Poly-Med Inc v. Novus Scientific Pte Ltd et al

Filing 266

ORDER denying 257 Motion to Certify Order for Interlocutory Appeal and to Stay the Proceedings, or in the Alternative, to Certify a Question of State Law to the South Carolina Supreme Court. Signed by Honorable J Michelle Childs on 5/29/18.(alew, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ANDERSON DIVISION
Poly-Med, Inc.,

)
)
Plaintiff,
)
)
v.
)
)
Novus Scientific Pte. Ltd.,
)
Novus Scientific, Inc., and
)
Novus Scientific AB,
)
)
Defendants.
)
_____________________________________)

Civil Action No.: 8:15-cv-01964-JMC

ORDER AND OPINION

This matter is before the court pursuant to Plaintiff Poly-Med, Inc.’s Motion to Certify
Order for Interlocutory Appeal and to Stay the Proceedings, or in the Alternative, to Certify a
Question of State Law to the South Carolina Supreme Court and to Stay (ECF No. 257).
Defendants Novus Scientific Pte. Ltd., Novus Scientific, Inc., and Novus Scientific AB
(collectively “Defendants”) filed a response in opposition (ECF No. 262). For the reasons set forth
below, the court DENIES Poly-Med’s Motion to Certify Order for Interlocutory Appeal and to
Stay the Proceedings, or in the Alternative, to Certify a Question of State Law to the South Carolina
Supreme Court and to Stay (ECF No. 257).
I.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

Founded by Dr. Shalaby W. Shalaby in 1993, Poly-Med is a South Carolina corporation
with its principal place of business at 6309 Highway 187, Anderson, South Carolina 29625. (ECF
Nos. 1 at 1 ¶ 1 & 104-1 at 1 ¶ 3.) “Poly-Med designs, develops, and manufactures products and
materials [out of bio-absorbable and biodegradable polymers] for use in medical,
pharmaceutical and biotechnology applications.” (ECF No. 1 at 3 ¶¶ 8–9; see also ECF No. 1041 at 1 ¶ 3.)

“Poly-Med has numerous trademarks, more than one hundred thirty patents and
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patent applications and has successfully licensed and manufactured technologies found in many
commercially available medical applications.” (ECF No. 104-1 at 2 ¶ 5.) “In addition to creating
its own products and materials, Poly-Med offers manufacturing services and consulting, analytic
and research and development services to a variety of firms in the medical, pharmaceutical and
biotechnology industries.” (Id. at ¶ 6.)
In December 2004, a Swedish company called Radi Medical Systems AB (“Radi”)
applied for a patent entitled “Mesh Implant for Use in Reconstruction of Soft Tissue Defects.”
(ECF No. 126-2 at 2 ¶ 4.) Radi’s goal was “to commercialize the invention in order to reconstruct
soft tissue defects to promote optimal healing and tissue restoration.” (Id.) Even though Radi
“possessed the background and know-how regarding degradable polymers, polymerization, and
processing into final medical devices,” it “did not have all of the physical equipment needed.”
(Id. at 2–3 ¶ 5.)
In early 2005, Poly-Med began negotiations with and eventually entered into a Sale of
Materials and License Agreement (the “Agreement”) with Radi on or about June 8, 2005. (ECF
No. 104-1 at 2 ¶ 7–4 ¶ 15.) The Agreement required Poly-Med to “develop and manufacture at
least six different types of Absorbable Composite Meshes 1 for sale to and use by Radi” in hernial
repair products.” (ECF No. 126-1 at 4 ¶ 2(a).) Additionally, the Agreement contained the

