Albritton v. Acclarent, Inc.
Filing
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Memorandum Opinion and Order: The Court GRANTS Acclarent's 26 Motion to Dismiss with respect to Dr. Albritton's claim for contributory infringement and DISMISSES that claim with prejudice. The Court DENIES Acclarent's 40 Motion for Leave to File a Supplemental Exhibit in Support of Motion to Dismiss. (Ordered by Chief Judge Barbara M.G. Lynn on 12/27/2017) (ykp)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
DR. FORD ALBRITTON, IV,
Plaintiff,
v.
ACCLARENT, INC.,
Defendant.
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Case No. 3:16-cv-03340-M
MEMORANDUM OPINION AND ORDER
Before the Court are (1) a Motion to Dismiss Plaintiff’s First Amended Complaint [ECF
#26], and (2) a Motion for Leave to File a Supplemental Exhibit in Support of Motion to Dismiss
[ECF #40], both filed by Defendant Acclarent, Inc. (“Acclarent”). For the following reasons, the
Motion for Leave to File a Supplemental Exhibit is DENIED, and the Motion to Dismiss is
DENIED in part, and GRANTED in part.
Background
The First Amended Complaint (“FAC”), which is the live pleading in this action and the
subject of Acclarent’s Motion to Dismiss, alleges Plaintiff Dr. Ford Albritton, IV (“Dr.
Albritton”) is a prominent ENT surgeon and an innovator in the field of nasal and sinus surgery.
FAC, ¶14. Acclarent is a medical device company that sells, among other things, balloon
sinuplasty devices, including the Relieva Spin® and SpinPlus® devices. Id., ¶¶8, 15. In 2006,
Dr. Albritton allegedly began working to develop a novel, surgical catheter device that could be
operated with a single hand. Id., ¶15. Acclarent allegedly learned of this invention and contacted
Dr. Albritton in 2007 to express interest in working with him to further develop the singlehanded surgical catheter and other medical devices. Id., ¶15. On June 12, 2007, Dr. Albritton and
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Acclarent executed a Mutual Non-Disclosure Agreement (“NDA”) to facilitate the sharing of
confidential information while the parties explored possible business opportunities of mutual
benefit. Id., ¶16; see also id., Ex. A. In 2008, the parties negotiated and signed a consulting
services agreement (“Consulting Agreement”), pursuant to which Dr. Albritton provided advice
and guidance to Acclarent employees on modifications and improvements to several Acclarent
products. Id., ¶¶25-27; see also id., Ex. F.
By this lawsuit, Dr. Albritton alleges that Acclarent breached the NDA and the
Consulting Agreement (1) by using his confidential information to develop Acclarent’s Relieva
Spin ® and SpinPlus ® devices; (2) by incorporating Dr. Albritton’s pre-existing intellectual
property into the patent applications that eventually issued as U.S. Patent No. 8,414,473 (“the
ʼ473 patent”); (3) by failing to identify Dr. Albritton as a co-inventor of the technology claimed
in the ‘473 Patent; and (4) by failing to assign Dr. Albritton all right, title, and interest in the ‘473
Patent. Dr. Albritton further alleges that Acclarent fraudulently induced him to sign both the
NDA and the Consulting Agreement and that Acclarent committed fraud because Acclarent
secretly used Dr. Albritton’s confidential information for its own purposes, including filing for
patent protection for its own benefit. Finally, Dr. Albritton alleges that Acclarent directly and
indirectly infringes his patent, U.S. Patent No. 9,011,412 (“the ‘412 patent”), by making and
selling the Acclarent Relieva devices, including the Relieva Spin® and the SpinPlus®.
Acclarent moves to dismiss on limitations grounds Dr. Albritton’s common law claims
for breach of the NDA, breach of the Consulting Agreement, fraudulent inducement, and fraud.
Acclarent further argues that Dr. Albritton’s claims regarding breach and fraudulent inducement
of the NDA should be dismissed because the NDA fails to protect the allegedly misused
information and because the FAC fails to identify with sufficient particularity the conduct that
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allegedly induced Dr. Albritton to sign the NDA. Finally, Acclarent argues that the FAC
establishes that the Acclarent Relieva devices do not infringe the ‘412 patent.
