[00:01:02] Speaker 01:
OK, the next argued case is number 1583, Wasser Arthopedic, Incorporated against Sasso.

[00:01:10] Speaker 01:
Mr. Fleming.

[00:01:11] Speaker 02:
Good morning, Your Honor.

[00:01:12] Speaker 02:
May it please the Court.

[00:01:13] Speaker 02:
Mark Fleming together with Mindy Souter on behalf of the Medtronic Appellants.

[00:01:17] Speaker 02:
There's no way to resolve this dispute without wrestling with substantial questions of patent validity and scope.

[00:01:23] Speaker 02:
And that is true for two independent reasons.

[00:01:26] Speaker 02:
First, the agreement itself provides

[00:01:28] Speaker 02:
that it has expired unless a patent is issued with valid claim coverage over particular medical devices.

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And second, Dr. Sasso's entire theory of liability and damages as pled and tried in state court necessarily depended on construing patent claims and determining whether they cover medtronic devices.

[00:01:45] Speaker 02:
That's why at the trial or before the trial, there was a Markman hearing in state court, a claim construction order issued

[00:01:51] Speaker 02:
There was expert testimony on claim coverage and detailed jury instructions on patent law.

[00:01:56] Speaker 01:
So the scope- So you're telling us that the litigation in the state court should just be ignored?

[00:02:02] Speaker 02:
Well, it is not relevant to this court's assessment of its own jurisdiction.

[00:02:06] Speaker 01:
Why not?

[00:02:06] Speaker 02:
That's certainly true.

[00:02:08] Speaker 02:
Because this court has an independent obligation to assess its own jurisdiction under the gun factors.

[00:02:12] Speaker 02:
And whether a state court made determinations after this complaint was filed does not bear on that.

[00:02:18] Speaker 02:
And we think all of the gun factors are eminently satisfied because patent issues are necessarily raised and they're substantial.

[00:02:24] Speaker 02:
And I don't think there's any dispute as to factors two and four once those two are resolved.

[00:02:29] Speaker 02:
And then the only question becomes, did the district court abuse its discretion in declining to exercise the jurisdiction that Congress has said is exclusive?

[00:02:38] Speaker 02:
And the fact that the state court proceeded after this complaint was filed to a trial that it had no jurisdiction to conduct,

[00:02:46] Speaker 02:
does not change the fact that the district court had exclusive jurisdiction, and this court has exclusive appellate jurisdiction.

[00:02:53] Speaker 04:
Well, the state court could determine that a patent was issued, as a matter of fact.

[00:02:57] Speaker 04:
Isn't that true?

[00:02:59] Speaker 02:
Yes, it could determine that.

[00:03:01] Speaker 02:
But that is not the issue we rely on.

[00:03:03] Speaker 02:
And it could determine the date of their expiration, as a matter of fact.

[00:03:06] Speaker 02:
The date of a patent's expiration?

[00:03:08] Speaker 02:
Yes.

[00:03:09] Speaker 02:
I suppose it could determine those things, yes, certainly.

[00:03:12] Speaker 02:
change whether the issue of the patent's scope and the patent's validity are substantial issues of patent law that under this Court's decision.

[00:03:22] Speaker 04:
The amount of money to be paid under the agreement and the term depend on the issuance of patents and their expiration, not their validity.

[00:03:36] Speaker 02:
So that is the determination that was made in the summary judgment ruling after this decision.

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declaratory judgment action was filed.

[00:03:43] Speaker 02:
So at the time this complaint was filed, which is the time at which this court determines not only the district court's jurisdiction, but also its own.

[00:03:51] Speaker 02:
That order had not been issued.

[00:03:52] Speaker 02:
Now had the state court done what we think it should have done, which was dismiss the state court judgment, the state court proceeding, because it lacked jurisdiction, that would never have come out.

[00:04:01] Speaker 02:
Besides, that issue was one of Tennessee law, not one of Indiana law.

[00:04:05] Speaker 02:
There's no requirement that federal courts defer to one state court's application

[00:04:09] Speaker 02:
of a different state's law.

[00:04:10] Speaker 02:
The Supreme Court told us that in Titus versus Wallach and Adam versus Sanger, which we cite.

[00:04:14] Speaker 02:
And also, a clearly erroneous determination, even if made under state law, is not preclusive if it would have the effect of depriving a federal court of jurisdiction.

[00:04:23] Speaker 02:
We cite a number of cases to that effect.

[00:04:24] Speaker 02:
And that sentence that Your Honor read

[00:04:26] Speaker 02:
does not even engage with, it was something drafted by Dr. Sasso's counsel, signed by the state judge.

[00:04:31] Speaker 02:
It has no analysis at all beyond the conclusion that Your Honor read.

[00:04:35] Speaker 02:
It does not address the key provision of the contract, which is section 7, which defines the term of the agreement.

[00:04:42] Speaker 02:
And one would think in determining the term of the agreement, one would construe and engage with the provision that is entitled term.

[00:04:48] Speaker 02:
And that one clearly says that the contract has expired unless a patent with, quote, valid claim coverage

[00:04:56] Speaker 02:
close quote, has issued and covers the Medtronic products.

[00:05:01] Speaker 02:
And the fact that the state court clearly erroneously came to a determination as to whether the contract was enforceable or not does not prevent this court from making a fresh determination of its own jurisdiction, which we think it has to do.

[00:05:14] Speaker 03:
What is the present posture of the appeal from the state court judgment?

[00:05:21] Speaker 02:
Our opening brief is due later this month, Judge Scholl.

[00:05:23] Speaker 02:
That is the posture.