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The Agreement defined “Absorbable Composite Mesh” as “any special absorbable composite
fibrous constructs absorbed by the human body for specific use in herniated tissues which (i) has
not been previously sold or licensed to any other person or entity for product development or
commercial application that conflicts with its use by RADI AB in its hernial mesh application;
(ii) that falls within the scope of any valid claim of any POLY-MED patent or patent application;
or (iii) is manufactured under or using a process that falls within the scope of any Valid Claim of
any POLY-MED Patent or POLY-MED Patent Application; or (iv) comprises or makes use of
POLY-MED Know-How; or (v) is manufactured under, or using a process constituting, POLYMED Know-How.” (ECF No. 126-1 at 3 ¶ 1(f).)
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following provisions relevant to this action:
•

This license shall include the right of RADI AB to arrange for manufacture of
Select Absorbable Composite Hernial Meshes used in RADI Absorbable
Composite Hernial Meshes with an independent manufacturing company at any
location selected by RADI AB, at prices and on terms and conditions acceptable
to RADI AB; provided however that (i) in no event may RADI AB manufacture,
deliver or sell, or cause the manufacture for delivery and sale, of Select
Absorbable Composite Meshes except for use in RADI Products for hernial
repair; . . . .

(ECF No. 126-1 at 10 ¶ 6(c).)
•

RADI AB shall neither acquire nor possess any right, title or interest in or to the
POLY-MED Know-How or other POLY-MED Intellectual Property with respect
to the specific fiber combinations used in construction, creation, manufacture or
production of Absorbable Composite Hernial Meshes. POLY-MED may file
patent applications in the United States with respect to any Absorbable
Constructs at any time, will have all right, title and interest in and to any patent
applications with respect thereto, and will own any and all patents on any
Absorbable Composite Mesh developed pursuant to this Agreement.

(Id. at 11 ¶ 7(a).)
•

If POLY-MED declines, after RADI AB's written request, to prepare and file or
maintain a patent application with respect to a Select Absorbable Composite
Hernial Mesh in a specified territory, including but not limited to the United
States, RADI AB shall have the right (but not the obligation) to prepare and file
or to maintain or prosecute a patent application in such territory in POLY-MED's
name and on POLY-MED’s behalf, at RADI AB’s sole cost and expense, and
shall have authority and power in POLY-MED’S name and on POLY-MED's
behalf but at RADI AB’s expense, to seek, file or execute (and pay the filing fees
or other costs associated with) any continuations, continuations-in-part or
divisionals thereof and any patents issuing thereon together with all reissues and
extensions thereof; provided however that RADI AB shall in all such cases keep
POLY-MED advised of the progress of any such applications, continuations,
continuations-in-part or divisionals and first consult with POLY-MED about the
desired course of action.

(Id. at 13 ¶ 8.)
•

This Agreement shall be governed by and construed in all matters with respect
to the validity, interpretation, legal effect and construction hereof in accordance
with the laws of SWEDEN, and in all matters with respect to patent or trademark
enforceability, validity, and infringement, in accordance with the patent or
trademark laws of the relevant country.
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(Id. at 27 ¶ 28.)
•

[N]either party to this Agreement may assign its rights or delegate its duties
without the prior written consent of the other party, which consent shall be in its
sole and absolute discretion; . . .

(Id. at 28 ¶ 30(a).)
From the group of six proprietary, absorbable surgical meshes, Radi was to select one or
two which it believed “hold the most promise for purposes of developing RADI Products . . . .”
(Id. at 7 ¶ 4(a).) Radi would then “have the exclusive right to use any Select Absorbable
Composite Mesh used by it in the development, manufacture, sale and distribution of its medical
products . . . .” (Id. at 8 ¶ 5.) Per the terms of the Agreement, “Radi was to compensate PolyMed for its development work, manufacturing and production of the mesh that took place
exclusively in South Carolina.” (ECF No. 35-2 at 2 ¶ 11.) In February 2007, Radi selected one
prototype surgical mesh which was then developed into a medical device called TIGR®Matrix
Surgical Mesh (“TIGR®Mesh”). (ECF No. 126-2 at 4–5 ¶ 14.) In December 2008, Radi
transferred its rights under the Agreement to Novus Singapore. 2 (ECF No. 126-5 at 2 ¶ 4.)
Upon receipt of an application, the U.S. Food and Drug Administration (“FDA”) issued
510(k) 3 clearance of TIGR®Mesh on January 25, 2010, “for surgical use in ‘reinforcement of
soft tissue where weakness exists.’” (ECF No. 126-2 at 5 ¶ 17.) Poly-Med helped Novus

