Fischell et al v. Cordis Corporation

Filing 277

MEMORANDUM AND ORDER that Plaintiffs' 206 Motion to Strike Defendant's and Intervenor's affirmative defenses of patent invalidity and unenforceability is denied. Signed by Judge Peter G. Sheridan on 11/29/2018. (mps)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

TIM A. FISCHELL, ROBERT E. FISCHELL,
AND DAVID R. FISCHELL,

Civil Action No.: 3:16-cv-00928
(PGS)(LHG)

Plaintiffs,
V.

CORDIS CORPORATION,

MEMORANDUM
AND ORDER
Defendant,

ABBOTT LABORATORIES AND
ABBOTT CARDIOVASCULAR SYSTEMS
INC.,
Intervenors.

This matter is before the Court on a Motion by plaintiffs to strike defendant’s and
intervenor’s affirmative defenses of patent invalidity and unenforceability, (ECF No. 206).
I
In 1999, Tim A. Fischell, Robert E. Fischell, and David R. Fischell (hereinafter
“plaintiffs”) entered into a patent royalty agreement with defendant Cordis Corporation
(hereinafter “Cordis”). (Third Am. Compi. (“TAC”), ECF No. 160, at

¶

5). Pursuant to the

assignment agreement, plaintiffs provided Cordis with the ownership rights to use and sell
certain coronary stent patents. (Id. at

¶

5).

In exchange, Cordis agreed to protect plaintiffs’

intellectual property rights and to pay plaintiffs royalties from the products made, sub-licensed,
or sold by Cordis. (Id. at

¶ 5).

Under the 1999 agreement, Cordis promised to pay a 1% royalty

on the Royalty Bearing Products, “so long as a court of competent jurisdiction has not held such
claim invalid or unenforceable in an unappealed or unappealable decision.” (1999 Agreement,
ECF No. 160-1 at

§

1.2, 1.6). Cordis also gained the right to sub-license the Fischell patents,
1

“as long as the appropriate (1%) percent ROYALTY is paid to the FISCHELLS in accordance
with the terms of the AGREEMENT.” (Id. at

§

2.13). Finally, Cordis gained the right to initiate

legal action against any potential infringer of any of the Royalty Bearing Patents that had been
assigned or licensed to it by plaintiffs. (TAC at

¶ 28).

In 2001, the Fischells and Cordis entered

into an agreement that modified the royalty rates, but otherwise left the 1999 patent royalty
agreement in full effect. (TAC at ¶ 26).
In late 2002 or early 2003, plaintiffs informed Cordis that certain stents manufactured by
Guidant infringed Fischell patents that had been assigned or licensed to Cordis. (Id. at

¶ 31).

In

2004, Cordis and Guidant entered into a Settlement and Release agreement, which resolved a
pending arbitration, wherein Guidant claimed Cordis had infringed on Lam/Lau patents, and
Cordis claimed that Guidant had infringed on Fischell patents.

(2004 Guidant Settlement

Agreement, ECF No. 160-3, at 2-3). As a result of the 2004 Guidant Settlement Agreement,
Cordis was to receive a royalty-free license to the Lam/Lau patents, and Guidant was to receive a
license to the Fischell patents, though it was required to pay a royalty on these patents to Cordis,
who then sent these payments to the Fischells. (Id. at 3, 4
cardiology division to Abbott. (TAC at ¶46).

¶ 2(c),

(d)). In 2006, Guidant sold its

Accordingly, “Abbott sent royalties to Cordis for

‘passthrough’ payment to the Fischells for a portion of Abbott’s manufacture and sale of various
stents, including Abbott’s Vision, Xience (the drug-eluting variant of the Vision stent), and Zeta
stents, among others.” (Id.) During this time, Abbott manufactured and sold certain stents to
Boston Scientific Corporation (“BSC”), who then re-sold the stents under its own label. (Id. at

¶ 48).
In 2010, Cordis sued BSC in the U.S. District Court for the District of Delaware for
selling a certain stent, identified as the Promus stent, that it alleged infringed on the Fischells’

2

stent patents that plaintiffs had assigned to Cordis.

(Id. at

¶

53).

In that litigation, Cordis

asserted three Fischell patents: U.S. Patent No. 6,086,604 (“the ‘604 patent”), U.S. Patent No.
6,716,240 (“the ‘240 patent”), and U.S. Patent No. 6,547,817 (“the ‘817 patent”). (Id. at

¶ 54).

