Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Maquet Cardiovascular LLC v. Saphena Medical, Inc.

United States District Court, N.D. California

May 26, 2017





         Plaintiff in this patent infringement action moves to dismiss defendants' antitrust counterclaim and also moves to stay, sever, or bifurcate the counterclaim. The motion to dismiss is Granted and the motion to stay is Held in abeyance.


         This is an action by plaintiff Maquet Cardiovascular LLC against its former employee, Dr. Albert Chin, and his recently-founded company, Saphena Medical, Inc. The initial complaint filed in December 2016 asserted claims for patent infringement and breach of contract. In February 2017, Maquet amended the complaint to add claims for false advertising in violation of the Lanham Act and for correction of inventorship. Saphena and Dr. Chin then answered and counterclaimed, accusing Maquet of various forms of anticompetitive conduct.

         The following is taken from the well-pled allegations of the counterclaim (Dkt. No. 44).[1]

         Maquet is a “multinational industry giant in the field of surgical equipment” that has operated for over 175 years. It is based in Germany and part of Getinge Group, a “massive global conglomerate” that markets medical equipment and systems worldwide (id. ¶ 43). Among other things, Maquet sells products designed for endoscopic vessel harvesting (“EVH”) procedures. Its customers consist primarily of large groups of hospitals (id. ¶ 70).

         Dr. Chin is an “inventor, engineer, and trained surgeon, who has worked in the conception and development of surgical instruments . . . for more than 20 years” (id. ¶ 21). Dr. Chin spent twenty years of his career at Guidant Corporation, where he designed surgical and intravascular instruments (id. ¶ 23). In 2008, Maquet acquired Guidant and Dr. Chin became Chief Innovation Officer at Maquet (id. ¶ 24).

         In 2009, Dr. Chin left Maquet and founded Pavilion Medical Innovations, LLC, an “incubator for innovative medical device companies.” Saphena, founded in 2013 by Dr. Chin and non-party Mike Glennon, is one such company (id. ¶ 25). Saphena's sole product is Venapax, a device designed for EVH procedures (id. ¶¶ 11, 26). Such devices are used to harvest blood vessels for subsequent use as graft material in, e.g., coronary artery bypass graft (“CABG”) surgery by cutting the vessels and sealing them off from surrounding branch vessels.

         Venapax competes with Vasoview, Maquet's own line of EVH products that originated with a device designed by Dr. Chin at Guidant in 1995 (id. ¶¶ 23, 44). Maquet launched its latest Vasoview device, HemoPro 2, in 2010 (id. ¶ 45). In a contemporaneous press release, Maquet claimed HemoPro 2 “utilizes next-generation HEMOPRO cut-and-seal technology to reduce thermal spread and to achieve optimal conduit quality for coronary artery bypass graft (CABG) surgery patients” (Dkt. No. 44-13). In February 2017, Maquet's own website contained a one-paragraph overview of HemoPro 2 that described it as “the latest generation of VASOVIEW simultaneous cut-and-seal technology” for EVH (Dkt. No. 44-14).

         The overview also claimed HemoPro 2 “virtually eliminates thermal spread and helps harvesters safely acquire high-quality conduits for [CABG] surgery.” An asterisk at the end of the foregoing sentence traced to small print at the end of the overview, which stated, “Thermal spread is defined as the extent (length) of thermal injury of the vessel extending laterally outward from the edge of the HEMOPRO 2 Jaws at the location of the interaction between the Jaws and the vessel” (ibid.). Minimization of thermal spread is important for EVH procedures because the cauterization process required to cut and seal blood vessels can damage the cells of the vessel to be harvested. When the harvested vessel is subsequently used as graft material, excessive damage can cause the graft to fail (Dkt. No. 44 ¶ 55).

         In August 2014, Maquet executives Michael McCartin, Philip Freed, and Peter Hinchliffe met with Saphena for a demonstration of Venapax's features and benefits. Although Maquet indicated during the meeting that it was “very impressed” and “very intrigued” with Venapax, it did not further discuss “acquisition” with Saphena thereafter (it is unclear whether the counterclaim means “acquisition” of Venapax or of Saphena) (id. ¶¶ 67-68).

