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Auge v. Stryker Corp.

United States District Court, D. New Mexico

May 11, 2018



         This matter comes before the Court upon Defendants' Motions for Summary Judgment, filed August 25, 2017. (Docs. 178, 179). Both motions are now fully briefed. (Docs. 186 and 192). Also before the Court are the parties' competing Motions to Strike certain portions of the summary judgment record, filed October 13, 2017 and October 17, 2017. (Docs. 193 and 196). Having considered all Motions, relevant undisputed evidence, and applicable law, the Court will grant the Motions as to Counts III, IV, and V of the Complaint. The Court will also grant summary judgment in Defendants' favor on Plaintiff's claim for breach of confidentiality agreement contained in Count I of the Complaint.

         I. Background and Uncontested Facts[1]

         This case arises from a contract dispute between Plaintiff, an orthopedic surgeon, and Defendants, medical device manufacturers. Around 1997, Plaintiff began developing devices and techniques for use in orthopedic surgery, including a flexible drill system.[2] (Doc. 179) at 3; (Doc. 186) at 16. On February 29, 2000, Plaintiff and Defendant Stryker (individually, Defendant) executed a Confidentiality Agreement “to begin discussions [about] a possible business relationship” relating to the flexible drill system technologies. (Doc. 178-3) at 1; (Doc. 179) at 3; (Doc. 186) at 16. “The form such a relationship might take, whether one of contract, joint venture, formation of a business, investment, employment of [Plaintiff] by [Defendant], acquisition or otherwise, ” was then “unknown.” (Doc. 178-3) at 1.

         “In order for such discussions to be meaningful, ” Plaintiff agreed to “make available to [Defendant] certain highly confidential information, ” including:

endoscopic technology; instruments; instrument designs; procedures; modifications of procedures; inventions and methods of treatment; … product design information; … and other information about [Plaintiff's] business and endoscopic inventions, designs, technology, and procedures not known to the public.

(Confidential Information) (Doc. 178-3) at 1. Defendant agreed not to disclose the Confidential Information to protect Plaintiff “against … improper use.” Id.

         The Confidentiality Agreement further provides:

If [Defendant] … discovers, develops, makes, or manufactures any improvements to the Confidential Information (hereafter referred to as ‘Improvements'), all such Improvements and all profits derived from the commercialization in any form of such Improvements, shall belong to and be the sole and exclusive property of [Plaintiff].

(Doc. 178-3) at 2.[3]

         Between 2000 and 2007, the parties (or their predecessors/entities) executed three additional confidentiality agreements. (Doc. 179) at 4; (Doc. 186) at 16. The subsequent agreements each contain largely identical provisions as the February 2000, Confidentiality Agreement.[4] (Doc. 179) at 5; (Doc. 186) at 16. The Confidentiality Agreements are governed by New Mexico law. Id.; (Doc. 178-3) at 3.

         In July 2009, after nine years of intermittent discussions, Plaintiff and Defendant executed an Assignment and Royalty Agreement (Royalty Agreement). (Doc. 178-5); (Doc. 186-1) at 3.

         Plaintiff assigned certain intellectual property rights to Defendant in exchange for royalty payments. (Doc. 178-5) at 1, 3. The Royalty Agreement provides:

[Plaintiff] agrees to assign and hereby sells, assigns, transfers, and sets over unto [Defendant] … and assigns all of its right, title and interest in and to any Intellectual Property and commercial rights inventions whatsoever that were heretofore or during the term of this Agreement are conceived, made or developed by [Plaintiff] and that relate to the design, engineering or marketing of the Products.

(Doc. 178-5) at 2. Intellectual Property is a defined term that includes Patent Rights, Know-How, and Other Rights. (Doc. 178-5) at 1. Know-How includes “all inventions, confidential or proprietary ideas, … technical information or knowledge, … manufacturing methods … and other trade secrets relating to the Products.” Id. It also includes any rights Plaintiff “hereafter conceives, makes, develops or reduces to practice or in which [Plaintiff] … may hereafter acquire any rights as such rights relate to Products.” Id. The “Products” are defined as “the Twin Loop FLEX System identified in Exhibit A, attached hereto and made part hereof.” (Doc. 178-5) at 2. Exhibit A identifies a series of drills, guides, and anchors. (Doc. 178-5) at 7.