In

response, BSC asserted numerous defenses, including invalidity and noninfringement of the
asserted claims.

Cordis Corp. v. Bos. Sci. Corp., 868 F. Supp. 2d 342, 344 (D. Del. 2012).

There, the court granted summary judgment in part, and denied summary judgment in part to
BSC.

In denying summary judgment based on invalidity, the court, with respect to the ‘817

patent, nullified (or invalidated) dependent claims 14-16. Id. at 357. Additionally, the court
granted summary judgment in favor of BSC by determining that Cordis could not show that the
Promus patent infringes. Id. at 358. On appeal, the Federal Circuit affirmed in part and vacated
in part the judgment of the district court, without opinion. Cordis Corp. v. Bos. Sci. Corp., 504
F. App’x 922, 922 (Fed. Cir. 2013). The court affirmed the district court’s conclusion that Cordis
could not show BSC’s Promus patent infringes, but “vacate[d], however, the portion of the
district court’s decision ‘nullifying’ (invalidating) dependent claims 14-16 of U.S. Patent No.
6,547,817.” Id.
The ‘817 patent shares the same specifications as the ‘856 and ‘452 patents, as the Promus
stent “share[s] the same metal stent architecture” as the Xience and Vision stents. (P1. reply br.
at 12, Abbott br. at 20). Based on the 2012 Delaware ruling, Abbott stopped paying Cordis
royalties for pass-through to the Fischells in 2012 for the Vision and Xience and bare metal
stents. (TAC at

¶

57; see also ECF No. 160-5, at 2). On December 21, 2012, a representative

from Cordis wrote to Abbott, and confirmed that the Vision and Xience stents were considered
“royalty-bearing” pass-through patents pursuant to the Guidant License, and that failure to pay
plaintiffs royalties for the sales of these stents amounted to non-compliance with the Guidant

3

License. (TAC at

¶

59). However, according to the complaint, Abbott has failed pay royalties

for sales of the royalty-bearing stents, and Cordis has done little else to compel Abbott to pay.
(Id. at ¶J 62-63).

Plaintiffs brought the present case against Cordis in 2015, and in 2016, Abbott moved to
intervene, asserting patent-law defenses to the breach of contract claims plaintiffs are asserting
against Cordis. (ECF No. 66). On May 30, 2017, to streamline the case, plaintiffs, Cordis, and
Abbott entered into a Stipulation, wherein they agreed to limit plaintiffs’ asserted patent claims to
three U.S. patents from three distinct patent families, the 8,157,856 (the “856 patent”), the U.S.
Patent No. 8,747,452 (the “452 patent”) and U.S. Patent No. 6,699,278 (the “278 patent”).
(Order, ECF No. 111). The Stipulation sets forth the issues that were to be determined and
resolved, including patent infringement, validity, and enforceability. (Id.)
Plaintiffs filed the present motion to strike defendant’s and intervenor’s affirmative
defenses of patent invalidity and unenforceability on May 23, 2018. (ECF 207). Plaintiff argues
that Cordis and Abbott should be estopped from challenging the validity of the Fischell patents
under the doctrine of “assignee estoppel” because Cordis has owned the patents at issue since
2001, and thus is the assignee of the Fischell patents. (P1. Br. at 9, ECF No. 207). Plaintiff
further argues that Abbott waived and released the defenses of invalidity and unenforceability in
the 2004 Settlement. (P1. Br. at 13). In response, Cordis and Abbott argue that the parties
expressly stipulated that Abbott and Cordis could challenge the patents’ validity and
enforceability, and have been litigating those issues for a year. Cordis and Abbott also argue that
“assignee estoppel” does not bar them from challenging patent validity and enforceability, as
Abbott is a licensee, and not an assignee, and Cordis is no longer assignee of the asserted patents.
Additionally, Cordis and Abbott argue that the entire doctrine of assignee estoppel is in “serious

