Cardiovascular Systems, Inc. v. Cardio Flow, Inc.
Filing
205
MEMORANDUM OPINION AND ORDER denying 137 Plaintiff's Motion for Partial Summary Judgment; granting 142 Defendant's Motion for Summary Judgment; denying as moot in part, and denying in part 161 Defendant's Motion to Strike Pleading and for Sanctions; denying as moot in part, and denying in part 193 Motion to Strike Pleading and for Sanctions. (Written Opinion) Signed by Judge Susan Richard Nelson on 11/2/2020. (SMD)
CASE 0:18-cv-01253-SRN-KMM Doc. 205 Filed 11/02/20 Page 1 of 31
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Cardiovascular Systems, Inc.,
Case No. 18-CV-1253 (SRN/KMM)
Plaintiff,
v.
MEMORANDUM OPINION AND
ORDER
Cardio Flow, Inc.,
Defendant.
Daniel L. Allender and Roman M. Silberfeld, Robins Kaplan LLP, 2049 Century Park
East, Suite 3400, Los Angeles, CA 90067; Thomas F. Berndt, Robins Kaplan LLP, 800
LaSalle Avenue, Suite 2800, Minneapolis, MN 55402, for Plaintiff.
Joseph W. Anthony and Daniel R. Hall, Anthony Ostlund Baer & Louwagie PA, 90
South Seventh Street, Suite 3600, Minneapolis, MN 55402, for Defendant.
SUSAN RICHARD NELSON, United States District Judge
This matter comes before the Court on Plaintiff Cardiovascular Systems, Inc.’s
(“CSI”) Motion for Partial Summary Judgment [Doc. No. 137], Defendant Cardio Flow,
Inc.’s Motion for Summary Judgment [Doc. No. 142], Cardio Flow’s first Motion to Strike
and for Sanctions [Doc. No. 161], and Cardio Flow’s second Motion to Strike and for
Sanctions [Doc. No. 193]. For the reasons set forth below, the Court DENIES CSI’s
Motion for Partial Summary Judgment, GRANTS Cardio Flow’s Motion for Summary
Judgment, and DENIES as moot in part and DENIES in part Cardio Flow’s Motions to
Strike and for Sanctions.
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In 2012, CSI and Ms. Lela Nadirashvili, the widow of CSI’s founder, Dr. Leonid
Shturman, resolved then pending patent litigation over the ownership of certain patents
related to Dr. Shturman’s former work at CSI, by way of a Settlement Agreement, which
is the subject of this breach of contract action. That Settlement Agreement allocated the
disputed patents and patent applications between the parties and, relevant to this action,
inter alia, granted CSI an exclusive license under the “Nadirashvili Patent Portfolio to
make, have made, use, offer to sell, sell and import rotational atherectomy devices or
methods utilizing Solid Counterweights.” Subsequently, Nadirashvili assigned her rights
to the patents in the Nadirashvili Patent Portfolio to Cardio Flow, the defendant in this case.
The salient issue in this case is whether CSI can enforce the terms of that Settlement
Agreement against Cardio Flow, a non-signatory to that Agreement, by way of a breach of
contract action. As the Court explains further infra, because there is no legal basis on which
to enforce the terms of the Settlement Agreement against Cardio Flow, CSI’s breach of
contract claim fails. Nonetheless, the exclusive license, to certain patents in the
Nadirashvili Patent Portfolio, granted to CSI under the Settlement Agreement, runs with
the patents. Accordingly, should CSI determine, in good faith, that Cardio Flow infringes
any of those patents, it is free to seek a remedy in a separate lawsuit for patent infringement.
I.
BACKGROUND
A. The Parties
The parties to this lawsuit are competing medical device companies, targeting the
market for orbital atherectomy devices. (Hall Decl. in Support of Motion for Summary
Judgment [Doc. No. 145] Ex. 2; Sealed Allender Decl. in Op. to Motion for Summary
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Judgment [Doc. No. 152] Ex. M.) Orbital atherectomy devices are used to remove built-up
plaque in arteries. (Hall Decl. in Support of Motion for Summary Judgment [Doc. No. 145]
Ex. 2.) CSI is a medical device company incorporated in Delaware, with its principal place
of business in Minnesota. (Id.) Cardio Flow is also a Delaware corporation, with its
principal place of business in Minnesota. (Sealed Allender Decl. in Op. to Motion for
Summary Judgment [Doc. No. 152] Ex. M.) Cardio Flow was organized as a corporation
in 2010. (Allender Decl. in Support of Motion for Partial Summary Judgment [Doc. No.
140] Ex. F, Petrucci Dep. at 17.)
B. The Settlement Agreement Between CSI and Nadirashvili
In 2012, Nadirashvili brought a declaratory judgment action against CSI to resolve
the ownership of certain patents and patent applications filed by her late husband, Dr.
Leonid Shturman. (See Hall Decl. in Support of Motion for Summary Judgment [Doc. No.
145] Ex. 6.) Nadirashvili and CSI resolved this litigation by entering into the Settlement
Agreement. (See id. at Ex. 1 (hereinafter, “Settlement Agreement”).)
Under the Settlement Agreement, Nadirashvili and CSI divided the patents and
patent applications at issue in the lawsuit into two portfolios: (1) the Nadirashvili Patent
Portfolio, found at Schedule 1 to the Settlement Agreement; and (2) the CSI Patent
Portfolio, found at Schedule 2 to the Settlement Agreement. (See id.) Nadirashvili assigned
any interest she had in the patents and patent applications within the CSI Patent Portfolio
to CSI, and CSI assigned any interest it had in the patents and patent applications within
the Nadirashvili Patent Portfolio to Nadirashvili. (Id. § 2.) Both sides affirmed that their
assignments “shall be free of any liens or encumbrances.” (Id.)
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Nadirashvili and CSI also exchanged exclusive licenses with regard to certain
devices or methods claimed under each other’s patent portfolio. (Id. § 3.) Nadirashvili
granted to CSI a “worldwide, royalty-free, paid-up, irrevocable exclusive right and license
under the Nadirashvili Patent Portfolio to make, have made, use, offer to sell, sell and
import rotational atherectomy devices or methods utilizing Solid Counterweights.” (Id.
§ 3(A).) This license did “not include any rights to practice any device or method that
utilize counterweights other than Solid Counterweights or any other technology in the
Nadirashvili Patent Portfolio.” (Id.) Section 3(A) further clarified that “a device that
includes both Solid Counterweights and other technology claimed in the Nadirashvili
Patent Portfolio that is not fully disclosed in the CSI Patent Portfolio will not be licensed.”
