Russo v. Baxter Healthcare Corp.

51 F. Supp. 2d 70, 1999 U.S. Dist. LEXIS 8128, 1999 WL 346005
CourtDistrict Court, D. Rhode Island
DecidedMay 26, 1999
DocketCiv.A. 94-555L
StatusPublished
Cited by10 cases

This text of 51 F. Supp. 2d 70 (Russo v. Baxter Healthcare Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Russo v. Baxter Healthcare Corp., 51 F. Supp. 2d 70, 1999 U.S. Dist. LEXIS 8128, 1999 WL 346005 (D.R.I. 1999).

Opinion

DECISION AND ORDER

LAGUEUX, Chief Judge.

Ronald Russo (“Russo”) was an unsuccessful litigant. Now, this Court must decide if he was a culpable one as well.

Russo invented a new type of medical catheter, and he brought this suit because he thought Baxter Healthcare Corporation (“Baxter”) had interfered with his ownership. In brief, he thought Baxter had publicized the invention without his permission, thus destroying his right to foreign patents. His complaint alleged that Baxter had violated his rights under the Rhode Island Uniform Trade Secrets Act, had interfered with his prospective business relationships and had negligently injured him by rendering his invention un-patentable in foreign countries.

Senior Judge Raymond Pettine handled the ease initially, and he denied two motions for summary judgment by Baxter. In the one published opinion, Judge Pet-tine held that Russo’s claim was not precluded by either res judicata or a release that Russo granted to his former employer. See Russo v. Baxter Healthcare, Corp., 919 F.Supp. 565 (D.R.I.1996) (Pettine, J.). Shortly before Judge Pettine’s *73 retirement, the case was transferred to this writer, who read the pleadings and decided that the case merited a trial rather than more preliminary dispositive motions.

The case did go to trial in May 1997. This writer granted judgment as a matter of law to Baxter under Fed.R.Civ.P. 50(a) when Russo completed his proofs and rested. In Russo’s own evidence there was proof that Baxter was not liable, including testimony from a patent expert that Baxter’s publicity had not foreclosed Russo’s right to foreign patents. Russo’s patent attorney had given him bad advice, and that mistake was a rickety base for the entire suit. In March 1998, the First Circuit affirmed the judgment for Baxter. See Russo v. Baxter Healthcare, Corp., 140 F.3d 6, 10-12 (1st Cir.1998).

This case remains before this Court on Baxter’s motion for attorneys’ fees. It bases its demand on two grounds: that Russo filed suit in bad faith under the Rhode Island Uniform Trade Secrets Act, Ri.Gen.Laws § 6-41-4 (“RIUTSA”), and that Russo failed to admit the truth of matters contained in several requests for admissions under Fed.R.Civ.P. 37(c)(2). On December 2, 1998, Magistrate Judge David L. Martin issued a Memorandum and Order that denied Baxter’s motion in part and granted it in part. Both parties appealed the Magistrate Judge’s, decision.

This Court reviews de novo, but the outcome mirrors Magistrate Judge Martin’s decision except as to the single request for admission on which he granted sanctions to Baxter. On that, he clearly erred. This Court denies Baxter’s motion in total.

I. Facts

In 1983, Russo began working with a company then called Superior Plastics Products Corporation and later known as Superior Healthcare Corporation (“Superi- or”). He developed new medical products in return for'royalties based upon the success of his inventions. In 1989, Russo developed a new kind of closed-seal tracheal suction catheter, a device that uses an endotracheal tube to clear the airways of patients breathing on a mechanical ventilator. Russo’s catheter had unique features, such as a rear irrigation port and a clamp valve, that distinguished it from others on the market.

Russo disclosed his idea for the improved catheter to .Superior’s President David Brodsky (“Brodsky”). Because Brodsky felt that Superior lacked the ability to market such a product, he sought another company to fill that role. To that end, Brodsky and Baxter discussed an agreement in April 1990 under which Baxter would manufacture and distribute the device. As part of its evaluation of the product, Baxter sent prototypes of the catheter to two clinicians so they could conduct bench trials. Baxter did not require that either clinician sign a confidentiality agreement before doing so.

In May, Brodsky told Russo about his discussions with Baxter, but not about the bench trials. Russo asked that Baxter be required to sign a confidentiality agreement, and Brodsky orally agreed to obtain one. Later in May 1990, Russo stopped working with Superior because of a dispute over money and issues unrelated to this action. Nonetheless, Russo retained some access to Superior’s offices and observed that Superior continued to'develop his catheter. He also learned in June 1990 that Baxter and Superior had entered into an Exclusive Distribution Agreement (the “Agreement”) that granted Baxter an option to obtain rights in the catheter.

Russo acted promptly in response to that discovery, sending two letters to Baxter asserting that he held the rights to the catheter. On June 14, 1990 he also filed an application with the United States Patent and Trademark Office (“PTO”) for a patent on the catheter, and on June 25, 1990 he sued Superior and Baxter in Rhode Island Superior' Court, seeking an injunction to prevent both companies from implementing the Agreement. Baxter and *74 Superior promptly countered in July 1990 by submitting their own application to the PTO for a United States patent on the catheter. In addition, Baxter, without Russo’s knowledge, conducted additional field trials on the catheter from June to August.' As part of those field trials, Baxter sent out samples of the device to 14 hospitals around the United States to solicit practitioner comments. Again Baxter did not require that the participants in its field trials agree to keep the catheter confidential.

Over a year later, in late October '1991, Russo’s patent attorney Robert Doherty (“Doherty”) received a Notice of Allowance from the PTO informing him that Russo’s United States patent application had been approved. Doherty paid the mandatory issuance fee and expected that the PTO would issue the patent within two or three months. In November 1991, Russo discussed filing patent applications in foreign countries with Doherty. They agreed on a tentative list of target countries, and Do-herty sought out a consultant in foreign patent law because he lacked sufficient contacts and knowledge to file patents in most foreign countries.

On December 9, 1991, Baxter displayed Russo’s closed suction tracheal catheter at the American Association of Respiratory Care convention in Atlanta. Baxter demonstrated the catheter, incorporated it into a sales brochure and took some sales leads on it. Russo did not authorize any of those activities, and he did not discover what Baxter had done until several days after the convention.

Russo immediately told Doherty about Baxter’s unauthorized disclosure of his product at the convention, although Russo did not know about the earlier bench trials and field tests. Without performing any research or consulting with his foreign patent expert, Doherty advised Russo that Baxter’s disclosures at the convention had destroyed the novelty of his invention and thus made it unpatentable in any foreign country other than Canada or possibly Australia.

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51 F. Supp. 2d 70, 1999 U.S. Dist. LEXIS 8128, 1999 WL 346005, Counsel Stack Legal Research, https://law.counselstack.com/opinion/russo-v-baxter-healthcare-corp-rid-1999.