4

doubt,” and the instances that courts have applied it are dissimilar to the dispute here, and as
such, this Court should decline to apply it in the present situation. (Def. Br. at 16-17; Abbott Br.
at 16-18). Finally, Cordis and Abbott argue that the 2004 Settlement does not bar the Abbott
from challenging the validity and enforceability of the asserted patents, as plaintiffs were not a
party to that agreement. (Def. Br. at 25-27; Abbott Br. at 2 1-24).
II
Under Rule 12(f) of the Federal Rules of Civil Procedure, “[t]he Court may strike from a
pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.” Fed. R. Civ. P. 12(f). The Court may act either “on its own” or on a motion by a party.
Id. at 12(f)(1)-(2). “The purpose of a motion to strike is to simplify the pleadings and save time
and expense by excising from a plaintiffs complaint any redundant, immaterial, impertinent, or
scandalous matter which will not have any possible bearing on the outcome of the litigation.”
Corradetti v. Sanitary Landfill, Inc., 912 F. Supp. 2d 156 (D.N.J 2012) (quoting Garlanger v.
Verbeke, 223 F. Supp. 2d 596, 609 (D.N.J. 2002)). “[M]otions to strike are usually ‘viewed with
disfavor’ and will generally ‘be denied unless the allegations have no possible relation to the
controversy and may cause prejudice to one of the parties, or if the allegations confuse the
issues.”

Gray v. Bayer Corp., 2010 U.S. Dist. LEXIS 33040, at *2 (D.N.J. Mar. 31, 2010)

(citing Garlanger, 223 F. Supp. 2d at 609). In fact, “Rule 12(f) should be construed strictly
against striking portions of the pleading on grounds of immateriality and if the motion is granted
at all, the complaint should be pruned with care.” Morgan Home Fashions, Inc. v. UTI, U.S.
Inc., 2004 U.S. Dist. LEXIS 13412, at *8 (D.N.J. Feb. 9, 2004).
Motions to strike challenge “the legal sufficiency of the pleading” and are governed by
“the same standards as a motion to dismiss filed pursuant to Fed. R. Civ. P. 12(b)(6).” In re

5

Gabapentin Patent Litig., 648 F. Supp. 2d 641, 647-48 (D.N.J. 2009). In determining “whether
Defendants’ affirmative defenses are insufficient, the Court must accept all factual allegations in
the Answers as true, construe the Answers in the light most favorable to Defendants, and
determine whether, under any reasonable reading of the pleadings, Defendants may be entitled to
relief.” Id. (citing Phillips v. Cnty. ofAllegheny, 515 F.3d 224, 233 (3d Cir. 2008)).
III
Plaintiffs argue that Cordis and Abbott must be estopped from challenging the validity of
the Fischell’s patents because Cordis has owned the patents at issue since 2001. (P1. br. at 9).
Plaintiffs also argue Abbott, as licensee of Cordis, is precluded from asserting these defenses
because Abbott is only asserting affirmative defenses to the Fischells’ claims against Cordis in
this case by standing in Cordis’s shoes, and the same assignee estoppel that bars Cordis from
bringing these defenses also bars Abbott. (Id. at 11). In response, both Cordis and Abbott argue
that plaintiffs stipulated that Cordis and Abbott may present invalidity and unenforceability
defenses, and thus the Stipulation governs, as the parties have been litigating these issues for a
year.

Further, Cordis argues that assignee estoppel is inapplicable because Cordis is no longer

the owner of the asserted patents, and the validity of the doctrine of assignee estoppel is “in
serious doubt.”

(Def. br. at 16, n.2). Abbott argues that Cordis is a licensee, not an assignee of

the patents, and thus the doctrine of assignee estoppel is inapplicable.

(See Def. br. at 16,

Intervenor br. at 16).
“Assignee estoppel is an equitable doctrine which, under appropriate circumstances, bars
the assignee of a patent from contesting the validity of the assigned patent.” Slip Track Sys. v.
Metal Lite, Inc., 113 F. App’x 930, 933 (Fed. Cir. 2004); see also Macom Tech. Sols. Holdings,
Inc. v. Infineon Techs. AG, No. 2:16-02859, 2017 U.S. Dist. LEXIS 121806, at *6 (C.D. Cal.