[00:05:25] Speaker 02:
in the Indiana Court of Appeals, the intermediate court.

[00:05:27] Speaker 03:
And is that the highest court of appeals?

[00:05:30] Speaker 02:
It is not.

[00:05:30] Speaker 02:
That's the intermediate court.

[00:05:31] Speaker 03:
The Supreme Court of Indiana is the highest state court.

[00:05:33] Speaker 03:
I'm asking because the district court opinion here sort of said, well, I'm going to take a wait and see.

[00:05:41] Speaker 03:
We'll see what happens in the state court proceedings.

[00:05:44] Speaker 02:
And maybe this could all be reopened then.

[00:05:48] Speaker 02:
So we think under this court's decision in, I believe it's either CAPO or CAPO, we are not required to wait for a determination of the dispute among the parties.

[00:05:58] Speaker 02:
by the only court that has jurisdiction that Congress gave it, which is the district court.

[00:06:03] Speaker 02:
Are the patent issues?

[00:06:04] Speaker 03:
Well, I can't ask you to say at this point, because you haven't filed your brief yet.

[00:06:09] Speaker 03:
But I thought I didn't realize that the briefs hadn't been filed yet in that case.

[00:06:13] Speaker 03:
So we don't know exactly what issues are presented in the appeal.

[00:06:19] Speaker 02:
I mean, that's certainly true.

[00:06:21] Speaker 02:
There's nothing on the public record.

[00:06:23] Speaker 02:
I mean, I have an idea.

[00:06:24] Speaker 02:
I mean, we certainly plan to appeal the patent issues, certainly.

[00:06:28] Speaker 02:
Because that's what this case was all about.

[00:06:30] Speaker 02:
I mean, both before we filed our complaint in the district court and afterwards.

[00:06:35] Speaker 02:
Dr. Sasso, from his complaint first asserting the facet agreement on pages 166 and 167 of the appendix, makes plain that his whole theory of recovery is because he believes claims of the 313 and the 046 patents cover Medtronic products.

[00:06:50] Speaker 02:
He says that's what he's going to prove.

[00:06:52] Speaker 02:
You're urging us to find jurisdiction, correct?

[00:06:55] Speaker 02:
The court needs to find jurisdiction.

[00:06:57] Speaker 02:
If it doesn't, it has to transfer to the Seventh Circuit.

[00:06:58] Speaker 03:
Now, that's what I was going to ask you.

[00:07:00] Speaker 03:
If we don't find jurisdiction, why would we transfer to the Seventh Circuit instead of just dismissing it?

[00:07:06] Speaker 02:
Well, if the court doesn't have jurisdiction, I mean, we have timely notice in appeal.

[00:07:09] Speaker 02:
We have the right to some Court of Appeals review of the district court's

[00:07:13] Speaker 03:
dismissal of our declaratory judgment action.

[00:07:17] Speaker 03:
If we found we lacked jurisdiction because we applied the gun factors, contrary to the way you would want us to do it, but assume one went through the gun factors and said no jurisdiction in the federal circuit because no patent issue, right?

[00:07:32] Speaker 03:
That's what we would be finding.

[00:07:33] Speaker 03:
I prefer to contemplate the situation where you agree with me.

[00:07:35] Speaker 03:
No, I understand.

[00:07:37] Speaker 03:
We obviously have to look at all the parameters.

[00:07:41] Speaker 03:
Why would, what would there be for the Seventh Circuit to do then?

[00:07:45] Speaker 02:
I think the Seventh Circuit would have to assess its own jurisdiction and as happened in the Zeitronics case, they could well disagree with that.

[00:07:52] Speaker 02:
They would be able to independently determine whether they think the district court had jurisdiction and on what basis.

[00:07:57] Speaker 03:
But it would turn on a patent issue.

[00:07:58] Speaker 03:
We would have said there's no patent jurisdiction here.

[00:08:03] Speaker 03:
And as I looked at the DJ complaint, it appears that the whole focus was on patent issues.

[00:08:10] Speaker 03:
And if

[00:08:11] Speaker 03:
I guess what I'm trying to get squared away in my own head is if respectfully we were to disagree with you and say there's no jurisdiction in our court, I'm wondering why the proper result wouldn't be just a dismissal as opposed to a transfer because I can't see what there would be for the

[00:08:28] Speaker 03:
7th Circuit to do.

[00:08:29] Speaker 03:
Now, maybe other side will have a different view on that.

[00:08:32] Speaker 02:
Yeah.

[00:08:32] Speaker 02:
No, I think the 7th Circuit would still have to review the district court's decision under Wilton and Brilhart, and whether there was a proper exercise of discretion.

[00:08:41] Speaker 02:
And that would include evaluating the district court's decision.

[00:08:44] Speaker 02:
I don't think it would be bound.

[00:08:45] Speaker 02:
by this court's evaluation of the issue, it would no doubt take it into account.

[00:08:49] Speaker 02:
But I think it would be deciding the issue afresh.

[00:08:51] Speaker 02:
I don't think this court could, for instance, either affirm, it couldn't affirm the district court.

[00:08:56] Speaker 02:
If your honor concludes you don't have appellate jurisdiction, you can't affirm the district court.

[00:09:00] Speaker 02:
And I don't think it would be proper to dismiss, because we have the right to have some kind of appellate review of the district court's decision.

[00:09:09] Speaker 02:
So with respect, I'm happy to go through the gun factors.

[00:09:12] Speaker 02:
I think it's clear, not least because of this court's decision in Jiang, which I think is completely indistinguishable from this case, where you have a contract that makes the enforceability of the contract and the payability of royalties depend on patent claim coverage.

