Braun et al v. Medtronic Sofamor Danek et al

Filing 228

MEMORANDUM DECISION and ORDERdenying as moot 224 Motion for Resetting the Trial Date. See Order for additional details and deadlines. Signed by Judge Robert J. Shelby on 05/01/2013. (tls)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

JOHN T. BRAUN, M.D.,
Plaintiff,

MEMORANDUM DECISION
AND ORDER

vs.

MEDTRONIC SOFAMOR DANEK, INC.,

Case No. 2:10-cv-1283

Defendant.

On September 20, 2012, Defendant Medtronic Sofamor Danek, Inc. (Medtronic) filed a
Motion to Amend or Correct its Answer in the above-captioned matter (Dkt. No. 66).
Medtronic sought leave to add two affirmative defenses and three counterclaims, the gravamen of
which was an allegation that Plaintiff John T. Braun, M.D., does not own the rights to the
invention that he disclosed and licensed to Medtronic. On January 2, 2013, the Honorable Dustin
B. Pead issued an Order denying Medtronic’s Motion as untimely (Dkt. No. 152). Medtronic
objected to the Magistrate Judge’s ruling and the court took up the matter at a hearing on January
30, 2013. The court also heard argument on a number of additional objections filed by both
parties to other aspects of Judge Pead’s Order.
The court overruled every objection to Judge Pead’s decision except for Medtronic’s
Objection to the denial of its Motion to Amend, which the court took under advisement. The
court ordered the parties to submit further briefing on a number of issues related to this matter,
including the proper standard of review that the court should apply, the facts in the record that

support the parties’ respective positions, and any arguments the parties wished to make about
whether Medtronic’s additional counterclaims and defenses would be futile.
The court has carefully considered this additional briefing, as well as the record before
Judge Pead. Based on these materials, and for the reasons stated below, the court SUSTAINS
Medtronic’s Objection to Judge Pead’s decision and GRANTS Medtronic leave to amend its
Complaint to add the requested defenses and counterclaims.
BACKGROUND
I.

Procedural History
This lawsuit involves a dispute between Dr. Braun and Medtronic over a licensing

agreement that the parties entered into concerning Dr. Braun’s concepts for the fusionless
treatment of scoliosis.1 Dr. Braun recorded his ideas at 12:01 a.m. on October 1, 1999, which
was the day after his discharge from the Air Force on September 30, 1999. Medtronic seeks
leave to amend its Answer to include two new defenses and three new counterclaims that address
the question of ownership of Dr. Braun’s inventions. Medtronic’s position is that Dr. Braun did
not correctly represent to Medtronic that he was the sole owner of “all right, title and interest in
and to the Licensed Patents” because he developed his inventions while working for the Air
Force. Medtronic’s thirty-eighth defense would assert that Dr. Braun’s claims are barred because
of a breach of express warranties with Medtronic; the thirty-ninth defense would assert that Dr.
Braun did not own the rights to the concepts he disclosed to Medtronic. The three new
counterclaims include: (1) breach of express warranties because the Air Force, and not Dr.
1

The court notes that the parties variously refer to Dr. Braun’s concepts as the “Invention”
or the “Concepts.” The court makes no distinction between these terms since this opinion does
not address the status of Dr. Braun’s ideas.
2