(Id.)
CSI’s license to Nadirashvili was similar in form. (See id. § 3(B).) CSI granted to
Nadirashvili a “worldwide, royalty-free, paid-up, irrevocable exclusive right and license
under the CSI Patent Portfolio to make, have made, use, offer to sell, sell and import
rotational atherectomy devices or methods utilizing Fluid Inflatable Counterweights.” (Id.)
This license did “not include any right to practice any device or method that utilizes one or
more Solid Counterweights.” (Id.)
Section 7 of the Settlement Agreement provided that Nadirashvili could partner with
an individual or entity to develop the Nadirashvili Patent Portfolio. (Id. § 7.) It provided in
full as follows:
Nadirashvili Partner. Nadirashvili may partner (which may include the
formation of an entity to own the Nadirashvili Patent Portfolio or the sale of
the Nadirashvili Patent Portfolio to a person or entity) with any individual or
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entity to develop the Nadirashvili Patent Portfolio, including Gary Petrucci.
However, CSI reserves all rights available to it under the law to pursue any
and all claims arising out of or based on the actions of Nadirashvili, Petrucci
or any other individual or entity, including without limitation claims for the
use or disclosure of any of CSI’s confidential, trade secret, and/or proprietary
information; for any tortious activity directed at CSI; and for breach of any
contractual and/or fiduciary duties owed to CSI. CSI acknowledges that it
would not breach any contractual or fiduciary duties for Petrucci to enter into
a business transaction with Nadirashvili for the purpose of developing and
commercializing the technology of the Nadirashvili Patent Portfolio as long
as no confidential, trade secret, or other proprietary information of CSI is
used or disclosed before, during or after the transaction.
(Id.)
The Settlement Agreement further described whether and under what circumstances
the parties could assign or transfer their rights under the Settlement Agreement. (Id. § 10.)
The full text is as follows:
Assignment or Transfer. The rights, obligations and privileges granted to the
parties in this Settlement Agreement are personal to the parties and may not
be assigned or transferred by a party without the written consent of the other
party. The preceding sentence notwithstanding, either party may assign,
without the consent of the other party, this Settlement Agreement and the
rights, obligation and privileges herein in conjunction with a sale or transfer
of the respective party’s Patent Portfolio to a third party who has agreed, in
writing promptly delivered to the other party, to be bound to this Agreement
as if it were a party.
(Id.)
C. The Patent Assignment from Nadirashvili to Cardio Flow
Later in 2012, after Nadirashvili and CSI executed the Settlement Agreement,
Nadirashvili entered into an assignment agreement with Cardio Flow. (See Hall Decl. in
Support of Motion for Summary Judgment [Doc. No. 145] Ex. 10.) Under this agreement,
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Nadirashvili assigned to Cardio Flow all of the patent interests comprising the Nadirashvili
Patent Portfolio that she acquired by virtue of the Settlement Agreement. (Id.) In exchange
for the patent interests, Nadirashvili and Petrucci agreed that Nadirashvili would receive
shares of Cardio Flow and two monetary payments. (Id.) There is no evidence of record
that, in connection with that assignment, Cardio Flow agreed to be bound by the terms of
the Settlement Agreement.
D. The Current Litigation
On April 6, 2018, CSI sued Cardio Flow. (See Notice of Removal [Doc. No. 1] Ex.
A, Summons and Complaint.) Under the operative complaint, CSI alleges three causes of
action against Cardio Flow. (See Am. Compl. [Doc. No. 34].) First, CSI alleges breach of
contract, contending that, by virtue of the assignment of the Nadirashvili Patent Portfolio
to Cardio Flow, Cardio Flow became bound by the terms of the Settlement Agreement as
if it were a party thereto and then breached those terms by developing an atherectomy
device that uses solid counterweights and by prosecuting patents that constructively
practice solid counterweights. (Id. ¶¶ 22-27.) Second, CSI seeks a declaratory judgment,
declaring that CSI is the owner of several counterweight patents that it believes Cardio
Flow wrongly claims to own. (Id. ¶¶ 28-34.) Third, CSI seeks a permanent injunction
enjoining Cardio Flow from developing an atherectomy device that uses solid
counterweights and from filing or prosecuting applications that constructively practice
solid counterweights. (Id. ¶¶ 35-38.)
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II.
DISCUSSION
A. Standard of Review
Summary judgment is appropriate 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). “A fact is ‘material’” if it may affect the outcome of the lawsuit. TCF
Nat’l Bank v. Mkt. Intelligence, Inc., 812 F.3d 701, 707 (8th Cir. 2016). Likewise, an issue
of material fact is “genuine” only if “the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The moving party bears the burden of establishing
a lack of any genuine issue of material fact in dispute, Celotex Corp. v. Catrett, 477 U.S.
317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986), and the Court must view the evidence
and any reasonable inferences in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89
L. Ed. 2d 538 (1986).
Before analyzing the threshold issue of whether Cardio Flow is bound by the terms
of the Settlement Agreement, it is crucial to understand what CSI acquired through Section
3(A) of Settlement Agreement. It is also important to understand the parties’ competing
views of Section 10.
B. The Settlement Agreement
The interpretation of unambiguous contractual language is a question of law for the
Court. See Staffing Specifix, Inc. v. TempWorks Mgmt. Servs., Inc., 913 N.W.2d 687, 692
(Minn. 2018). Indeed, if a contract is unambiguous, “no external evidence can be admitted
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to contradict, explain, or supplement the terms contained therein.” Qwinstar Corp. v.
Anthony, 882 F.3d 748, 753 (8th Cir. 2018), as amended (Feb. 26, 2018)). By contrast, if
the Court determines that contractual language is ambiguous, the interpretation of that
language, and the accompanying issue of the parties’ intent, “becomes a question of fact
for the jury.” Staffing Specifix, 913 N.W.2d at 692. It is well established, however, that a
“contract’s terms are not ambiguous simply because the parties’ interpretations differ.” Id.
Indeed, as the Eighth Circuit has noted (when interpreting Minnesota law), courts must
“fastidiously guard against the invitation to create ambiguities where none exist,” and must
endeavor to interpret words in a contract in accordance with their “plain and ordinary
meaning.” In re SRC Corp., 545 F.3d 661, 666 (8th Cir. 2008) (internal quotations and
citations omitted).
1.
