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Cochlear Ltd. v. Oticon Medical AB

United States District Court, D. New Jersey

October 26, 2018

COCHLEAR LTD., Plaintiff,
v.
OTICON MEDICAL AB, and OTICON MEDICAL, LLC Defendants.

          OPINION

          HON. BRIAN R. MARTINOTTI UNITED STATES DISTRICT JUDGE

         Before this Court is an Order to Show Cause (ECF No. 3) why Plaintiff Cochlear Ltd. (“Cochlear” or “Plaintiff”) should not be granted a preliminary injunction enjoining Defendants Oticon AB and Oticon Medical, LLC (collectively, “Oticon” or “Defendants”) “from infringing Cochlear's recently issued U.S. Patent No. 9, 838, 807 (the “‘807 Patent”) by selling, offering for sale, and/or importing Oticon's Ponto BHX implant.” (Pl.'s Mot. for a Preliminary Injunction (ECF No. 3-1) at 1.) Pursuant to Federal Rule of Civil Procedure 78(a), the Court heard oral argument on October 16, 2018. Upon reviewing the papers submitted by the parties and considering the arguments of counsel, for the reasons set forth below, Plaintiff's application is DENIED.

         I. Background

         Cochlear is an Australian Corporation that develops and manufactures bone anchored hearing systems. (Pl.'s Complaint (ECF No. 1 ¶¶ 1-2).) Cochlear sells its products in the United States through its subsidiary Cochlear Americas, a Colorado corporation. (Mendel Decl. (ECF No. 3-4 ¶ 2).) Oticon Medical AB, a Swedish corporation, and Oticon Medical, LLC, a New Jersey corporation, are both subsidiaries of William Demant Holdings A/S (“WDH”), an affiliate of the William Demant Group, a hearing healthcare company with a presence in over 130 countries. (Olsen Decl. (ECF No. 37-1 ¶ 1, 16).) On December 5, 2017, the United States Patent and Trademark Office issued the ‘807 Patent to Cochlear for its “Bone Anchor Fixture for a Medical Prothesis.” (Compl. Ex. A (ECF No. 1-1).) On April 13, 2018, Cochlear filed a Complaint alleging that Oticon infringed the ‘807 Patent with the manufacture and sale of its Ponto BHX Implants. (ECF No. 1.) On the same date, Cochlear filed a Motion for a Preliminary Injunction by Order to Show Cause, pursuant to Federal Rule of Civil Procedure 65, seeking to enjoin and restrain Oticon from “making, using, offering to sell, and selling within the United States, and importing into the United States, the Ponto BHX Implant or any colorable imitations thereof.” (ECF No. 3-2.)

         II. Legal Standard

         “Preliminary injunctive relief is an ‘extraordinary remedy, which should be granted only in limited circumstances.'” Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir. 2002)). “A plaintiff seeking a preliminary injunction must establish that he is [1] likely to succeed on the merits, [2] that he [or she] is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his [or her] favor, and [4] that an injunction is in the public interest.” Ferring, 765 F.3d at 210 (quoting Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008)). The failure to establish any of the four elements “renders a preliminary injunction inappropriate.” Ferring, 765 F.3d at 210 (quoting NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151, 153 (3d Cir. 1999)). “The movant bears the burden of showing that these four factors weigh in favor of granting the injunction.” Ferring, 765 F.3d at 210 (citing Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990)).

         III. Factual Background

         A. The Bone Conduction Hearing Systems

         Both Cochlear and Oticon manufacture and sell bone conduction hearing systems, also known as bone anchored hearing systems. (ECF No. 3-4 ¶ 3; ECF No. 37-1 ¶ 1.) These devices conduct sound wave vibrations from a sound processor through a patient's skull bones to bypass a damaged outer and middle ear and send sound directly to the inner ear. (ECF No. 3-4 ¶ 3.) Cochlear distributes two types of implantable bone conduction hearing systems: Baha® Connect (“Baha Connect”) and Baha® Attract (“Baha Attract”). (ECF No. 3-4 ¶ 4.) The Baha Connect, which is at issue in this litigation, uses an implant secured to the skull and connected to a skin penetrating abutment attaching to a sound processor that picks up sound and generates the vibrations transmitted through the bone to the inner ear. (ECF No. 3-4 ¶ 5.)