Braun, owned the inventions at the time Dr. Braun licensed them to Medtronic; (2) declaratory
judgment holding that the Air Force, and not Dr. Braun, is the lawful owner of the inventions;
and (3) declaratory judgment finding that there has been a failure of consideration under the
parties’ license agreement since Dr. Braun did not own the inventions.
Judge Pead denied Medtronic’s Motion on the grounds that the amendment was untimely
because it was filed over six months after the deadline to amend pleadings had passed. (Order,
Jan. 2, 2013, at 17, Dkt. No. 152.) Judge Pead reached his decision after finding that Medtronic
knew or should have known about Dr. Braun’s work in the Air Force. The Magistrate Judge
cited a deposition of Troy Drewry, who was the Senior Product Development Engineer at
Medtronic. Judge Pead found that, in both his deposition and in letters to Dr. Braun, Mr. Drewry
demonstrated knowledge that Dr. Braun was working for the Air Force when Medtronic
contacted him to discuss his work. As a result, Judge Pead found that Medtronic “knew or at
least should have known as of September 1999 of Dr. Braun’s work in the Air Force.” (Id.)
While Medtronic argued that it filed its Motion shortly after receiving a number of handwritten
notes from Dr. Braun in discovery, Judge Pead was not persuaded by Medtronic’s stated reason
for the delay because he found that there was “no demonstrable link between Dr. Braun’s
undated notes and his time in the Air Force.” (Id.) Judge Pead did note some concern about the
timing of Dr. Braun’s documentation of his invention, but concluded that Medtronic still should
have known about the possible ownership issues: “While the court shares some wariness
regarding Dr. Braun’s 12:01 a.m. epiphany the morning after his discharge, the inferences
stemming therefrom should have at that time prompted Medtronic’s awareness of the ownership
issues.” (Id.)
3

II.

Factual Background
The parties submitted briefing on the facts present in the record that provide evidence

concerning what Medtronic knew in September 1999 about Dr. Braun’s work at the Air Force.
These facts include the letters and deposition testimony from Troy Drewry that Judge Pead
discussed in his Order. In addition, Dr. Braun cites the deposition of Hugh Shaum, Medtronic’s
area sales manager for Utah in 1999, who testified that he believed that Dr. Braun began work at
the University of Utah “when his tour was up” in the Air Force. (Shaum Dep. 80:24-81:16, Ex.
D to Dkt. No. 188.) And Mike Sherman, Medtronic’s former head of technology development,
testified that Medtronic had a due diligence process in place to “vet whether or not the
[intellectual property] was available for acquisition and whether there were other encumbrances
on it.” (Sherman Dep. 24:10-18, Ex. C to Dkt. No. 188.)
Medtronic emphasizes that it did not know the precise end date of Dr. Braun’s
employment with the Air Force until it received Dr. Braun’s answers to discovery. Medtronic
alleges that Dr. Braun disclosed his discharge date in response to the interrogatories that he was
served on June 11, 2012. (See Pl.’s Resp. to Def.’s First Discovery Requests, Ex. A to Dkt. No.
197.) In addition, Medtronic cites portions of Dr. Braun’s deposition that discuss his motivation
to write down his ideas before he began work at the University of Utah. (Braun Dep. 80:2581:23, Ex. C to Dkt. No. 197.)
The parties provided a summary of the content of the undated handwritten notes that
Medtronic alleges were created during Dr. Braun’s time in the Air Force. The court will discuss
these notes in its analysis below. Finally, Dr. Braun submitted a Declaration from Michael
Camara, the Chief of the Reserve Service Programs for the United States Air Force Reserves,
4

who stated that “Dr. Braun did not have any further obligation to the Air Force of any kind after
September 30, 1999.” (Camara Decl. ¶ 4, Ex. C to Dkt. No. 148.)
ANALYSIS
I.

Standard of Review
Under Rule 72 of the Federal Rules of Civil Procedure, a district judge, upon receiving an

objection to a non-dispositive pretrial ruling, must “modify or set aside any part of that order that
is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a). In contrast, when considering
an objection to a dispositive pretrial ruling, the district court must review the ruling using a de
novo standard of review. Fed. R. Civ. 72(b). The parties agree that many motions to amend a
complaint are not dispositive. See Doe v. Nevada Crossing, 920 F. Supp. 164, 165-66 (D. Utah
1996). But the parties also agree that the Tenth Circuit has not directly addressed whether this
specific type of motion, namely a motion to amend an answer to add an affirmative defense or a
counterclaim, is “dispositive” under Rule 72. Dr. Braun argues that the court should review
Judge Pead’s decision for abuse of discretion. But Medtronic asserts that Judge Pead’s ruling is
dispositive because it would have the effect of permanently barring Medtronic’s proposed
counterclaims. As a result, Medtronic contends that the court must review Judge Pead’s Order
de novo.
Both parties point to cases supporting their position that were decided by district courts in
other circuits. In Credit Suisse First Boston, LLC v. Coeur D’Alene Mines Corp., 2005 WL
323714 (S.D.N.Y. Feb. 10, 2005), the United States District Court for the Southern District of
New York applied a clearly erroneous standard to a magistrate judge’s decision on a defendant’s
motion for leave to amend its answer to assert an additional affirmative defense and five
5