6

Aug. 2, 2017) (“Macom”). “For example, circumstance may warrant application of the doctrine
to prevent an assignee from avoiding royalty payments otherwise due under an assignment
contract by challenging the validity of the assigned patent.” Id. (first citing Baladevon, Inc. v.
Abbott Lab., 871 F. Supp. 89, 96 (D. Mass. 1994); then citing Sybron Transition Corp. v. Nixon,
770 F. Supp. 803, 811-12 (W. D.N.Y. 1991)).
Abbott and Cordis rely on the Supreme Court’s decision in Lear, Inc. v. Adkins, 395 U.S.
653 (1969) to argue that assignee estoppel is inapplicable. There, a licensee of a patent (Lear)
brought suit against the licensor (Adkins); the issue before the Court was whether a licensee
could challenge the validity of licensed-patent, and whether the licensee was required to pay the
agreed to royalties regardless of the validity of the licensed patent. Lear, 395 U.S. at 656. The
Court recognized that the “judicial efforts to accommodate” competing notions of patent law and
contract law had led to the “uncertain status of licensee estoppel in the case law.” Id. at 689; see
also Macom, 2017 U.S. Dist. LEXIS 121806, at *6..7. The Court explained, “[o]n the one hand,
the law of contracts forbids a purchaser to repudiate his promises simply because he later
becomes dissatisfied with the bargain he has made. On the other hand, federal law requires that
all ideas in general circulation be dedicated to the common good unless they are protected by a
valid patent.” Id. at 688.

Faced with “this basic conflict in policy, both this Court and courts

throughout the land have naturally sought to develop an intermediate position.
been a failure.”

..

[t]he result has

Id. at 668; see also Macom, 2017 U.S. Dist. LEXIS 121806, at *6..7.

Consequently, the Court decided to abolish the doctrine of licensee estoppel altogether,
explaining:
Surely the equities of the licensor do not weigh very heavily when
they are balanced against the important public interest in
permitting full and free competition in the use of ideas which are in
reality a part of the public domain. Licensees may often be the
7

only individuals with enough economic incentive to challenge the
patentability of an inventor’s discovery. If they are muzzled, the
public may continually be required to pay tribute to would-be
monopolists without need or justification. We think it plain that
the technical requirements of contract doctrine must give way
before the demands of the public interest in the typical
situation involving the negotiation of a license after a patent has
issued.
Id. at 670-71.’
“Although Lear did not squarely address assignee estoppel as compared to licensee
estoppel, ‘[t]he distinction between licensee estoppel and assignee estoppel [has not always been]
logical.” Macom, 2017 U.S. Dist. LEXIS 121806, at *8 (quoting Coast Metals, Inc. v. Cape, No.
78-276, 1979 U.S. Dist. LEXIS 7798, at *4 (D.N.J. Dec. 24, 1979)). “Thus, Justices White and
Blackmun have observed that it is ‘arguably inconsistent’ with Lear to prevent an assignee from
challenging patent validity.” Macom, 2017 U.S. Dist. LEXIS 121806, at *8 (quoting Brown
Transp. Corp. v. Atcon, Inc., 439 U.S. 1014, 1020 (1978) (dissenting from the denial of certiorari
of Sears, Roebuck & Co. v. Roberts, No. 78-26, 573 F.2d 976 (CA7 1978)).
Since Lear, courts have had little occasion to further develop or discuss the doctrine of
assignee estoppel. The courts that have analyzed the doctrine of assignee estoppel are split in its

To fall under the Lear doctrine and assert that a patent’s invalidity excuses a contractual royalty
obligation, the court in Studiengesellschafl Kohie, MB.H v. Shell Oil Co., 112 F.3d 1561, 1568 (Fed. Cir.
1997) required a licensee to (1) “actually cease[] payment of royalties, and (ii) provide[] notice to the
licensor that the reason for ceasing payment of royalties is because it has deemed the relevant claims to be
invalid.” Shell, 112 F.3d at 1568. Plaintiffs reliance on Shell to conclude that “that a party can obligate
itself to pay royalties regardless of a patent’s validity,” and thus “patent licensing law bars Cordis and
Abbott from asserting patent invalidity as a defense to their failure to pay royalties that were due before
they first raised invalidity as a defense to their royalty obligations” is misguided. (P1. br. at 23-24). In
Shell, the license agreement did not make payment of royalties contingent upon validity of the patent at
issue. Shell, 112 F.3d at 1567. Here, the 1999 Agreement expressly states that Cordis would pay a
royalty on the Royalty Bearing Patents, “so long as a court of competent jurisdiction has not held such
claim invalid or unenforceable in an unappealed or unappealable decision.” (1999 Agreement, ECF No.
160-1 at § 1.2, 1.6). Additionally, Abbott followed the Federal Circuit’s Shell decision in order to fall
under the Lear doctrine, by ceasing payment of royalties and notifying Cordis that it had deemed the
claims invalid. (See ECF No. 160-5, at 2 (E-mail from Abbott Rep. to Cordis Rep. explaining that Abbott
believed no further royalties were due based on the 2012 Delaware ruling)).
8

application in light of Lear. Most recently, the court in Macom declined to strike invalidity
defenses based on “the foregoing weight of uncertainty about the state of the doctrine.” Macom,

