In a little noticed response among the streams of back and forth in the patent lawsuit between MAKO Surgical (the $1.65 billion division of Stryker Corporation) and Blue Belt Technologies, Inc. was an interesting filing which appears to flip the tables on MAKO.
In its response to MAKO’s June 10, 2014 patent infringement lawsuit against Blue Belt, Blue Belt’s management not only denies infringing patent No. 7, 346, 417 but then adds on the following interesting counterclaims:
- Patent No. 7, 346, 417 (‘417 patent) is invalid
- MAKO infringes Blue Belt’s patents
- MAKO engaged in an systematic campaign of tortious interference
- And finally, MAKO does not use the ‘417 patent in its products implying, therefore, that the license was acquired expressly to generate litigation against Blue Belt
That new filing was put in play July 10, 2014—about a month ago.
In this ever extending saga involving these two robotics rivals, this new twist would not warrant much notice except for the facts that Blue Belt is offering the court to consider.
There’s a lot at stake here.
According to the court filings in this case, fully 15% of all knee arthroplasty cases are robotically assisted. MAKO’s RIO costs around $1 million and can require up to another $100, 000 in annual follow-on costs. Blue Belt’s system, by contrast, costs about $400, 000.
Blue Belt had successfully taken customers away from MAKO so…the stakes were high.
Tactics
Lawsuits are like three-dimensional chess games. Blue Belt’s move, it seems to us, is both creative and aggressive and could, if successful, change the dynamic of this litigation.
Whether these moves are more tactical than substantive will be up to, potentially, some lucky jury of retirees and housewives. We checked with Mark DuVal, president of DuVal & Associates, P.A., a FDA law firm, here was his comment: “Having been an in-house general counsel myself for almost 15 years and now having represented over 625 clients as part of my law firm, you inevitably see these legal fights over intellectual property and market share. But every large organization has to keep its marketing and sales organization under control. The stakes rise for large organizations when forecasts are missed while the smaller competitor’s sales grow. I don’t know the facts of this case, but if the allegations are true MAKO’s sales and marketing organization has crossed the line. It is good their management is doing a self-examination. My final thought: If the product is better, don’t resort to unethical sales tactics, build a better more cost-effective mousetrap, or acquire the competitor.”
Blue Belt’s Allegations
MAKO’s RIO system costs about $1 million and service costs add about $100, 000 to the overall costs. Blue Belt’s NavioPFS systems cost about $400, 000 and service costs add about $40, 000 annually. Blue Belt cited nine instances where buyers compared RIO with NavioPFS and chose Blue Belt’s NavioPFS.
Blue Belt’s system is covered by its own patents and the company is claiming to deliver comparable or better robotic surgical knee performance at a drastically more affordable price point.
Since 2013, Blue Belt has sold approximately 20 NavioPFS systems in the United States, to hospitals, private practitioners, and ambulatory surgery centers (ASCs) and has treated more than 500 patients.
In this new filing, Blue Belt is claiming that MAKO engaged in “a national campaign of unlawful tactics with the intention of destabilizing Blue Belt’s business, imposing remedial costs on Blue Belt, and attempting to unfairly forcing Blue Belt to raise its prices.”
Then Blue Belt cited this specific instance in the complaint of alleged pressure to raise its prices:
“On or about March 14, 2014, at a conference of the American Academy of Orthopedic Surgeons in New Orleans, a Mako senior executive met with a consultant to Blue Belt who has a relationship with Blue Belt’s upper-level management. Mako’s senior executive told Blue Belt’s consultant that Mako believes that Blue Belt is undermining Mako’s sales of capital equipment by making it harder for Mako to consummate sales of the RIO system at its current prices.…The Mako senior executive conveyed to Blue Belt’s consultant that Blue Belt was impairing Mako’s ability to charge elevated prices for installed UKR [unicondylar knee replacement] systems. The Mako senior executive then told Blue Belt’s consultant that Mako would not pursue the Florida Action or other legal action if Blue Belt agreed to raise its prices.”
Who Said What to Whom?
Blue Belt’s allegations included a string of instances where they are accusing Mako of tortious interference.
Again, from the Blue Belt complaint:
“For example, at the Community Regional Medical Center in Fresno, California, Mako sales representatives offered to provide practitioners with a free RIO system, on the condition that they uninstall their NavioPFS® system.”
In Blue Belt’s opinion, “Mako is pursuing a nationwide plan to “swap out” NavioPFS® systems, at a loss, in order to prevent Blue Belt from obtaining a critical mass of practitioners who use the NavioPFS®.” Blue Belt is alleging that “Among other things, Mako and its agents have falsely stated to current and prospective Blue Belt customers that: Blue Belt infringes on Mako’s intellectual property; Blue Belt was forced to recall all of its NavioPFS® systems because of safety malfunctions; pending legal actions will require customers to cease using their NavioPFS® systems; Blue Belt requires NavioPFS® users to also use Blue Belt’s implants; the NavioPFS® system is not actually robotic; the NavioPFS® system is incompatible with burs larger than four millimeters; the NavioPFS® system cannot be used to perform lateral UKR procedures; certain customers were returning their NavioPFS® systems and/or abandoning their use; and Blue Belt will soon be forced to discontinue sales of the NavioPFS® system entirely. Each and every one of these statements by Mako and its representatives is false and misleading.”
