DocketNumber: Civil Action No.: 8:15-cv-01964-JMC
Citation Numbers: 330 F. Supp. 3d 1067
Judges: Childs
Filed Date: 8/31/2018
Status: Precedential
Modified Date: 7/25/2022
Plaintiff Poly-Med, Inc. ("Plaintiff") filed this action seeking monetary damages and equitable relief from Defendants Novus Scientific Pte. Ltd., Novus Scientific, Inc., and Novus Scientific AB (collectively "Defendants") as a result of alleged violations of the parties' business agreement. (ECF No. 181.)
This matter is before the court pursuant to Plaintiff's Motion for Summary Judgment (ECF No. 268). For the reasons set forth below, the court GRANTS IN PART and DENIES IN PART
I. RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
The court adopts its prior recitation of the facts from its April 24, 2018 Order and Opinion (ECF No. 252) granting Defendants' Motion for Partial Summary Judgment (ECF No. 209) on Plaintiff's hernia only and patent application breach *1070of contract claims. As brief background, in June 2005, Plaintiff and Radi Medical Systems AB ("Radi AB"), a Swedish corporation in Uppsala, Sweden, entered into a Sale of Materials and License Agreement (the "Agreement") for the development and manufacture of Absorbable Composite Meshes. (ECF No. 181 at 4-5.) Pursuant to this Agreement, Plaintiff manufactured and Defendants developed and sold TIGR®Matrix Surgical Mesh ("TIGR®Mesh"). (Id. at 9 ¶ 42-46.) In December 2008, Radi AB assigned the Agreement to Novus Scientific Pte. Ltd. or Novus Scientific, Inc., which own subsidiaries Novus Scientific AB and Novus Scientific, Inc. (Id. at ¶ 19-20).
Under Section 5 of the Agreement,
Unless [Defendants'] exclusive right terminates as provided in this Section 5, [Plaintiff] shall not sell, donate or otherwise transfer, or license or grant any rights in or to the Select Absorbable Composite Hernial Mesh (including but not limited to its chemical composition or manufacturing processes) to any other person or company for any purpose whatsoever without [Defendants'] prior written consent, the granting of which shall be in [Defendants'] sole and absolute discretion, and shall use its best efforts to keep the chemical composition, manufacturing processes, and [Plaintiff] Know-How employed to create, develop or manufacture such Select Absorbable Composite Meshes a proprietary trade secret (but this obligation shall not prevent [Plaintiff] from filing patent applications with respect to the Select Absorbable Composite Meshes).
(ECF No. 268-H at 71370.)
On January 15, 2007, Dr. Torbjorn Mathisen, Senior Scientist of Novus Scientific AB,
During our last visit[,] we discussed a suture made from the same material as used in the long[-]lasting multifilament in the surgical mesh (SMC-7). I think the name was Osseoprim and it was FDA registered according to your information. I have searched for the 510K filing on [the] FDA[']s homepage, but cannot find such a suture.4
*1071(ECF No. 268-EE at 39020.) That same day, Plaintiff responded to Dr. Mathisen's inquiries with a memo identifying the product Dr. Mathisen called "Osseoprim" as "Osteoprene" and informing him of the registration number of the 510K application. (ECF No. 268-FF at 39833.) Dr. Mathisen again inquired about Osteoprene on October 23, 2008, this time in reference to developing a similar suture product. (ECF No. 268-GG at 6157.) Then, on November 6, 2009, Dr. Mathisen, for a third time, inquired about Osteoprene in an email on which Magnusson and Dr. Roger Johansson
In addition to inquiring about Osteoprene, earlier in 2008, Dr. Mathisen, emailed Thomas Engstrom, Chief Executive Officer (CEO) of Novus Scientific Pte. Ltd.,
to expand the current [A]greement so we can actually use [TIGR®Mesh] for applications other than hernias. As the current [A]greement is worded, we only have rights to the mesh for the hernia indication....Sat with [Dr.] Roger [Johansson] yesterday and reviewed the [A]greement. I will be writing down a few things that we would like to amend and for you and [Dr. Johansson] to look over before we take up these items with [Dr.] Shalaby.