2017 U.S. Dist. LEXIS 121806 at *8. There, the court explained that in instances where courts
distinguish Lear and apply assignee estoppel, they do so by
noting that an assignment, unlike a license, precludes the assignor
from exacting “tribute’ until the patent rights are returned to him.”
Roberts v. Sears, Roebuck & Co., 573 F.2d 976, 982 (7th Cir.
1978); see also Sybron, 770 F. Supp. at 811 (“The assignor thus
has nothing left, and has no legal basis to exact ‘tribute’ from the
public.”). Courts also note the inequity of permitting an assignee
to obtain the benefits of their bargain while avoiding payment of
due consideration. See Sybron, 770 F.Supp. at 811; Coast Metals,
Inc. v. Cape, No. 78-cv-276, 1979 U.S. Dist. LEXIS 7798, at *4

(D.N.J. Dec. 24, 1979) (assignee was “seeking to repudiate its
agreement and avoid payments due the inventor”).
Id. The court distinguished Macom from the above referenced cases, explaining the assignment

did not leave the assignor with “nothing,” and instead, the assignor “retains some rights to
prosecute infringers as well as practice the

.

.

.

Patents

.

.

.

Additionally, [the assignor] does not

contend here that [assignee] is asserting invalidity to avoid royalty payments or its obligations to
pay consideration.

.

.

.“

Macom, 2017 U.S. Dist. LEXIS 121806, at *8.2

In Coast Metals, Inc. v. Cape, relied on by plaintiffs, defendant-assignors moved for
summary judgment after assignee-plaintiff sought to invalidate the patent, because the assignee,
“as owner of the patent by assignment is estopped from challenging the validity of the patent.”
No. 78-276, at *45 The court first noted that prior courts’ decisions on the doctrine of assignee
estoppel did “not permit easy interpretation.” Coast Metals, Inc., 1979 U.S. Dist. LEXIS 7798,
at *9

Instead, the court distinguished from Lear and Sears by holding assignee estoppel

2

The Macom court also concluded that “the issue [of assignee estoppel] is not well suited to resolution at the
pleading stage, [because] resolution of the doctrine may require the Court to weigh not only the equities of each
parties’ contentions about the Purchase Agreement and License Agreement, but also the circumstances under which
those agreements were negotiated and evidence of each parties’ performance.” Macom, 2017 U.S. Dist. LEXIS
121806, at *10.

9

applicable because, unlike those cases, the assignee in Coast Metals itself was bringing a
declaratory judgment action to declare its own patent invalid, whereas “[un Lear and Sears the
claim of patent invalidity was a defense.” Coast Metals, Inc. v. Cape, 1979 U.S. Dist. LEXIS
7798, at *11..12 (emphasis added).
Based on the uncertainty involved in the applicability of the doctrine of assignee
estoppel, the Court declines to apply it, and therefore, declines to strike Cordis and Abbott’s
affirmative defenses of patent invalidity and unenforceability. In this case, there is uncertainty as
to whether Cordis is even an assignee, as Cordis asserts that the patents are now owned by
Cardinal Health Switzerland. (See Cordis br., ECF No. 216, at 15 n.2; see also ECF No. 213-3).
Further, the case at hand presents an issue distinguishable from the cases that have applied
assignee estoppel.

The 1999 Agreement explicitly states that the royalty agreement was

contingent upon Cordis practicing valid claims: “where a VALID CLAIM of a royalty bearing
patent is practiced by CORDIS, CORDIS shall pay the FISCHELLS a royalty
Agreement, at

§

.

.

.

.“

(1999

2.1). The 1999 Agreement defines a valid claim as “a claim of an unexpired

patent so long as a court of competent jurisdiction has not held such claim invalid or
unenforceable in an unappealed or unappealable decision.” (1999 Agreement, ECF No. 160-1 at

§

1.2, 1.6).
Here, the 1999 Agreement expressly sets out that Cordis may cease paying royalties for

patent bearing products where court has held a claim invalid or unenforceable in an unappealed
or unappealable decision.