Section 3(A) of the Settlement Agreement
Section 3(A) of the Settlement Agreement granted to CSI a
worldwide, royalty-free, paid-up, irrevocable exclusive right and license
under the Nadirashvili Patent Portfolio to make, have made, use, offer to sell,
sell and import rotational atherectomy devices or methods utilizing Solid
Counterweights. The license granted in this Agreement does not include any
rights to practice any device or method that utilize counterweights other than
Solid Counterweights or any other technology in the Nadirashvili Patent
Portfolio. To be clear, a device that includes both Solid Counterweights and
other technology claimed in the Nadirashvili Patent Portfolio that is not fully
disclosed in the CSI Patent Portfolio will not be licensed.
(Settlement Agreement § 3(A).)
CSI and Cardio Flow dispute precisely what Nadirashvili granted to CSI through
Section 3(A). Cardio Flow argues that, through Section 3(A), Nadirashvili only granted to
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CSI an exclusive license to specific patent rights under the Nadirashvili Patent Portfolio.
In contrast, CSI contends that Nadirashvili granted to CSI two separate rights: (1) an
“exclusive right … to make, have made, use, offer to sell, sell and import rotational
atherectomy devices or methods utilizing Solid Counterweights”; and (2) a “license under
the Nadirashvili Patent Portfolio to make, have made, use, offer to sell, sell and import
rotational atherectomy devices or methods utilizing Solid Counterweights.” (Pl.’s Mem. in
Op. to Motion for Summary Judgment [Doc. No. 150] at 30-31.) According to CSI, the
phrase “under the Nadirashvili Patent Portfolio” in Section 3(A) only modifies the word
“license,” not the phrase “exclusive right.”
Courts have long understood that a grant of an “exclusive right and license” only
creates one obligation in the context of a patent license. See, e.g., Waterman v. Mackenzie,
138 U.S. 252, 257 (1891) (a “sole and exclusive right and license” was a “mere license”);
Deitel v. Chisholm, 42 F.2d 172, 173 (2d Cir. 1930) (person with “exclusive right and
license” was an “exclusive licensee”); see also Murphey v. TPS Enterprises, 296 F. App’x
24, 25 (Fed. Cir. 2008) (using the phrase “exclusive right and license” in an exclusive
licensing agreement); W.L. Gore & Assocs., Inc. v. AGA Med. Corp., No. CV 12-827
(JNE/JSM), 2013 WL 12149249, at *1 (D. Minn. Apr. 22, 2013) (using the phrase
“exclusive right and license” in a licensing agreement).
Indeed, the second and third sentences of Section 3(A) make clear that Nadirashvili
only granted a license. In the second sentence, Section 3(A) discusses “[t]he license granted
in this Agreement ….” (See Settlement Agreement § 3(A).) In the third sentence, Section
3(A) discusses technology that “will not be licensed.” (See id.) Furthermore, as Cardio
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Flow notes, many form patent licenses use the language “right and license.” (See Supp.
Hall Decl. in Support of Motion for Summary Judgment [Doc. No. 174] Exs. 25-28.)
Moreover, CSI offers no legal authority that would justify departing from courts’
longstanding interpretation of the phrase “exclusive right and license.” Accordingly, CSI’s
“exclusive right and license” is merely an exclusive license, and there is no other
reasonable construction of those plain terms.
Additionally, the plain language of Section 3(A) dictates that CSI’s “exclusive right
and license” is limited by the phrase “under the Nadirashvili Patent Portfolio.” “A contract
must be interpreted in a way that gives all of its provisions meaning.” Baker v. Best Buy
Stores, LP, 812 N.W.2d 177, 180 (Minn. Ct. App. 2012) (quoting Current Tech. Concepts
v. Irie Enters., 530 N.W.2d 539, 543 (Minn. 1995)). The only reasonable way to construe
Section 3(A) is to conclude that the phrase “under the Nadirashvili Patent Portfolio”
modifies “exclusive right and license.” In other words, in Section 3(A), Nadirashvili
granted to CSI an exclusive license to certain patent rights under the Nadirashvili Patent
Portfolio. 1
1
Cardio Flow argues that if the Court construed Section 3(A) as granting CSI an
exclusive right to practice solid counterweights in general, such an agreement would
violate antitrust law. Cardio Flow contends that a broad restrictive covenant that divides
the marketplace for atherectomy devices, without regard to patents, would be a per se
violation of U.S. antitrust laws. (See Def.’s Mem. in Support of Motion for Summary
Judgment [Doc. No. 144] at 34-37.) However, in light of the fact that the Court finds that
CSI only acquired an exclusive license through Section 3(A), the Court need not address
the parties’ antitrust arguments.
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2.
Section 10 of the Settlement Agreement
CSI and Cardio Flow further disagree as to the proper interpretation of Section 10,
which provides that
The rights, obligations and privileges granted to the parties in this Settlement
Agreement are personal to the parties and may not be assigned or transferred
by a party without the written consent of the other party. The preceding
sentence notwithstanding, either party may assign, without the consent of the
other party, this Settlement Agreement and the rights, obligation and
privileges herein in conjunction with a sale or transfer of the respective
party’s Patent Portfolio to a third party who has agreed, in writing promptly
delivered to the other party, to be bound to this Agreement as if it were a
party.
(Settlement Agreement § 10.)
Cardio Flow argues that the phrase “may assign” in the second sentence of Section
10 means that Section 10 permitted, but did not require, Nadirashvili to assign the
Settlement Agreement and its rights, obligations, and privileges if she sold, transferred, or
assigned the Nadirashvili Patent Portfolio to a third party. (Def.’s Mem. in Support of
Motion for Summary Judgment [Doc. No. 144] at 23-24.) In Cardio Flow’s view, the
language “may assign” is permissive and therefore cannot mean that Nadirashvili “must”
or “shall” make such an assignment. (Id. at 24.) Cardio Flow contends that the parties used
the term “may” in its permissive sense throughout the rest of the Settlement Agreement, so
the “may” in Section 10 must be read as permissive to harmonize all of the clauses of the
contract. (Id.) As such, according to Cardio Flow, Section 10 does not impose an obligation
to assign the Settlement Agreement by its plain terms. (Id.)
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Cardio Flow also argues that Section 10 must be read in conjunction with Section 7
of the Settlement Agreement. (Id. at 25.) In relevant part, Section 7 provides that
“Nadirashvili may partner (which may include the formation of an entity to own the
Nadirashvili Patent Portfolio or the sale of the Nadirashvili Patent Portfolio to a person or
entity) with any individual or entity to develop the Nadirashvili Patent Portfolio, including
Gary Petrucci.” (Settlement Agreement § 7.) According to Cardio Flow, whereas Section
10 broadly governs the assignment of rights, obligations, and privileges under the
Settlement Agreement, Section 7 specifically granted Nadirashvili express permission or
consent to sell, transfer, or assign the Nadirashvili Patent Portfolio without regard to the
remaining terms of the Settlement Agreement. (Def.’s Mem. in Support of Motion for
Summary Judgment [Doc. No. 144] at 25.)