(ECF No. 268-Z at 5509.) During his deposition on May 17, 2018, Dr. Mathisen stated he was not "completely familiar with the [A]greement," and that apart from himself and the Regulatory Department, he did not know if anyone else was aware that SMC-7 was being used in Osteoprene. (ECF 290-21 at 133.)
Two years later on April 20, 2010, during a meeting between Plaintiff and Defendants, Dr. Shalaby "mentioned that he [wa]s working on a short-term resorbable mesh for another company. He would not specify the polymer, the product or the polymer, other than to say that mesh would absorb in less than four weeks and was to be used to 'make a pouch.' " (ECF No. 268-HH at 65843.) Defendants speculated the pouch was for "a pacemaker/ICD pouch." (Id. )
On August 4, 2010, in an email to James Archetto, President of Novus Scientific, Inc., Thomas Engstrom, CEO of Novus Scientific Pte. Ltd., wrote,
[Dr. Shalaby] is obviously not aware of the fact that he has already breached the [Agreement] by using confidential info from us on the mesh design by filing his own patents on the same basic concept. [F]ortunately we soon can spin our own fibres - without any confidential info from [Dr. S]halaby or [S]hawn [Peniston]. We plan to test knit in Europe *1072by [the] end of the year. Hopefully we can have a knitting machine delivered first Q 2011 and after that it will not be long until we can tell [Dr. Shalaby] to F....k off.
(ECF No. 268-KK at 146872.)
On May 8, 2015, Plaintiff commenced the present action against Defendants. (ECF No. 1.) Plaintiff filed its Second Amended Complaint on June 10, 2017, alleging breach of contract, tortious interference with contract, and violation of the South Carolina Unfair Trade Practices Act ("SCUTPA"),
II. JURISDICTION
The court has jurisdiction over this matter pursuant to
III. LEGAL STANDARD
Summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact *1073and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if proof of its existence or non-existence would affect the disposition of the case under the applicable law. Anderson v. Liberty Lobby Inc. ,
When ruling on a summary judgment motion, a court must view the evidence in the light most favorable to the non-moving party. Perini Corp. v. Perini Constr., Inc. ,
IV. ANALYSIS
Under South Carolina law,
Defendants assert Plaintiff breached the Agreement by
refusing to recognize and give [Defendants] the benefit of the operative license *1074and/or the benefit of the bargain, including but not limited to [ (1) ] improperly selling, donating, otherwise transferring, or licensing or granting rights in or to mesh (including but not limited to its chemical composition or manufacturing processes) to one or more third parties without the prior written consent of [Defendants], [ (2) ] improperly publishing (and/or allowing to be published) and/or disclosing (and/or allowing to be disclosed) information in connection with the subject matter of the...Agreement, the chemical composition, manufacturing processes, and/or "[Plaintiff] Know-How employed to create, develop or manufacture" mesh, [ (3) ] improperly asserting that [Defendants] are in breach, [ (4) ] improperly asserting that the...Agreement has been terminated, and [ (5) ] improperly attempting to "terminate" the...Agreement (which [Defendants] dispute resulted in any such termination).
(ECF Nos. 184 at 51-52; 185 at 51-52.)
A. Breach of Contract Counterclaims Regarding Plaintiff's Sale or Licensing of Mesh, Chemical Composition, and Manufacturing Processes
Plaintiff argues it "simply would not, and could not, agree to not license SMC-7 to other customers when it was doing exactly that when the Agreement was executed." (ECF No. 268-1 at 23.) Moreover, Plaintiff asserts Defendants claims are barred by the statute of limitations because Defendants knew Plaintiff was selling or licensing the polymers used to make TIGR®Mesh as early as 2007, citing the aforementioned communications about Osteoprene by Dr. Mathisen. (Id. ) However, Defendants argue there is no evidence anyone in management knew or had reason to know Plaintiff was using SMC-7 "in a non-competitive product," and dispute whether Dr. Mathisen's knowledge can be imputed to Defendants because Dr. Mathisen "was not and is not an officer, director, or managing agent of Defendants." (ECF No. 290 at 15.)
