Just more than a year ago, Judge Yvonne Gonzalez Rogers of the U.S. District Court for Northern California ruled that AngioScore founder Eitan Konstantino violated his duties to AngioScore when he started rival companies TriReme, Quattro Vascular and QT Vascular (SGX:5I0). (AngioScore ultimately lost a related patent infringement lawsuit brought by TriReme in 2014).
AngioScore, which Spectranetics (NSDQ:SPNC) acquired in 2014 for $230 million, accused Konstantino of breaching his fiduciary duties when he developed TriReme’s Chocolate balloon catheter, which competes directly with AngioScore’s AngioSculpt balloon. The Chocolate device won 510(k) clearance from the FDA in June 2014. The lawsuit also accused TriReme, Quattro and QT Vascular of abetting in Konstantino’s alleged breaches.
Gonzalez Rogers ordered Konstantino to disgorge $250,000 received for licensing the Chocolate rights and a 2.85% royalty on sales of the device. Gonzalez Rogers also ordered Konstantino to cough up his roughly 15 million shares in QT Vascular, which were worth about $2 million at their July 2 closing price of ¢13.5 (0.182 SGD), and any profits gleaned from sales of the stock and any remuneration from consulting on the Chocolate device. The judge also awarded nearly $3.0 million in lost profits and another $17.1 million in future lost profits to AngioScore on future sales from 2014 through the 2nd quarter of 2019.
TriReme, QT Vascular and Quattro Vascular appealed to the U.S. Court of Appeals for the Federal Circuit as soon as the decision was finalized Oct. 14 and asked the appeals court to stay the verdict pending its appeal, saying they will likely go bankrupt if forced to pony up.
Yesterday the Federal Circuit found that the lawsuit involves a California state law claim that never should have been heard in a federal court.
“Because we find that the district court improperly exercised supplemental jurisdiction over the state-law claims but did not err in denying attorneys’ fees, we reverse-in-part, affirm-in-part, vacate in-part, and remand with instructions to dismiss the state-law claims for lack of jurisdiction,” Judge Todd Hughes wrote for the Federal Circuit.
Regarding the denial of legal fees to TriReme, Hughes wrote that the company never pressed its claim when it originally moved for summary judgment.
“The district court’s failure to grant summary judgment on an argument that was never properly presented does not constitute a legal error. Therefore, we find that the district court did not abuse its discretion in denying attorneys’ fees,” he wrote.