WRIGHT, J.
For the reasons discussed below, we affirm the circuit court.
Dr. Michel Mirowski developed an implantable cardiac defibrillator ("ICD"), a
MFV originally licensed the two patents exclusively to Guidant, a corporate entity later acquired by BSC, in 1973 ("1973 License Agreement"). The licenses were then restated in 2004 ("2004 License Agreement"). The licenses gave Guidant (and subsequently BSC) the rights to sublicense any or all of the MFV patents on its own terms, as long as MFV received a 3% royalty on the initial sale as well as the sale of covered products. Guidant also received "the right to bring and conduct suit or actions in its name against others for infringement of any [licensed] patent..., the same as if such patent were the exclusive property of GUIDANT." Importantly, the license agreement reserved for MFV certain litigation rights:
In 1996, Guidant
Guidant and MFV mutually agreed to appeal the court's decision as to a key "method claim"
Guidant and MFV brought a second suit against St. Jude in the U.S. District Court for the District of Delaware for allegedly infringing the `119 patent ("the St. Jude Delaware case") in 2004. After two years, the parties completed fact discovery but the issues in dispute had not been considered by the court.
In April 2006, BSC completed its purchase of Guidant and became the exclusive licensee to the MFV patents. BSC then began discussing a settlement with St. Jude ("the BSC-St. Jude Settlement") that included not only unresolved issues from the St. Jude Delaware case and the St. Jude Indiana Litigation, but also "a number of other cases in which BSC was adverse to St. Jude." MFV asserts that these were cases "that presented a serious risk to BSC and had nothing to do with Mirowski." The parties disagree as to whether MFV was given sufficient notice of the BSC-St. Jude Settlement discussions.
The BSC-St. Jude Settlement dismissed four pending litigations by St. Jude against BSC in exchange for the value of the Indiana and Delaware cases.
MFV continued with the Delaware and Indiana cases against St. Jude. In July 2007, MFV and St. Jude settled the Delaware case for $35 million dollars. The Indiana case continued until 2009, when the Federal Circuit again concluded that the `288 patent was not invalid and that St. Jude had infringed it, and MFV settled the remnants for $1.9 million.
After learning of the BSC-St. Jude Settlement, MFV informed BSC that BSC had breached the 2004 License Agreement because (1) the separate negotiations deprived MFV of the "right to participate" in the St. Jude litigations and caused damages, and (2) BSC failed to obtain MFV's "mutual agreement" before entering into the BSC-St. Jude settlement. Further, BSC did not pay MFV the amount of royalties agreed upon in the 2004 Royalty Agreement that determined what BSC owed MFV at the end of the St. Jude Indiana Litigation. Because the `288 patent was deemed valid and St. Jude found to have infringed upon it, BSC owed MFV "a sum equal to all royalties that accrued" between 2002-2003, plus interest. While both parties agreed that "the sum" plus interest equaled over $86.5 million dollars, BSC paid MFV only $6.7 million of this amount. BSC based this amount on its interpretation that royalties were due only the percentage of St. Jude devices that allegedly infringed the `288 patent in the St. Jude Indiana Litigation, excluding royalties on devices and accessories that BSC had paid in the past pursuant to the 2004 License Agreement.
On May 31, 2011, Boston Scientific filed its "Complaint for Declaratory Judgment" seeking declaratory judgments that, among other things, the payments it had made to MFV satisfied its royalty obligations under the 2004 License Agreement. After several pre-trial motions, BSC brought to the court's attention Gunn v. Minton, ___ U.S. ___, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013), a Supreme Court decision handed down while the parties were preparing for trial. Gunn limited the jurisdiction of federal courts to hear
MFV filed the suit from which this appeal arises in the Circuit Court for Montgomery County after BSC argued that the Indiana District Court lacked jurisdiction, and the Montgomery County case proceeded after the federal case was dismissed. Prior to trial, the circuit court granted MFV's motion for summary judgment that BSC breached MFV's "right to participate" as outlined in the 2004 Royalty Agreement. After three weeks of trial, the jury returned a verdict in favor of MFV. On the claim of royalties owed, the jury awarded MFV the full stipulated value of $86.5 million; on the claim for breach of the 2004 License Agreement related to the BSC-St. Jude Settlement, the jury returned a verdict for less than MFV requested, but still amounting to $222 million for both the Delaware and Indiana cases.
