A federal judge has ruled that a royalties suit against Medtronic does not raise an issue of patent law and should be remanded to state court.
The lawsuit arises from a royalties dispute between Rick Sasso, M.D., a spinal surgeon, and Medtronic, a medical device company and spinal implant manufacturer. Dr. Sasso previously licensed spinal surgery inventions to Medtronic. Contracts from two of the inventions are the subjects of the litigation.
Dr. Sasso invented a screw delivery system and, in 1999, Dr. Sasso and the predecessor company to Medtronic Spine entered a licensing agreement for the system. A few years later, Dr. Sasso and Medtronic Spine entered into a similar licensing agreement for another invention, the Vertex cervical spine system.
Dr. Sasso then sued Medtronic for royalty payments he claimed were due under his contracts. Medtronic tried to remove the case to federal court, arguing the lawsuit relied on claims of patent law. Medtronic was not successful and Dr. Sasso prevailed in state court. In November 2018, Dr. Sasso was awarded $112 million in damages based on the two agreements. See OTW’s prior coverage, “Spine Surgeon Wins $112 Million in Battle with Medtronic.”
The present matter stems from the same spinal surgery inventions of Dr. Sasso’s original claims. Following his successful verdict, Dr. Sasso requested an audit to determine if Medtronic was continuing to sell products that were subject to the agreements and if they were paying the royalties that were required. Medtronic did not oblige, so Dr. Sasso filed suit in state court.
Medtronic filed a counterclaim and once again argued that the lawsuit relied on claims of patent law and filed a notice of removal to federal court. According to the federal court’s opinion and order, “Medtronic’s counterclaims seek declarations that Dr. Sasso is not entitled to audits and is not entitled to any further royalty payments because the agreements have terminated, a question it asserts depends on the validity and coverage of patents.”
The federal court disagreed with Medtronic and found that the dispute arose from contract interpretation, not patent law. The federal court granted Dr. Sasso’s motion to remand to state court for lack of subject matter jurisdiction because contract law is an issue for state court.
The federal court did not, however, grant Dr. Sasso’s request for attorney’s fees. The federal court stated that Medtronic’s arguments “were not objectively unreasonable” in part because of the “difficult and complex” jurisdictional issues.
Dr. Sasso is a board-certified orthopedic surgeon, specializing in spine surgery. He serves as an adjunct clinical professor of orthopedic surgery at Indiana University School of Medicine. Dr. Sasso is also one of the founders of Carmel, Indiana-based, Indiana Spine Group.