         Maquet's contracts with its customers offer significant discounts or rebates when customers purchase all their EVH products from Maquet for a certain period of time, up to four years. Maquet also offers further discounts and promotions when customers buy “bundles” of devices and accessories. In addition, Maquet offers its customers incentive rebates on overall prices for maintaining exclusive commitment to Maquet products (id. ¶¶ 70-76). Maquet's customers who benefit from its contract discounts, promotions, and rebates include large groups of hospitals with member hospitals in California and Massachusetts (id. ¶¶ 80-81). Maquet currently “controls” approximately 85 percent of the market for EVH products (id. ¶ 13).

         Maquet's business practices have caused difficulties for Saphena. For example, in January 2017, a “potential customer” hospital in Georgia rebuffed Saphena's attempt to pitch Venapax to its physician's assistants because “purchasing any Venapax devices could result in both a loss of rebates associated with their agreement [with Maquet] and substantial increases in [prices for] their purchase of other Maquet products (not just EVH devices), not only for them, but [also for] other hospitals on the agreement as well.” Similarly, “another large group of hospitals, whose members include several California hospitals, recently informed Saphena that they could only use EVH equipment that is already part of its fixed, bundled cardiac artery bypass grafting payment system” from Maquet (id. ¶¶ 78-79).

         Based on the foregoing allegations, Saphena and Dr. Chin assert counterclaims against Maquet for (1) below-cost sales in violation of California law, (2) tortious interference with prospective business relationships, (3) unfair competition in violation of California law, (4) loss leaders in violation of California law, (5) false advertising in violation of the Lanham Act, (6) attempted monopolization in violation of Section 2 of the Sherman Act, and (7) unfair competition in violation of Massachusetts law.

         Maquet moves to dismiss all counterclaims under Rule 12(b)(6). Additionally, Maquet moves to stay, sever, or bifurcate the counterclaims as this litigation progresses. This order follows full briefing and oral argument.


         1. Motion to Dismiss.

         To survive a motion to dismiss, defendants' counterclaim must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has facial plausibility when the party asserting it pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When ruling on a motion to dismiss, a court may generally consider only allegations in the pleadings, attached exhibits, and matters properly subject to judicial notice. The court accepts factual allegations in the complaint (or counterclaim) as true and construes the pleadings in the light most favorable to the nonmoving party. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1030-31 (9th Cir. 2008). Conclusory allegations or “formulaic recitation of the elements” of a claim, however, are not entitled to the presumption of truth. Iqbal, 556 U.S. at 681.

         As an initial matter, Maquet contends Dr. Chin lacks standing to assert the counterclaims because they do not allege that he suffered any injury (Dkt. No. 62 at 22). Defendants do not deny this. Indeed, they offer in their opposition brief to “stipulate that, going forward, all seven of their Counterclaims will be pursued by Defendant Saphena alone” (Dkt. No. 66 at 21). This order therefore discusses the counterclaims only as asserted by Saphena.

         A. Below-Cost Sales.

         Section 17043 of the California Business and Professions Code states, “It is unlawful for any person engaged in business within this State to sell any article or product at less than the cost thereof to such vendor, or to give away any article or product, for the purpose of injuring competitors or destroying competition.” Saphena claims Maquet sells certain Vasoview EVH systems “below its fully allocated costs of producing and distributing those products” in violation of this provision (Dkt. No. 44 ¶ 88).

         Specifically, Saphena alleges that Maquet “purchases [its] Vasoview EVH systems from its corporate parent for a cost of up to $750.” Saphena also alleges that Maquet sells certain Vasoview EVH systems to customers for less than $750 as a result of various discounts, promotions, and rebates. For example, some Maquet customers can purchase the Vasoview 6 EVH System “for as little as $650.” Thus, Saphena contends, Maquet violates Section 17043 because it “must sell its Vasoview EVH systems at above $750 in order to realize any margin.” Saphena further alleges that “Maquet's predatory pricing scheme is being conducted for ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.