Covidien LP v. Esch

378 F. Supp. 3d 119
District Court, District of Columbia·Decided May 6, 2019·No. Civil Action No. 16-12410-NMG·Published·Cited by 2 cases

Opinion

Nathaniel M. Gorton, United States District Judge

This dispute arises out of alleged breaches of two agreements between Covidien LP and Covidien Holding Inc. ("plaintiffs" or "Covidien"), on the one hand, and Brady Esch ("defendant" or "Esch"), Covidien's former employee, on the other. Plaintiffs allege defendant breached an employment agreement and a separation agreement by 1) assigning rights to three patents to his new company rather than to Covidien and 2) disclosing plaintiffs' confidential information in the patent applications. Pending before the Court are the parties' cross-motions for summary judgment and defendant's motion for leave to file newly discovered information relevant to the pending motions for summary judgment.

I. Background

Brady Esch began working for Covidien in 2009, when Covidien acquired his employer at the time, VNUS Technologies. In December, 2009, Esch entered into a "Non-Competition, Non-Solicitation, and Confidentiality Agreement" ("NNC Agreement") with Covidien, in which he agreed to assign his "Inventions" (defined broadly) to Covidien. The NNC Agreement, which is governed by a Massachusetts choice-of-law provision states that

[I]n order to avoid any dispute as to the date on which Inventions were made or conceived by you, they shall be deemed to have been made or conceived during your employment with the Company if you take affirmative steps to have them reduced to practice either during the term of your employment or within one year after separation from employment.

During his time at Covidien, Esch worked on Project Merge/Cattleya ("Project *123Cattleya"), which focused on a new radio frequency ("RF") ablation device. As director of the project, he led the engineers during development and maintained "veto power" over key aspects. While at Covidien, he expressed disfavor of a "premium" feature that provided a selectable or switchable heating element for the RF ablation device.

In 2013, Esch signed a "Separation of Employment Agreement and General Release" ("the Separation Agreement") following his termination. Esch, with counsel, provided edits to the Separation Agreement which Covidien rejected. Nevertheless, Esch signed the Separation Agreement, which reaffirmed the Invention assignment provision of the NNC. Although parts of the Separation Agreement superseded provisions of the NNC, the Separation Agreement provides that

any provisions of such Employee Agreement concerning disclosure or ownership of inventions, methods, processes or improvements shall continue in full force and effect and shall not be superseded by any provision of this Agreement.

Esch disputes the validity of this provision as he asserts that he assumed that California law would render terms relating to competition, solicitation and confidentiality unenforceable.

In February, 2014, Esch organized the incorporation of Venclose Inc. ("Venclose"), a direct competitor to Covidien. One month later, he filed provisional patent application No. 61/970,498 ("the '498 provisional patent") which describes designs, technology and improvements to venous RF ablation devices. That application was assigned to Venclose. Covidien alleges that the stated subject matter directly relates to Esch's work at Covidien. For example, the '498 provisional patent describes a selectable heating element similar to the dimensions disclosed in Project Cattleya.

In 2015, Venclose filed 1) utility patent application No. 14/670,338 ("the '338 patent") and 2) a foreign Patent Cooperation Treaty application ("the PCT application"). Darius Pryzgoda, Rory Chrstian and Cody Schlindler are also listed as inventors on the '338 patent. While Covidien alleges that those follow-on patent applications claim priority to Esch's early provisional patent application ('498) and include additional advancements, the four named inventors assigned the rights to the applications to Venclose.

In January, 2017, this Court issued a preliminary injunction in favor of Covidien enjoining Esch and his agents, successors, representatives or assignees from making, developing, manufacturing or selling products that disclose or use any confidential information from Covidien. Esch, who was then CEO of Venclose, has since been discharged by that company.

II. Cross-Motions for Summary Judgment

A. Standard of Review

The role of summary judgment is to assess the proof in order to see whether there is a genuine need for trial. Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991). The burden is on the moving party to show, through the pleadings, discovery and affidavits, that there is "no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law". FED. R. CIV. P. 56(a). A fact is material if it "might affect the outcome of the suit under the governing law". Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party". Id.

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Covidien LP v. Esch, 378 F. Supp. 3d 119 (D.D.C. 2019).

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