[00:09:26] Speaker 02:
That is a patent issue that is necessarily raised.

[00:09:28] Speaker 02:
And it is something that is substantial within the meaning of gun.

[00:09:33] Speaker 02:
And this is, I think, what distinguishes it from the Inspired Development case, which was decided recently.

[00:09:39] Speaker 02:
We put in on a 28-J letter earlier this week.

[00:09:42] Speaker 02:
The issues of federal patent law are necessary here.

[00:09:44] Speaker 02:
They weren't in Inspired Development.

[00:09:45] Speaker 02:
They weren't in NeuroRepair.

[00:09:47] Speaker 02:
But NeuroRepair specifically cited Jang as an example of the case where the patent issues were dispositive.

[00:09:53] Speaker 02:
And that's precisely what's going on here.

[00:09:55] Speaker 02:
That's how it was pled.

[00:09:56] Speaker 02:
And that's how it was tried.

[00:09:57] Speaker 02:
So we don't think there's actually any significant difference between this case and Jang.

[00:10:01] Speaker 02:
And so we'd respectfully submit that there is federal jurisdiction exclusive in the district court and exclusive appellate jurisdiction in this court.

[00:10:10] Speaker 02:
And that, we would also submit, resolves the question under Wilton and Brillhardt.

[00:10:14] Speaker 02:
Because neither Dr. Sasso nor the district court cited any case suggesting that it is remotely proper for a federal court to decline to hear a DJ action that's within its exclusive jurisdiction simply because there is a state court that has improperly exercised jurisdiction over the dispute.

[00:10:29] Speaker 02:
But that's what the district judge

[00:10:31] Speaker 02:
did here.

[00:10:32] Speaker 02:
The court assumed that it had jurisdiction, which means exclusive jurisdiction.

[00:10:36] Speaker 02:
And that meant the state court lacked jurisdiction.

[00:10:39] Speaker 02:
But the district court then refused to exercise that out of respect for what had then become a judgment.

[00:10:44] Speaker 02:
It wasn't at the time we filed the case, but it took months.

[00:10:46] Speaker 02:
And then by then, there had been a trial and then ultimately a judgment that by the district court's own assumption was a felony under both federal and Indiana law.

[00:10:55] Speaker 02:
And that's an abuse of discretion.

[00:10:56] Speaker 02:
Brilhart and Wilton both involved state issues purely

[00:11:00] Speaker 02:
And they said, however, that when a plaintiff asserts that the controversy can be fully adjudicated in state court, then the federal court needs to determine whether that's actually true.

[00:11:07] Speaker 02:
And of course, a state court cannot fully adjudicate a dispute that is within the exclusive jurisdiction of the federal courts.

[00:11:14] Speaker 02:
And as I said, Dr. Sasso hasn't cited.

[00:11:16] Speaker 02:
We haven't found any case, not one, where a court declined declaratory jurisdiction in favor of a state suit that fell within exclusive federal jurisdiction.

[00:11:25] Speaker 02:
The court made other errors as well, respectfully, which compounded it.

[00:11:28] Speaker 02:
The court misunderstood our authorities, thought that they were addressing only Colorado River.

[00:11:34] Speaker 03:
Abstention to do in we identify them as such of course what if what if the appellate process in Indiana results in a win for you namely the appellate court says the trial court in Indiana got the Got the patent issues wrong and so you win on the patent issues in Indiana.

[00:11:59] Speaker 03:
Where does that leave things?

[00:12:00] Speaker ?:
I

[00:12:00] Speaker 02:
I mean, I certainly hope that the courts of Indiana will eventually recognize that either we were correct on the merits or that the case didn't belong to Indiana in the first place.

[00:12:08] Speaker 03:
Because then you would have gotten a favorable decision from the state court system on the patent issues.

[00:12:14] Speaker 02:
Yes.

[00:12:14] Speaker 02:
I mean, we would welcome that, obviously.

[00:12:17] Speaker 02:
We were made to go through the trial.

[00:12:19] Speaker 02:
We litigated the trial in the belief, we think, correct, that we have paid all that Dr. Sasse was entitled to under this law.

[00:12:27] Speaker 02:
So that eventuality would moot the DJ action.

[00:12:31] Speaker 02:
Not entirely, I don't think, because ultimately the case as it went to trial in Indiana did not involve all the claims at issue in the patents.

[00:12:42] Speaker 02:
It involved a subset of them, but ultimately Dr. Sasso left a few of them go, so the DJS is broader in that sense that it involves all of the patents.

[00:12:50] Speaker 02:
Dr. Sasso ultimately didn't try the 046 patent at all.

[00:12:53] Speaker 02:
That's part of our DJ complaint.

[00:12:55] Speaker 02:
So there would still be issues now.

[00:12:56] Speaker 02:
Whether we would still continue to press them, I think, would depend on timing and that sort of thing.

[00:13:01] Speaker 02:
But they're not.

[00:13:03] Speaker 02:
The DJ covers the claims that were litigated in Indiana, but it also covers the rest of the patents as well.

[00:13:10] Speaker 02:
So what I'd just point out, we clearly cited to the district court cases under Wilton and Brillhart.

[00:13:16] Speaker 02:
We cited Epling, UL, Carlin, Saber oxidation, which we've also cited.

[00:13:21] Speaker 02:
To this court, the district court, I think, discarded those in the erroneous impression that they were Colorado River cases.

[00:13:27] Speaker 02:
They're not.

[00:13:28] Speaker 02:
And the district court also erroneously thought that there was no benefit to Medtronic from filing this complaint unless the district court could somehow disturb the Indiana judgment.