In 2012, Cordis defended the Fischell patents in the District of

Delaware against BSC’s claims that the ‘81 7 patent was invalid.

In that case, Cordis was

unsuccessful, as the court held that certain claims in the ‘81 7 patent were “nullified” and that
BSC’s Promus patent did not infringe. While the Federal Circuit vacated the portion of district

10

court’s decision that “nullified” the certain claims of the ‘817 patent, it upheld the portion finding
that the Promus patent did not infringe upon the Fischell patent, thus in this respect, Cordis
defended the Fischell patents and lost. It now seeks to get out of the contract it had entered into
with plaintiffs, as the validity of the patents it owns and continues to pay a royalty is in question.
This is evident because the ‘81 7 patent shares the same specification as the ‘856 and ‘452 patents,
and also shares the same metal stent structure as the Xience and Vision stents. It was based on
these issues that Abbott ceased paying the royalties to Cordis.

In this instance, it is not fair to

harm Cordis, who has acted in conformance with the 1999 Agreement by defending the Fischell
patents, and lost. Here, the assignment agreement explicitly states that the assignee

—

Cordis

—

shall only pay royalties for valid claims. Thus the agreement allows Cordis to challenge the
validity of the patents it owns, and accordingly, the defenses of patent invalidity and
unenforceability may be raised. Cordis may pursue these defenses, at least through discovery.
Unlike in cases where an assignee now controls the patent and is “seeking to repudiate its
agreement and avoid payments due the inventor,” here, Cordis has stopped paying royalties to
Fischell only after Abbott, the licensee of the patents, stopped paying royalties. to it.

Thus,

Cordis is not proactively challenging the patents; instead, they are defending against making a
payment for patents whose validity and enforceability have been questioned. Further, allowing
Cordis and Abbott to raise the defenses of patent invalidity and unenforceability is in line with
the policy set forth in Lear: if a patent may be invalid, it is not fair to treat the patent as if it is
valid, and allow the plaintiffs to continue to receive a royalty when there may be no valid reason
for preferential treatment.3

Moreover, Abbott is a party to the case based on its own significant interest in this case, as the defenses Cordis
asserts of patent invalidity and unenforceability are for the products Abbott has licensed and produces. Any
judgment potentially invalidating or holding a patent licensed to Abbott will directly affect Abbott. Here, it is clear
that the doctrine of assignee estoppel does not apply to Abbott because Abbott not an assignee, but is clearly a

11

Finally, the Court finds it significant that the parties entered into a Stipulation on May 30,
2017, after both parties met, conferred, and agreed that “that they would propose to the Court
that the issues of patent infringement, validity, and enforceability in this case can be most
efficiently resolved by [limiting the patents at issue in the case].” (Stipulation, ECF No. 111).
The Stipulation here recognized that validity and infringement were both at issue. The
Stipulation further stated:
if the Fischells establish in this action, via an unappealed or unappealable final
determination, that an Abbott product practices (i.e., infringes but for a license)
Asserted Fischell Claim, then it shall be established that the Abbott product is a
Royalty Bearing Product as defined in the 1999 Fischell-Cordis Agreement and a
Licensed Product as defined in the 2004 Cordis-Guidant Agreement, unless
Abbott or Cordis establishes, via an unappealed or unappealable final
determination, that the Asserted Fischell Claim is invalid or unenforceable.
(Id.)

Thus, the Stipulation clearly sets forth that the issues that were to be determined and

resolved included patent infringement, validity, and enforceability. It was clear to the Court and
clear to the parties that the issues of validity and enforceability of the patents were to be
resolved. The parties and the Court relied on this Stipulation, and proceeded for over a year
under the belief that the patent issues to be resolved during the course of this litigation were
validity and enforceability.

Accordingly, plaintiffs motion to strike Abbott and Cordis’s

affirmative defenses of invalidity and unenforceability is denied.
Iv

Plaintiff additionally argues that Abbott has waived arguments that the Fischell patents are
invalid or unenforceable because these defenses were waived and released in the 2004 Guidant
Settlement. In the Settlement Agreement, the parties first acknowledged:

licensee of the patents. Further, any licensee estoppel arguments against Abbott must be rejected, as the Supreme
Court has abrogated the doctrine of licensee estoppel in Lear.