In South Carolina, "Generally, [a]gency is a question of fact." Froneberger v. Smith ,
The court finds Plaintiff has identified facts tending to prove an agency relationship between Dr. Mathisen and Defendants.
B. Breach of Contract Counterclaims Regarding Plaintiff's Commercial Exploitation of Information, Test Results, and Documentation with Respect to Testing
Under Section 7(b) of the Agreement,
All information, test results and documentation with respect to the testing, by or for [Defendants], of the Absorbable Composite Meshes for hernial repair shall be proprietary and belong exclusively to [Defendants], and [Plaintiff] shall have no right, title or interest therein. Any such information acquired by Dr. Shalaby or any other officer, director, shareholder, employee or agent of [Plaintiff] shall be employed by such person or entity solely for purposes of providing professional technical services for [Defendants] and/or developing an Absorbable Composite Mesh suitable for [Defendants'] use as provided herein, shall not otherwise be commercially exploited, and shall not be disclosed to any other person or entity (other than pursuant to court or governmental order).
(ECF No. 268-H at 71373-74.)
Plaintiff contends Defendants' breach of contract counterclaims regarding Plaintiff's exploitation of information, test results, and documentation with respect to testing are barred by the statute of limitations, citing the aforementioned August 4, 2010 communication between Thomas Engstrom, CEO of Novus Scientific Pte. Ltd., and James Archetto, President of Novus Scientific, Inc., in which Engstrom opined Plaintiff had breached the Agreement "by using confidential info from us on the mesh design by filing his own patents on the same basic concept." (ECF No. 268-KK at 1.) As a result, Plaintiff contends that more than three years before this action was filed, Defendants were on notice of the alleged breaches by Plaintiff, namely, "improperly publishing (and/or allowing to be published) and/or disclosing *1076(and/or allowing to be disclosed) information in connection with the subject matter of the...Agreement, the chemical composition, manufacturing processes, and/or '[Plaintiff] Know-How employed to create, develop or manufacture' mesh," (ECF No. 184 at 51-52; 185 at 51-52). (ECF No. 268-1 at 25-26.)
Engstrom's email to Archetto, shows two things: one, Engstrom had already discovered what he believed to be a breach of the Agreement ("[Dr. Shalaby] is obviously not aware of the fact that he has already breached the [Agreement] by using confidential info from us on the mesh design by filing his own patents on the same basic concept."); and two, Engstrom chose not to act on the believed breach because Defendants were dependent on Plaintiff's manufacturing services ("[F]ortunately we soon can spin our own fibres - without any confidential info from [Dr. S]halaby or [S]hawn [Peniston]. We plan to test knit in Europe by [the] end of the year. Hopefully we can have a knitting machine delivered first Q 2011 and after that it will not be long until we can tell [Dr. Shalaby] to F….k off."). (ECF No. 268-KK at 1.) This is the opposite of "act[ing] with some promptness where the facts and circumstances of an injury place a reasonable person of common knowledge and experience on notice that a claim against another party might exist." True ,
Accordingly, based on the evidence viewed in the light most favorable to Defendants, the court concludes Defendants should have known through the exercise of reasonable diligence that its breach of contract claims regarding commercial exploitation of information, test results, and documentation with respect to testing existed as early as August 2010. However, Defendants never filed their own breach of contract claims against Plaintiff, and asserted these breach of contract counterclaims almost six years later in 2016. (ECF Nos. 82, 83, 84.) For this reason, the court finds Plaintiff is entitled to summary judgment on Defendants' breach of contract claims regarding commercial exploitation of information, test results, and documentation with respect to testing because these claims are barred by the three year statute of limitations found in
V. CONCLUSION
Upon careful consideration of the entire record, as to Defendants' breach of contract claims regarding commercial exploitation of information, test results, and documentation with respect to testing, the court GRANTS IN PART Plaintiff's Motion for Summary Judgment (ECF No. 268). As to Defendants' breach of contract claims regarding sale or licensing of mesh, chemical composition, and manufacturing processes, the court DENIES IN PART Plaintiff's Motion for Summary Judgment (ECF No. 268).