[00:13:37] Speaker 02:
And of course, that's not our position.

[00:13:39] Speaker 02:
Obviously, we're appealing the Indiana judgment.

[00:13:41] Speaker 02:
We hope that that appellate process will take care of that.

[00:13:44] Speaker 02:
But we filed this case for a completely different reason, which is we want this dispute to be resolved.

[00:13:49] Speaker 02:
And we want it to be resolved by the court that has exclusive jurisdiction that Congress gave it.

[00:13:55] Speaker 02:
And under CAPO, we're entitled to have that now.

[00:13:56] Speaker 02:
We don't have to wait until the state appellate process plays out.

[00:14:00] Speaker 02:
Unless there are further questions, I would respectfully reserve the remainder of my time for a bottle.

[00:14:03] Speaker 01:
We'll hear from the other side, and we'll save you a rebuttal.

[00:14:05] Speaker 02:
Thank you very much, Your Honor.

[00:14:06] Speaker 01:
Let's hear from Mr. Enhart.

[00:14:11] Speaker 00:
May it please the Court, contrary to the claims of the appellate, Dr. Sasso could prevail on the claims of

[00:14:18] Speaker 00:
of this lawsuit or this mere lawsuit without mentioning the language of the issued patents at all.

[00:14:26] Speaker 00:
Christiansen versus Colt Industries says that if on the face of a well-pleaded complaint, there are reasons completely unrelated to the provisions and purposes of the patent laws, why the plaintiff may or may not be entitled to relieve, then the claim does not arise under those laws.

[00:14:41] Speaker 00:
It goes on to state, a claim

[00:14:44] Speaker 00:
Formed by alternative theories may not form the basis for 1338 jurisdiction unless patent law is essential to each of the theories.

[00:14:55] Speaker 00:
Here, the well-pleaded complaint could be proven without going to the language of the issued patent at all.

[00:15:04] Speaker 00:
This, at its core, is a contract dispute.

[00:15:07] Speaker 00:
Dr. Sasso created surgical instruments.

[00:15:11] Speaker 00:
For spine surgery on his own he took those two medtronic.

[00:15:15] Speaker 00:
He assigned all intellectual property including know-how Surrounding that the instruments to medtronic in a detailed written agreement I'm sorry to interrupt yes, but I had it and I know you're in the middle of something I did have a question I wanted to ask yes, and it's the same question.

[00:15:34] Speaker 03:
I asked Mr.. Fleming if I could What if we determine?

[00:15:40] Speaker 03:
that there was no jurisdiction for our court here.

[00:15:43] Speaker 03:
What would you say would be the correct remedy?

[00:15:46] Speaker 03:
Mr. Fleming suggests that we should transfer it to the Seventh Circuit.

[00:15:52] Speaker 03:
I was sort of thinking that, well, if we find no jurisdiction, what would there be for the Seventh Circuit?

[00:15:59] Speaker 03:
Wouldn't it just be a dismissal?

[00:16:00] Speaker 03:
Do you have a view on that?

[00:16:02] Speaker 00:
I believe that the court could and should simply dismiss this complaint.

[00:16:08] Speaker 00:
There is no.

[00:16:08] Speaker 03:
Without a transfer.

[00:16:10] Speaker 00:
Yeah, there is no underlying diversity jurisdiction that exists in most of the cases that come before this court that are then transferred back to a different court of appeals, as with the Inspired Development case that was recently decided by Judge Newman's panel.

[00:16:28] Speaker 00:
And because of that.

[00:16:29] Speaker 00:
You say could.

[00:16:31] Speaker 04:
Yes.

[00:16:33] Speaker 04:
Dismissed.

[00:16:34] Speaker 04:
Are you implying that we could also transfer?

[00:16:37] Speaker 00:
Well, I wish I knew jurisdiction as well as you all probably do, but they did say supplemental jurisdiction.

[00:16:47] Speaker 00:
It's true that the judge used Wilton Brillhardt discretion to dismiss the complaint.

[00:16:53] Speaker 00:
But he did that without prejudice.

[00:16:55] Speaker 00:
And we've said in our briefing, why are we even here when the

[00:17:01] Speaker 00:
was simply dismissed without prejudice.

[00:17:03] Speaker 00:
And if there isn't any other jurisdiction diversity there, then to just dismiss it seems like an appropriate way to go and an appropriate relief for my client.

[00:17:15] Speaker 00:
And so we would say simply dismiss.

[00:17:20] Speaker 00:
Looking at the well-pleaded complaint, it would have to closely track the written agreement between the parties.

[00:17:27] Speaker 00:
This written agreement is at the appendix.

[00:17:30] Speaker 00:
It's an exhibit to the third amendment complaint and also at the appendix 596.

[00:17:34] Speaker 00:
And in this agreement, he assigns his rights in an invention in exchange for royalties to be paid on a medical device using the invention.

[00:17:46] Speaker 00:
The invention is defined, and that's very important.

[00:17:49] Speaker 00:
It's any product, method, system,

[00:17:52] Speaker 00:
system relating to a facet screw instrumentation and a headless facet screw fixation system as described in schedule a This is important the parties defined the invention they didn't leave it to patent laws to come up with what the invention was schedule a says States facet screw instrumentation and a headless facet screw fixation system consisting of bone screws and

[00:18:18] Speaker 00:
and associated instruments for installation thereof.

[00:18:22] Speaker 00:
There's no mention of a patent there either.

[00:18:24] Speaker 00:
The medical device at 597 is any device, article, system, apparatus, or product

[00:18:32] Speaker 00:
including the invention.