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Poly-Med contends that it was told by Radi that the Agreement was assigned to Novus
Singapore, but a “Transfer Agreement” provided to Poly-Med reveals that the Agreement
transferred from Radi to Novus USA. (See ECF Nos. 35-2 at 3 ¶¶ 13, 15 & 35-3 at 1.)
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“A 510(k) is a premarket submission made to FDA to demonstrate that the device to be
marketed is at least as safe and effective, that is, substantially equivalent, to a legally marketed
device (21 CFR 807.92(a)(3)) that is not subject to PMA.” FDA Premarket Notification 510(k),
http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/HowtoMarketYourDevice/
PremarketSubmissions/PremarketNotification510k/default.htm (last visited Dec. 5, 2016).
“Submitters must compare their device to one or more similar legally marketed devices and
make and support their substantial equivalency claims.” Id.
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Defendants obtain FDA approval of the TIGR®Mesh by (1) maintaining their Device Master
Record 4 (“DMR”) in South Carolina and (2) allowing them to use “confidential and proprietary
information located in South Carolina and substantial consultation, testing and assistance.” (ECF
No. 38-3 at 4 ¶¶ 19, 25.) After receiving 510(k) clearance, Novus Singapore began marketing
and selling TIGR®Mesh. (ECF No. 126-5 at 2 ¶ 5.)
On September 27, 2010, Waleed Shalaby, Poly-Med’s Chief Science Officer (“CSF”),
sent an e-mail to its then President, David Shalaby, 5 in which the CSF observed that a lawyer
needed to be contacted because Novus “Defendants were making, selling, and/or using the
Medical Device for TRAM flap/breast reconstruction surgery6—. . . an application other than
hernia repair.” (ECF No. 209 at 7 (referencing ECF No. 209-1 at 1).) In response to this
information, Poly-Med told Novus Defendants that “it objected to commercialization of the
TIGR®Mesh as a ‘surgical’ mesh rather than a ‘hernia’ mesh” and allegedly demanded “firm
commitments by Novus defendants on further orders for production at substantially increased
prices.” (ECF No. 104-1 at 16 ¶ 62; see also ECF No. 126-5 at 2 ¶ 7.) Then, on September 30,
2010, Poly-Med was informed by a consultant that “it could be inferred from the Novus website
that the company is indicating its use for ‘soft tissue repair’” and that “if Novus is indeed
promoting its use beyond hernia repair, it could be argued that they have violated the terms of the

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“A Device Master Record is a compilation of all the instructions, drawings and other records
that must be used to produce a product.” (ECF No. 38-3 at 4 ¶ 25.) “The term is used in Quality
Management Systems that cover product design and production.” (Id.) “Under FDA
regulations, a DMR must be maintained by the manufacturer of any medical device for use in
humans.” (Id. at 4–5 ¶ 25.)
5
In August 2010, David Shalaby replaced his father as President of Poly-Med. (ECF No. 104-1
at 16 ¶ 61.)
6
In a TRAM flap procedure (or abdominal wall reconstruction surgery), a section of the abdomen
wall is removed and used in breast reconstruction and the mesh is used to repair the hole in the
abdomen wall.” (ECF No. 104-1 at 16 ¶ 62.)
5