Additional facts will be included in the discussion as they become relevant.
BSC avers that the circuit court wrongly granted partial summary judgment in MFV's favor when it ruled that there was no genuine dispute of material fact as to whether the July 2006 Agreement between BSC and St. Jude violated MFV's contractual "right to participate."
In our review of the granted summary judgment, we must "examine the same information from the record and determine the same issues of law as the trial court." La Belle Epoque, LLC v. Old Europe Antidue Manor, LLC, 406 Md. 194, 209, 958 A.2d 269 (2008) (citation omitted). We therefore "only look to the evidence submitted in opposition and support of the motion for summary judgment in reviewing the trial court's decision to grant the motion." Id. (citations omitted). In its
Even if we could consider BSC's argument on the merits based on the evidence on which it relies, we would nevertheless affirm the circuit court's granting of partial summary judgment. BSC claims that a dispute of material facts exists regarding the "right to participate" provision because BSC and MFV disagree on whether MFV did, in fact, participate. BSC maintains that MFV had an equal chance to participate in its dealings with St. Jude because 1) MFV had its own settlement negotiations with St. Jude, and 2) MFV knew that BSC was having discussions with St. Jude but never asked to join in those discussions.
While MFV does not dispute that those two things are true, BSC neglects to note the timing of the two 2006 settlement discussions: MFV's discussions with St. Jude occurred in June of 2006 and concluded without reaching an agreement, whereas the BSC-St. Jude discussions took place through June and July of 2006, leading to the BSC-St. Jude Settlement on July 29, 2006. While MFV knew that BSC was negotiating with St. Jude in June, it was unaware that negotiations between the two carried into July.
Next, BSC argues that "the circuit court erred by allowing the jury to find that BSC breached the `mutual agreement' provision." The provision reads: "[BSC] shall, subject to mutual agreement between [BSC] and MIROWSKI, bring and conduct suit or actions against any infringer...." BSC moved for summary judgment on the issue, which the circuit court denied, finding the term unambiguous. At trial, the circuit court instructed the jury on its interpretation of the term.
Again, we review the circuit court's decision of a motion for summary judgment de novo. Injured Workers' Ins. Fund, 190 Md.App. at 450-51, 988 A.2d 1120. When reviewing the denial of summary judgment, we look to see if there existed a genuine dispute of material facts. Id. When reviewing contract construction, the circuit court may grant summary judgment if a contract is unambiguous. GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 778 (Del. 2012). Our review of the court's determination of whether the contractual language is ambiguous is also de novo. Calomiris v. Woods, 353 Md. 425, 435, 727 A.2d 358 (1999).
BSC relies heavily on the Indiana contract proceedings, in which the federal district judge found the "only reasonable interpretation of the phrase `subject to mutual agreement' in the contract is that [BSC] must bring and conduct suit against infringers with sales exceeding $75,000, unless Mirowski and [BSC] agree that suit should not be brought." Boston Scientific Corp. v. Mirowski Family Ventures, LLC ("BSC 2012"), No. 1:11-CV-736-WTL-DKL, 2012 WL 5996482 (S.D.Ind., Nov. 30, 2012) (emphasis in original). What this means, the district judge explained, is that "`mutual agreement' applies not to [BSC's] subsequent decisions in the course of litigation, but rather explains the circumstances under which [BSC] is relieved of its obligation to bring suit." Id. The judge, therefore, found the "mutual agreement" provision inapplicable to the BSC-St. Jude Settlement. Id. Accordingly, as the circuit court observed, the Indiana district court's construction leaves the "right to participate" provision as "the only ground for potential contractual liability."
