Medical Components, Inc. v. Osiris Medical, Inc.

226 F. Supp. 3d 743, 2016 U.S. Dist. LEXIS 183311, 2016 WL 8138806
CourtDistrict Court, W.D. Texas
DecidedDecember 29, 2016
DocketEP-15-CV-305-PRM
StatusPublished
Cited by1 cases

This text of 226 F. Supp. 3d 743 (Medical Components, Inc. v. Osiris Medical, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Medical Components, Inc. v. Osiris Medical, Inc., 226 F. Supp. 3d 743, 2016 U.S. Dist. LEXIS 183311, 2016 WL 8138806 (W.D. Tex. 2016).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART COUNTER-DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

PHILIP R. MARTINEZ, UNITED. STATES DISTRICT JUDGE

On this day, the Court considered Counter-Defendants Medical Components, Inc. (“Medcomp”) and Martech Medical Products, Inc.’s (“Martech”) “Motion for Summary Judgment” (ECF No. 114), filed on August 31, 2016, Counter-Claimants Osiris Medical, Inc. (“Osiris”) and Raul Garcia, Jr.’s “Response ... in Opposition to Plaintiffs Medical Component, Inc.’s Motion for Summary Judgment” (ECF No. 120) [hereinafter “Response”], filed on September 14, 2016; and Medcomp and Martech’s “Reply Brief in Support of Motion for Summary Judgment” (ECF No. 124) [hereinafter “Reply”], filed on September 20, 2016, in the above-captioned cause.1

For the' reasons discussed below, the Court will grant in part and deny in part Medcomp’s Motion.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of a dispute concerning a patent license agreement (“PLA”) involving Garcia’s patented Huber needle—United States Patent No. 7125,398 (“the ’398 Patent Needle”). Second Am. Compl. for Declaratory J. of Non-Infringement of U.S. Patent No. 7125,398 1, July 22, 2016, ECF No. 95. Osiris granted Medcomp a license to use the intellectual property rights to manufacture and sell the ’398 Patent Needle. Mot. Ex. B, at 1 [hereinafter “PLA”].

Medcomp and Osiris executed the PLA on December 20, 2011 (the “Effective Date”). PLA 10. The PLA specifically provides for a three-year term starting from the Effective Date; as a result, the PLA expired on December 20, 2014 (“Termination Date”). Id. at 5.

A. Relevant PLA Provisions

The PLA contains the following relevant provisions: Integration Clause, Best Efforts Provision, Discretionary Clause, Notice and Cure Provision, and Minimum Royalty Provision.

The Integration Clause provides as follows:

This Agreement represents the entire, final, and integrated agreement between [Medcomp and Osiris] as of the Effective Date. This Agreement can only be modified by the mutual agreement of both [Medcomp and Osiris] in writing.

Id. at 6.

The Best Efforts Provision states that Medcomp “shall use good faith, best ef[747]*747forts to market and sell all [the ’398 Patent Needle] manufactured.” Id. at 3.

The Discretionary Clause provides as follows:

[Medcomp] makes no guarantees, representations, warranties, or promises regarding its sales activity of the [’398 Patent Needle] and shall in its sole discretion devote as much or as little (or none) of its time and resources to selling the [’398 Patent Needle].

Id. at 7.

The Notice and Cure Provision requires the non-breaching party to provide written notice to the breaching party. Id. at 8. After receiving notice, the breaching party is afforded an opportunity to have thirty or sixty days to cure the monetary or non-monetary breach, respectively. Id.

The PLA’s Minimum Royalty Provision further provides a royalty payment from Medcomp to Osiris. Id. at 2. Namely, the Minimum Royalty Provision outlines that Medcomp is projected to sell the following amounts of the ’398 Patent Needle:

• 225,000 during the “First Year”;
• 262,500 during the “Second Year”; and
• 325,000 during the “Third Year.”

Id. In the event that Medcomp’s sales exceeded any of those amounts during the respective ‘Tear,” Medcomp would pay a royalty rate. Id.

The PLA defines the “First Year,” “Second Year,” and “Third Year” as the “period from the Validation Date to the last day of the month falling [twelve, twenty-four, and thirty-six] months [respectively] after the Validation Date.” Id. at 1.2

Medcomp made payments to Osiris until the Termination Date of December 2014. See Mot. 8-9.3

B. Instant Motion for Summary Judgment

On October 19, 2015, Medcomp and Martech initiated the instant declaratory action requesting that the Court determine that they did not infringe upon the ’398 Patent Needle. See Compl. for Declaratory J. of Non-Infringement of U.S. Patent No. 7125,398, Oet.19, 2015, ECF No. 1.

Eventually, Osiris filed its “First Amended Counterclaims” (ECF No. 103), on August 5, 2016, asserting five causes of action against Medcomp:

1. Breach of Contract for Payment of Minimum Royalties;
2. Breach of Contract for Payment of Excess Royalties;
3. Breach of Express Covenant of Best Efforts;
4. Demand for Full Audit; and
5. Counterclaim of Garcia as Co-inventor of V4.4

First Am. Countercl. 25-42.

As a result, Medcomp now brings the instant Motion arguing that it is entitled to [748]*748summary judgment on the remaining four causes of action. Mot. 20. In its Response, Osiris abandoned the following two claims: its Breach of Contract for Payment of Excess Royalties (Claim 2) and its Demand for Full Audit (Claim 4). Resp. 11,16 (“Osiris withdraws counterclaim count two .... Osiris agreed that discovery in the present litigation would suffice for the audit.”).5

Consequently, the Court will address the remaining two causes of action: Breach of Contract for Payment of Minimum Royalties and Breach of Express Covenant of Best Efforts.

II. LEGAL STANDARD

A. Summary Judgment

A court should grant summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute regarding a material fact exists if there are “any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In a motion for summary judgment, “[t]he moving party bears the initial burden of showing that there is no genuine issue for trial; it may do so by ‘pointing] out the absence of evidence supporting the nonmoving party’s case.’ ” Nat’l Ass’n of Gov’t Emps., 40 F.3d 698, 712 (5th Cir. 1994) (quoting Latimer v. Smithkline French Labs., 919 F.2d 301, 303 (5th Cir. 1990)). If the moving party has satisfied its initial burden, the nonmovant must then come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v.

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226 F. Supp. 3d 743, 2016 U.S. Dist. LEXIS 183311, 2016 WL 8138806, Counsel Stack Legal Research, https://law.counselstack.com/opinion/medical-components-inc-v-osiris-medical-inc-txwd-2016.