Dr. Albritton responds that his common law claims are not barred by the statute of
limitations because he adequately pleaded that Acclarent fraudulently concealed information that
would trigger the statute of limitations and that his fraudulent inducement and patent
infringement allegations are sufficient to state a claim for relief.
The Court held a hearing on Acclarent’s Motion to Dismiss on October 24, 2017, and the
parties filed supplemental briefs directed to various limitations issues. On November 9, 2017,
Acclarent filed a Motion for Leave to File pleadings submitted to the Patent Trial and Appeal
Board (“PTAB”) in support of its Motion to Dismiss. The issues have now been fully briefed and
argued, and both Motions are ripe for determination.
Legal Standards
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must have pled “a short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
In analyzing a motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court
accepts all well-pleaded facts as true and views them in the light most favorable to the plaintiff.
Thompson v. City of Waco, 764 F.3d 500, 502 (5th Cir. 2014); In re Katrina Canal Breaches
Litig., 495 F.3d 191, 205 (5th Cir. 2007). The Court will not, however “accept as true conclusory
allegations, unwarranted factual inferences, or legal conclusions.” Great Lakes Dredge & Dock
Co. LLC v. La. State, 624 F.3d 201, 210 (5th Cir. 2010).
A “complaint must contain sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.” Howe v. Yellowbook, USA, 840 F. Supp. 2d 970, 975 (N.D.
Tex. 2011) (Lynn, J.) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
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plausible on its face “when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Lone Star Nat.
Bank, N.A. v. Heartland Payment Sys., Inc., 729 F.3d 421, 423 (5th Cir. 2013) (quoting Highland
Capital Mgmt., L.P. v. Bank of Am., Nat’l Ass’n, 698 F.3d 202, 205 (5th Cir. 2012)). “Plausible”
does not mean “probable,” but it asks for “more than a sheer possibility that a defendant has
acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
556).
Claims sounding in fraud must also satisfy the heightened pleading standard set out in
Fed. R. Civ. P. 9(b), which requires a party “alleging fraud or mistake . . . [to] state with
particularity the circumstances constituting fraud or mistake.” United States ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009) (internal citation omitted). The Fifth Circuit has
interpreted Rule 9(b) to require, at a minimum, that a plaintiff set forth the “who, what, when,
where, and how” of the alleged fraud. United States ex rel. Thompson v. Columbia/HCA
Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (internal citation and quotation marks
omitted). However, the Fifth Circuit has also stated that the “time, place, contents, and identity
standard is not a straitjacket for Rule 9(b),” concluding that Rule 9(b) is context-specific and
flexible. Grubbs, 565 F.3d at 185.
Preliminary Matters
As a preliminary matter, Acclarent seeks leave to submit a copy of Dr. Albritton’s
response to Acclarent’s petition for inter partes review (“IPR”) of the ‘412 patent, for the
Court’s consideration in connection with Acclarent’s Motion to Dismiss Dr. Albritton’s patent
infringement claims. Acclarent contends the IPR Response filed with the PTAB is relevant to (1)
the claim construction proposed by Dr. Albritton and (2) a hypothetical question posed by the
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Court at the October 24, 2017, hearing regarding “creative” use. More specifically, Acclarent
argues Dr. Albritton’s assertion at the hearing that the ‘412 patent is infringed if the Relieva
devices are “capable of” manipulation of a working device with a thumb and forefinger is
inconsistent with his position in the PTAB proceeding that the ‘412 patent covers only products
that are “configured to” or “designed to” permit, and not merely “capable of” permitting,
manipulation of the working device with both the thumb and index finger.
Dr. Albritton argues that Acclarent’s request should be denied because it is procedurally
improper and substantively incorrect. Dr. Albritton contends that his arguments to this Court and
the PTAB are consistent and that Acclarent improperly conflates the concepts of inherent
anticipation, express anticipation, and literal infringement to show inconsistency.
