveal that it is not an
‘egregious case’ justifying enhanced damages, but at the pleading stage, especially in light of
Halo, [plaintiff] has carried its burden.”); see also Finjan, Inc. v. ESET, LLC, Case No. 3:17-cv0183, 2017 U.S. Dist. LEXIS 40784, at **10-11 (S.D. Cal. Mar. 21, 2017) (denying motion to
dismiss allegations of willful infringement but noting that defendant “may introduce evidence of
its response to [plaintiff’s] notice of infringement and the steps it took to address those
contentions.”).
CONCLUSION
Based on the foregoing reasons, the Court GRANTS in part and DENIES in part
Biomet’s Motion for Judgment on the Pleadings. [DE 114] The Court hereby DISMISSES
Puget’s allegations relating to claims 1, 2, 5-13, 21-30, 32, 41-44, 46, and 48 of the ‘541 patent,
without prejudice. The Court also DISMISSES Puget’s allegations relating to claims 45 and 47
of the ‘541 patent, with prejudice. The Court lastly DISMISSES Puget’s allegations of direct
infringement of claims 31 and 33 of the ‘541 patent as conceded by Puget. The Court DENIES
all other requested relief. In sum, this case is now limited in scope to Puget’s allegations that
Biomet willfully induced and contributed to the infringement of claims 31 and 33 of the ‘541
patent.5
5
Puget’s opposition to the instant motion lists patent claims 49 and 51 as among those at issue in this
lawsuit, but they clearly are not – the FAC makes no mention of them. Puget could have submitted
another amended complaint to include these claims. But, despite being well aware of its ability to amend
the pleadings without leave prior May 1, 2018 [DE 118 at 33], Puget chose not to do so.
16
SO ORDERED.
ENTERED: July 2, 2018
/s/ JON E. DEGUILIO
Judge
United States District Court
17
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