United States District Court, D. New Jersey
TIM A. FISCHELL, ROBERT E. FISCHELL, AND DAVID R. FISCHELL, Plaintiffs,
CORDIS CORPORATION, Defendant, ABBOTT LABORATORIES AND ABBOTT CARDIOVASCULAR SYSTEMS INC., Intervenors.
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter is before the Court on a Motion by plaintiffs to
strike defendant's and intervener's affirmative
defenses of patent invalidity and unenforceability, (ECF No.
1999, Tim A. Fischell, Robert E. Fischell, and David R.
Fischell (hereinafter "plaintiffs") entered into a
patent royalty agreement with defendant Cordis Corporation
(hereinafter "Cordis"). (Third Am. Compl.
("TAC"), ECF No. 160, at ¶ 5). Pursuant to the
assignment agreement, plaintiffs provided Cordis with the
ownership rights to use and sell certain coronary stent
patents. (Id. at ¶ 5). In exchange, Cordis
agreed to protect plaintiffs' intellectual property
rights and to pay plaintiffs royalties from the products
made, sub-licensed, or sold by Cordis. (Id. at
¶ 5). Under the 1999 agreement, Cordis promised to pay a
1% royalty on the Royalty Bearing Products, "so long as
a court of competent jurisdiction has not held such claim
invalid or unenforceable in an unappealed or unappealable
decision." (1999 Agreement, ECF No. 160-1 at
§§ 1.2, 1.6). Cordis also gained the right to
sub-license the Fischell patents, "as long as the
appropriate (1%) percent ROYALTY is paid to the FISCHELLS in
accordance with the terms of the AGREEMENT."
(Id. at § 2.13). Finally, Cordis gained the
right to initiate legal action against any potential
infringer of any of the Royalty Bearing Patents that had been
assigned or licensed to it by plaintiffs. (TAC at ¶ 28).
In 2001, the Fischells and Cordis entered into an agreement
that modified the royalty rates, but otherwise left the 1999
patent royalty agreement in full effect. (TAC at ¶ 26).
2002 or early 2003, plaintiffs informed Cordis that certain
stents manufactured by Guidant infringed Fischell patents
that had been assigned or licensed to Cordis. (Id.
at ¶ 31). In 2004, Cordis and Guidant entered into a
Settlement and Release agreement, which resolved a pending
arbitration, wherein Guidant claimed Cordis had infringed on
Lam/Lau patents, and Cordis claimed that Guidant had
infringed on Fischell patents. (2004 Guidant Settlement
Agreement, ECF No. 160-3, at 2-3). As a result of the 2004
Guidant Settlement Agreement, Cordis was to receive a
royalty-free license to the Lam/Lau patents, and Guidant was
to receive a license to the Fischell patents, though it was
required to pay a royalty on these patents to Cordis, who
then sent these payments to the Fischells. (Id. at
3, 4 ¶ 2(c), (d)). In 2006, Guidant sold its cardiology
division to Abbott. (TAC at ¶46). Accordingly,
"Abbott sent royalties to Cordis for
'passthrough' payment to the Fischells for a portion
of Abbott's manufacture and sale of various stents,
including Abbott's Vision, Xience (the drug-eluting
variant of the Vision stent), and Zeta stents, among
others." (Id.) During this time, Abbott
manufactured and sold certain stents to Boston Scientific
Corporation ("BSC"), who then re-sold the stents
under its own label. (Id. at 148).
2010, Cordis sued BSC in the U.S. District Court for the
District of Delaware for selling a certain stent, identified
as the Promus stent, that it alleged infringed on the
Fischells' stent patents that plaintiffs had assigned to
Cordis. (Id. at ¶ 53). In that litigation,
Cordis asserted three Fischell patents: U.S. Patent No. 6,
086, 604 ("the "604 patent"), U.S. Patent No.
6, 716, 240 ("the '240 patent"), and U.S.
Patent No. 6, 547, 817 ("the "817 patent").
(Id. at ¶ 54). In response, BSC asserted
numerous defenses, including invalidity and noninfringement
of the asserted claims. Cordis Corp. v. Bos. Sci.