Finally, Cardio Flow contends that an interpretation of Section 10 that requires an
assignee to agree to be bound by the terms of the Settlement Agreement would encumber
Nadirashvili’s ownership interest in the patents, which is inconsistent with Section 2 of the
Settlement Agreement (Id.; see Settlement Agreement § 2 (CSI’s assignment of patents to
Nadirashvili “shall be free of any liens or encumbrances”).
CSI urges the Court to adopt an entirely different interpretation of Section 10. It
contends that, when considering Section 10 in its entirety, the second sentence of Section
10 must be read to prohibit Nadirashvili from assigning her patents to any third party unless
the assignee agrees to be bound by all of the terms of the Settlement Agreement. (Pl.’s
Mem. in Op. to Motion for Summary Judgment [Doc. No. 150] at 22.) In CSI’s view, the
first sentence of Section 10 prohibits the parties from assigning their rights under the
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Settlement Agreement, which includes their patent portfolios, without the other party’s
written consent. (Id. at 23.) CSI then reads the second sentence as creating a limited
exception to that prohibition on assignment—an exception that allows Nadirashvili to
assign her patent portfolio only if the assignee agrees to be bound by all of the terms of the
Settlement Agreement. (Id. at 23-24.) CSI explains that Section 7 of the Settlement
Agreement acknowledges that Nadirashvili could partner with Petrucci or Cardio Flow,
but Section 10 assures CSI that Nadirashvili, Petrucci, and Cardio Flow would be required
to abide by all of the terms of the Settlement Agreement in the event that occurred. (Id. at
22-23.) Finally, CSI argues that the use of “may” in the second sentence of Section 10
means only that Nadirashvili was permitted to assign her patents to another party, and that
there was no requirement that she do so. (Id. at 24.)
The Court finds that it need not resolve these competing interpretations of Section
10. Even if the Court were to adopt the interpretation of Section 10 urged by CSI, the only
possible legal consequence would be that Nadirashvili may have breached the Settlement
Agreement by having failed to obtain such prior consent or by having failed to obtain
Cardio Flow’s agreement in writing, acknowledging that it was bound by the terms of the
Settlement Agreement. Stated differently, even in the face of a potential breach by
Nadirashvili, no operation of law would render Cardio Flow liable for Nadirashvili’s
potential breach. Any relief for such a breach could only be sought from Nadirashvili. To
be clear though, the Court here does not interpret the language of Section 10 and therefore
makes no findings as to any obligations Nadirashvili may have had thereunder and/or
whether her obligations, if any, were breached.
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In light of these rulings, the Court now turns its attention to CSI’s arguments that
Cardio Flow is nonetheless bound to the terms of the Settlement Agreement by operation
of law.
C. Whether Cardio Flow Is Bound by the Terms of the Settlement
Agreement by Operation of Law
CSI argues that, by virtue of the assignment of patent rights from Nadirashvili to
Cardio Flow, Cardio Flow is bound by the terms of the Settlement Agreement. If Cardio
Flow is not so bound, CSI has no viable breach of contract claim against Cardio Flow. If
Cardio Flow is so bound, CSI could maintain a breach of contract claim against Cardio
Flow if, of course, CSI also satisfies all other elements necessary to establish such a claim.
Cardio Flow argues that CSI cannot enforce the Settlement Agreement against it
because it was not a party to the Settlement Agreement, did not negotiate it, and did not
agree to be bound by it. CSI contends that Cardio Flow is bound by the terms of the
Settlement Agreement for three reasons: (1) Nadirashvili granted CSI an exclusive license
to patent rights in the Nadirashvili Patent Portfolio, and when Nadirashvili assigned the
Nadirashvili Patent Portfolio to Cardio Flow, CSI’s license “ran with the patents” under
federal patent law, thereby binding Cardio Flow to the terms of the Settlement Agreement;
(2) Cardio Flow is equitably estopped from denying it is bound by the terms of the
Settlement Agreement because it knew of the restriction on assignment in Section 10 of
the Settlement Agreement yet accepted the assignment of patent rights without CSI’s
consent; and (3) Cardio Flow is bound by the terms of the Settlement Agreement because
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Nadirashvili acted as Cardio Flow’s agent at the time the Settlement Agreement was
executed.
1. The Impact of CSI’s Exclusive License to Certain Patent
Rights in the Nadirashvili Patent Portfolio
a.
The Law
Through Section 3(A) of the Settlement Agreement, Nadirashvili granted to CSI an
exclusive license to certain patent rights under the Nadirashvili Patent Portfolio. (See supra
Section II.B.1) “[A]n exclusive license is a license to practice the patented invention
‘accompanied by the patent owner’s promise that others shall be excluded from practicing
it within the field of use wherein the licensee is given leave.’” Molon Motor & Coil Corp.
v. Nidec Motor Corp., 946 F.3d 1354, 1361 (Fed. Cir. 2020) (quoting Textile Prods., Inc.
v. Mead Corp., 134 F.3d 1481, 1484 (Fed. Cir. 1998)). “[A]n exclusive licensee has an
interest in the patent sufficient to establish an injury when a third party infringes, akin to
an ownership interest.” Id.
In general, state law governs contract interpretation related to patent ownership or
rights under patents, while federal law governs “the validity and terms of an assignment.”
Sky Techs. LLC v. SAP AG, 576 F.3d 1374, 1379 (Fed. Cir. 2009). Federal Circuit law
applies “to both substantive and procedural issues ‘intimately involved in the substance of
enforcement of the patent right.’” Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d
852, 856 (Fed. Cir. 1999) (quoting Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d
424, 428 (Fed. Cir. 1996)). “As such, the effect of patent assignment, as opposed to
interpretation of assignment contract terms themselves, is an issue of substantive patent
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law and is governed by federal law.” Paice, LLC v. Hyundai Motor Co., No. WDQ-12-499,
2014 U.S. Dist. LEXIS 95042, at *9 (D. Md. July 7, 2014) (citing Sky Techs., LLC, 576
F.3d at 1379). Therefore, although state law governs interpretation of the Settlement
Agreement, Federal Circuit law controls the effect, if any, of an assignment of patent
interests.
It is a bedrock principle in patent law that “one cannot convey what one does not
own.” TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271, 1275 (Fed.
