Stryker (NYSE:SYK) wants to drag Medtronic (NYSE:MDT) into a patent infringement lawsuit filed against it over vertebroplasty technology by alleged patent troll Orthophoenix as it seeks to assert anti-trust claims against Medtronic, Orthophoenix and its owner.
Orthophoenix was formed April 25, 2013, and bought the rights to Medtronic’s Kyphon IP the next day, according to court documents.
"Within a few weeks of the transfer of these patents to Orthophoenix, a company called IP Navigation Group LLC, which shares an office and a CEO with Orthophoenix, approached Stryker suggesting that Stryker take a license to the newly-acquired patents. At the time, Stryker advised IP Nav that the patents were invalid and/or not infringed and, thus, a license was unnecessary," according to the documents.
That prompted Orthophoenix to sue Stryker for patent infringement in October 2013, according to the documents. Now Stryker wants a federal judge in Delaware to allow it to bring anti-trust claims against Medtronic, Orthophoenix and IP Nav, the documents show.
Stryker claimed that Medtronic’s deal with Orthophoenix is a cover for a "shakedown" of Medtronic’s competitors in the spine market, according to the documents.
"Medtronic knew that Orthophoenix and/or IP Nav would attempt to extract unwarranted licensing royalties or other monetary payments from Medtronic’s competitors by threatening expensive ‘shakedown’ patent litigation and then, if unable to extract royalties, improperly asserting at least certain of those patents against Stryker and other competitors of Medtronic," Stryker alleged in the documents. "Stryker believes that discovery will show that as part of this transaction or a related transaction, Medtronic has received or will receive additional consideration for these patents based on their licensing or assertion by Orthophoenix and/or IP Nav.
"Stryker believes that discovery will further show that Medtronic conspired with IP Nav and/or Orthophoenix to assert admittedly invalid and non-infringed Medtronic patents against Medtronic’s competitors including Stryker," Stryker claimed. "[T]hese 3 entities know and should have known that the claims of infringement of the patents-in-suit alleged in the complaint are objectively baseless, unreasonable, and unsupported, at least because the patents-in-suit are invalid. This is not only because Medtronic previously admitted invalidity and unenforceability of certain patents but also because, prior to filing the instant lawsuit, Stryker provided to Orthophoenix and IP Nav detailed bases in fact and law as to why each of the patents-in-suit are invalid and/or not infringed. Medtronic cannot purge its court admissions through agreements with third parties to assert the invalid patents in its stead."
Orthophoenix denied that the patents have ever been shown to be invalid and said its patent infringement claim is "strong, based on, among other things, Stryker’s own statements made in multiple submissions to the FDA that Stryker’s devices at issue in this case have ‘the same functional scientific technology, basic design, functional characteristics and the same clinical applications’ as a predicate device covered by the patents in this case," according to the documents.
That prompted Stryker to claim that Orthophoenix can’t meet the burden of establishing futility, the documents show.
"Stryker’s amended counterclaims provided detailed facts regarding the counterclaimants’ concerted, predatory, and anticompetitive scheme that give rise to antitrust violations under the Sherman Act. The counterclaimants did more than facilitate Orthophoenix’s filing of baseless patent infringement lawsuits. As part of an overall conspiracy to restrain trade, the counterclaimants conspired to extract unwarranted monetary payments from Medtronic’s competitors on patents that they knew were invalid and not infringed – before a lawsuit was even filed," according to the documents.