[00:18:33] Speaker 00:
Again, no mention of any patent.

[00:18:35] Speaker 01:
The contract says any valid patent.

[00:18:38] Speaker 01:
Are you saying that in your view, and I'm thinking now of Christensen against Colt, that the state court would not have jurisdiction if in fact a fair interpretation of that contract was that the patent needed to be valid?

[00:18:57] Speaker 00:
I would still think that the

[00:18:59] Speaker 00:
the state court would have jurisdiction that, and that is because the gun factors are four, that it's necessarily adjudicated and that it's actually disputed and it's substantial and there's not an upset of the balance between federal and state law.

[00:19:16] Speaker 00:
And here, even if the Indiana Court of Appeals reversed the validity summary judgment order that

[00:19:25] Speaker 00:
took out the valid claim coverage language that is the cornerstone.

[00:19:31] Speaker 00:
It's the mainstay of everything that they pleaded to the district court.

[00:19:35] Speaker 00:
Even if they took that away, they could take it away.

[00:19:39] Speaker 00:
And that agreement, that term part of the agreement, it doesn't just say valid claim coverage.

[00:19:44] Speaker 00:
It says that the agreement is to last until the last two expire of the intellectual property rights included in the agreement.

[00:19:53] Speaker 01:
A valid intellectual property.

[00:19:56] Speaker 00:
Well, the first part is simply on the expiration date of the patent, the first part of paragraph seven.

[00:20:04] Speaker 00:
And then it says, or if no patents issue with valid claim coverage, then seven years from the date of first sale of the medical device.

[00:20:12] Speaker 00:
Well, even that paragraph has payments being made for seven years after the sale of the medical device, which

[00:20:19] Speaker 00:
That's not raising a patent law issue either.

[00:20:23] Speaker 00:
But as it stands, the ruling has taken out completely their whole reason for filing this lawsuit about getting some ruling about valid claim coverage.

[00:20:35] Speaker 03:
General, let me ask you.

[00:20:37] Speaker 03:
We have to look at the four gun factors, correct?

[00:20:41] Speaker 03:
Yes.

[00:20:41] Speaker 03:
Now, we also have the fact here that there's been a verdict and a judgment in the state trial court in Indiana.

[00:20:51] Speaker 03:
Mr. Fleming has told us that it's now on appeal and his briefs are due to be filed shortly at the first appellate level and then there's the second appellate level.

[00:21:01] Speaker 03:
How does that fact, in other words, the pending case in Indiana, play into the gun analysis?

[00:21:08] Speaker 03:
In other words, which of the gun factors does the consideration that we have litigation in Indiana play into?

[00:21:15] Speaker 03:
Do you understand my question?

[00:21:16] Speaker 00:
Yeah.

[00:21:17] Speaker 00:
I believe that that goes to factor four.

[00:21:20] Speaker 00:
And what we have here is a company that used the Indiana court system to seek a dismissal

[00:21:29] Speaker 00:
because of subject matter jurisdiction and lost that ruling.

[00:21:33] Speaker 00:
So we've fully and fairly litigated the issue before the state court.

[00:21:39] Speaker 00:
It was rejected, and now it's being appealed.

[00:21:41] Speaker 00:
And if the federal system steps in and takes that away from the state system, the state system has made a ruling.

[00:21:49] Speaker 00:
Both sides have litigated, and it's going up on appeal.

[00:21:54] Speaker 00:
And it would seem that to do that would be

[00:21:58] Speaker 00:
In violation or contrary to factor four it's upsetting the balance yes, and so that that has been done and to do that it's like they're they've lost in the state court and That now has become a final judgment And it is on appeal and I think it also that's relevant to the wilton-brilhart abstention factors that that the district court judge has

[00:22:26] Speaker 00:
looked at in saying, I'm going to dismiss this case without prejudice, because it is going up on appeal.

[00:22:32] Speaker 00:
And many different things could happen on appeal that would moot everything about this declaratory judgment action that's been filed anyway.

[00:22:40] Speaker 00:
And that's a reason for a district court to step back and say, I will assume without citing jurisdiction and dismiss.

[00:22:49] Speaker 00:
And again, in the arguments that I'm hearing about assuming jurisdiction, it's assuming

[00:22:56] Speaker 00:
But they're ignoring that it's without deciding, that he didn't say that there was jurisdiction.

[00:23:02] Speaker 00:
He just used that to get to Wilton.

[00:23:06] Speaker 00:
It's an even if statement.

[00:23:08] Speaker 00:
Yeah, even if, right.

[00:23:10] Speaker 00:
And I think that this court, I cited cases in my brief where that's used a lot.

[00:23:15] Speaker 00:
That it's assuming without deciding is a way to get to other reasons for taking the action that the court does.

[00:23:27] Speaker 03:
And he can correct me if I'm wrong.

[00:23:28] Speaker 03:
Mr. Fleming said in an oral argument a few minutes ago, he said that, well, he'll correct me if I'm wrong on this, that even if we, meaning his client Medtronic, prevails in the Indiana appeal process, that there's still, the case doesn't totally go away from his standpoint.

[00:23:47] Speaker 03:
There's still an open question.

[00:23:48] Speaker 03:
Do you remember him talking about that as to the validity of the 064 patent?

[00:23:52] Speaker 03:
But he said, you know, we maybe wouldn't pursue it.

[00:23:55] Speaker 03:
Do you have a comment on that?

[00:23:57] Speaker 03:
Do you remember what I'm talking about?

[00:24:00] Speaker 00:
I can't remember that exactly, but there are issues between the parties about these contracts.

[00:24:08] Speaker 00:
The Indiana State Court has found both contracts enforceable and has awarded damages.

