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Veteran Medical Products, Inc. v. Bionix Development Corp.

March 16, 2010


The opinion of the court was delivered by: Hon. Hugh W. Brenneman, Jr.


This matter is now before the court on plaintiffs' "Notice and memorandum regarding declaration on attorney fees" (docket no. 140).

I. Background

Plaintiffs filed this action on September 23, 2005. In their complaint, plaintiffs sought a declaratory judgment that the '669 Patent was not infringed and that no trade secrets had been misappropriated from defendants. In addition, plaintiffs sought damages for: federal unfair competition pursuant to § 43(a) of the Lanham Act, 16 U.S.C. § 1125(a) (Count I); violation of the Michigan common law of unfair competition, business defamation and product disparagement (Count II); and tortious interference with business relationships (Count III). Counts I and II arose from defendants' alleged statement that plaintiffs' product infringed the '669 Patent, which constituted a false or misleading description of fact or false or misleading representation of fact. Count III arose from an allegation that defendants tortiously interfered with one of plaintiffs' suppliers by contacting the supplier and representing to it that plaintiffs' product infringed the '669 patent.

On October 4, 2005, defendants filed an action against plaintiffs in the Northern District of Ohio alleging claims of patent infringement and trade secret appropriation. See Bionix Development Corporation v. Veteran Medica Products, et al., No. 3:05-cv-7387 (N.D. Ohio) (the "Ohio lawsuit").*fn1 The Ohio lawsuit sought three claims for relief. First, defendants alleged that plaintiffs' disposable ear curettes infringed the '669 patent. See docket no. 6-4. Second, defendants alleged that plaintiffs misappropriated defendant Bionix's confidential and proprietary information and trade secrets in violation of Ohio law. Id. Third, defendants sought declaratory relief, equitable relief and other relief (including attorneys fees under § 285) against plaintiffs. Id.

On October 3, 2005, defendants moved to dismiss plaintiffs' action, claiming: that Michigan lacked subject matter jurisdiction over this matter; that this court lacked personal jurisdiction over defendant Milligan; that defendant Milligan had not been properly served under the Federal Rules of Civil Procedure; and that Ohio was the proper forum to adjudicate this matter fully. See docket no. 5. On September 14, 2006, this court denied defendants' motion. See Opinion and Order (docket nos. 13, 14). On October 13, 2006, more than one year after plaintiffs filed this action, defendants filed an answer and affirmative defenses. See docket no. 17. In addition, Bionix filed a counterclaim which involved the same basic claims for relief as asserted in the Ohio lawsuit: infringement of the '669 patent; misappropriation of its confidential and proprietary information and trade secrets in violation of state law (i.e., Michigan); and various declaratory, equitable and other relief (including attorneys fees under § 285). Id.

The parties' Joint Status Report reflected that the alleged infringement of the '669 patent was but one part of this action, which also included a number of business torts under both federal and state law. See Joint Status Report (docket no. 23). The case was re-assigned to the undersigned on November 21, 2006. See docket no. 26. The court scheduled an informal conference to become acquainted with the patents in suit and the claims and defenses of the parties, which was held on May 16, 2007. See docket nos. 25, 40, 46.

On August 6, 2007, the parties stipulated to the dismissal of plaintiffs (and counterdefendants) Longcore and Kotwick. See Stipulation of dismissal (docket no. 55). Plaintiffs' subsequent summary judgment motion attacked all of defendants' counterclaims. See Motion for Summary Judgment (docket no. 56). Of particular interest to plaintiffs was the dismissal of defendants' counterclaim for misappropriation of trade secrets. Id. In their motion to file a brief under seal, plaintiffs advised the court that "[t]his is a trade secrets case." See Plaintiffs' Motion to file under seal (docket no. 57). It is not surprising that approximately two-thirds of the arguments set forth in plaintiffs' brief in support of the motion for summary judgment addressed defendants' counterclaim that plaintiffs misappropriated defendants' trade secrets. Plaintiffs' Brief (docket no. 58) (filed under seal).

On October 18, 2007, the court ruled as follows: The parties having agreed that plaintiffs do not infringe United States Patent No. 423,669 ("the '669 Patent'"), and the parties having agreed that it is not necessary to litigate the issue of the alleged invalidity of the '669 Patent any further in this action,

IT IS ORDERED that plaintiffs' action for declaratory judgment is GRANTED to the extent that it seeks a declaration that the '669 Patent is not infringed by the plaintiffs; and

IT IS FURTHER ORDERED that the defendants' first counterclaim, which alleges infringement of the '669 Patent, and all relief sought in the counterclaim based thereon, is DISMISSED.

Order (docket no. 74). In a lengthy opinion, the court also granted plaintiffs' motion for summary judgment as to defendants' second and third counterclaims "for misappropriation of technical information for producing a plastic ear curette," but denied the motion in all other respects. Opinion (docket no. 76).

The case proceeded to trial and, on April 21, 2008, the jury entered a verdict in favor of plaintiffs. Pursuant to the verdict, the court entered a judgment in favor of plaintiffs in the amount of $199,000.00. See docket no. 118. After the jury rendered its verdict, plaintiffs submitted a motion for a finding that defendants' unsuccessful patent infringement counterclaim was an "exceptional case" warranting award of attorney fees pursuant to 35 U.S.C. § 285. See docket no. 119. Defendants filed a post-trial motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b). See docket no. 122.

In an opinion and order entered on March 31, 2009, the court considered and granted both defendants' motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b) and entered an amended judgment which reduced plaintiffs' recovery to $0.00. See docket nos. 136, 137, and 138. The court also determined that this was an "exceptional case" making it eligible for an award of attorneys fees pursuant to 35 U.S.C. ยง 285. See docket nos. 136 and 137. Specifically, the court found that this was an appropriate case for an award of attorneys fees "due to the length of time defendants have forced plaintiffs to expend attorneys fees to defend against this baseless and unjustified litigation" arising from defendants' counterclaim for infringement of the '669 patent. Id. The court's order granting plaintiffs' motion for attorneys fees provided that if the parties could not agree upon an appropriate amount of fees within 14 days of the entry of the order, then plaintiffs were required to submit an affidavit with any supporting documents justifying their claim for attorney fees and defendants ...

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