Acclarent’s Motion is DENIED, and the Court will not consider Dr. Albritton’s PTAB
submission in the context of the pending Motion to Dismiss. The proffered material is not part of
the FAC, and thus is outside of the scope of the pleadings the Court considers under Fed. R. Civ.
P. 12(b)(6). See Scanlan v. Texas A & M Univ., 343 F.3d 533, 536 (5th Cir. 2003) (explaining
that district court must not go outside the pleadings in determining whether to grant a motion to
dismiss). As explained below, the Court declines to consider any claim construction arguments
or resolve any disputed issue of fact at this stage in the litigation.
Patent Claims
Direct Infringement
Acclarent argues Dr. Albritton’s claims for direct patent infringement must be dismissed
because the FAC does not plausibly allege that Acclarent’s Relieva devices infringe the ‘412
patent. More particularly, Acclarent argues that the ‘412 patent claims all require any infringing
product to be used to manipulate a “working device” (1) with “a thumb and index finger of the
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hand” (2) “via a portion of the working device immediately adjacent to the handle opening,” but
the FAC does not plausibly allege the Relieva devices practice these limitations. According to
Acclarent, the FAC fails to plausibly allege that someone using a Relieva device uses the thumb
and index finger to manipulate the working device portion of the invention. Instead, Acclarent
argues, its own marketing materials, which Dr. Albritton incorporated into the FAC as
illustrations, establish that only the thumb—and not the index finger—controls the working
device. Acclarent further argues that the FAC shows that the Relieva devices do not permit the
user “to manipulate the working device via a portion of the working device immediately adjacent
to the handle opening,” because the Relieva devices interpose implements (the Balloon Slider,
Wire Spinner, and Wire Slider) that slide in a track between the working device and the user’s
thumb and forefinger.
The FAC alleges, in pertinent part:
The structure of the Relieva Devices’ handle is adapted to permit the
operator to position a thumb and index finger of the hand to
manipulate the working device via a portion of the working device
immediately adjacent to the handle opening. For example, the
Relieva Spin marketing literature describes the “Balloon Slider” and
“Wire Spinner and Wire Slider,” as depicted below. Similarly, the
Relieva SpinPlus marketing literature describes an independent
“Balloon Slider” that allows for precise control of the balloon
catheter, and “Wire Spinner and Wire Slider,” described as “[an]
[e]longated tactile thumb wheel to easily gain thumb purchase and
navigate sinus anatomy.”
The Balloon Slider, Wire Spinner, and Wire Slider of the Relieva
Devices are manipulated by the operator’s thumb, the operator’s
forefinger, and the operator’s thumb and index finger
(simultaneously). Moreover, even when an operator uses the thumb
(as advertised) to manipulate the Balloon Slider or the Wire Slider,
the operator also uses his or her forefinger to apply oppositional
force and stabilizing force that is part of the manipulation of the
working device as illustrated below.
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The use of the thumb and other finger(s) to manipulate the working
device (including the Wire Slider) is further described in the Relieva
SpinPlus instructions for use:
The Handle features a Wire Slider, a Wire Spinner, a
Balloon Slider, a Sinus Balloon, Handle Markers,
and proximal connections. The Wire Slider allows
the user to advance, retract and spin the Sinus
Illumination System with a single hand while
simultaneously supporting the Handle. The Balloon
Slider allows the user to advance and retract the
Sinus Balloon Catheter (shown in Figure 2).
The “Balloon Slider” and “Wire Spinner and Wire Slider,” are
examples of a portion of the working device immediately adjacent
to the handle opening. The Balloon Slider, Wire Spinner, and Wire
Slider all travel along and abut an opening in the handle as depicted
[in incorporated marketing materials.]
FAC ¶¶121-24. Even after Twombly and Iqbal, a complaint is sufficient if it places the alleged
infringer on notice of the specific activity that is being accused of infringement. Lifetime Indus.,
Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017); see also K-Tech Telecomms., Inc. v.