Cir. 2009). Because patent owners can only convey what they own, patent assignees take
ownership to patents “subject to the legal encumbrances thereon.” Datatreasury Corp. v.
Wells Fargo & Co., 522 F.3d 1368, 1372 (Fed. Cir. 2008) (citing Worley v. Tobacco Co.,
104 U.S. 340, 26 L. Ed. 821, 1882 Dec. Comm’r Pat. 109 (1881); Sanofi, S.A. v. Med-Tech
Veterinarian Prods., 565 F. Supp. 931 (D.N.J. 1983)); accord Energy Innovation Co., LLC
v. NCR Corp., No. 1:18-cv-3919-TCB, 2018 U.S. Dist. LEXIS 223110, at *10 (N.D. Ga.
Nov. 29, 2018); Paice, LLC, 2014 U.S. Dist. LEXIS 95042, at *32. Indeed, courts have
long recognized that “an assignee of a patent takes the patent subject to prior licenses.”
Innovus Prime, LLC v. Panasonic Corp. & Panasonic Corp. of N. Am., Inc., No. C-1200660-RMW, 2013 U.S. Dist. LEXIS 93820, at *14 (N.D. Cal. July 2, 2013) (citing
Keystone Type Foundry v. Fastpress Co., 272 F. 242, 245 (2d Cir. 1921); L.L. Brown Paper
Co. v. Hydroiloid, Inc., 118 F.2d 674, 677 (2d Cir. 1941)).
The Federal Circuit has explained that legal encumbrances involving the right to use
the patent “run with the patent.” Datatreasury Corp., 522 F.3d at 1372. For example, a
covenant not to sue runs with a patent when a party assigns the patent because the covenant
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is a legal encumbrance involving the right to use the patent. See Energy Innovation, 2018
U.S. Dist. LEXIS 223110, at *10. In contrast, procedural terms in an agreement, such as
an arbitration clause or a confidentiality provision, do not run with a patent when a party
assigns that patent because those terms do not involve the right to use a patent. See
Datatreasury Corp., 522 F.3d at 1372-73 (holding that an arbitration clause in a licensing
agreement did not run with the patent); Paice, LLC, 2014 U.S. Dist. LEXIS 95042, at *33
(holding that a confidentiality provision in a settlement agreement did not run with a
patent).
With these principles in mind, the Court now analyzes what happened when CSI
and Nadirashvili executed the Settlement Agreement, what happened when Nadirashvili
assigned her patent interests to Cardio Flow, and how these two events affect CSI’s
exclusive license and claim for breach of contract.
b.
The Effect of the Settlement Agreement
In accordance with the terms of the Settlement Agreement, CSI and Nadirashvili
divided the disputed patents and patent applications into two portfolios: the CSI Patent
Portfolio and the Nadirashvili Patent Portfolio. CSI assigned any interest it had in the patent
interests comprising the Nadirashvili Patent Portfolio to Nadirashvili. (Settlement
Agreement § 2(A).) Likewise, Nadirashvili assigned any interest she had in the patent
interests comprising the CSI Patent Portfolio to CSI. (Id. § 2(B).)
CSI and Nadirashvili also exchanged exclusive licenses. Nadirashvili granted to CSI
an exclusive license to certain patent rights under the Nadirashvili Patent Portfolio, and
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CSI granted to Nadirashvili an exclusive license to certain patent rights under the CSI
Patent Portfolio. (Id. § 3.)
Accordingly, after CSI and Nadirashvili executed the Settlement Agreement, CSI
owned the patent interests comprising the CSI Patent Portfolio, and Nadirashvili owned
the patent interests comprising the Nadirashvili Patent Portfolio. CSI’s patent interests,
however, were encumbered by Nadirashvili’s exclusive license under the CSI Patent
Portfolio, and likewise, Nadirashvili’s interests were encumbered by CSI’s exclusive
license under the Nadirashvili Patent Portfolio. See Datatreasury Corp., 522 F.3d at 137273.
c.
The Effect of Nadirashvili’s Assignment to
Cardio Flow
After CSI and Nadirashvili executed the Settlement Agreement, Nadirashvili
assigned all of her patent interests comprising the Nadirashvili Patent Portfolio to Cardio
Flow. (Hall Decl. in Support of Motion for Summary Judgment [Doc. No. 145] Ex. 10.)
Although Nadirashvili owned the Nadirashvili Patent Portfolio, her patent interests
were encumbered by the exclusive license that Nadirashvili granted CSI under Section
3(A) of the Settlement Agreement. Therefore, when Nadirashvili assigned her entire
interest in the Nadirashvili Patent Portfolio to Cardio Flow, CSI’s exclusive license ran
with the patents assigned to Cardio Flow. See Datatreasury Corp., 522 F.3d at 1372-73.
Indeed, Nadirashvili could not convey her patent interests comprising the Nadirashvili
Patent Portfolio to Cardio Flow free of CSI’s exclusive license because she could not
convey what she did not own. Accordingly, Cardio Flow took the patent interests
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comprising the Nadirashvili Patent Portfolio subject to CSI’s prior, exclusive license. See
id.
2.
CSI’s Breach of Contract Claim
Under Minnesota law, a breach of contract claim has four elements: “(1) formation
of a contract; (2) performance by plaintiff of any conditions precedent; (3) a material breach
of the contract by defendant; and (4) damages.” Gen. Mills Operations, LLC v. Five Star
Custom Foods, Ltd., 703 F.3d 1104, 1107 (8th Cir. 2013) (quoting Parkhill v. Minn. Mut.
Life Ins. Co., 174 F. Supp. 2d 951, 961 (D. Minn. 2000)).
CSI argues that Cardio Flow is bound by the terms of the Settlement Agreement as
if it were a signatory to the Settlement Agreement because, citing Datatreasury Corp.,
Cardio Flow is bound by the exclusive license CSI acquired under the Settlement
Agreement. (See Am. Compl. [Doc. No. 34] ¶¶ 23, 25; Pl.’s Mem. in Support of Motion
for Partial Summary Judgment [Doc. No. 139] at 15-19.) In response, Cardio Flow
contends that the terms of the Settlement Agreement cannot be enforced against them
because Cardio Flow never agreed to be bound by the terms of the Settlement Agreement.
(See Def.’s Mem. in Op. to Motion for Partial Summary Judgment [Doc. No. 147] at 1621.) Moreover, Cardio Flow disputes that they are bound by the terms of the Settlement
Agreement by operation of law. (See id.)