We are not bound to afford any weight to the decisions and findings of the Indiana district court deciding the contractual dispute between MFV and BSC. See Cates v. State, 21 Md.App. 363, 372, 320 A.2d 75 (1974) (explaining that rulings from other jurisdictions are persuasive authority, and "[i]f the reasoning which supports them fails to persuade, they are no authority at all"). Unlike the Indiana district court, the circuit court found "mutual agreement" to be an unambiguous term meaning:
The circuit court stated that the contract term is an "express promise" made by BSC to MFV that is not irrelevant.
A contract is not ambiguous merely "because the parties disagree as to its proper construction," Trustees of Indiana Univ. v. Cohen, 910 N.E.2d 251, 257 (Ind.Ct.App.2009), but rather is ambiguous "only if reasonable persons would differ as to the meaning of its terms." Oxford Fin. Grp., Ltd. v. Evans, 795 N.E.2d 1135, 1142 (Ind.Ct.App.2003) (citations omitted). When interpreting an unambiguous contract, "a court gives effect to the parties' intentions as expressed in the four corners of the instrument and clear, plain, and unambiguous terms are
Looking at the "mutual agreement" provision in the context of the 2004 License Agreement "as a whole," id., we agree that the term is unambiguous because reasonable persons would not differ as to its meaning when the provision is read as a whole rather than examining each phrase therein in isolation. Oxford Fin. Grp., Ltd., 795 N.E.2d at 1142. The 2004 License Agreement overall outlines the rights and responsibilities of BSC and MFV individually and to each other with regard to the `299 patent. It affords BSC the exclusive license to MFV's patents and the right to bring suit to protect them. MFV, as the patent holder, therefore, has a serious stake in the outcome of any potential dispute or litigation between BSC and infringers. Thus, construing the portion of the contract that calls for "mutual agreement" to "bring and conduct suit or action against infringers" to mean anything short of the obligation BSC has to inform and seek MFV's advice on its actions in a suit would require reading the contract to mean that MFV reserved no authority for itself to have a say or impact the status of its patents once litigation commenced. Such a reading of the contract, as the circuit court and MFV point out, would permit BSC to act in bad faith by settling without MFV's permission. No reasonable person could read the agreement that way.
Furthermore, the interpretation of the Indiana district court, which BSC urges us to adopt, is that the "mutual agreement" provision merely "explains the circumstances under which Boston Scientific is relieved of its obligation to bring suit," but does not apply to BSC's "subsequent decisions in the course of litigation." However, the language of the agreement reads that "[BSC] shall, subject to mutual agreement between [BSC] and MIROWSKI, bring and conduct suit or actions...." (Emphasis added). The Indiana district court's construction completely disregards the term "conduct," which immediately follows the provision "subject to mutual agreement." A reading of the plain language of the agreement urges the circuit court's interpretation. Accepting the circuit court's interpretation of the provision, we also conclude that it appropriately instructed the jury as to what "mutual agreement" means.
BSC next argues that the jury did not have sufficient evidence to find that BSC violated the "mutual agreement" provision, even as interpreted by the circuit court, and asks us to overturn the jury's factual finding. We disagree with BSC and see no reason to overturn the jury's finding. A case must be submitted to the jury for consideration if there exists "any evidence, no matter how slight, that is legally sufficient to generate a jury question." Publish Am., LLP v. Stern, 216 Md.App. 82, 97, 84 A.3d 237 (2014) (citation omitted). There was ample evidence presented at trial to present the question to the jury. The jury heard testimony on the issue from: Sidney Silver, MFV's counsel; Ginat Mirowski; and four of BSC's in-house counsel. BSC also presented
"Under Indiana law ..., causation is an essential element of liability in a breach of contract claim." Shepard v. State Auto. Mut. Ins. Co., 463 F.3d 742, 744 (7th Cir.2006) (citation omitted). The aggrieved party in a contract claim "must prove that the alleged breach of contract was a cause in fact of his loss, which requires a showing that the breach was a `substantial factor' in bringing about the plaintiff's damages." Id. (citation omitted). BSC argues that MFV failed to show such "causation" for its damages in this case because MFV had a "choice" regarding whether to accept the terms of the BSC-St. Jude Settlement. Because of this choice, BSC suggests that its actions were not a "cause in fact" in MFV's damages.