Time Warner Cable, Inc., 714 F.3d 1277, 1284-87 (Fed. Cir. 2013) (holding that complaint
survives Rule 12(b)(6) challenge when it gives notice of what patentee accuses of being an
infringing act with reasonable inferences that such acts are being done). The facts set forth above
are sufficient to give Acclarent notice that Dr. Albritton contends the Relieva devices allegedly
can be manipulated with a thumb and index finger, in a manner that infringes the ‘412 patent.
The Court thus determines the FAC states a plausible claim for direct infringement.
Acclarent argues the marketing materials incorporated into the FAC fail to establish
infringement because they contradict Dr. Albritton’s succinct written allegations and depict the
Relieva Spin® and SpinPlus® as being operated with a thumb only. However, Dr. Albritton’s
infringement claims are not limited to the examples of the Relieva devices as depicted in the
FAC. Rather, the marketing materials are merely demonstrative. Dr. Albritton also brought a
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sample Relieva device to the hearing on October 24, 2017, as a demonstrative aid to show how
the accused device can be adapted to allow for direct manipulation by both a thumb and
forefinger, and thus show infringement. The Court is not basing its decision on any particular
example or demonstration. Rather, the Court’s decision is strictly limited to the allegations set
forth in the FAC, which plausible allege facts sufficient to infer that the Relieva devices can be
adapted to infringement. To the extent Acclarent argues that Dr. Albritton has misconstrued any
patent claim terms or that its Relieva devices actually do not infringe, the Court declines to
consider any claim construction arguments or resolve any disputed issue of fact on an
underdeveloped record at this stage in the litigation.
In the context of Acclarent’s Motion to Dismiss, the question is merely whether Dr.
Albritton’s claim is plausible in light of the allegations of the FAC, which must be accepted as
true. In view of this standard and the allegations of the FAC, the Court determines that Dr.
Albritton has alleged a plausible claim that Acclarent’s Relieva devices infringe the ‘412 patent.
Accordingly, Acclarent’s Motion to Dismiss is DENIED with respect to Dr. Albritton’s claims
for direct infringement.
Indirect Infringement
Dr. Albritton also asserts claims against Acclarent for indirect infringement. Specifically,
Dr. Albritton claims Acclarent both induces infringement and contributes to infringement
through the provision of marketing materials that cause health care professionals to use the
Relieva devices in a manner that infringes the ‘412 patent. Acclarent argues Dr. Albritton’s
claims for induced infringement must be dismissed because the FAC does not plead a plausible
claim for direct infringement, and because Acclarent’s marketing materials do not instruct users
to manipulate the working devices on the Relieva devices with their thumbs and forefingers, in a
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manner that infringes the ‘412 patent. Acclarent further argues that Dr. Albritton’s claim for
indirect infringement must be dismissed because the FAC reveals a substantial non-infringing
use that bars contributory infringement.
For Dr. Albritton’s induced infringement claim to survive Acclarent’s Motion to Dismiss,
the FAC must plead facts plausibly showing that Acclarent “specifically intended [another party]
to infringe [the patent] and knew that the [other party]’s acts constituted infringement.” See
Trim-Lok, 869 F.3d at 1381 (quoting In re Bill of Lading Transmission & Processing Sys. Patent
Litig., 681 F.3d 1323, 1339 (Fed. Cir. 2012)). With respect to Acclarent’s argument that Dr.
Albritton’s claims for indirect infringement fail because he failed to state a claim for direct
infringement, the Court determines, for the reasons already discussed, that the FAC alleges
sufficient facts to state a claim for direct infringement. The Court further determines that,
viewing the facts in a light most favorable to Dr. Albritton, the FAC alleges Acclarent’s
marketing materials instruct health care professionals to operate the Relieva devices with their
thumb and forefinger, in a manner that could infringe the ‘412 patent. This allegation is
sufficient to satisfy the requirement that Dr. Albritton allege Acclarent specifically intended
health care providers to infringe the ‘412 patent and knew that those provider’s use of the
Relieva devices, consistent with Acclarent’s instructions, constituted infringement.