license agreement and it could thus be terminated.” (ECF No. 209 at 8 (quoting ECF No. 209-2
at 6 & 7).) On December 22, 2010, Poly-Med sent a letter to Novus Defendants containing the
following language:
Novus has commercialized the TIGR hernia mesh as a ‘surgical mesh’ when our
agreement clearly identifies product licensure by Novus as a ‘hernia’ mesh only.
We believe this to be a serious issue that needs to be addressed by Novus
immediately.
(ECF No. 209-3 at 5.)
On or about February 27, 2013, Novus Singapore transferred its interest in the Agreement
to its Swedish sister company, Novus Sweden. (ECF No. 126-8 at 1 ¶ 2.) “Since August 2014,
using its own manufacturing procedures, Novus Sweden has manufactured TIGR®Matrix
Surgical Mesh in its own production facilities, and has continued to sell TIGR® Matrix Surgical
Mesh in accordance with the 510(k) clearance and CE registration.” (Id. at ¶ 3.) “Novus Sweden
has paid and continues to pay royalties to Poly-Med regardless of the end use of TIGR®Matrix
Surgical Mesh . . . and regardless of whether Poly-Med or Novus Sweden manufactured the
TIGR®Matrix Surgical Mesh.” (Id. at 2 ¶ 5.) “Poly-Med has accepted royalty payments arising
from all end uses.” (Id.)
On May 8, 2015, Poly-Med filed a Complaint against Novus Defendants alleging four
causes of action: breach of contract, tortious interference with contract, violation of the South
Carolina Trade Secrets Act (“SCTSA”), S.C. CODE ANN. §§ 39-8-10 to -130 (2016), and violation
of the South Carolina Unfair Trade Practices Act (“SCUTPA”), S.C. CODE ANN. §§ 39- 5-10 to
-560 (2016). (ECF No. 1 at 13–25.) After Novus Defendants answered the Complaint on March
14, 2016, the parties engaged in discovery. On November 22, 2016, the court granted Poly-Med’s
Motion for Leave to Amend Complaint (ECF No. 118) and it filed its Amended Complaint on
November 29, 2016. (ECF Nos. 149, 153.) Thereafter, on July 6, 2017, the court granted Poly6

Med’s Motion for Leave to Amend and Supplement the Amended Complaint (ECF No. 167) and
it filed its Second Amended Complaint on July 10, 2017. (ECF Nos. 179, 181.) In the Second
Amended Complaint, Poly-Med alleged claims against Novus Defendants for breach of contract,
tortious interference with contract and violation of the SCUTPA. (ECF No. 181 at 4 ¶ 89–27 ¶
160.)
On October 5, 2017, Novus Defendants moved for partial summary judgment on PolyMed’s breach of contract cause of action. (ECF No. 209.) After the parties submitted their
Response in Opposition (ECF No. 216) and Reply in Support (ECF No. 222), the court heard
argument from the parties on this matter on January 22, 2018. (ECF No. 231.) On April 24,
2018, the court granted Defendants’ Motion for Partial Summary Judgment (ECF No. 252).
In the present Motion, Poly-Med requests that the court certify for interlocutory appeal the
court’s Order and Opinion (“Order) (ECF No. 252) granting Defendants’ Motion for partial
Summary Judgment (ECF No. 209), and to stay proceedings until the interlocutory appeal is
resolved. (ECF No. 257 at 1.) In the alternative, Poly-Med moves the court to certify a question
of state law to the South Carolina Supreme Court pursuant to Rule 244 of the South Carolina
Appellate Rules and to stay the proceedings until the certified question is answered. (Id.) In
support of this Motion, Poly-Med states as follows:
1. The Order involves the controlling question of law of whether South Carolina
recognizes the continuing-breach theory to extend the life of a breach of
contract cause of action;
2. That question of state law is determinative of Poly-Med’s breach of contract
claims, which the court has ruled are barred by the statute of limitations if they
are not extended under the continuing-breach theory;
3. There is a substantial difference of opinion concerning the controlling question
of law, which has not yet been the subject of a South Carolina appellate
decision;
4. The available state law is clearly insufficient to answer the controlling and
determinative question of law;