counterclaims. In contrast, the United States District Court for the Southern District of
Mississippi applied a less deferential standard of review2 to a magistrate judge’s decision and
concluded that the magistrate judge had not appropriately considered the requirement that a party
be allowed to amend when justice so requires. Hunt Energy Corp. v. Crosby-Mississippi
Resources, Ltd., 732 F. Supp. 1378 (S.D. Miss. 1989). Accordingly, the Mississippi District
Court reversed the magistrate judge’s decision.
Recognizing that the law is somewhat unclear on this question, both parties have
attempted to draw meaningful distinctions between cases with conflicting outcomes. Dr. Braun
argues that, when courts have found that denial of leave to amend is dispositive, they have done
so only when the magistrate judge’s ruling is based on futility. Courts applying this reasoning
state that “by declaring a proposed amendment futile, the magistrate judge has effectively
engaged in the Rule 12(b)(6) analysis and has decided the amendment fails to state a claim, thus
making the decision dispositive.” Hall v. Norfolk Southern Railway Co., 469 F.3d 590, 595 (7th
Cir. 2006) (rejecting this position, but summarizing a line of opinions from other circuits to the
contrary). Dr. Braun contends that because Judge Pead based his decision on the timeliness and
not the futility of Dr. Braun’s amendment, the court should find that his decision was not
dispositive.
Medtronic disagrees and argues that the court must decide whether a given motion is

2

Dr. Braun argues that the Mississippi court did not apply a de novo standard, but simply
decided that the court was “not constrained to be quite as deferential to the magistrate’s ruling as
it would ordinarily be.” Hunt Energy Corp., 732 F. Supp. at 1390, n. 18. But whether the
standard of review that the Mississippi court applied is properly characterized as de novo or
simply less deferential, the court’s decision still resulted in a reversal of the magistrate judge’s
decision.
6

dispositive by focusing on the effect of the magistrate judge’s decision. To support its position,
Medtronic cites a Tenth Circuit opinion holding that a magistrate judge’s order on a motion for
sanctions that struck the plaintiff’s pleadings should be reviewed under a de novo standard
because the sanction order was dispositive: “Motions not designated on their face [as dispositive]
are nevertheless to be treated as such a motion when they have an identical effect.” Ocelot Oil
Corp. v. Sparrow Indus., 847 F.2d 1458, 1462 (10th Cir. 1988). Similarly, the Tenth Circuit held
that a magistrate judge’s decision to remand a case was dispositive because, “insofar as
proceedings in the federal court are concerned, the order is the functional equivalent of an order
of dismissal. . . .” First Union Mortg. Corp. v. Smith, 229 F.3d 992 (10th Cir. 2000). Medtronic
contends that, since it cannot assert its claims elsewhere,3 Judge Pead’s decision has a dispositive
effect and should be treated as such.
Medtronic also argues that Judge Pead went beyond a traditional timeliness analysis when
he resolved disputed issues of fact concerning what Medtronic knew or should have known about
Dr. Braun’s ownership status in 1999. According to Medtronic, Judge Pead’s analysis more
closely resembles a futility determination, since many of the arguments that Dr. Braun makes
about the futility of Medtronic’s amendments hinge on the question of when Medtronic knew or
should have known about the evidence supporting its counterclaims. As a result, Medtronic
argues that the court should review Judge Pead’s Order de novo, even if the court is convinced by
Dr. Braun’s proposed distinction between motions to amend that are denied as untimely and
those that are denied as futile.
3