12

that this Agreement is being executed in settlement and compromise of the
Lam/Lau Dispute and the Fischell Dispute and that nothing in this Agreement
shall be construed as an admission by any party of any wrongdoing, or of the
validity or invalidity of any position taken or proposed to be taken by or against
the party in any past, present, or future dispute or proceeding.
(SA, ECF No. 160-3, at ¶ 1). The Settlement Agreement also contains the following release:
J&J, on the one hand, and GUIDANT, on the other hand, do hereby for
themselves and their respective legal successors and assigns, release and forever
discharge each other and their respective shareholders, officers, directors,
employees, agents, attorneys, customers, distributors, officials, legal successors
and assigns of and from any and all claims, demands, damages, debts, liabilities,
accounts, reckonings, obligations, costs, expenses, liens, actions and causes of
action of any kind and nature whatsoever, whether now known or unknown,
suspected or unsuspected, which either now has, owns or holds or at any time
heretofore had ever owned or held, based on or arising out of or relating to the
LamlLau Dispute and the Fischell Dispute, all of which are referred to hereinafter
as the “Released Matters”, including, without limitation, (i) any and all disputes
concerning the infringement, validity or enforceability of the LamlLau Patents or
the Fischell Patents...
(Id. at

¶ 3).

The “Fischell Dispute” was defined as “J&J [identified as Cordis’ parent company at

the time of the Settlement] has alleged that certain GUIDANT products infringe upon U.S.
Patent No. 6,547,817B1 issued April 15, 2003 to Fischell et. al. and assigned to CORDIS (the
“Fischell Dispute”).” (Id. at 2). Because the present dispute clearly does not arise out of the
“Fischell Dispute,” as defined by the 2004 Settlement Agreement, this release provision is
inapplicable.
The 2004 Settlement Agreement also states, “[tjhere are no other third-party beneficiaries
of this Agreement.” (Id. at

¶

12). “Under New York law, such a provision negates the ability of

a third-party to rely on the contract for any purpose.” Comcast Cable Communs., LLC v. Sprint
Communs. Co., LP, 203 F. Supp. 3d 499, 542 (E.D. Pa. 2016) (citing Jndia.com Inc. v. Dalal,
412 F.3d 315, 321-322 (2d Cir. 2005) (“Where a provision exists in an agreement expressly
negating an intent to permit enforcement by third parties, that provision is decisive.”)). Because

13

plaintiff was not a party to the 2004 Settlement Agreement, it may not attempt to enforce any
provision of the contract. Thus, the Settlement Agreement conclusively states that the release
only governs claims arising out of the “Fischell Dispute,” as defined above, between Cordis and
Guidant/Abbott, and Cordis and Abbott may bring their affirmative defenses of patent invalidity
and unenforceability.4

Conclusion
Plaintiffs’ motion to strike defendant’s and intervenor’s affirmative defenses of patent
invalidity and unenforceability is DENIED.

Plaintiffs reliance on Hernstreet v. Spiegel, Inc., 851 F.2d 348, 349 (Fed. Cir. 1988) and Baseload
Energy, Inc. v. Roberts, 619 F.3d 1357, 1363 (Fed. Cir. 2010) is misplaced: “each case must be examined
on its own facts in light of the agreement between the parties. In the context of settlement agreements, as
with consent decrees, clear and unambiguous language barring the right to challenge patent validity in
future infringement actions is sufficient, even if invalidity claims had not been previously at issue and had
not been actually litigated.” Baseload Energy, Inc., 619 F.3d. at 1363. As explained above, the release
and settlement agreement is clear and unambiguous, however it applied to Cordis and Guidant/Abbott,
and their ability to challenge the validity of Fischell patent’s arising out of the “Fischell Dispute,” a
dispute involving Guidant products infringing on U.S. Patent No. 6,547,817B1 issued to plaintiffs and
assigned to Cordis. The present dispute clearly does not arise out of the “Fischell Dispute,” thus this
release provision is not applicable.
“

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ORDER
This matter, having been brought before the Court on plaintiffs’ motion to strike
defendant’s and intervenor’s affirmative defenses of patent invalidity and unenforceability [ECF
No. 206], and the Court having considered the briefs and submissions of the parties; and having
heard oral argument; and for good cause having been shown;

IT IS on this 29th day of November, 2018;

ORDERED that plaintiffs’ motion to strike defendant’s and intervenor’s affirmative
defenses of patent invalidity and unenforceability (ECF No. 206) is DENIED.

PETER G. SHERIDAN, U.S.D.J.

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