The Court does not accept Acclarent’s assertion that “the threshold for establishing a
plausible inference of intent to induce infringement should be especially high” in this case
because the FAC also contains information that shows users could operate the Relieva devices in
a non-infringing manner, i.e., with their thumbs alone. The case Acclarent relies on for authority,
Vita-Mix Corp. v. Basic Holdings, Inc., 581 F.3d 1317 (Fed. Cir. 2009), does not establish a
heightened pleading standard for allegations of induced infringement. Rather, Vita-Mix stands
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for the proposition that a court may appropriately grant summary judgment if the plaintiff comes
forward with no evidence of intent, other than evidence that the defendant has actual knowledge
that some uses of its product may result in infringement. Vita-Mix, 581 F.3d at 1329. Acclarent’s
Motion to Dismiss is DENIED with respect to Dr. Albritton’s claims for induced infringement.
The Court comes to the opposite conclusion with respect to Dr. Albritton’s claims for
contributory infringement. A party contributorily infringes a patent if: (1) it sells or offers to sell
a material or apparatus for use in practicing a patented process; (2) that is material to practicing
the invention; (3) which has no substantial non-infringing uses; (4) and is known by the party “to
be especially made or especially adapted for use in an infringement of such patent.” In re Bill of
Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1337 (Fed. Cir. 2012)
(quoting 35 U.S.C. § 271(c)). To survive a motion to dismiss, a plaintiff must “plead facts that
allow an inference that the components sold or offered for sale have no substantial noninfringing uses.” Id. A substantial non-infringing use is one that is “not unusual, far-fetched,
illusory, impractical, occasional, aberrant, or experimental.” Vita-Mix, 581 F.3d at 1327-29. The
relevant inquiry is “whether the accused products can be used for purposes other than
infringement.” Bill of Lading, 681 F.3d at 1338. Although the FAC recites the Relieva devices
have no substantial non-infringing uses, see FAC ¶¶ 150, 151, 154, the FAC also incorporates
Acclarent marketing materials that show the Relieva devices have a non-infringing use, in that
the materials depict users manipulating the working device using their thumbs alone. Because the
FAC contains information that the Relieva devices can have non-infringing uses, the Court
concludes that Dr. Albritton has not stated a claim for contributory infringement against
Acclarent. See Bill of Lading, 681 F.3d at 1339 (affirming trial court’s dismissal of claim for
contributory patent infringement where allegations affirmatively established that accused
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products could be used for substantial non-infringing purposes); Sonrai Systems, LLC v. AMCS
Group Inc., 2017 WL 4281122, at *8 (N.D. Ill. 2017) (granting motion to dismiss contributory
infringement claims where plaintiff’s complaint revealed non-infringing uses). Accordingly, Dr.
Albritton’s claim for contributory infringement is DISMISSED.
Statute of Limitations
Choice of Law
Acclarent contends that Dr. Albritton’s claims for breach of the NDA, breach of the
Consulting Agreement, fraudulent inducement, and fraud are all barred by the applicable statutes
of limitations. Although Acclarent originally argued, and Plaintiff agreed, that Texas limitations
law applied to Dr. Albritton’s claim for breach of the NDA, and California limitations law
applied to his claim for breach of the Consulting Agreement, see Def. Br. [ECF #27] at 2 & 12,
Acclarent argued at the October 24, 2017, hearing that Texas limitations law applies to Dr.
Albritton’s claim for breach of the Consulting Agreement. The Court therefore must determine,
as a threshold matter, which State’s law provides the applicable limitations.
The NDA and the Consulting Agreement each contain a choice of law provision. The
NDA provides that Texas law governs the NDA, see FAC, Ex. A at 2; the Consulting Agreement
states that California law governs the Agreement, see id., Ex. F at ¶10.A. Both Texas and
California have four-year statutes of limitations for breach of contract claims. Compare Tex. Civ.