The court agrees with Medtronic that its counterclaims are compulsory under Rule 13 of
the Federal Rules of Civil Procedure since they “arise[] out of the transaction or occurrence that
is the subject matter” of Dr. Braun’s claims. Fed. R. Civ. P. 13(a).
7

The court finds the weight of authority on this question of unsettled law to be slightly in
Medtronic’s favor. The court agrees with Medtronic that, in both Ocelot Oil and First Union
Mortgage, the Tenth Circuit focused on the effect that a magistrate judge’s ruling had on a given
motion and not on the form of that motion. Here, the court finds that the effect of Judge Pead’s
ruling is clearly dispositive because his decision would bar the assertion of Medtronic’s
compulsory counterclaims. See Doelle v. Mt. States Tel. & Tel., 872 F.2d 942, 946 (10th Cir.
1989) (holding that a compulsory counterclaim “must be raised before the current tribunal or be
forever lost to the claimant”). As a result, the court reviews Judge Pead’s Order de novo. But
given the uncertainty in the law on this issue, the court notes that its decision is not dependent on
the standard of review that the court applies. For the reasons stated below, the court would
sustain Medtronic’s Objection even if the court applied a more deferential standard of review.
II.

Timeliness of Medtronic’s Proposed Amendment
Rule 15 of the Federal Rules of Civil Procedure provides that leave to amend “shall be

freely given when justice so requires.” Fed. R. Civ. P. 15(a). Reasons that a court may deny
leave to amend include, among others, “undue delay, bad faith or dilatory motive on the part of
the movant, . . . undue prejudice to the opposing party by virtue of allowance of the amendment,
[and] futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962). The Tenth Circuit has
found that “untimeliness alone is a sufficient reason to deny leave to amend.” Frank v. U.S.
West, Inc., 3 F.3d 1357, 1365-66 (10th Cir. 1993). But in instances where timeliness is the only
factor at play, a court should “focus[] primarily on the reasons for the delay.” Minter v. Prime
Equipment Co., 451 F.3d 1196, 1206 (10th Cir. 2006). Denial of leave to amend is appropriate
“when the party filing the motion has no adequate explanation for the delay.” Frank, 3 F.3d at
8

1365-66.
The court agrees with Judge Pead that Medtronic did not provide an adequate explanation
for the delay on the basis of Dr. Braun’s undated handwritten notes that were uncovered during
discovery. The court has carefully considered the evidence that allegedly supports Medtronic’s
contention that the notes were created during Dr. Braun’s time in the Air Force. This evidence
includes the similarity between the notes and Dr. Braun’s later disclosure to Medtronic, as well
as the references in the notes to patients that Dr. Braun treated and work that he performed while
in the Air Force. While these facts do provide some support for Medtronic’s allegation that Dr.
Braun wrote the notes while working for the Air Force, the evidence is simply not strong enough
to explain why these undated documents suddenly caused Medtronic to realize that Dr. Braun
may have breached his ownership warranty. If Medtronic already knew that Dr. Braun started
work at the University immediately after his discharge from the Air Force, then Medtronic should
have been aware of the potential ownership issues at the time that Medtronic filed its Answer.
And if Medtronic was unaware of these issues, then it must have thought there was some gap
between the two periods of Dr. Braun’s employment. Dr. Braun could have written the undated
notes during this gap just as easily as he could have written them while he was working for the
Air Force. Accordingly, the disclosure of these notes during discovery does not justify
Medtronic’s delay in filing its motion.
But Medtronic emphasizes a second reason for its delay that the court finds more
compelling. Medtronic argues that it was not until it received Dr. Braun’s answers to
Medtronic’s First Set of Interrogatories that Medtronic learned that Dr. Braun was discharged
from the Air Force on September 30, 1999. Without this knowledge, the fact that Dr. Braun
9