[00:24:16] Speaker 00:
That brings up other factors about continuing damages under these contracts, but that

[00:24:24] Speaker 00:
with the Indiana Court of Appeals deciding these issues, then the parties will know whether or not it's a state law or federal law that decides the claim.

[00:24:38] Speaker 00:
But that's something that the Court of Appeals will be doing in the appellate process.

[00:24:44] Speaker 00:
So I'm trying to go through the language with you, that there is no language in this agreement.

[00:24:51] Speaker 00:
So only the length of the time and the patents and that's the only thing that how long they go is how long he's supposed to be paid for.

[00:25:01] Speaker 00:
So there are four issues.

[00:25:03] Speaker 00:
What is the medical device?

[00:25:04] Speaker 00:
What is the invention?

[00:25:06] Speaker 00:
Was he paid in accordance with 4B?

[00:25:09] Speaker 00:
And what are his damages?

[00:25:11] Speaker 00:
And proving that,

[00:25:12] Speaker 00:
There's no need to use the language of the issued patent to do that.

[00:25:16] Speaker 00:
Now, the patents did come up.

[00:25:19] Speaker 00:
And the patents were transferred to the company.

[00:25:24] Speaker 00:
And patent application was written.

[00:25:27] Speaker 00:
There was all sorts of evidence to determine what the invention was.

[00:25:32] Speaker 01:
When do these patents expire?

[00:25:36] Speaker 00:
In 17 days.

[00:25:37] Speaker 00:
Well, the 313 patent on November 23rd, 29th.

[00:25:41] Speaker 01:
Where does that take us?

[00:25:43] Speaker 01:
The initial seven years has passed.

[00:25:46] Speaker 01:
Where do we stand in the number of years that are left?

[00:25:50] Speaker 00:
Yeah, well, 17 days are left on the 3-1-3 patent.

[00:25:53] Speaker 00:
It will expire November 20th.

[00:25:55] Speaker 01:
17 days?

[00:25:56] Speaker 00:
Days, yes.

[00:25:58] Speaker 00:
And so there are almost no more damages to be accrued under the agreements anyway.

[00:26:08] Speaker 01:
But that is not the damages that will accrue in the future, right?

[00:26:14] Speaker 01:
It's the jury award of damages.

[00:26:16] Speaker 00:
Well, the jury awarded damages through December 31 of 2017, I believe.

[00:26:23] Speaker 00:
There was no other data provided to the damages expert.

[00:26:29] Speaker 00:
And there also are two different agreements that were at trial before the trial court, and there were

[00:26:35] Speaker 00:
There were case within a case patent type issues in the vertex dispute.

[00:26:41] Speaker 00:
And those were also decided by the state trial court.

[00:26:45] Speaker 00:
But Vertex is not before us.

[00:26:47] Speaker 00:
And Vertex is not before.

[00:26:49] Speaker 00:
This case was removed right when it was filed.

[00:26:52] Speaker 00:
And Judge Miller of the Northern District of Indiana looked at the gun factors and remanded it to the state court.

[00:27:00] Speaker 00:
And that included, that made the Vertex dispute something for the state court to consider.

[00:27:10] Speaker 04:
One more interesting question.

[00:27:13] Speaker 04:
I say that's going to be a much more interesting question if we ever see it.

[00:27:17] Speaker 00:
The vertex one.

[00:27:20] Speaker 00:
And again, this is all going up to the Indiana Court of Appeals.

[00:27:24] Speaker 00:
And the subject matter jurisdiction argument has already been made and fully briefed and going before the Court of Appeals.

[00:27:37] Speaker 00:
This analysis that I give you is the exact same analysis that Medtronic used

[00:27:43] Speaker 00:
when they filed a motion for summary judgment to limit the screws that could be considered, the implants that could be considered as the ones they'd already paid on.

[00:27:54] Speaker 00:
And if you go to the 932 of the appendix, that is their brief in support of a motion for summary judgment on this.

[00:28:04] Speaker 00:
And they are saying that they go through it and say, we're only paying on medical devices, and medical devices are limited.

[00:28:13] Speaker 00:
And contrary to what they say in their reply brief, at the 1286 of the appendix is the judge denial of their summary judgment order.

[00:28:24] Speaker 00:
And he finds ambiguity in the provisions that I've given to you, which I read those provisions.

[00:28:30] Speaker 00:
And I think that there is ambiguity.

[00:28:33] Speaker 00:
He found that.

[00:28:34] Speaker 00:
And that's what was being tried in the state court, was what came out of his summary judgment order found at 1286 of the appendix.

[00:28:45] Speaker 00:
So all those things show that with a well-pleaded complaint... You cite us to 932.

[00:28:52] Speaker 00:
932 is the brief.

[00:28:53] Speaker 00:
Yeah, we're in the brief.

[00:28:55] Speaker 00:
And I think it's a...

[00:28:57] Speaker 00:
949 is where that argument goes.

[00:29:03] Speaker 00:
And then at 1286 is his order on that.

[00:29:08] Speaker 00:
And so everyone is looking at this agreement saying that's how you analyze it.

[00:29:14] Speaker 00:
And so the essence of this dispute is what is a medical device?

[00:29:20] Speaker 00:
And Dr. Sassell said that consistently throughout this case, that that's what's going on.

[00:29:27] Speaker 00:
And that's what happened, and that's how he could prevail without ever looking at the patents that he transferred.