BSC asks for a remand and new trial on the basis of "causation" because the circuit court should not have admitted the MFV-St. Jude Stipulation Agreement ("the stipulation"),
Maryland Rule 5-408 states: "(a) The following evidence is not admissible to prove the validity, invalidity, or amount of a civil claim in dispute: ... (3) Conduct or statements made in compromise negotiations or mediation." BSC, invoking Md. Rule 5-408 in this context, requires that the stipulation of validity be a statement "made in compromise negotiations or mediation." Id. BSC notes, however, that the stipulation was entered into "following a good-faith mediation." (Emphasis added). As we have previously noted about the admission of settlements as subsequent evidence:
Bittinger v. CSX Transp. Inc., 176 Md.App. 262, 276-77, 932 A.2d 1243 (2007) (internal citation omitted). As in Bittinger, Md. Rule 5-408 is equally inapplicable here because the `119 patent validity stipulation was part of a "previously settled claim[ ]," not a "promise[ ] to settle." Id. Talks and discussions taking place during mediation and negotiation meetings are part of the "promises to settle," and it is the statements made during these discussions that are barred by Md. Rule 5-408, not the finished product coming out of them. "[T]he admission of evidence is committed to the considerable and sound discretion of the trial court" and will not be disturbed in the absence of abuse of that discretion. Id. at 273, 932 A.2d 1243. We see no such abuse here, and therefore will not remand on this basis. The properly admissible stipulation operated like a "consent judgment and adjudication on the merits."
In the alternative, accepting that the stipulation has res judicata effect, BSC argues that the stipulation nevertheless is not binding in the contract dispute between BSC and MFV because it was part of a settlement agreement between only MFV and St. Jude. BSC asserts that "while BSC (as a party to the litigation) signed the St. Jude stipulation ... BSC agreed only to the fact that St. Jude entered into a stipulation." Having "not itself enter[ed] into or approve[d] the stipulation," BSC should have been allowed to raise St. Jude's invalidity defenses in its defense against MFV.
BSC's argument fails because BSC was, in fact, a party to the stipulation of the validity stipulation for the `119 patent for the purposes of preclusive effect. The language of the stipulation points us to that understanding. The stipulation states:
(Emphasis added). At the time, BSC and MFV were still co-plaintiffs in the Delaware case. Thus, even though the settlement negotiations may have involved only MFV and St. Jude, the "parties to this action" are MFV, BSC, and St. Jude, with the "action" being the Delaware litigation. BSC, represented by attorneys, appropriately signed the stipulation as a party to the action, doing more than merely acknowledging that MFV and St. Jude entered into the stipulation, as it contends. By signing the agreement, BSC also approved the stipulation. Therefore, the language of the stipulation does not constrict it as applying only between MFV and St. Jude, but as to all three parties and their relationship with each other.
Importantly, we must note that BSC's argument that the admission of the stipulation was wrong because it prevented BSC from presenting evidence of the patent's
At trial, MFV presented "three independent reasons"
BSC argues that the jury's verdict in favor of MFV on the 2004 Royalties claim must be vacated because it may have rested on MFV's first reasoning, which BSC deems to be a "legally erroneous" theory of liability based "on evidence that never should have been admitted." The other two reasons MFV presented are cause for remand as well, BSC claims, because they "implicated patent law issues" on which the jury was not instructed. We disagree.
BSC alleges that the accrual argument is "legally erroneous" because it "turned on" evidence that should have never been admitted. At trial, the circuit court admitted as evidence BSC memoranda that discussed its obligations under the 2004 Royalty Agreement.
Although the memoranda was properly admitted, the court curbed any prejudice the evidence may have had on BSC issuing a limiting instruction on the evidence, at BSC's request and which BSC drafted. Where admitted evidence "is admissible as to one party or for one purpose but not admissible as to another party or for another purpose, the court, upon request, shall restrict the evidence to its proper scope and instruct the jury accordingly." Md. Rule 5-105. The instructions to the jury provided:
BSC contends that this limiting instruction was insufficient because it "cannot cure an erroneous decision to admit evidence that has no legitimate purpose." However, the memorandum had a "legitimate purpose:" the circuit court admitted the memoranda as parol evidence to clarify what it found to be an ambiguous phrase in the 2004 Royalty Agreement. See, e.g., Tricat Indus., Inc. v. Harper, 131 Md.App. 89, 107, 748 A.2d 48 (2000) (explaining that "parol evidence is admissible when the written words are sufficiently ambiguous") (citation omitted).