recorded his invention at one minute after midnight on October 1, 1999, simply seems quirky.
But given the context of his discharge date, Dr. Braun’s actions are much more plausibly the
result of a deliberate calculation to avoid ownership issues. The disclosure of this discharge date
during discovery provides an adequate explanation for Medtronic’s delay in seeking leave to
amend its Answer.
None of the evidence provided by Dr. Braun sufficiently establishes that Medtronic knew
or should have known that the gap between his two periods of employment was so small. While
Mr. Shaum testified that he believed that Dr. Braun began work at the University of Utah “when
his tour was up” in the Air Force, this statement does not establish that Medtronic knew that Dr.
Braun did not have even a day’s gap between employment. Medtronic may have plausibly
believed that Dr. Braun spent several weeks or months between jobs, during which time he could
have come up with the ideas for his invention. Similarly, Mr. Drewry’s letter of September 30,
1999, mentions Dr. Braun’s future employment at the University, but does not provide any
indication that Mr. Drewry believed that Dr. Braun was still working for the Air Force at the
time. Because it is plausible that Medtronic did not realize until discovery that there was a
strange coincidence between Dr. Braun’s date of discharge from the Air Force and the date on
which he recorded his invention, the court finds that Medtronic’s Motion to Amend or Correct its
Answer was timely. Medtronic filed its motion while discovery was ongoing and has provided
an adequate explanation of why it did not seek leave to amend until six moths after the deadline
to amend pleadings had passed.
Judge Pead shared “some wariness regarding Dr. Braun’s 12:01 a.m. epiphany the
morning after his discharge,” but held that “the inferences stemming therefrom should have at
10

that time prompted Medtronic’s awareness of the ownership issues.” (Order, at 17, Dkt. No.
152.) But Judge Pead did not address the impact of Medtronic’s assertion that it did not learn of
Dr. Braun’s discharge date until discovery. It is unclear if Judge Pead considered this argument
but found it unpersuasive or if Medtronic failed to highlight its argument in front of Judge Pead
with the same force that it has done so in front of this court. The court notes that Medtronic did
not emphasize the discharge date realization in its briefing in front of Judge Pead. But given that
these facts are in the record—namely, the disclosure of Dr. Braun’s discharge date in response to
the First Set of Interrogatories and an absence in the record of any information showing that
Medtronic was previously aware of this date—the court finds that Medtronic may properly
emphasize this point in its Objection to Judge Pead’s Order.
Because the court finds that the issue involving the exact timing of Dr. Braun’s discharge
date is of great importance to the question of what Medtronic knew or should have known when
it filed its Answer, the court would normally remand this issue to the Magistrate Judge for
consideration of this information. But given that almost seven months have already passed since
Medtronic first filed its Motion to Amend or Correct, the court finds that the interests of justice
require the court to resolve the issue itself to prevent any further delay. In any event, and as
discussed above, the court believes that the law requires it to conduct a de novo review of the
material in the record, thereby obviating the need to first seek a more complete record from the
Magistrate Judge.
The court has considered a number of other factors in support of its decision to sustain
Medtronic’s Objection. First, the court has not found any evidence that Medtronic’s delay was
caused by bad faith or a dilatory motive. Instead, Medtronic has provided a reasonable
11

explanation of why it realized during discovery that it could assert its proposed counterclaims
and defenses. As discussed below, the court also finds that Medtronic’s proposed counterclaims
are not futile. Most importantly, the court finds that there are too many issues of disputed fact to
resolve an issue of such importance to the case at this stage. Dr. Braun is of course free to
reassert at summary judgment or at trial his contention that Medtronic knew or should have
known about any potential ownership issues in 1999. Dr. Braun may well be successful on this
point. But the court finds that it would be premature to decide these questions now. Instead,
justice requires that Medtronic be allowed a chance to test its disputed factual assertions about
what it knew and when.
III.