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5. An immediate appeal from the Order may materially advance the ultimate
termination of this litigation by avoiding the necessity of a second trial just on
Poly-Med’s breach of contract claims if the Order is reversed on appeal only
after the parties’ other claims have been tried; and
6. The proceedings should be stayed until the interlocutory appeal is resolved or
the certified question is answered to avoid the extensive duplication of effort
that would occur if two trials are held, one limited solely to Poly-Med’s breach
of contract claims and the second to determine the parties’ other claims.
(Id.)
In their opposition, Defendants state that (1) Poly-Med has not met the high burden for
Section 1292(b) certification, and (2) the Fourth Circuit frowns upon certification of questions
after a party receives an adverse decision, and certification is not warranted in any event as
sufficient law existed to guide this court. (ECF No. 262).
II.

LEGAL STANDARD

A district court may certify an order entered in a civil action for interlocutory review when
the court is of the opinion that “(1) its order involves a controlling question of law, (2) as to which
there is substantial ground for difference of opinion, and (3) the immediate appeal of the prior
order may materially advance the ultimate termination of the litigation.” See 28 U.S.C. § 1292(b);
Ashmore v. Sullivan, No. 8:15-CV-00563-JMC, 2017 WL 4074565, at *4 (D.S.C. Sept. 14,
2017). All three elements must be satisfied for certification. Id. Whether to certify an order for
interlocutory appeal is within the district court’s discretion. See Swint v. Chambers County
Comm’n, 514 U.S. 35, 47 (1995); Warwick v. S.C. Elec. & Gas Co., No. 3:15-CV-04897-JMC,
2016 WL 3085808, at *3 (D.S.C. June 2, 2016).
Rule 244 of the South Carolina Appellate Court Rules provides that the South Carolina
Supreme Court in its discretion may answer questions of law certified to it by a federal court, if
there are involved in a proceeding before the certifying court “questions of law of this state which
may be determinative of the cause then pending in the certifying court when it appears to the

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certifying court there is no controlling precedent in the decisions of the Supreme Court.” SCACR
244(a). A federal court should certify a determinative question to the South Carolina Supreme
Court when “the available state law is clearly insufficient” to resolve the question. Ashmore v.
Sullivan, No. 8:15-CV-00563-JMC, 2016 WL 6927888, at *1 (D.S.C. Nov. 28, 2016) (quoting
Roe v. Doe, 28 F.3d 404, 407 (4th Cir. 1994)).
III.

ANALYSIS

A. Interlocutory Appeal
“The Fourth Circuit has cautioned that § 1292(b) should be used sparingly and . . . that its
requirements must be strictly construed.” Myles v. Laffitte, 881 F.2d 125, 127 (4th Cir. 1989).
First, a controlling question of law is not involved in this case because reversal would not
terminate this litigation. A question of law is generally considered to be controlling within the
meaning of § 1292(b) only if the action would have been terminated had the district court ruled
the opposite way. Weichert Real Estate Affiliates, Inc. v. Dean Kelby Realty, LLC, No.: 2:08-cv2652-RMG, 2010 WL 11530906, at *2 (Dec. 10, 2010) (citing City of Charleston v. Hotels.Com,
LP, 586 F. Supp. 2d 538, 542 (D.S.C. 2008)). Here, a controlling question of law is not present
because even if this court were to certify the issue for interlocutory appeal, the court of appeals
were to accept the interlocutory appeal, and the court of appeals were to decide in favor of PolyMed, both parties would still be before this court to litigate the remaining causes of action and
defenses.
Next, there is no substantial ground for difference of opinion because case law from this
District supports the court’s Order on the Partial Summary Judgment Motion. The court cited
ample support for its conclusion that South Carolina would not recognize a continuing-breach
theory with respect to Poly-Med’s breach of contract claim. (See ECF No. 252 at 12-17); see