Corp., 868 F.Supp.2d 342, 344 (D. Del. 2012). There, the
court granted summary judgment in part, and denied summary
judgment in part to BSC. In denying summary judgment based on
invalidity, the court, with respect to the '817 patent,
nullified (or invalidated) dependent claims 14-16.
Id. at 357. Additionally, the court granted summary
judgment in favor of BSC by determining that Cordis could not
show that the Promus patent infringes. Id. at 358.
On appeal, the Federal Circuit affirmed in part and vacated
in part the judgment of the district court, without opinion.
Cordis Corp. v. Bos. Sci. Corp., 504 Fed.Appx. 922,
922 (Fed. Cir. 2013). The court affirmed the district
court's conclusion that Cordis could not show BSC's
Promus patent infringes, but "vacate[d], however, the
portion of the district court's decision
'nullifying' (invalidating) dependent claims 14-16 of
U.S. Patent No. 6, 547, 817." Id.
'817 patent shares the same specifications as the
'856 and '452 patents, as the Promus stent
"share[s] the same metal stent architecture" as the
Xience and Vision stents. (PL reply br. at 12, Abbott br. at
20). Based on the 2012 Delaware ruling, Abbott stopped paying
Cordis royalties for pass-through to the Fischells in 2012
for the Vision and Xience and bare metal stents. (TAC at
¶ 57; see also ECF No. 160-5, at 2). On
December 21, 2012, a representative from Cordis wrote to
Abbott, and confirmed that the Vision and Xience stents were
considered "royalty-bearing" pass-through patents
pursuant to the Guidant License, and that failure to pay
plaintiffs royalties for the sales of these stents amounted
to non-compliance with the Guidant License. (TAC at ¶
59). However, according to the complaint, Abbott has failed
pay royalties for sales of the royalty-bearing stents, and
Cordis has done little else to compel Abbott to pay.
(Id. at ¶¶ 62-63). Plaintiffs brought the
present case against Cordis in 2015, and in 2016, Abbott
moved to intervene, asserting patent-law defenses to the
breach of contract claims plaintiffs are asserting against
Cordis. (ECF No. 66). On May 30, 2017, to streamline the
case, plaintiffs, Cordis, and Abbott entered into a
Stipulation, wherein they agreed to limit plaintiffs'
asserted patent claims to three U.S. patents from three
distinct patent families, the 8, 157, 856 (them856
patent"), the U.S. Patent No. 8, 747, 452 (the
'"452 patent") and U.S. Patent No. 6, 699, 278
(them278 patent"). (Order, ECF No. 111). The
Stipulation sets forth the issues that were to be determined
and resolved, including patent infringement, validity, and
filed the present motion to strike defendant's and
intervenor's affirmative defenses of patent invalidity
and unenforceability on May 23, 2018. (ECF 207). Plaintiff
argues that Cordis and Abbott should be estopped from
challenging the validity of the Fischell patents under the
doctrine of "assignee estoppel" because Cordis has
owned the patents at issue since 2001, and thus is the
assignee of the Fischell patents. (PI. Br. at 9, ECF No.
207). Plaintiff further argues that Abbott waived and
released the defenses of invalidity and unenforceability in
the 2004 Settlement. (PI. Br. at 13). In response, Cordis and
Abbott argue that the parties expressly stipulated that
Abbott and Cordis could challenge the patents' validity
and enforceability, and have been litigating those issues for
a year. Cordis and Abbott also argue that "assignee
estoppel" does not bar them from challenging patent
validity and enforceability, as Abbott is a licensee, and not
an assignee, and Cordis is no longer assignee of the asserted
patents. Additionally, Cordis and Abbott argue that the
entire doctrine of assignee estoppel is in "serious
doubt," and the instances that courts have applied it
are dissimilar to the dispute here, and as such, this Court
should decline to apply it in the present situation. (Def.
Br. at 16-17; Abbott Br. at 16-18). Finally, Cordis and
Abbott argue that the 2004 Settlement does not bar the Abbott
from challenging the validity and enforceability of the
asserted patents, as plaintiffs were not a party to that
agreement. (Def. Br. at 25-27; Abbott Br. at 21-24).