Futility of Medtronic’s Proposed Amendment
Even if Medtronic’s amendment is timely, the court must still consider whether it could

survive a motion to dismiss. Dr. Braun contends that Medtronic’s motion is futile under five
different theories.
A. Equitable Estoppel and Statute of Limitations
First, Dr. Braun argues that Medtronic is equitably estopped from asserting that Dr. Braun
does not own his invention. Second, he contends that any counterclaim by Medtronic or other
claim by a third-party related to Dr. Braun’s ownership interest is barred by the statute of
limitations. The court is not persuaded by either of these arguments because they both turn on
the question of whether Medtronic knew in 1999 that Dr. Braun may have come up with his
invention while he was in the Air Force. As discussed above, the facts surrounding this question
are in dispute and deserve to be tested at summary judgment or at a trial.

12

B. Air Force Ownership of the Invention
Third, Dr. Braun contends that Medtronic cannot assert the purported rights of the Air
Force to Dr. Braun’s invention. Dr. Braun argues that Medtronic has improperly interpreted
Executive Order No. 10,096, which determines the allocation of rights to inventions made by
government employees. See Zacharin v. United States, 1997 WL 63177, at *6 (Fed. Cir. Feb. 14,
1997) (“[T]he Executive Order provides the exclusive means for determining ownership rights in
inventions made by government employees.”). As codified under 37 C.F.R. § 501.6, the Order
provides that the government “shall obtain” the rights to any invention made by a government
employee:
(i)

During working hours, or

(ii)

With a contribution by the Government of facilities, equipment, materials,
funds or information, or of time or services of other Government
employees on official duty, or

(iii)

Which bears a direct relation to or is made in consequence of the official
duties of the inventor.

37 C.F.R. § 501.6(a)(1). The second section of this provision states that, in cases where the
application of the above criteria do not justify an assignment of all rights and interest in an
invention to the government, “the Government agency concerned shall leave title to such
invention in the employee, subject however, to the reservation to the Government of a
nonexclusive, irrevocable, royalty-free license in the invention with power to grant licenses for
all governmental purposes.” 37 C.F.R. § 501.6(a)(2).
The third section of this provision provides a presumption about whether the first section
or second section should apply to a given invention. 37 C.F.R. § 501.6(a)(3). Finally, the fourth

13

section states:
In any case wherein the Government neither:
(i)

Obtains the entire right, title and interest in and to an invention pursuant to
the provisions of paragraph (a)(1) of this section nor

(ii)

Reserves a nonexclusive, irrevocable, royalty-free license in the invention,
with power to grant licenses for all governmental purposes, pursuant to the
provision of paragraph (a)(2) of this section,

the Government shall leave the entire right, title and interest in and to the
invention in the Government employee, subject to law.
37 C.F.R. § 501.6(a)(4).
The regulation is unclear as to whether it is self-executing or whether the United States
must initiate some action to obtain ownership over an employee’s invention. While the first and
third sections of the regulation suggest that the United States “shall obtain” presumptive
ownership over certain types of inventions, the fourth section suggests that the United States
must perform at least some action to obtain this ownership. If it does not, the United States
“shall leave” the ownership rights to the employee. The Air Force procedures implementing this
regulation that are cited by both parties do not clear up the matter. Rather, the procedures
delineate authority within the Air Force related to intellectual property but do not establish the
legal effect of Executive Order No. 10,096 on inventions for which the United States has not
asserted an ownership claim.
In any event, the application of the Air Force’s procedures depends to some degree on the
disputed factual matter of whether Dr. Braun came up with his invention while he was a
government employee. The Air Force may not have any notice that it has a possible ownership
claim over Dr. Braun’s ideas, and Dr. Braun has not established that any applicable statute of
14