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also For Legal Reform v. Rabowsky, No. 3:14-cv-01674-JFA, 2014 WL 6389709, at *4 (D.S.C.
No. 14, 2014) (supporting conclusion that South Carolina would not adopt Poly-Med’s desired
theory in this case). “The mere fact that a party disagrees with the district court’s ruling is
insufficient to establish that there is a substantial ground for a difference of opinion.” Southern
U.S. Trade Ass’n v. Unidentified Parties, No. 10-1669, 2011 WL 2790182, at *2 (E.D. La. 2011).
Lastly, permitting an immediate appeal would not materially advance the ultimate
termination of the litigation, but rather prolong the proceedings. Staying this matter to permit an
appeal would only serve to delay the end of the case. Certification “is not intended as a vehicle
to provide early review of difficult rulings in hard cases. Nor is it appropriate for securing early
resolution of disputes concerning whether the trial court properly applied the law to the facts.”
City of Charleston, 586 F. Supp. 2d at 548 (quoting Abortion Rights Mobilization, Inc. v. Regan,
552 F. Supp. 364, 366 (S.D.N.Y. 1982)). Certification of an interlocutory appeal is limited to
extraordinary cases where significant effort and expense would be spared by appellate review
prior to the entry of final judgment. Id. at 542 (internal quotations and citations omitted).
Because this litigation will continue before this court regardless of what an appellate court may
decide, certifying the order for interlocutory appeal would not materially advance this litigation
towards a more efficient and expedient conclusion.
B. Certification of State Law Question
Certification should be denied when sufficient jurisprudence exists to guide the federal
court on what the state court would do when confronted with the same fact pattern. Assurance
Co. of Am. v. Penn-America Ins. Co., No.: 4:11-cv-03425-RBH, 2013 WL 1282141, at *4 (March
27, 2013). Poly-Med raised certification for the first time after the court issued its Order on
Partial Summary Judgment against Poly-Med. Courts “do not look favorably, either on trying to

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take two bites at the cherry by applying to the state court after failing to persuade the federal
court, or on duplicating judicial effort.” S.C. Dep’t of Mental Health v. Hoover Universal, Inc.,
Nos. 3:03-4118-JFA; 6:04-1219-JFA, 2006 WL 6463481, at *3 (D.S.C. March 6, 2006) (quoting
Fischer v. Bar Harbor Banking & Trust Co., 857 F.2d 4, 8 (1st Cir. 1988)); see also Hall v.
Greystar Mgmt. Servs., L.P., 637 F. App’x 93, 100–01 (4th Cir. 2016) (citing with approval
decisions from several circuit courts of appeal that uniformly reject granting certification after
the issuance of an adverse ruling).
Federal courts in diversity cases apply the law of the forum state. Erie Railroad Co. v.
Tompkins, 304 U.S. 64, 75 (1930). Where there is no case law from the forum state which is
directly on point, the district court attempts to do as the state court would do if confronted with
the same fact pattern. Wilson v. Ford Motor Co., 656 F.2d 960 (4th Cir. 1981); Empire
Distributors of N.C. v. Schieffelin & Co., 859 F.2d 1200, 1203 (4th Cir. 1988); Doe v. Doe, 973
F.2d 237, 240 (4th Cir. 1992). Only if the available state law is clearly insufficient should the
court certify the issue to the state court. Smith v. FCX, Inc., 744 F.2d 1378, 1379 (4th Cir. 1984),
cert. denied, 471 U.S. 1103 (1985). An Article III court sitting in diversity is equipped to opine
in this matter, and the court adequately did so.
IV.

CONCLUSION

Based on the foregoing, the court DENIES Poly-Med’s Motion to Certify Order for
Interlocutory Appeal and to Stay the Proceedings, or in the Alternative, to Certify a Question of
State Law to the South Carolina Supreme Court and to Stay (ECF No. 257).

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IT IS SO ORDERED.

United States District Judge
May 29, 2018
Columbia, South Carolina

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