[00:29:32] Speaker 00:
Now, of course, when a patent application is written on an invention, and the facts here are that he created the prototypes, and he went to patent attorney, and the patent attorney put together the pictures and the different things of the patent, had to describe them, wrote everything about a patent, then that is helpful, along with lab notes and emails and everything else that goes into

[00:29:56] Speaker 00:
defining that ambiguous term, medical device, that had to be done for the state court trial to determine what the intent of the parties was.

[00:30:06] Speaker 00:
So now we have a verdict, too.

[00:30:08] Speaker 00:
And the verdict is simply a damages verdict.

[00:30:14] Speaker 00:
In Indiana, general verdicts are given by juries.

[00:30:18] Speaker 00:
There are no special interrogatories and special verdicts as there is in federal court.

[00:30:23] Speaker 00:
So we have a number.

[00:30:25] Speaker 00:
And there haven't been any, no patent's been declared invalid or valid, no or infringed or not infringed.

[00:30:33] Speaker 00:
It's simply a damage amount, and it has no effect on the lay of the land in the patent system.

[00:30:41] Speaker 00:
It is simply a verdict establishing damages on two different contracts.

[00:30:48] Speaker 00:
And so I think when you look at the cases

[00:30:52] Speaker 00:
Air Incident, Uroplasty, they all are cases that come before this court that demonstrate that just because their patents are mentioned, there is not a rising under jurisdiction under the factors of gut.

[00:31:06] Speaker 00:
So, OK.

[00:31:08] Speaker 01:
OK.

[00:31:08] Speaker 01:
Thank you.

[00:31:10] Speaker 01:
Thank you.

[00:31:11] Speaker 01:
Mr. Brennan, you're very welcome.

[00:31:20] Speaker 02:
Thank you, Your Honor.

[00:31:22] Speaker 02:
Quick point, and then three hopefully also quick points.

[00:31:26] Speaker 02:
First, to Judge Wallach's question, on page three of the red brief, Dr. Sassow's counsel asks that the court either dismiss or transfer the case to the US Court of Appeals for the Seventh Circuit.

[00:31:36] Speaker 02:
So they certainly contemplate that the court may transfer.

[00:31:39] Speaker 02:
And we think if the court concludes there is no jurisdiction, that's the right answer.

[00:31:44] Speaker 02:
Three remaining points, if I may.

[00:31:46] Speaker 02:
First of all, with respect to the necessity of deciding

[00:31:50] Speaker 02:
the patent issues.

[00:31:52] Speaker 02:
If one looks at page 600 of the appendix, which is where you find section seven governing the term of the agreement, it specifically says, the agreement shall expire upon the last to expire of the patents included in the intellectual property rights, or if no patent applications issue into a patent having valid claim coverage of the medical device, then seven years.

[00:32:12] Speaker 02:
That's 600?

[00:32:12] Speaker 02:
600, yes.

[00:32:14] Speaker 02:
And that's section seven entitled term of the agreement.

[00:32:16] Speaker 02:
There is no way

[00:32:18] Speaker 02:
to determine which of those contingencies applies, whether we're talking about life of patent royalties or seven years of royalties, without determining valid claim coverage.

[00:32:29] Speaker 02:
The fact that Dr. Sasso's counsel wrote an order and the state court judge signed it giving absolutely no notice to this provision at all does not change the fact that that is an issue that, and certainly as of the time when we filed this declaratory judgment complaint, which was before they even moved for summary judgment on this point, this is something that we think

[00:32:47] Speaker 02:
needs to be determined in order to resolve the dispute among the parties.

[00:32:51] Speaker 02:
And this court can decide it and must decide it in order to assess both its jurisdiction and the district court's jurisdiction.

[00:32:56] Speaker 02:
The second point, Mr. Amherst said, the patents did come up.

[00:33:00] Speaker 02:
Respectfully, that is the understatement of the century.

[00:33:02] Speaker 02:
In the complaint on page 166 and 167.

[00:33:05] Speaker 02:
Are you alleging some impropriety?

[00:33:07] Speaker 04:
I beg your pardon?

[00:33:08] Speaker 04:
Are you alleging some impropriety?

[00:33:11] Speaker 02:
Not in the least, Your Honor.

[00:33:11] Speaker 04:
I'm alleging disagreement.

[00:33:13] Speaker 04:
Trial courts all the time, when I practice

[00:33:18] Speaker 04:
It was routine that they would say, prepare an order.

[00:33:22] Speaker 04:
And then they'd prepare an order.

[00:33:24] Speaker 04:
And then they'd review it, look at the finance fed inclusions, and so on.

[00:33:29] Speaker 04:
And they'd sign it or modify it as they thought fit.

[00:33:32] Speaker 04:
But that, just because counsel prepared the order and the court signed it, doesn't work.

[00:33:38] Speaker 02:
No, no.

[00:33:38] Speaker 02:
I don't mean to suggest.

[00:33:39] Speaker 02:
I'm sorry, Judge Walk.

[00:33:40] Speaker 02:
I do not mean to suggest impropriety.

[00:33:42] Speaker 02:
The point is there was no analysis at this point.

[00:33:44] Speaker 02:
And so there's nothing for this court to defer to, to the extent

[00:33:48] Speaker 02:
Dr. Sasso's counsel is suggesting that there needs to be deference to that construction of the complex.

[00:33:53] Speaker 03:
What about the fact that, and I discussed this with Mr. Amar a little bit, that we have this state court process in full bloom, so to speak.

[00:34:07] Speaker 03:
Where do you think that plays into the gun analysis?

[00:34:11] Speaker 03:
He says it's a significant point with respect to factor four of gun.

[00:34:17] Speaker 03:
What is your response to that?