Prac. & Rem. Code §16.051 with Cal. Code Civ. P. §337. Texas law provides that a breach of
contract claim accrues for limitations purposes when the contract is breached. Stine v. Stewart,
80 S.W.3d 586, 592 (Tex. 2002). Under California law, a cause of action accrues “at the time
when the cause of action is complete with all of its elements.” Fox v. Ethicon Endo–Surgery,
Inc., 110 P.3d 914, 920 (2005). The simple fact that a party has breached a contract—without
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more—does not necessarily trigger the statute of limitations under California law. See Buschman
v. Anesthesia Business Consultants LLC, 42 F. Supp. 3d 1244, 1250 (N.D. Cal. 2014) (collecting
cases). Where monetary damages are an element of the offense, California courts have held that
the cause of action does not accrue until the plaintiff suffers a pecuniary loss. Id. Because the
FAC alleges that Dr. Albritton did not suffer a pecuniary loss immediately upon the initial
breach, the accrual date for Dr. Albritton’s claim for breach of the Consulting Agreement would
be different depending on whether Texas or California law applies.
The Court determines that Texas limitations law applies to Dr. Albritton’s claim for
breach of the Consulting Agreement. A federal court exercising diversity jurisdiction or
supplemental jurisdiction, which are the two bases for this Court’s jurisdiction over Dr.
Albritton’s state law claims, “is ordinarily bound to look to the choice of law rules of the state in
which it sits to determine whether the state courts of that state would apply their own state’s
statute of limitations or the statute of limitations of some other state.” Ellis v. Great
Southwestern Corp., 646 F.2d 1099, 1103 (5th Cir. 1981). In Texas, where parties contractually
agree to apply the law of another state, the courts apply the substantive law of the contractuallychosen state but apply the law of the forum state to matters of remedy and procedure. WesternSouthern Life Assurance Co. v. Kaleh, 193 F.Supp.3d 756, 771 (S.D. Tex. 2016). Under Texas
law, the statute of limitations is ordinarily a procedural issue. Id. Therefore, Texas limitations
law applies to Dr. Albritton’s claim for breach of the Consulting Agreement. Ultimately,
however, this choice of law is not determinative of limitations issue, because the Court concludes
the FAC survives dismissal, even under the more restrictive Texas standard.
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Analysis
The limitations period for each of Dr. Albritton’s claims for breach of the NDA, breach
of the Consulting Agreement, fraudulent inducement, and fraud is four years from when the
cause of action accrues. See Tex. Civ. Prac. Rem. Code § 16.051 (providing four-year statute of
limitation for contract claims); Tex. Civ. Prac. Rem. Code § 16.004(a)(4) (providing four-year
statute of limitation for claims based on fraud). Dr. Albritton filed this case on December 1,
2016. Therefore, any claim that accrued before December 1, 2012 is barred by limitations, unless
some exception to the statute of limitations applies.
Dr. Albritton invokes the fraudulent concealment exception to toll the statute of
limitations in this case. Fraudulent concealment is an equitable doctrine which tolls the statute of
limitations where a defendant conceals his unlawful conduct either by (1) failing to disclose his
wrongful conduct when there is a duty to disclose, or (2) lying about his conduct. Timberlake v.
A.H. Robins Co., 727 F.2d 1363, 1366 (5th Cir. 1984) (quoting Nichols v. Smith, 507 S.W.2d
518, 519 (Tex. 1974)); Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983); Arabian Shield
Development Co. v. Hunt Oil Co., 808 S.W.2d 577, 584 (Tex. App.—Dallas 1991, writ denied).
The fraudulent concealment doctrine requires that a plaintiff plead, and subsequently prove, that
(1) the defendant had actual knowledge of the facts giving rise to the plaintiff’s cause of action,
(2) the defendant concealed its unlawful conduct, and (3) the plaintiff failed, despite reasonable
diligence on his part, to discover the facts giving rise to his cause of action. Tex. v. Allen Constr.
Co., 851 F.2d 1526, 1528 (5th Cir. 1988); Timberlake, 727 F.2d at 1366.