Blue Belt then added the following details to the allegations: “For example, in 2013, one or more Mako representatives made false, misleading, and deceptive statements about Blue Belt to employees of St. Francis Memorial hospital in San Francisco (“St. Francis Memorial”), a prospective Blue Belt customer. Mako tried to convince St. Francis Memorial staff that one or more of Blue Belt’s products were not lawfully commercialized because they allegedly lacked clinical data, resulted in long case durations, and did not contain certain features. These statements were false and misleading. “
The examples in the complaint continued; “In mid- to late-2013, one or more Mako representatives spoke with employees of McBride Orthopedic Hospital in Oklahoma City (“McBride”) and made false, deceptive, and misleading statements meant to convince McBride to use Mako’s products instead of Blue Belt’s products. These statements included false suggestions that Blue Belt’s technology was not “proven, ” that NavioPFS® infringes on Mako’s intellectual property, and that Blue Belt would soon be forced to discontinue the NavioPFS® system and support for it.”
“In late 2013, one or more Mako representatives contacted employees of Valley Baptist Medical Center in Brownsville, Texas (“Valley Baptist”) and made false, misleading, and deceptive statements about the NavioPFS® system in order to convince Valley Baptist to use Mako products instead. Mako representatives falsely suggested that NavioPFS® was unproven and that the system could not do what comparable Mako products can do.”
“In or between March and May of 2014, Mako representatives made false, misleading, and deceptive statements about the NavioPFS® system to an orthopedic surgeon in or around Fremont, California. Mako representatives falsely stated that a four-millimeter bur is the largest bur the NavioPFS® system can utilize, that the NavioPFS® system cannot be used to perform lateral UKR surgeries, and that St. Francis Memorial was returning its NavioPFS® system and discontinuing use of it in the meantime.”
“In early June 2014, representatives of Mako and/or Stryker contacted a physician at Southcoast Physicians Group (“Southcoast”) and made false, deceptive, and misleading statements about Blue Belt and its products. The Mako and/or Stryker representatives falsely stated that this physician could no longer use his NavioPFS® system because of a recent alleged recall and because of the Florida Action against Blue Belt, and that Blue Belt would soon be put out of business by intellectual property lawsuits, including the Florida Action.”
“On or about June 5, 2014, representatives of Mako and/or Stryker, including at least Bill Peters, made false, deceptive, and misleading statements to doctors and other potential customers associated with the Southeast Alabama Medical Center (“SAMC”). The Mako and/or Stryker representatives, including Mr. Peters, falsely and misleadingly stated that the NavioPFS® is “not a robotic system, ” that the NavioPFS® “was recalled last week due to failures in surgery, ” including a “clinical failure to keep the bur in the field, ” and that Blue Belt “also [has] another major problem, St[r]yker just filed a lawsuit because they [Blue Belt] stole IP and they are making false claims about being a robotic system.” The Mako and/or Stryker representatives also falsely accused Blue Belt of requiring surgeons to use Blue Belt’s implants with the system. The representatives also falsely claimed that Blue Belt would “most likely be put out of business.””
“On June 2, 2014, a Mako representative named Andrew Whetsel contacted Andrew Camp, Blue Belt’s Regional Manager for the Northeast, and used false, deceptive, and misleading statements about Blue Belt to try to convince Mr. Camp to quit Blue Belt and begin working for Mako. Mr. Whetsel falsely stated that Blue Belt was in trouble in light of the Florida Action—which Mako had filed the previous business day. Mr. Whetsel also asked for contact information for Blue Belt’s employees in New York and New Jersey, in an attempt to contact these employees, mislead them regarding Blue Belt, and convince them to quit Blue Belt and join Mako.”
MAKO’s Answers
On June 20, 2014 Blue Belt’s lawyers sent a letter to MAKO detailing eight instances where, in Blue Belt’s view, MAKO’s representatives crossed the line into unlawful sales practices. MAKO responded on July 1 saying that they took the issues raised seriously and would investigate.
MAKO is formulating its answers to these allegations and, no doubt, will have good responses.
But the weight of not only these allegations of tortious interference as well as the counter claim that, in fact, the ‘417 patent is invalid and, furthermore, that MAKO is infringing Blue Belt’s patents is a sharply vigorous response which, in this long fight between Blue Belt and MAKO, may well have flipped the tables.
Stay tuned, for sure.