Under Datatreasury Corp., CSI is correct that its exclusive license ran with the
patents that Nadirashvili assigned to Cardio Flow because CSI’s exclusive license was a
legal encumbrance involving the right to use patents. Therefore, it is correct that CSI could
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enforce the exclusive license it acquired through the Settlement Agreement, even though
Cardio Flow now owns the patent interests comprising the Nadirashvili Patent Portfolio.
The ruling in Datatreasury Corp., however, does not support a finding that Cardio
Flow is bound by the terms of the Settlement Agreement as if it were a party to that
agreement. “A settlement agreement is a contract and therefore subject to a contract’s
requirements.” Ittel v. Pietig, 705 N.W.2d 203, 207 (Minn. Ct. App. 2005) (citing Ryan v.
Ryan, 193 N.W.2d 295, 297 (Minn. 1971)). “It goes without saying that a contract cannot
bind a nonparty.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 294 (2002). “[A]s a general
rule, nonparties to a contract acquire no rights or obligations under it.” Woodruff v. 2008
Mercedes, 831 N.W.2d 9, 14 (Minn. Ct. App. 2013) (quoting Mon-Ray, Inc. v. Granite Re,
Inc., 677 N.W.2d 434, 439 (Minn. Ct. App. 2004)). There is no basis in federal patent law
that would support a finding that Cardio Flow is a party to the Settlement Agreement—a
contract, to which it did not agree to be bound. The fact that CSI’s exclusive license ran
with Nadirashvili’s patent interests, because they legally encumber those interests, does
not render Cardio Flow a party to the Settlement Agreement itself. See also Andrew C.
Michaels, Patent Transfer and the Bundle of Rights, 83 Brooklyn L. Rev. 933, 946 (2018)
(“while transfer of a patent is generally held not to affect the licensee’s privilege to infringe,
that does not mean that the entire license agreement runs with the patent”).
To understand why Cardio Flow is not bound by the Settlement Agreement, it is
important to recognize the distinction between the Settlement Agreement itself and the
effect that the Settlement Agreement had on patent rights. Through the Settlement
Agreement, CSI and Nadirashvili agreed to encumber the patent interests comprising the
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Nadirashvili Patent Portfolio with CSI’s exclusive license. The Settlement Agreement
itself, however, remains between CSI and Nadirashvili, unless another party agrees to be
bound by the Settlement Agreement. Put differently:
The patent owner, through a license agreement, may diminish the bundle [of
patent rights] by exchanging sticks in the bundle for other forms of value, but
may not enlarge the in rem bundle. When a patent is transferred, what is
transferred is whatever remains in the bundle. The in personam contract, that
is, the license agreement, remains between the two signatories.
Id. at 980 (emphasis in original). Because Cardio Flow is a not a party to the Settlement
Agreement, there is no privity of contract between CSI and Cardio Flow, and Cardio Flow
cannot breach a contract to which it is not a party. 2
In sum, federal patent law does not allow CSI to maintain a breach of contract claim
against Cardio Flow. The Settlement Agreement does not provide a right to divide the
marketplace without regard to patent rights; it is an agreement to exchange exclusive patent
licenses. And those licenses, as the Court has ruled, run with the patents. Accordingly,
neither Cardio Flow—nor any other third party—may practice any claim of a patent that
2
If Cardio Flow were a party to the Settlement Agreement, CSI is correct that a
claim for patent infringement could be addressed in the context of a breach of contract
action. The Federal Circuit’s decision in U.S. Valves, Inc. v. Dray illustrates that point. 212
F.3d 1368 (Fed. Cir. 2000). There, U.S. Valves and Dray executed a license agreement,
which granted U.S. Valves a license to several of Dray’s patents. Id. at 1370. U.S. Valves
eventually sued Dray, alleging breach of contract because Dray manufactured and sold
valves covered by the license agreement and sought to enjoin Dray from violating U.S.
Valves’ rights under the licensing agreement. Id. at 1371. The district court found that
Dray’s infringement violated the license agreement. Id. The Federal Circuit affirmed the
district court’s ruling on the breach of contract claim. Id. at 1373.
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Nadirashvili licensed to CSI in the Nadirashvili Patent Portfolio. Those patent rights could
only be enforced against Cardio Flow by way of a patent infringement action.
3.
Equitable Estoppel
CSI alternatively argues that Cardio Flow is bound by the Settlement Agreement
under the doctrine of equitable estoppel. (See Pl.’s Mem. in Support of Motion for Partial
Summary Judgment [Doc. No. 139] at 19-24.)
To succeed on an equitable estoppel claim, CSI must prove three elements: “(1) that
promises or inducements were made; (2) that it reasonably relied upon the promises; and,
(3) that it will be harmed if estoppel is not applied.” Hydra-Mac, Inc. v. Onan Corp., 450
N.W.2d 913, 919 (Minn. 1990). “Estoppel is an equitable doctrine addressed to the
discretion of the court and is intended to prevent a party from taking unconscionable
advantage of his own wrong by asserting his strict legal rights.” N. Petrochemical Co. v.
U. S. Fire Ins. Co., 277 N.W.2d 408, 410 (Minn. 1979). Equitable estoppel “estops a party
who has full knowledge of the facts from accepting the benefits of a transaction, contract,
or order and subsequently taking an inconsistent position to avoid corresponding
obligations.” Total Petroleum, Inc. v. Davis, 822 F.2d 734, 737 (8th Cir. 1987) (citations
omitted).
CSI argues that it is undisputed that Cardio Flow knew CSI had an exclusive license
when Nadirashvili assigned her patents to Cardio Flow. Moreover, CSI contends that
Cardio Flow knew about the requirements of Section 10 of the Settlement Agreement,
which, in their view, prohibited Nadirashvili from assigning the patents to a third party,
unless the third party “has agreed, in writing promptly delivered to the other party, to be
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bound to this Agreement as if it were a party.” (Pl.’s Mem. in Support of Motion for Partial
Summary Judgment [Doc. No. 139] at 19-20.) Because Cardio Flow voluntarily accepted
the benefits of the transaction between CSI and Nadirashvili, according to CSI, Cardio
Flow is bound by the resulting obligations. (Id.)
Cardio Flow counters first that CSI did not adequately plead equitable estoppel, so
it cannot receive affirmative relief on this theory. (Def.’s Mem. in Op. to Motion for Partial
Summary Judgment [Doc. No. 147] at 23 (citing Am. Compl. [Doc. No. 34]).) Second,
Cardio Flow argues there is no legal or factual basis for equitable estoppel in the record.