Although Acclarent’s counsel acknowledged at the October 24, 2017, hearing that the
question of whether a party exercised reasonable diligence is generally a fact issue, Acclarent
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contends that the facts alleged in the FAC conclusively establish that Dr. Albritton did not
exercise reasonable diligence. Specifically, the FAC alleges:
On September 18, 2008, after meeting with Dr. Albritton and
unknown to Dr. Albritton, Acclarent filed provisional Patent
Application No. 61/098,157, which does not list Dr. Albritton as an
inventor. Acclarent’s provisional application misappropriates and
incorporates the ideas Dr. Albritton shared with Acclarent under the
protections of the NDA and the Consulting Agreement. The
provisional Patent Application No. 61/098,157 eventually issued as
U.S. Patent No. 8,414,473 (“the ʼ473 patent”).
FAC ¶30 (internal citations omitted). The PTO issued the ‘473 patent and published the patent
application that claimed priority to the ‘157 application, on April 22, 2010. See Def. Mot., Ex. 1
at 4. Acclarent thus contends that Dr. Albritton should have known of the facts underlying his
causes of action by April 22, 2010, at the latest, which is outside the statute of limitations.
However, the FAC also alleges that Acclarent’s employees told Dr. Albritton that Acclarent
would not use Dr. Albritton’s confidential information, that Dr. Albritton would be named a coinventor if Acclarent pursued his ideas, and that Acclarent did not wish to pursue Dr. Albritton’s
concept because it was commercializing its own distinct device. See FAC ¶¶ 15, 16, 23, 28, 48,
50, 51, 52. The FAC further alleges that, contrary to Acclarent’s representations, Acclarent filed
a provisional patent application that included Dr. Albritton’s ideas, without naming Dr. Albritton
as an inventor, and then concealed the fact of that filing from Dr. Albritton. Id. ¶¶ 91, 94, 100.
The Court concludes that the FAC sets forth sufficient allegations to plead that Acclarent
actively and fraudulently concealed its alleged misappropriation of Dr. Albritton’s confidential
information. Taking the FAC’s allegations as true, as the Court must in the context of a motion
to dismiss, Acclarent has not established as a matter of law that Dr. Albritton failed to act with
reasonable diligence, such that his claims should be dismissed on limitations grounds. The
allegations in the FAC are sufficient to invoke the exception to the statute of limitations at this
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early stage in the litigation. It may be that, in another procedural context, after discovery,
Acclarent can show that there is no question that Dr. Albritton failed to act with reasonable
diligence, but for now his claims survive.
Breach of the NDA
Acclarent also argues that Dr. Albritton’s claim for breach of the NDA fails because the
NDA does not cover the allegedly misappropriated information. Acclarent focuses on the NDA’s
definition of “Confidential Information,” which excludes “any information which . . . (ii)
becomes publicly known and made generally available after disclosure by the disclosing party to
the receiving party through no action or inaction of the receiving party.” FAC, Ex. A at ¶1. The
FAC alleges that Acclarent misappropriated information from, or that was otherwise reflected in,
the provisional patent application that resulted in the ‘412 patent. FAC ¶¶ 32-37. Thus, the
information that was reflected in the provisional application became publicly known and was
made generally available after disclosure by the disclosing party to the receiving party through
no action or inaction of the receiving party. That information would not qualify as Confidential
Information under the NDA.
However, the FAC also alleges that Dr. Albritton’s claim for breach of the NDA relates
to confidential information on Dr. Albritton’s tactile feedback mechanism that was not included
in the ‘412 patent. FAC ¶68. To the extent the allegedly misappropriated information relates to
the tactile feedback mechanism, that information is not excluded from the definition of
Confidential Information under the NDA. Acclarent argues, however, that any misappropriation
theory based on the tactile feedback mechanism fails because the FAC alleges that Dr. Albritton
shared information about the tactile feedback mechanism with Acclarent’s engineering team on
June 11, 2008, which is five days after the Consulting Agreement took effect. The Consulting
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Agreement contains an integration clause, providing that that Consulting Agreement “supersedes
all prior written and oral agreements between the parties” – including the NDA. Acclarent
contends that the NDA was not in effect on the date Dr. Albritton revealed the tactile feedback
mechanism to Acclarent and, therefore, information about the tactile feedback mechanism cannot
support a claim for breach of the NDA.
The FAC also alleges:
Between June 2007 and May 2008, Dr. Albritton disclosed information
related to his innovations, including (without limitation) the working
prototypes of the single-handed guide and catheter device developed by Dr.
