CardiAQ Valve Technologies, Inc. v. Neovasc Inc. et al.

Docket Nos. 2017-1302, -1513

September 1, 2017


Brief summary: DC decision finding that CardiAQ’a employees should have been named inventors on Neovasc’s patents and trade secret misappropriation.

Summary: Neovasc appealed DC on finding that CardiAQ’a employees should have been named inventors its US 8,579,964 realting to heart valves (“TMVIs”) based on its finding of trade secret misappropriation, and its award of $91 million to CardiAQ. CardiAQ appealed DC denial of its motion for injunctive relief. CardiAQ’s Dr. Quadri and Mr. Ratz engaged Neovasc to assist in the development of a heart valve and the parties signed a non-disclosure agreement. “CardiAQ disclosed detailed information about at least three of its prototypes” and then Neovasc’s “Mr. Lane started developing a TMVI for Neovasc”. Neovasc’s CEO “decided that Neovasc should not tell CardiAQ it had begun work on a competing design”. CardiQA discovered the device when Neovasc’s patent application published. As mentioned above, the DC agreed with CardiAQ’s arguments but did not issue an injunction. The FC panel explained that “[t]he overall determination of co-inventorship is a legal one…review[ed] de novo, but it is based on factual findings reviewed for clear error when, as in this case, made by the [DC]” (Eli Lilly, FC 2004; Ethicon, FC 1998). And “[t]o prevail under 35 U.S.C. § 256, the plaintiff must show, by clear and convincing evidence, that the unnamed but alleged co-inventor made a contribution to the conception of at least one claim of the patent ‘that is not insignificant in quality, when that contribution is measured against the dimension of the full invention” (Acromed, FC 2001 (“It is not enough…if the alleged co-inventor ‘merely explain[ed] to the real inventors well-known concepts and/or the current state of the art.”)) Neovasc argued the features contributed by CardiAQ “were present in the prior art” (“Chau”, US 8,449,599, “even though it was secret at the time of the collaboration, under the now-repealed 35 U.S.C. § 102(e) (2006)). The FC panel disagreed with this reasoning, finding “no sound reason for adopting” a “legal bar” to inventorship where “the contribution later appeared in the public domain, where the ideas contributed were not contemporaneously available to an ordinary skilled artisan and were otherwise significant in producing the inventive conception at the time it was completed” (“the presence of the CardiAQ-contributed features in then-secret prior art does not, as a matter of law, automatically disqualify the CardiAQ employess as inventors.” Neovasc made a second argument regarding another prior art document (“Solem”) but the FC panel concluded it had not presented that complete argument to the DC, which was therefore not obliged to address it. The FC panel also reviewed the trade secret issues and Neovasc’s denied request for a new trial regarding the same, and agreed with the DC “that ‘the jury could reasonably find that a TMVI device containing’ even some known features was a protectable device”, “Trade Secret 4 ‘was both a secret and a unified process’” under MA law, CardiAQ’s patent application did not disclose “as much information as Neovasc received” regarding Trade Secret 5, and that “CardiAQ continues to use trade secret 6 in the operation of its business”. The FC panel also disagreed with Neovasc’s challenge of the damages award which depended, e.g., on an expert witness’ use of “valuations from 2015” (use “ex-post evidence” may be appropriate (Lucent, FC 2009)) and his proper reliance “on the underlying testimony of Mr. Ratz, with his intimate knowledge of the TMVI challenges, as to the value of the particular trade secrets” (Williams, US 2012). The FC panel also agreed with DC’s denial of the injunction requested by CardiAQ since the DC is allowed to determine whether a particular injunction is warranted-considering, among other things, the public interest” (eBay, US 2006), noting that “even if the nondisclosure agreement requires some injunction, it does not say what injunction is warranted or why the particular injunction CardiAQ seeks is appropriate.” Thus, the DC decision was affirmed.

This entry was posted in Damages, Inventorship, Lost Profits, Trade Secret. Bookmark the permalink.

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