We, therefore, will not disturb the jury's verdict with regard to Count One on the basis of a "legally erroneous" theory because the evidence was appropriately admitted and the jury properly considered it to make its determination.
MFV presented two other alternative evidentiary bases for recovering under the 2004 Royalty Agreement. The jury did not need to be instructed on issues of patent law because the relevant information it needed to make a decision as to the breach of contract were presented before it.
BSC claims that the circuit court erred in refusing to construe the term "cardioversion" and instead left it to the jury to determine the meaning. Claim 4 involved the patented methodology of treating an abnormal heartbeat using "multimode therapy," with one mode being "cardioversion." Thus, whether the ICDs performed "cardioversion" was significant in whether they were covered by the patented method and, therefore, whether MFV could collect royalties on their sales. BSC argues that the circuit court erred in refusing to re-construe the term and leaving "it to the jury to resolve any disputes about the meaning of the [ ] claim's construction" by the Indiana court.
In the St. Jude Indiana Litigation, the Indiana district court interpreted "cardioversion" to mean "the application of non-pacing electrical pulses designed to stimulate sufficient heart tissue to correct an arrhythmia, with energy levels generally below those used for defibrillation." Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 381 F.3d 1371, 1374 (Fed.Cir.2004). During this litigation, MFV and BSC were not adverse to each other and together supported this definition.
The circuit court appropriately denied BSC's request for further claim construction and accepted the Indiana district court's definition of the term, finding the construction of the term to be "judicial admissions [by BSC and MFV], binding both clients not only for [the St. Jude Indiana Litigation] but in other litigation as well." Campfield v. Crowther, 252 Md. 88, 100, 249 A.2d 168 (1969) ("A judicial admission by an attorney in the presence of his client is admissible in subsequent litigation."). BSC mistakenly asserts that the circuit court left the construction of the term to the jury. In its order, the circuit court adopted the undisputed construction of the Indiana district court, leaving to the jury only the application of the claim.
Next, BSC contends that MFV's argument that it was entitled to royalties on ICD sales during 2002-2003 because it could have obtained an injunction on the sales of all those ICDs is "legally erroneous under applicable patent law." When used in patent licenses, the term "covered," BSC argues, applies only to the product or technology that actually infringes the claim; the terms "covers" and "infringes" are "synonymous" according to BSC. In support, BSC provides a list of
Furthermore, looking at the merits of MFV's argument, we conclude that MFV did not err in its reasoning that because it legally could have stopped the sale of all ICDs, it was entitled to royalties on those ICDs. The United States Court of Appeals for the Federal Circuit, which is the only appellate-level court with the jurisdiction to hear patent case appeals, has affirmed injunctions against sales of all products where the product's label "would inevitably lead consumers to practice the claimed method." AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1060 (Fed.Cir. 2010). It has also found liability for induced infringement when an entity "offers a product with the object of promoting its use to infringe, as shown by clear expression or other affirmative steps taken to foster infringement." DSU Med. Corp. v. JMS Co. Ltd., 471 F.3d 1293, 1305-06 (Fed.Cir.2006). The sale of a product specifically labeled for use in a patented method constitutes inducement to infringe that patent, and usually is also contributory infringement. See AstraZeneca, 633 F.3d at 1060. Under this applicable patent law, because BSC (1) was designing and manufacturing ICDs to perform cardioversions, (2) instructed its sales representatives to program ICDs to perform cardioversions, (3) included directions with each ICD with instructions on how to program the ICD to perform cardioversions, and (4) admitted that if cardioversions were performed according to the products' label, the `288 patent covered the ICD, the ICDs were covered by the patent and thus the jury's award for royalties was appropriate.