         In addition to the assignment, Plaintiff agreed to “consult and cooperate fully … with respect to potential … improvements to the Products.” (Doc. 178-5) at 3. “No additional compensation [would] be paid” if Defendant accepted the improvements and incorporated them into the Products. Id. Plaintiff further agreed to assist Defendant in filing or prosecuting patent applications on any Intellectual Property incorporated in the Products. (Doc. 178-5) at 3. Finally, Plaintiff agreed not to assist in the development of any product that would compete “with the Products related to curved or flexible implant delivery systems” or perform consulting work “on the same or similar subject matter” as the Royalty Agreement. Id.

         Defendant, in turn, agreed to “pay a one-time licensing fee [of $273, 649.76] for exclusive rights to [Plaintiff's] technology related to flexible drill technology.” (Doc. 178-5) at 3. The flexible drill technology included “prior patent submissions, engineering drawings, sketches, and prior disclosures.” Id. Defendant also agreed to pay royalties (3% for instrumentation and 1.5% for implants) on the net worldwide sales of the Products. (Doc. 178-5) at 4.

         The Royalty Agreement contains an intergration clause and a no-conflict clause. Section 13 provides: “This Agreement … constitute[s] the entire agreement between the Parties with respect to the subject matter….” (Doc. 178-5) at 5. Section 5 further provides: “[Plaintiff] represent[s] that there are no agreements in effect … that conflict with the rights granted by [Plaintiff] to [Defendant] hereunder or … with [Plaintiff's] obligations hereunder.” (Doc. 178-5) at 3. The Royalty Agreement is governed by New Jersey law. (Doc. 178-5) at 6.

         Defendant paid royalties as agreed on the TwinLoop FLEX device (TwinLoop). (Doc. 186) at 20. Defendant also obtained a patent on “[a]n apparatus for inserting a suture anchor into an internal anatomical site….” (Doc. 179-1).

         After the Royalty Agreement was executed, Defendant developed a line of devices called Iconix. (Doc. 186-1) at 6-7. Defendant initially paid Plaintiff about $93, 000 in royalties on the Iconix devices between late 2012 and 2013. (Doc. 186-1) at 6. The parties also exchanged three draft amendments specifying that the Iconix devices were covered by the Royalty Agreement. (Doc. 186-1) at 48-58. The parties could not reach an agreement, and Defendant ceased paying royalties. (Doc. 186-1) at 6.

         Defendants currently market and sell devices called Iconix, VersiTomic, and MicroFX. (Doc. 186-1) at 6-7. Those devices constitute Improvements to the confidential flexible drill technology disclosed pursuant to the Confidentiality Agreements. (Doc. 186-1) at 7; (Doc. 178-1) at 6.[5] VersiTomic was first advertised, marketed, and offered for commercial sale in March 2010. (Doc. 179) at 10; (Doc. 186) at 16. Aside from the initial $93, 000 or so, Defendant has not paid Plaintiff royalties on the Iconix, VersiTomic, or MicroFX devices. (Doc. 186-1) at 6.

         Plaintiff ceased practicing medicine in 2010. (Doc. 186-1) at 1. He currently works as a technical consultant for the trustee in the NuOrtho Surgical bankruptcy proceedings. (Doc. 179) at 2; (Doc. 186) at 16. Plaintiff formed NuOrtho in 2008 to develop medical technologies and market products. (Doc. 186-1) at 7. The bankruptcy docket reflects NuOrtho is not operating. See Bankr. No. 15-10476.[6] Plaintiff has not purchased or sold the Iconix, VersiTomic, or MicroFX products. (Doc. 179) at 9; (Doc. 186) at 16.

         On May 12, 2016, Plaintiff filed his First Amended Complaint for Breach of Contract (Complaint). (Doc. 34). Plaintiff contends the Iconix, VersiTomic, and MicroFX devices constitute “Improvements” as defined by the Confidentiality Agreements. (Doc. 186-1) at 7. Hence, he claims ownership of both devices and any profits therefrom. Id. If the Court disagrees, Plaintiff alternatively argues he is entitled to royalties on the Iconix, VersiTomic, and MicroFX devices. (Doc. 186-1) at 6. Plaintiff also asserts non-contract state law claims based on the theory that Defendant misappropriated his intellectual property. (Doc. 34).

         By the instant Motions, Defendants seek summary judgment on all claims. (Docs. 178, 179). With respect to the contact claims, Defendants argue the Royalty Agreement superseded the Confidentiality Agreements, and that no additional royalties are due on the new devices. (Doc. 178). Defendants also seek summary judgment on Plaintiff's non-contract claims for: (1) unfair trade practices; (2) misappropriation of trade secrets; (3) unfair competition; (4) quantum meruit; and (5) unjust enrichment. (Doc. 179). Plaintiff opposes the summary judgment motions in their entirety. (Doc. 186).

         II. ...

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