IT IS SO ORDERED.
Plaintiff's summary judgment motion addresses all of Defendants' counterclaims. (ECF No. 268.) The only subject of this Order are Defendants' breach of contract counterclaims regarding sale or licensing of mesh, chemical composition, and manufacturing processes and commercial exploitation of information, test results, and documentation with respect to testing.
As a result of an apparent filing error, not all of the exhibits attached to Plaintiff's Motion for Summary Judgment (ECF No. 268) appear on the docket. Plaintiff moved to have the majority of these exhibits sealed (ECF No. 267), which the court granted (ECF No. 287). All of the exhibits to Plaintiff's Motion for Summary Judgment that were sealed do not appear on the docket. Therefore, the court has cited these exhibits by their given letter and any page number that appears on the bottom of the page. For those exhibits without page numbers, the court has assigned a number, starting with the title page of the exhibit.
In his declaration, Dr. Mathisen states that in 2004, he and Henrik Magnusson began inventing what would become TIGR®Mesh. (ECF No. 126-2 at 1-3.) Magnusson "was [the] Global product manager on Novus Scientific AB from 2009 until 2014." (ECF No. 126-13 at 1.)
In his deposition, Dr. Mathisen elaborated on this inquiry:
Q. [Plaintiff] used SMC-7 in other products, right?
....
[Dr. Mathisen] Yes. Now I am not sure it was the SMC-7, but I asked [Dr.] Shalaby whether [Plaintiff] had used that polymer in any product that was approved by the FDA. Then [Dr.] Shalaby said that Bruce Anneaux will look into this - it was a person working at [Plaintiff] at the time - and he later wrote me an email saying that the SMC-7 was used as a ligature in a suture anchor which was sold by a company, and I can't recall whether it was a German company or U.S. company.
(ECF 290-21 at 129.)
Dr. Roger Johansson
was Director of Intellectual Property Rights at Radi...AB from 2001 to 2009. [He] was the site manager of Novus Scientific from September 2009 to April 2012, and then Quality Assurance, Regulatory Affairs, Legal and Intellectual Property Rights Manager of Novus Scientific AB until July or August 2014.
(ECF No. 126-24 at 1.) A letter addressed to Dr. Johansson from William Matthews, the Vice President of Manufacturing at Plaintiff, also indicates Dr. Johansson was the Vice President of Novus Scientific AB in 2010. (ECF No. 271-7.)
A situation similar to what occurred with the sealed exhibits to Plaintiff's Motion for Summary Judgment (ECF No. 268) occurred with Plaintiff's Reply in Support of its Motion for Summary Judgment (ECF No.). The unredacted versions of the sealed exhibits to Plaintiff's Reply were provided to the court by email. The court has identified these exhibits by their given letter and any page number that appears on the bottom of the page. For those exhibits without page numbers, the court has assigned a number, starting with the title page of the exhibit.
(ECF No. 16-1 at 1.)
Defendants refer to Plaintiff as "PMI" in their filings.
In its order granting Defendants' Motion for Summary Judgment on Plaintiff's hernia only and patent application breach of contract claims (ECF No. 209), the court found South Carolina law governed the selection and application of the appropriate statute of limitations because, "While choice of law provisions, such as the Swedish law provision of the Agreement, govern substantive issues with the contract, the law of the forum state governs purely procedural issues," (ECF No. 252 at 8 (citing Stern v. Shelley ,
South Carolina law would still be applicable to this issue, as its resolution is necessary to determine whether Defendants' claim is barred by the statute of limitation, which, as previously discussed, does not implicate the substance of the Agreement.
"Agency is the fiduciary relationship that arises when one person (a 'principal') manifests assent to another person (an 'agent') that the agent shall act on the principal's behalf and subject to the principal's control." Froneberger ,
Henrik Magnusson and Dr. Johansson, who both served in a variety of management positions for Defendants, were copied on one of the aforementioned communications about Osteoprene cited by Plaintiff (ECF No. 268-Z at 5509). But, as the court noted, this email did not mention that SMC-7 was used to make Osteoprene.