Albritton, and later, a prototype containing Dr. Albritton’s novel
mechanism for providing improved tactile feedback to the surgeon through
contact with the guidewire.
FAC ¶19 (emphasis added). This allegation plausibly states that the disclosure of information
about the tactile feedback mechanism occurred prior to the June 6, 2008, effective date of the
Consulting Agreement, when the NDA was still in effect. The inclusion of the word “later” does
not preclude an inference that a protected disclosure occurred between May 2008 and June 6,
2008. Acclarent’s Motion to Dismiss is DENIED with respect to Dr. Albritton’s claim for breach
of the NDA based on any disclosure of the tactile feedback mechanism that occurred prior to the
June 6, 2008.
Fraudulent Inducement of the NDA
Finally, Acclarent argues that the FAC fails to state a claim for fraudulent inducement of
the NDA. Specifically, Acclarent challenges Dr. Albritton’s allegation that Greg Garfield, an
Acclarent employee, fraudulently induced Dr. Albritton to enter the NDA by “representing that
Acclarent would not use his confidential information for any improper purpose.” FAC ¶16.
Acclarent characterizes this allegation as conclusory and contends that it fails to meet the
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particularity standards of Rule 9(b) because it fails to identify the actual statement and state
exactly when and where this statement was made.
Dr. Albritton argues that, in addition to the allegation highlighted by Acclarent, the FAC
also alleges that Mr. Garfield expressed interest in working with Dr. Albritton in early 2007.
FAC ¶15. Dr. Albritton then insisted to Mr. Garfield that they execute an NDA before Dr.
Albritton shared his innovations. Id. ¶16. In response, Mr. Garfield agreed to enter the NDA,
allegedly representing that Acclarent would not use his confidential information for any
improper purpose. Id. ¶¶16, 91. The NDA was later executed on June 12, 2007. Id. ¶16. The
FAC also alleges that Acclarent “intended to use the NDA to gain access to Dr. Albritton’s
inventions, so that Acclarent could incorporate the innovative features created by Dr. Albritton in
its ‘next generation Guide Catheter.’” Id. ¶90. This sufficiently pleads the required “who, what,
when, and how” elements of a fraud claim.
Acclarent argues that Dr. Albritton’s claim for fraudulent inducement fails because it is
nothing more than a breach of contract claim masquerading as a fraud claim. Acclarent contends
that a mere failure to perform a contract cannot be evidence of fraud. While Acclarent’s assertion
is a correct statement of the law, it is not a complete statement. Under Texas law, “[a] promise to
do an act in the future is actionable fraud when made with the intention, design and purpose of
deceiving, and with no intention of performing the act.” Spoljaric v. Percival Tours, Inc., 708
S.W.2d 432, 434 (Tex. 1986); see also Formosa Plastics Corp. USA v. Presidio Engs. &
Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998) (holding a promise of future performance can
constitute an actionable misrepresentation, so long as the promise was made “with no intention
of performing at the time it was made”). The FAC pleads facts that support a fraudulent intent
not to perform, and thus states a claim for fraudulent inducement.
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Conclusion
For the reasons stated, the Court finds that Dr. Albritton’s First Amended Complaint sets
forth sufficient facts to survive dismissal on limitations grounds and to state claims for relief for
breach of contract, direct patent infringement, and inducement of infringement. Accordingly, the
Court DENIES Acclarent’s Motion to Dismiss [ECF #26] with respect to these claims. The
Court further finds that the First Amended Complaint incorporates Acclarent marketing materials
that show the Relieva devices can have a non-infringing use. Accordingly, the Court GRANTS
Acclarent’s Motion to Dismiss with respect to Dr. Albritton’s claim for contributory
infringement and DISMISSES that claim with prejudice.
The Court DENIES Acclarent’s Motion for Leave to File a Supplemental Exhibit in
Support of Motion to Dismiss [ECF #40].
SO ORDERED.
Dated: December 27, 2017.
__________________________
BARBARA M.G. LYNN
CHIEF JUDGE
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