BSC contends that because "MFV's second and third theories of liability under Count One raised a number of complex issues particular to patent law," the circuit court should have instructed the jury on the patent law governing these issues. BSC reminds us in their argument that "[t]he party arguing that an instruction should have been given bears the burden of proving prejudice and error." See Farley v. Allstate Ins. Co., 355 Md. 34, 47, 733 A.2d 1014 (1999).
However, as the party bearing the burden of proof, BSC merely provides that the prejudice and error are "self-evident," with no other explanation or support. We will not make the argument for BSC. An
In its final argument, BSC claims that the circuit court erred in deciding that MFV was entitled to royalties on ICDs sales made abroad during 2002-2003 on top of its sales within the United States. Pre-trial, MFV argued that sales made abroad were covered by Claim 4 under 35 U.S.C. § 271(f), at least in the time they were made. Section 271(f)(1) reads:
The parties made the same argument during the St. Jude Indiana Litigation. During that time period, MFV and BSC were both plaintiffs on the same side, arguing the position that MFV asserts here. In 2009, however, the Federal Circuit reviewing the St. Jude Indiana Litigation decided that Section 271(f) does not apply to method or process patents (specifically Claim 4 of the `288 patent). Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348, 1365 (Fed.Cir.2009). In other words, the 2009 Federal Circuit changed the law so that method patents cannot be enforced on overseas sales, which would have allegedly resulted in lower damages on Count One for MFV.
First, the circuit court determined that the law in place at the time the parties entered the 2004 Royalty Agreement governed royalties of overseas sales for the pertinent period, 2003-2004. In looking at what law governs in contracts between parties, we note:
Second, the circuit court determined that the doctrine of judicial estoppel prevented BSC from arguing to the jury that overseas sales were not covered. During the St. Jude Indiana Litigation, BSC argued that overseas sales were covered. We have previously identified three factors that inform whether there is judicial estoppel in a particular case: first, "whether the party's later position is clearly inconsistent with its earlier position;" second, "whether the party succeeded in persuading the court in the earlier matter to accept its position, so that judicial acceptance of the contrary position in the later matter would create the perception that one of the courts had been misled;" and third, "whether the party seeking to assert the inconsistent position in the later matter would derive an unfair advantage, or would impose an unfair detriment on the other party, from being permitted to do so." Abrams v. Am. Tennis Courts, Inc., 160 Md.App. 213, 225-26, 862 A.2d 1094 (2004) (citation omitted). While these factors are not "inflexible prerequisites," they do provide guidance. Id.
Applying the Abrams factors to the instant case, we agree with the circuit court that BSC is barred by judicial estoppel from raising the overseas sales claim. First, BSC's current position is "clearly inconsistent" with its position during the St. Jude Indiana Litigation; BSC has switched sides from arguing that overseas sales were covered to overseas sales are not covered. Second, BSC did succeed in the St. Jude Indiana Litigation, at least on the trial level, in persuading the court of its position. Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 418 F.Supp.2d 1021, 1044 (S.D.Ind.2006) ("[T]his court cannot conclude as a matter of law that [35 U.S.C.] section 271(f) does not apply to the method claim at issue here."). Third, BSC "would derive an unfair advantage" in switching its position. BSC used the winning argument in the St. Jude Indiana Litigation, that overseas sales were covered, in its subsequent negotiations with St. Jude that led to the BSC-St. Jude Settlement later on, which resulted in St. Jude dropping several pending litigations against BSC. After obtaining that benefit, BSC now wants to avoid the approximately $17 million in royalties from overseas sales that it contractually owed to MFV. With all three factors weighing heavily against BSC, we are persuaded that BSC is judicially estopped from bringing this claim. If not, "BSC would reap the benefit of `blowing hot and cold.' The law does not countenance that result." Vogel v. Touhey, 151 Md.App. 682, 722, 828 A.2d 268 (2003) (citation omitted).
For the reasons set forth above, we affirm the circuit court in the issues raised by BSC.
Boston Scientific Corp. v. Mirowski Family Ventures, LLC ("BSC 2013"), No. 1:11-CV-736-WTL-DKL, 2013 WL 587368 (S.D.Ind. Feb. 13, 2013).