Rule 12(f) of the Federal Rules of Civil Procedure,
"[t]he Court may strike from a pleading an insufficient
defense or any redundant, immaterial, impertinent, or
scandalous matter." Fed.R.Civ.P. 12(f). The Court may
act either "on its own" or on a motion by a party.
Id. at 12(f)(1)-(2). "The purpose of a motion
to strike is to simplify the pleadings and save time and
expense by excising from a plaintiffs complaint any
redundant, immaterial, impertinent, or scandalous matter
which will not have any possible bearing on the outcome of
the litigation." Corradetti v. Sanitary Landfill,
Inc., 912 F.Supp.2d 156 (D.N.J 2012) (quoting
Garlanger v. Verbeke, 223 F.Supp.2d 596, 609 (D.N.J.
2002)). "[M]otions to strike are usually Viewed with
disfavor' and will generally 'be denied unless the
allegations have no possible relation to the controversy and
may cause prejudice to one of the parties, or if the
allegations confuse the issues.*" Gray v. Bayer
Corp., 2010 U.S. Dist. LEXIS 33040, at *2 (D.N.J. Mar.
31, 2010) (citing Garlanger, 223 F.Supp.2d at 609).
In fact, "Rule 12(f) should be construed strictly
against striking portions of the pleading on grounds of
immateriality and if the motion is granted at all, the
complaint should be pruned with care." Morgan Home
Fashions, Inc. v. UTI, U.S. Inc., 2004 U.S. Dist. LEXIS
13412, at *8 (D.N.J. Feb. 9, 2004).
to strike challenge "the legal sufficiency of the
pleading" and are governed by "the same standards
as a motion to dismiss filed pursuant to Fed.R.Civ.P.
12(b)(6)." In re Gabapentin Patent
Litig, 648 F.Supp.2d 641, 647-48 (D.N.J. 2009). In
determining "whether Defendants' affirmative
defenses are insufficient, the Court must accept all factual
allegations in the Answers as true, construe the Answers in
the light most favorable to Defendants, and determine
whether, under any reasonable reading of the pleadings,
Defendants may be entitled to relief." Id.
(citing Phillips v. Cnty. of Allegheny, 515 F.3d
224, 233 (3d Cir. 2008)).
argue that Cordis and Abbott must be estopped from
challenging the validity of the Fischell's patents
because Cordis has owned the patents at issue since 2001.
(PI. br. at 9). Plaintiffs also argue Abbott, as licensee of
Cordis, is precluded from asserting these defenses because
Abbott is only asserting affirmative defenses to the
Fischells' claims against Cordis in this case by standing
in Cordis's shoes, and the same assignee estoppel that
bars Cordis from bringing these defenses also bars Abbott.
(Id. at 11). In response, both Cordis and Abbott
argue that plaintiffs stipulated that Cordis and Abbott may
present invalidity and unenforceability defenses, and thus
the Stipulation governs, as the parties have been litigating
these issues for a year. Further, Cordis argues that assignee
estoppel is inapplicable because Cordis is no longer the
owner of the asserted patents, and the validity of the
doctrine of assignee estoppel is "in serious
doubt." (Def. br. at 16, n.2). Abbott argues that Cordis
is a licensee, not an assignee of the patents, and thus the
doctrine of assignee estoppel is inapplicable. (See
Def. br. at 16, Intervenor br. at 16).
estoppel is an equitable doctrine which, under appropriate
circumstances, bars the assignee of a patent from contesting
the validity of the assigned patent." Slip Track
Sys. v. Metal Lite, Inc.,113 Fed.Appx. 930, 933 (Fed.
Cir. 2004); see also Macom Tech. Sols. Holdings, Inc. v.
Infineon Techs. AG, No. 2:16-02859, 2017 U.S. Dist.
LEXIS 121806, at *6 (CD. Cal. Aug. 2, 2017) (“
Macom"). "For example, circumstance may
warrant application of the doctrine to prevent an assignee
from avoiding royalty payments otherwise due under an
assignment contract by challenging the validity of the
assigned patent." Id. (first citing