         In 2009, Oticon launched its “Ponto” bone anchored hearing system. (ECF No. 37-1 ¶ 3.) The Ponto has three basic components: the BHX implant which sits in the bone behind the ear; the abutment which connects to the implant and extends outwardly through the skin; and the sound processor which attaches to the abutment above the skin level. (Id.) Oticon's Ponto and Cochlear's Baha Connect are direct market competitors, as the Baha Connect also incorporates the same three-part structure. (Popelka Decl. (ECF No. 38 ¶ 20).)

         The Ponto BHX Implant, which is at issue in this litigation, is the “third generation” of Oticon's skull implant, designed for use with the Ponto abutment and sound processors. (ECF No. 37-1 ¶¶ 19-20.) The Ponto BHX Implant uses a laser ablation technology to modify the surface of the implant's titanium screw where it comes into contact with the bone so as to improve its “osseointegration.” (Id.) Osseointegration is the process by which new bone binds with the implant surface and the implant exhibits mechanical stability allowing the load-carrying implant to conduct hearing. (ECF No. 3-4 ¶ 9.) Improved osseointegration promotes implant stability and allows the implant to be loaded to the living bone sooner. (ECF No. 3-4 ¶ 9; ECF No. 37-1 ¶¶ 9-10.) As is evident from the diagrams of the Ponto BHX Implant and the Cochlear BI300 Implant, the implant in the Baha Connect, the Ponto BHX Implant has a single screw thread of constant pitch, whereas the Cochlear BI300 Implant has two distinct screw threads of differing pitches. (ECF No. 37-2, Ex. 5; ECF No. 3-4 ¶ 8.)

         B. The ‘807 Patent and Cochlear's Claims

         On December 5, 2017, the United States Patent and Trademark Office issued Cochlear the ‘807 Patent, titled “Bone Anchor Fixture for a Medical Prothesis, ” which expires on September 27, 2027. (ECF No. 1-1.) The ‘807 Patent discloses features for a bone conduction implant, including a tapered portion (labeled as 108), a flange for providing a stop (labeled as 103), and a circumferential groove between the flange and the threads (labeled as 117). (ECF No. 1-1, figs. 1 and 2; Rentschler Decl. (ECF No. 3-5, Ex. B).)

         Cochlear asserts Oticon infringed only two independent claims in the ‘807 Patent: claims 1 and 8. (ECF No. 1-1). Every other ‘807 Patent claim upon which Cochlear alleges an infringement necessarily depend upon or are incorporated within claim 1 and/or claim 8. Pursuant to claim 1 of the ‘807 Patent, Cochlear claims:

An anchoring fixture for anchoring a prosthesis to a skull bone comprising: a screw thread apparatus including a screw thread having a varying outer diameter; a flange configured to function as a stop for the anchoring fixture adapted to rest on top of the bone when the anchoring fixture is implanted into the bone; and a circumferential groove located, with respect to a side of the flange, on the anchoring fixture on a threaded side of the anchoring fixture, wherein the anchoring fixture is configured for anchoring a hearing prosthesis component to the skull bone at a location behind an external ear so that sound is transmitted from the hearing prosthesis via the skull bone to the cochlea.

(ECF No. 1-1 at 8.)

         Pursuant to claim 8 of the ‘807 Patent, Cochlear claims:

A bone fixture configured to anchor to bone, comprising: a threaded tapered portion, wherein a maximum width of the bone fixture is about the same as a height of the bone fixture; a flange configured to function as a stop for the bone fixture adapted to rest on top of the bone when the bone fixture is implanted into the bone; and a circumferential groove located, with respect to a side of the flange, on the bone fixture on a threaded side of the bone fixture, wherein the bone fixture is configured to anchor a hearing aid prothesis to a skull bone at a location behind an external ear of a recipient so that sound is transmitted from the hearing prosthesis via the skull bone to the cochlea.

(Id.)

         C. The Licensing Agreement

         Cochlear and Oticon are parties to various licensing and cross-licensing agreements that convey rights to import and sell certain implants in the United States. (ECF No. 37-1 ¶¶ 16-18.) Specifically, in 2009, Cochlear entered into a “Cross Patent License Agreement” (the “2009 License”) with WDH, an affiliate of the William Demant Group and Oticon's parent company. (ECF No. 37-2, Ex. 7.) The 2009 License conveys to WDH and its affiliates a ...


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