133 A.3d 1176
Md. Ct. Spec. App.2016Background
- Dr. Michel Mirowski (through Mirowski Family Ventures, LLC — MFV) owned patents covering an implantable cardiac defibrillator (the ‘288 patent) and CRT technology (the ‘119 patent); Guidant (later acquired by Boston Scientific Corporation — BSC) held exclusive licenses under long‑standing license agreements (restated in 2004).
- The 2004 License Agreement granted BSC the right to bring and conduct suits but reserved MFV: (1) a “right to participate” in infringement litigation, (2) that BSC obtain “mutual agreement” with MFV to bring/conduct suits or settlements, and (3) equal division of litigation proceeds.
- Guidant/MFV jointly sued St. Jude in two suits (Indiana re: the ‘288 patent; Delaware re: the ‘119 patent). Appeals and remands produced mixed results; MFV and Guidant entered a 2004 Royalty Agreement pausing royalties pending appeal and specifying payment if validity/infringement were finally affirmed.
- BSC (after acquiring Guidant) negotiated and executed a settlement with St. Jude in July 2006 covering multiple matters; MFV claims it was deprived of its contractually reserved participation and mutual‑agreement rights and was shorted royalties under the 2004 Royalty Agreement for 2002–2003.
- MFV sued in Maryland state court after a related federal declaratory action in Indiana was dismissed for lack of jurisdiction. The Montgomery County jury awarded MFV (inter alia) $86.5 million in accrued royalties and ~$222 million for damages tied to BSC’s settlement conduct; the trial court had entered partial summary judgment that BSC breached MFV’s "right to participate."
Issues
| Issue | Plaintiff's Argument (MFV) | Defendant's Argument (BSC) | Held |
|---|---|---|---|
| Whether BSC breached MFV’s contractual “right to participate” by settling with St. Jude | BSC negotiated/settled in July 2006 without giving MFV opportunity to participate; MFV lacked knowledge of July talks | MFV had negotiated with St. Jude in June and knew BSC was negotiating; factual dispute exists about participation | Court affirmed partial summary judgment for MFV: undisputed timing facts showed MFV lacked knowledge of July negotiations; no genuine dispute on that provision |
| Construction and breach of the “mutual agreement” clause (must BSC obtain MFV’s agreement before settlement?) | “Mutual agreement” requires BSC to consult/advice MFV sufficiently to permit MFV to protect its interests; breach occurred if BSC settled without such consultation | Clause interpreted in Indiana as limited to obligation to bring suit (not conduct/settle); BSC contends clause inapplicable to settlement decisions | Court held the clause unambiguous as requiring consultation/advice enabling MFV to act; jury properly decided breach; trial court’s instruction appropriate |
| Admissibility and preclusive effect of MFV–St. Jude stipulation (validity/infringement of ‘119) and BSC’s ability to present St. Jude’s invalidity defenses | Stipulation is a settlement product, admissible and preclusive as to the Delaware litigation; binding on parties to that action | Stipulation arose from MFV–St. Jude settlement; BSC argues it did not approve/enter it and should be allowed to present invalidity defenses | Court held stipulation admissible (not barred by Md. Rule 5‑408) and, because BSC signed as a party to the Delaware action, preclusive effect applied; BSC nonetheless could present evidence about defenses, which the jury heard |
| Whether MFV was entitled to full accrued royalties for 2002–2003 under the 2004 Royalty Agreement (including overseas sales) | MFV: royalties had accrued under the license and Royalty Agreement; alternatively royalties due because products were covered/inducing infringement and because ~98% of devices practiced the method; overseas sales were royalty‑bearing under §271(f) as law then stood | BSC: MFV’s accrual argument relied on improperly admitted parol evidence; alternate theories raised patent issues requiring jury instructions; Federal Circuit later held §271(f) inapplicable to method claims so overseas sales are not covered; BSC is judicially permitted to change positions | Court upheld admission of parol evidence with limiting instruction and sustained the jury verdict. Court rejected BSC’s challenge to patent‑law instructions (no reversible error shown). Regarding overseas sales, the court applied contract law and judicial estoppel to bar BSC from denying coverage because BSC had previously argued overseas coverage in the Indiana litigation |
Key Cases Cited
- Wechsler v. Macke Int’l Trade, Inc., 486 F.3d 1286 (Fed. Cir. 2007) (patentee’s ability to recover lost profits tied to being the seller of the infringing product)
- Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770 (Fed. Cir. 1993) (method claims are directly infringed only by practicing the method)
- Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 381 F.3d 1371 (Fed. Cir. 2004) (claim construction and earlier interpretation of “cardioversion” in the related litigation)
- Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348 (Fed. Cir. 2009) (Federal Circuit holding that §271(f) does not apply to method claims)
- DSU Med. Corp. v. JMS Co. Ltd., 471 F.3d 1293 (Fed. Cir. 2006) (standards for induced infringement via promotion or labeling)
- AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042 (Fed. Cir. 2010) (injunctions and sale‑labeling leading consumers to practice a claimed method)
- Bittinger v. CSX Transp. Inc., 176 Md. App. 262 (Md. Ct. Spec. App. 2007) (Rule 5‑408 inapplicable to finalized settlement products as opposed to negotiation statements)