Yates v. Medical Specialties, Inc.

Filing 56

ORDER denying 50 Motion for Clarification and Reconsideration of Claim Construction order. Signed by District Judge Max O. Cogburn, Jr on 4/3/2013. (blf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
3:11cv006
C. STEVEN YATES,

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Plaintiff,
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Vs.
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MEDICAL SPECIALTIES, INC.,
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Defendant.
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____________________________________)

ORDER

THIS MATTER is before the court on defendant’s Motion for Clarification and
Reconsideration of Claim Construction Order.
I.

Procedural Background
As set forth in this court’s Memorandum of Decision (#18) of June 6, 2011, plaintiff filed

his Complaint in the North Carolina General Court of Justice, Case No. 10CVS24536
(Mecklenburg Co. Sup. Ct. 2010) and defendant filed a Notice of Removal on January 5, 2011
(#1). Defendant filed an Answer and Counterclaim on January 12 (#4), and plaintiff replied to
the Counterclaim on February 1 (#5).
Defendant filed a Motion to Consolidate this matter with a parallel declaratory judgment
action. See Medical Specialties, Inc. v. Yates, 3:11cv7 (W.D.N.C).

This court issued a

Memorandum, determined that defendant properly removed the case to federal court, that
subject-matter jurisdiction exists and denied defendant’s Motion to Consolidate. The court also
made the following findings:
Following a pretrial conference on August 1, 2011, the court established a Patent Claim
Construction Scheduling Order (#20), and the parties submitted Patent Claim Construction Briefs

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(#s 28, 29, 32, 33). A Markman Hearing was held on July 30, 2012, after which the court
requested that the parties submit proposed Orders.
The undersigned also participated in a telephone conference with the parties on August
10 and asked the parties to provide Supplemental Briefs addressing whether, if the ‘486 patent is
narrowly construed, what features, if any, of the patent are used in defendant’s ASO EVO or
other models using ASO technology.

Following the conference, each party submitted a

Supplemental Brief and proposed Order (## 36, 42). After extensive deliberation, the court
entered a Markman Order on December 18, 2012 (#49). Dissatisfied with parts of the court’s
order, defendant filed this motion on January 18, 2013. Plaintiff filed has filed a reply and
defendant a response.
II.

Analysis
The court will deny defendant’s motion. In support thereof, defendant cites portions of

the court’s June 6 Order and Markman Order out of context for contentions that the court was
not then addressing. While defendant is correct in its contention that “when a court decides upon
a rule of law, that decision should continue to govern the same issues in subsequent stages in the
same case,” Christianson v. Colt Indus. Ooperating Corp., 486 U.S. 800, 816 (1988), the issues
before the court in the two referenced orders were very specific- namely (1) whether the court
had subject matter jurisdiction over the matter; (2) whether to consolidate this action with
defendant’s declaratory judgment action; and (3) claim construction of the ‘486 patent. These
were the issues and nothing else. However, defendant has taken language from these orders
dealing with these specific issues, out of context, and cited it in support of arguments which this
court has already denied. See Markman Order 5 (defendant has “parse[d] plaintiff’s references

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to the various ASO products” and the “court denies defendant’s attempt to block plaintiff’s
claims in such a manner).
First, defendant claims the court’s Markman Order is inconsistent with the established
law of the case in that, as defendant argues, the court’s June 6, 2011 Order (#18) limits plaintiff’s
second claim to whether the ASO EVO infringes the ‘486 patent. Pl. Memm. Supp. Mot.
Clarification, January 18, 2013, ECF. No. 51. Specifically, plaintiff points to the following
portion of the court’s June 6 Order:
Resolution of whether MSI had a legal obligation to pay Yates fees under
the contract for devices developed after 1996 clearly turns on the
resolution of a patent issue, to wit, whether the later developed devices are
within the scope of claims embodies in the ‘486 patent, as made clear in
paragraph 12(a) of the Complaint. While the court agrees with Yates that
such issue may well not require a full-on Markman hearing, and could
even be resolved through discovery, MSI properly removed this action as
state tort law creates the causes of action, but the well-pleaded Complaint
requires patent-law questions to be resolved.
Mem., p. 10.
But as stated above, the issue then before the court was 1: whether the court had
jurisdiction and 2: whether to consolidate the case with the parallel declaratory judgment action.
A review of the record indicates that defendants have made this very same argument at least
twice before, once in the Markman Hearing, Hr’g Tr., July 30, 2012, 45:5-6, ECF No. 41, and
then again in their supplemental brief to the Markman hearing, Responsive Claim Construction
Brief , Aug. 31, 2012, ECF No. 42. The court has declined to so limit plaintiff’s claim and will
decline to do so today. See Markman Order 5. To the extent that allegations in plaintiff’s
second claim for relief extend beyond the scope of 1338(a) and the court’s original jurisdiction,
the court will exercise its authority under 28 U.S.C. § 1367 to keep those parts of the second
claim as well.

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Defendant’s second point of contention revolves around another innocuous statement in
the court’s Markman Order regarding the scope of the Settlement Agreement as it might pertain
to the ASO EVO.

As the court made clear, the sole issue before the court was claim

construction; the order was “not intended to bind the court or the parties as to plaintiff’s breach
of contract claim.” Markman Order 6. It may be that the settlement agreement covers the ASO
EVO if it is covered by any terms of the ‘486 patent. But as explained above, the court’s
Markman Order was not intended to bind the parties as to plaintiff’s breach of contract claim.
Defendant should rest assured that it will have its day in court.
Finally, MSI contends the court erred in its statement from the Markman Order that
“plaintiff’s liability to defendants is now ripe for disposition” without first allowing briefing on
substantive North Carolina contract law and Supreme Court precedent disallowing royalty
payments for expired patents. As explained above, the Markman Order was exactly that, a
Markman Order. It construed the patent terms for the upcoming trial- nothing more, nothing
less. To the extent that defendant believes it has a valid argument, it is free to raise such
argument in its upcoming summary judgment motion. But at this stage of the litigation, the court
will not revisit its claim construction order to rule on this issue relating to contract interpretation.
ORDER
IT IS, THEREFORE, ORDERED that defendant’s Motion for Clarification and
Reconsideration of Claim Construction Order (#50) is DENIED.
Signed: April 3, 2013

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