Although the parties dispute what pleading standard applies to a claim for equitable
estoppel, it is clear that CSI did not adequately plead equitable estoppel under any pleading
standard. (See Am. Compl. [Doc. No. 34].) CSI’s Amended Complaint does not even
mention “equitable estoppel,” or even the word “estop.” (See id.) On that basis alone, it is
precluded from seeking such relief.
Even if CSI had adequately plead equitable estoppel, CSI neither identifies any
promise or inducement, nor factual evidence in the record that Cardio Flow knowingly
accepted the benefits of any such promise or inducement and took an inconsistent position
to avoid corresponding obligations. Also, CSI offers no evidence that it reasonably relied
on that promise or inducement and points to no evidence of harm. (See Pl.’s Mem. in
Support of Motion for Partial Summary Judgment [Doc. No. 139] at 22-23.)
Moreover, CSI identifies no genuine issue of material fact in dispute to defeat
Cardio Flow’s motion. The only evidence CSI cites in support of its claim for equitable
estoppel is: (1) Petrucci’s testimony that he introduced Nadirashvili to attorneys at the Fish
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& Richardson law firm for the purpose of helping her resolve ownership to certain patent
interests; (2) Petrucci’s testimony that he relied on a lawyer at the Fish & Richardson law
firm to advise him about certain sections of the Settlement Agreement; and (3) testimony
from counsel at the Fish & Richardson law firm, who helped negotiate the Settlement
Agreement, that the exclusive licenses exchanged under Section 3 “would be subsumed
under the rights, obligations and privileges” of Section 10 of the Settlement Agreement.
(See Allender Decl. in Support of Motion for Partial Summary Judgment [Doc. No. 140]
Ex. F, Petrucci Dep. at 28:24-29:7, 186:21-187:22 & Ex. E Kane Dep. at 51:5-53:18.) Even
had equitable estoppel been adequately plead, which it was not, this record evidence is
simply insufficient to support such a claim.
4.
Agency Principles
CSI’s final argument on the issue of privity of contract is that Nadirashvili signed
the Settlement Agreement as Cardio Flow’s agent, so Cardio Flow is bound by it.
A partnership agreement or joint venture relationship can arise out of “agreements
between parties to combine their money, skill and efforts towards the accomplishment of
a mutually profitable enterprise.” Seaboard Sur. Co. v. H & R Const. Corp., 153 F. Supp.
641, 646 (D. Minn. 1957). “The existence of a joint venture is ordinarily an issue of fact.”
Duxbury v. Spex Feeds, Inc., 681 N.W.2d 380, 389 (Minn. Ct. App. 2004). “But where no
competent evidence will support a finding of joint venture, the district court may decide
the issue as a matter of law.” Id. “[A] joint venture ... generally arises when necessary to
impute negligence between two entities that otherwise have no legal relationship.” Trustees
of the Graphic Commc’ns Int’l Union Upper Midwest Local 1M Health & Welfare Plan v.
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Bjorkedal, 516 F.3d 719, 729 (8th Cir. 2008) (quoting Stelling v. Hanson Silo Co., 563
N.W.2d 286, 290-91 (Minn. Ct. App. 1997)).
CSI argues that a jury could reasonably find that, at the time Nadirashvili entered
into the Settlement Agreement, she was acting in a partnership with Petrucci. CSI contends
that Cardio Flow was their joint venture on the basis of Petrucci’s testimony that he left
CSI to form a partnership with Nadirashvili, and that their mutual goal was to exploit the
patents she inherited from Dr. Shturman. Moreover, CSI notes that Petrucci himself
described their relationship as a partnership. 3 CSI also notes that Section 7 of the
Settlement Agreement specifically authorized Nadirashvili to “partner” with Mr. Petrucci.
Additionally, CSI argues that an agency relationship existed at that time because the record
evidence demonstrates that Petrucci exercised close control over Nadirashvili during the
2012 settlement negotiations and at the time she signed the Settlement Agreement. See A.
Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285, 290-93 (Minn. 1981) (holding
that a corporate creditor who assumed significant control over a debtor’s business created
3
The record evidence does not support CSI’s claim that Petrucci described their
relationship as a partnership at the time Nadirashvili executed the Settlement Agreement.
When asked “What was the connection between the starting of Cardio Flow and the end of
that litigation between [Nadirashvili] and CSI?”, Petrucci replied: “Well, in the – in the
litigation – in the settlement agreement they specifically said she could partner with
anybody she wanted to, including Gary Petrucci.” (Allender Decl. in Support of Motion
for Partial Summary Judgment [Doc. No. 140] Ex. F, Petrucci Dep. at 13:4-10.)
Rather, he described himself as her partner after the assignment of her patent rights.
When asked “So you became a partner of [Nadirashvili’s] when you acquired the patent
rights?”, Petrucci replied: “That’s correct.” (Sealed Allender Decl. in Op. to Motion for
Summary Judgment [Doc. No. 152] Ex. S, Petrucci Dep. at 180:25-181:16.)
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an agency relationship with the debtor that supported a jury verdict holding the creditor
liable for the debts of the debtor).
Cardio Flow argues that CSI’s joint venture theory is contrary to Minnesota law,
emphasizing that a joint venture cannot apply to the relationship between a corporation and
its shareholders. Moreover, Cardio Flow contends that Nadirashvili did not enter into the
Settlement Agreement as an agent for Cardio Flow because: (1) Cardio Flow was not a
party to the Settlement Agreement; and (2) CSI cites no evidence that Nadirashvili had
actual or apparent authority to bind Cardio Flow. Finally, Cardio Flow contends that the
record plainly fails to support CSI’s argument that, under Cargill, Inc., Cardio Flow
exercised such close control over Nadirashvili’s affairs so as to render Cardio Flow subject
to the terms of the contracts to which she was a signatory.
Here, agency principles do not bind Cardio Flow to the Settlement Agreement. First,
Cardio Flow is correct that joint venture principles do not apply because Cardio Flow is a
corporation that was created in 2010 and in which Nadirashvili and Petrucci own shares.
See Rehnberg v. Minnesota Homes, Inc., 52 N.W.2d 454, 456 (Minn. 1952) (joint venture
assumes “corporation has not been organized”); Stelling v. Hanson Silo Co., 563 N.W.2d
286, 290-91 (Minn. Ct. App. 1997) (no joint venture because corporation and shareholder
already had legal relationship). Moreover, the record evidence that CSI identifies does not
support a finding that Nadirashvili and Petrucci were in a partnership at the time
Nadirashvili executed the Settlement Agreement.