limitations has already run on a claim the Air Force may later wish to assert. As a result,
Medtronic’s breach of express warranty claim is a live issue.
The court also finds that it would be premature to dismiss Medtronic’s declaratory
judgment claims on these grounds. The position of the United States on these issues is unclear,
including its position on whether Executive Order No. 10,096 is self-executing, whether it
believes it has an enforceable ownership interest in Dr. Braun’s ideas, or whether it believes that
it has forfeited any rights it may have once had. Accordingly, it is too soon to know whether
Medtronic is barred from asserting Air Force ownership of the invention due to the failure of the
United States to take any action to establish its interest.
C. Medtronic’s Damages
Fourth, Dr. Braun argues that Medtronic has not suffered any damages and that its breach
of warranty claim is therefore barred. But as discussed above, Dr. Braun has not convinced the
court that it is impossible for the United States to assert an ownership interest in Dr. Braun’s
invention at some time in the future. While Medtronic may find it difficult to show exactly how
the value of the ideas it acquired has dropped due to the disputed ownership issues, it should not
be precluded from making its case on this point. In addition, Medtronic argues that it was
damaged by paying licensing fees for an invention that may not have been owned by the person
who provided the warranty of ownership. These damages are far less speculative, and Medtronic
has therefore properly alleged that it has suffered loss from Dr. Braun’s alleged breach of express
warranties.
D. Failure to Join Indispensable Parties
Finally, Dr. Braun contends that both the Air Force and Warsaw Orthopedic (Warsaw), an
15

affiliate of Medtronic, are indispensable parties and that Medtronic’s claims should be dismissed
under Rule 12(b)(7) of the Federal Rules of Civil Procedure for failure to join a party.
The court has discussed above why it is still unclear whether the Air Force must be a
party to the litigation in order to assert its rights. If, for example, the United States obtains
presumptive ownership rights over inventions made by government employees in the
circumstances discussed in Executive Order No. 10,096, then it appears that the court may grant
Medtronic’s requested relief without the addition of the Air Force to the lawsuit. While
Medtronic’s likelihood of success on its claims may be lessened by its failure to join the Air
Force, its claims are not precluded.
The court is more concerned about Medtronic’s failure to join Warsaw. In 2002, Dr.
Braun and three other Medtronic employees who were named as co-inventors on the patent
assigned their ownership rights to SDGI, an affiliate of Medtronic that was later merged into
Warsaw. (See Assignment, Ex. K to Dkt. No. 147.) Warsaw is now listed as the owner of the
patent. (See Patent, Ex. J to Dkt. No. 147.) Dr. Braun contends that the court cannot adjudicate
any ownership rights concerning the patent without Warsaw’s participation.
Medtronic responds that it is not asserting any ownership claim, but instead merely seeks
to show that Dr. Braun breached his warranties. But the court cannot see how it can hold that Dr.
Braun breached these warranties without holding that the ownership of the patent is at least in
question. Since it seems axiomatic that Warsaw, as the current owner of the patent, would wish
to retain its ownership interest clear of any future litigation from the Air Force, the court is not
convinced by Medtronic’s position that a ruling in its favor on its breach of warranties claim
would not have any effect on Warsaw’s ownership rights. In any event, Medtronic has also
16

moved the court for leave to add a counterclaim for declaratory judgment finding that the Air
Force, and not Dr. Braun, is the owner of his invention. Such a ruling would certainly affect
whatever rights Warsaw has in the patent.
Dr. Braun argues that the court should dismiss Medtronic’s claims because joinder of
Warsaw is infeasible. Before SDGI merged with Warsaw, SDGI was already a party to this
lawsuit in a separate claim that was dismissed by stipulation. Dr. Braun contends that principles
of res judicata and collateral estoppel would preclude SDGI and Warsaw from rejoining the suit.
The court disagrees. Medtronic’s proposed counterclaims and defenses are entirely distinct from
the claim that was earlier dismissed, which related to a separate contract and a separate device.
As a result, the court may order joinder of Warsaw under Rule 19(a)(2) of the Federal Rules of
Civil Procedure.
Dr. Braun also maintains that this joinder would be highly prejudicial because he has not
been able to conduct any discovery of Warsaw. The court does not see what discovery would be
necessary, since the court’s main concern in requiring joinder of Warsaw to the lawsuit is that, if
it wishes, Warsaw should be allowed to argue that Dr. Braun was the true owner of the invention
before the court issues a ruling that could dispute this assertion and thereby affect the value of
Warsaw’s patent. The court will, however, allow Dr. Braun to submit a request for additional
discovery of Warsaw if he includes a succinct and compelling reason why such discovery should
be allowed. Dr. Braun should submit his request according to the schedule for other discovery
requests described below.
IV.

