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Stone Basket Innovations, LLC v. Cook Medical LLC

United States District Court, S.D. Indiana, Indianapolis Division

June 20, 2017

STONE BASKET INNOVATIONS, LLC, Plaintiff,
v.
COOK MEDICAL LLC, Defendant.

          ORDER ON DEFENDANT'S MOTIONS FOR EXCEPTIONALITY AND JOINDER

          LARRY J. McKINNEY, United States District Court Judge

         This matter is before the Court on Defendant Cook Medical LLC's (“Cook's”) Motion to Find the Case Exceptional and Award Fees against Plaintiff Stone Basket Innovations, LLC (“SBI”). Dkt. 99. Cook has also filed, pursuant to Federal Rule of Civil Procedure 19 (“Rule 19”), a Motion to Join Daniel Mitry and Timothy Salmon. Dkt. 91. Cook seeks the recovery of its attorneys' fees and costs against SBI, SBI's counsel Sutton McAughan Deaver PLLC (“SMD”), Mitry, and Salmon, following its defense of a patent infringement claim asserted by SBI against Cook. Dkt. 1. Cook alleges that it is entitled to its fees under 35 U.S.C. § 285, which allows for a prevailing party in patent litigation to recover attorney fees “in exceptional cases;” and/or under 28 U.S.C. § 1927 for vexatious litigation. Cook further requests, pursuant to Rule 19, that the Court personally join Mitry and Salmon to this action in order to provide Cook adequate relief. For the reasons set forth below, Cook's motions are DENIED.

         I. BACKGROUND

         A. DR. DHINDSA'S PATENT

         Avtar Dhindsa, M.D., obtained U.S. Patent No. 6, 551, 327 (the “‘327 Patent”) for his stone extraction device used to remove kidney stones. Dkt. 1. During the prosecution of the ‘327 Patent, the Examiner twice rejected the application finding that the prior art disclosed each of the limitations of the claimed invention. Dkt. 99-4 at 15-34, 88-93. To overcome these rejections, Dr. Dhinsda added a “sheath movement element” that allowed the physician extracting the stones to close the basket by advancing a “sheath” over it and then open the basket by withdrawing the sheath. Dkt. 99-4 at 99-100.

         B. PRE-SUIT INVESTIGATION

         In October 2014, Salmon contacted SMD to seek representation on the enforcement of the ‘327 Patent, which SBI had recently acquired from Dr. Dhindsa. Dkt. 106-2, ¶ 4. Salmon told Dr. Dhindsa that he wished to acquire the ‘327 Patent because he believed Cook infringed the patent. Dkt. 99-7 at 173. Salmon informed SMD that Cook had been chosen as a defendant. Dkt. 106-2, ¶ 4. On October 21, 2014, Salmon provided SMD the ‘327 Patent, the ‘327 Patent file history, and an illustrative claim chart mapping the Cook NCompass stone extraction device against claim 1 of the ‘327 Patent. Dkt. 106-2, ¶ 5.

         SMD interviewed Dr. Dhindsa about the ‘327 Patent. Dkt. 106-2, ¶ 6. Dr. Dhindsa explained the purpose and use of his invention, which was to catch the small stone particles with a basket. Dkt. 106-2, ¶ 6. He also described his prior communications with Cook about his device. Dkt. 106-2, ¶ 6. Specifically, in July 2001, prior to its publication, Dr. Dhindsa discussed his stone extraction device patent application with Cook representatives. Dkt. 106-4 at 147-48. On September 6, 2001, Cook informed Dr. Dhindsa that it believed his idea was “good” but stated that it did not have the capacity to work on his project at that time. Dkt. 106-5. In August 2006, Cook announced the release of its NCompass Nitinol Stone Extractor (“NCompass”), which is the device accused of infringement in the instant case. Dkt. 106-6.

         C. TEXAS LITIGATION

         On March 18, 2015, Mitry and Salmon formed SBI and are its only managing members. Dkt. 99-8. SBI's sole asset is the ‘327 Patent. Dkts. 99-8; 99-9; 99-10; 99-11; 99-12; 99-14.

         On April 8, 2015, SBI filed its Complaint against Cook in the Eastern District of Texas (“Eastern District”) alleging that Cook infringed the '327 Patent. Dkt. 1. SMD claims it chose the Eastern District because: (1) Cook sold and marketed the NCompass in the district; (2) the district had well developed local patent rules; (3) the district judges there are well versed in patent cases; and (4) the time to trial in the district was found to be short compared to other districts. Dkt. 106-2, ¶ 8.

         On April 30, 2015, Cook's counsel informed SMD that it would be seeking a motion to transfer, to which SBI refused to consent. Dkt. 106-2, ¶ 10. On May 15, 2015, Cook filed its Motion to Transfer Venue pursuant to 28 U.S.C. § 1404. Dkt. 10. At no point during the pendency of its motion to transfer did Cook request that SBI agree to stay the litigation proceedings until a ruling on the motion. Dkt. 106-2, ¶ 11.

         SBI served its infringement contentions on July 16, 2015, to which Cook never raised any complaint or objection. Dkt. 106-2, ¶ 12. SBI also served Cook interrogatories on August 26, 2015. Cook timely answered, but SBI claimed the responses were insufficient. Dkt. 106-9. Cook provided supplemental responses on December 15, 2015, which again SBI believed to be unsatisfactory. Dkt. 106-10. Cook supplemented its responses on March 8, 2016.[1]

         Cook served its invalidity contentions on October 1, 2015, which SBI believed did not meet the minimum standards of the Eastern District's local patent rules. Dkt. 106-11. SBI requested that Cook amend or supplement its contentions, which it did on November 2, 2015. Dkt. 106-11. Cook never communicated to SBI a demand that the lawsuit be dismissed based on the invalidity contentions. Dkt. 106-2, ¶ 13.

         On November 13, 2015, SBI indicated that no terms needed construed. Dkt. 106-13. To the contrary, Cook sought claim construction on twenty-five terms and/or phrases. Dkt. 106-15. On January 5, 2016, Cook dropped twenty-three of the twenty-five terms and added one new term for construction at the Markman hearing.

         On December 7, 2015, Cook emailed SBI to inform it that it would be requesting oral argument on its motion to transfer venue, which SBI did not oppose. Dkt. 106-18. On December 11, 2015, Cook filed its unopposed request for oral argument on December 11, 2015. Dkt. 29.

         On January 7, 2016, Cook deposed Dr. Dhindsa in Phoenix, Arizona. See Dkt. 106-4. During his deposition, Dr. Dhindsa was asked questions about his contact with Empire IP, LLC (a company owned by Mitry and Salmon and prior assignee of the ‘327 Patent), the conception of his invention, his contact with Cook, and the preparation for the ‘327 Patent. See Dkt. 106-4. When asked about the “sheath movement element” in claim 1 to overcome ...


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