Additionally, CSI does not identify any record evidence suggesting that Nadirashvili
had actual or apparent authority to bind Cardio Flow when she signed the Settlement
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Agreement. Finally, Cargill, Inc. is not analogous to this case. Cargill, Inc. involved a
corporate creditor that, among other things, took control of a debtor’s business, financed
the debtor’s purchases, held rights to enter the debtor’s property, and could prevent the
debtor from entering into certain contracts. 309 N.W.2d at 290-91. CSI, however, identifies
no evidence that Petrucci or Cardio Flow exercised such control over Nadirashvili. Indeed,
Petrucci’s deposition testimony fails to demonstrate that Petrucci exercised close control
over Nadirashvili. (See Order Denying Motion to Alter/Amend/Supplement Pleadings
[Doc. No. 121] at 7-8 n.2, aff’d Order Denying Appeal/Objection of Magistrate Judge
Decision [Doc. No. 131] (Petrucci’s deposition transcript “does not paint him as a ‘puppet
master guiding the 2012 litigation’ as CSI alleges”).) Accordingly, agency principles do
not create privity of contract here and hence do not preclude the entry of summary
judgment on behalf of Cardio Flow.
In sum, Cardio Flow is not bound by the Settlement Agreement under federal patent
law, equitable estoppel, or agency principles. Because CSI has provided no legal basis for
binding Cardio Flow to the terms of the Settlement Agreement, CSI’s breach of contract
claim must be dismissed.
D. Claim for Injunctive Relief
CSI’s claim for injunctive relief seeks to enjoin Cardio Flow from developing or
using solid counterweights in the future in breach of the Settlement Agreement and from
filing any new application or prosecuting any existing application that practices or
constructively practices solid counterweights. (See Am. Compl. [Doc. No. 34] ¶¶ 35-38;
Pl.’s Mem. in Op. to Motion for Summary Judgment [Doc. No. 150] at 4.)
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CSI’s claim for injunctive relief, however, is wholly premised on its argument that
it received an “exclusive right” to practice solid counterweights, without regard to patent
rights, in Section 3(A) of the Settlement Agreement. (See Am. Compl. [Doc. No. 34] ¶¶ 3738.) As discussed above, however, Section 3(A) grants no such exclusive right. CSI’s
“exclusive right and license” was merely an exclusive license, and therefore, the Court
cannot enjoin Cardio Flow in the ways CSI seeks. Accordingly, CSI’s claim for injunctive
relief is dismissed.
E. Claim for Declaratory Relief
CSI’s claim for declaratory relief seeks a declaration that CSI is the owner of a list
of patents that incorporate counterweights that Cardio Flow claims to own. (See Am.
Compl. [Doc. No. 34] ¶¶ 28-34; Pl.’s Mem. in Op. to Motion for Summary Judgment [Doc.
No. 150] at 4-5.) CSI’s position is that it owns these patents by virtue of an arbitration
award and several agreements that predate the Settlement Agreement. (See Am. Compl.
[Doc. No. 34] ¶ 19.) According to CSI, Dr. Shturman invented some of these patents, and
they were erroneously omitted from the schedules of patent interests attached to the
Settlement Agreement. (Pl.’s Mem. in Op. to Motion for Summary Judgment [Doc. No.
150] at 4-5.) CSI contends that the rest of the patent interests were developed by Cardio
Flow after the Settlement Agreement was executed but belong to CSI because they
constructively practice solid counterweights in violation of CSI’s exclusive right. (Id.)
According to Cardio Flow, CSI’s claim must be dismissed because CSI is seeking
a declaration that Cardio Flow must assign patents and applications that are by definition
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not part of the Nadirashvili Patent Portfolio, not part of the Settlement Agreement, or
invented by other inventors altogether.
The Court cannot issue a declaratory judgment here. Section 3(A) only provides a
license to patent rights under the Nadirashvili Patent Portfolio; it does not grant CSI an
exclusive right to practice solid counterweights in general, does not restrict patent
prosecution, and does not mention assigning patent applications. (Settlement Agreement
§ 3.) In fact, the Settlement Agreement authorized Nadirashvili to “prosecute the
Nadirashvili Patent Portfolio as she sees fit.” (Id. § 4.) Additionally, although CSI argues
that some patents were “erroneously omitted” from the Settlement Agreement, it identifies
no evidence that any patents were erroneously omitted, and in any event, did not plead such
a theory of mistake with particularity, as Rule 9(b) requires. (See Fed. R. Civ. P. 9(b); Pl.’s
Mem. in Op. to Motion for Summary Judgment [Doc. No. 150] at 10.) Moreover, the Court
cannot compel Cardio Flow to assign patents to CSI based on agreements and an arbitration
award involving Shturman, Shturman’s company, and CSI that predate the Settlement
Agreement when Cardio Flow was not a party to those agreements or arbitration and where
CSI released any claim it “may have or claim to have, related to claims and counterclaims
asserted in the [2012] Lawsuit.” (Settlement Agreement § 11; see Hall Decl. in Support of
Motion for Summary Judgment [Doc. No. 145] Ex. 6, First Amended Complaint from
Nadirashvili v. Cardiovascular Systems, Inc., Case No. 12-cv-00616 (SRN/FLN).)
As a result, the Court dismisses CSI’s claim for declaratory relief.
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F. Motions to Strike and for Sanctions
Cardio Flow has filed two motions to strike and for sanctions. Cardio Flow’s first
motion to strike seeks to exclude as untimely the infringement contentions in the
declaration of CSI’s expert that was filed with CSI’s memorandum in opposition to Cardio
Flow’s motion for summary judgment. Cardio Flow’s second motion to strike seeks to
exclude as untimely certain of CSI’s case theories regarding breach.
The Court, however, need not rule on Cardio Flow’s motions to strike because CSI
has no viable breach of contract claim. Accordingly, Cardio Flow’s motions to strike are
dismissed as moot.
Cardio Flow also requested the Court to impose sanctions on CSI. The Court
declines to exercise its discretion to impose any sanctions. Accordingly, Cardio Flow’s
motions for sanctions are denied.
III.
CONCLUSION
Based on the foregoing, and the entire file and proceedings herein, IT IS HEREBY
ORDERED that:
1. Plaintiff’s Motion for Partial Summary Judgment [Doc. No. 137] is DENIED;
2. Defendant’s Motion for Summary Judgment [Doc. No. 142] is GRANTED;
3. Defendant’s Motion to Strike and For Sanctions [Doc. No. 161] is DENIED as
moot in part and DENIED in part;
4. Defendant’s Motion to Strike and For Sanctions [Doc. No. 193] is DENIED as
moot in part and DENIED in part.
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LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: November 2, 2020
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
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