Undue Prejudice and Delay
The court finds that, at the time Medtronic filed its motion, its proposed amendment
17

would not have subjected Dr. Braun to any undue prejudice. The parties were still engaged in
discovery and Dr. Braun would have had ample time to conduct any necessary additional
discovery. But given that the parties are now moving towards the deadline for filing dispositive
motions, the court is concerned about prejudice to Dr. Braun at this stage. Dr. Braun argues that
the court’s decision will require additional depositions and discovery from previously deposed
witnesses, Air Force personnel, and Warsaw Orthopedic. The court agrees that its decision will
force new burdens on Dr. Braun, but the court must balance any prejudice to Dr. Braun with the
prejudice that Medtronic would face if the court denied it leave to amend for a reason that was
not in Medtronic’s control. The delay over the past eight months has not been caused by
Medtronic, but by the significant caseloads faced by Judge Pead and the undersigned, who are
both newly appointed judges. Additionally, Dr. Braun has been on notice since September 20,
2012, that Medtronic was attempting to assert these claims and defenses. As a result, the court
will allow Medtronic to amend its Answer.
At the hearing on Medronic’s Objection, Medtronic represented to the court that only
limited additional discovery would be necessary if the court were to sustain its Objection. While
the court desires to maintain the deadline for filing dispositive motions, the court is aware that
Dr. Braun may feel that he cannot adequately obtain the additional discovery he needs by that
time. Accordingly, the court orders each party to submit within fourteen days from the date of
this Order a concise list of any additional requested discovery, as well as any requests for an
amendment to the current scheduling order. The parties should include a requested date for trial.
On March 27, 2013, the court vacated the current trial setting on October 21, 2013, but the court
has kept that date available on its calendar if the parties wish to proceed to trial as originally
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scheduled. The court will look to Dr. Braun for guidance on the trial schedule.
To minimize additional burdens on Dr. Braun, the court is inclined to adopt the strategy
used by the United States District Court in the Southern District of Mississippi in the case that
Medtronic cited to the court in support of its argument that the court should apply a de novo
standard of review to Judge Pead’s decision. In that case, the court allowed the defendants to add
a counterclaim but held that,
in granting the relief requested by the plaintiff, [the court] is relying in part on the
representation by defendants that the need for discovery on the matters raised in
the counterclaim is minimal, if there is any need at all, and will not unduly delay
the proceedings. To lessen any prejudice to plaintiff which may be caused by the
allowance of this amendment, the court is of the opinion that to the extent that
reasonable discovery is required, that discovery should be completed within fortyfive days of the entry of this order and shall be at defendants’ expense.
Hunt Energy Corp., 732 F. Supp. at 1390. The parties should bear in mind that the court is likely
to impose similar conditions on the additional discovery requested in this case.
CONCLUSION
For the reasons stated above, Medtronic’s Objection to Judge Pead’s Order is
SUSTAINED. The court GRANTS Medtronic leave to add its proposed affirmative defenses
and counterclaims to its Answer. The court ORDERS Warsaw Orthopedic, Inc., to be joined as a
notice party to this lawsuit. The court further ORDERS the parties to submit their requests for
any additional discovery or changes to the scheduling order, including a requested date for trial,
within fourteen days from the date of this Order. Because of the foregoing rulings, the court
DENIES AS MOOT Dr. Braun’s Motion for Resetting the Trial Date (Dkt. No. 224).

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SO ORDERED this 1st day of May, 2013.
BY THE COURT:

______________________________
ROBERT J. SHELBY
United States District Judge

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