[00:34:19] Speaker 02:
I don't think it is, Judge Schall, because I think the determination of the gun factors has to do with what is on the face of the well-pleaded complaint.

[00:34:31] Speaker 02:
Does it necessarily raise patent issues?

[00:34:33] Speaker 02:
Of course it does.

[00:34:34] Speaker 02:
Are they substantial?

[00:34:35] Speaker 02:
Yes, they are, for the same reason as they were in Jang.

[00:34:38] Speaker 02:
Are they disputed?

[00:34:39] Speaker 02:
Of course they were.

[00:34:40] Speaker 02:
We had a full trial about them in the wrong court, but there was a full trial about them.

[00:34:43] Speaker 02:
And then finally, would exercising federal jurisdiction upset the federal state balance?

[00:34:48] Speaker 02:
And that has weighed against situations where you have, for instance, a Florida court deciding issues of Florida law, construing a Florida contract.

[00:34:56] Speaker 02:
But here you have a Tennessee contract being adjudicated by an Indiana court.

[00:35:00] Speaker 02:
There's no reason to defer to that.

[00:35:02] Speaker 02:
The federal district court can construe a Tennessee contract just as well as the Indiana court can.

[00:35:06] Speaker 04:
Is that Indiana conflicts of law?

[00:35:08] Speaker 04:
Determination?

[00:35:09] Speaker 02:
The contract specifically specifies Tennessee law, and that was not disputed.

[00:35:14] Speaker 02:
The jury was instructed on Tennessee law.

[00:35:16] Speaker 02:
That's how this contract is construed.

[00:35:19] Speaker 02:
With respect, by the way, to the way that the patent issues permeated this case from the very beginning, I would urge the court to look at page 166 of the appendix.

[00:35:28] Speaker 02:
Paragraph 67, this is the complaint that has the facet allegations in it.

[00:35:32] Speaker 02:
Quote, Medtronic through an acquisition now manufactures and sells Kaifon Anchor FS

[00:35:36] Speaker 02:
which product and method is covered by several claims of the screw delivery patents.

[00:35:41] Speaker 02:
Same page paragraph 70, patent numbers 313 and 046 describe in the Summary of Invention and have claims that cover a screw delivery system at the heart of different Medtronic products.

[00:35:51] Speaker 02:
Next page 167, paragraph 71, patent numbers 313 and 046 describe and have claims that cover products other than the facet screw products for which Medtronic paid royalties.

[00:36:03] Speaker 02:
Those are the allegations at the beginning of this claim, and it only continued from there.

[00:36:07] Speaker 02:
He answered contention interrogatories at page 762 that the contract was intended to provide me royalties, quote, for Medtronic products covered by any patents issuing from the intellectual property developed.

[00:36:18] Speaker 02:
The reply brief in the district court, 1839, said he would prove his case, quote, by showing patent coverage.

[00:36:23] Speaker 02:
His opposition to our motion to dismiss in state court, 1187,

[00:36:26] Speaker 02:
Dr. Sasso intends to show that those patents cover Medtronic's fine products.

[00:36:30] Speaker 02:
There were numerous jury instructions on the patent law.

[00:36:33] Speaker 02:
He threatened to move for a mistrial in the state court because of something our experts said about the scope of claim 26 of the 313 patent.

[00:36:41] Speaker 02:
He demanded depositions on claim scope and coverage.

[00:36:43] Speaker 02:
He served expert reports with detailed claim coverage opinions.

[00:36:47] Speaker 02:
Markman hearing in state court.

[00:36:48] Speaker 02:
Markman ordered issued.

[00:36:49] Speaker 02:
Dr. Sasso himself on the stand.

[00:36:51] Speaker 04:
Was that in the case before this court?

[00:36:53] Speaker 02:
No.

[00:36:54] Speaker 02:
Yes.

[00:36:54] Speaker 02:
Yes, your honor.

[00:36:56] Speaker 02:
There is another case, there is another follow-on case that he has filed in the Indiana courts seeking additional damages, which is a reason under the gun factors why this is going to affect other cases.

[00:37:07] Speaker 02:
But yes, everything I've recited happened, it was, well it happened, some of it happened before we filed our complaint in the federal court.

[00:37:15] Speaker 02:
Some of it happened afterwards, but it's all of record.

[00:37:17] Speaker 02:
It's cited in our briefs.

[00:37:19] Speaker 02:
And when Dr. Sasso himself was on the stand, he testified that he thought Claim 26 of the 313 patent was, quote, incredibly broad.

[00:37:27] Speaker 02:
He presented expert testimony on claim coverage comparing it to the products that he wanted to be paid on, lengthy testimony on the patent issuance process and how they're interpreted, including specific reference to Claim 26 of the 313.

[00:37:38] Speaker 02:
The only way Dr. Sasso tried to get and ultimately was able to get a judgment of $79 million on the Facette Agreement

[00:37:47] Speaker 02:
was by arguing the scope of the patent claims and applying them to the Medtronic devices.

[00:37:52] Speaker 02:
That's the case he pled.

[00:37:53] Speaker 02:
It's the case he tried.

[00:37:54] Speaker 02:
There's no other way he could have prevailed.

[00:37:56] Speaker 02:
That claim should have been brought and needed to have been brought in district court.

[00:38:00] Speaker 02:
And we are entitled to have it resolved on this declaratory judgment.

[00:38:03] Speaker 02:
Unless the court has further questions, I thank the court for its time.

[00:38:07] Speaker 01:
Thank you.

[00:38:07] Speaker 01:
Thank you both.

[00:38:09] Speaker 01:
The case is taken under submission.

[00:38:11] Speaker 01:
That concludes our argued cases for this morning.