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for the Southern District of New York

Court Dismisses Patent Infringement Action on the Ground of Laches

In a March 14, 2014 ruling, Judge Shira Scheindlin dismissed Medinol, Ltd.’s patent infringement action against Cordis Corporation and Johnson & Johnson on the ground of laches following a five day bench trial on that issue. Medinol had two suites of patents for arterial stents, the so-called “Pinchasik patents” and the so-called “Israel patents” which issued from continuation-in-part applications from the Pinchasik patents. In 2000, Medinol sued Cordis over the Israel patents. That series of lawsuits was ultimately unsuccessful, and ended in 2004. The parties thereafter entered into a distribution relationship, which included a tolling provision for any unspecified claims that the parties might have against each other. Sometime in 2005, Medinol explored an infringement action against Cordis on the Pinchasik patents, but did not file that action (or in any way inform Cordis that it was contemplating such an action) until 2013. The parties’ distribution relationship ended early by mutual agreement in 2012. There were some ultimately unfruitful negotiations to renew the relationship, and when those collapsed, Medinol sued on the Pinchasik patents.

Judge Scheindlin noted that to “‘prevail on a defense of laches, a defendant must establish that (1) the plaintiff’s delay in filing a suit was “unreasonable and inexcusable,” and (2) the defendant suffered “material prejudice attributable to the delay.”’” The Court further wrote that in a patent case, the time period for laches does not begin to run until after the patent issues, and that a “delay of more than six years before bringing suit raises a presumption that such a delay was both unreasonable and prejudicial to the defendant.” The presumption shifts the burden to the plaintiff to submit evidence reasonably putting into dispute the reasonableness of the delay and the lack of any prejudice.

As a threshold issue, the Court considered from when the laches period should run. Cordis argued that the period should run from the earliest patent in the Pinchasik series because all the later applications in the series were continuation applications, the substance of which were substantially identical to the original application. Thus, Cordis argued, all the Pinchasik patents claimed the same invention. Judge Scheindlin noted that there was at best limited case law to support the position, but found the argument compelling. The Court ruled, though, that since a decision on the issue would not affect the outcome, the Court would not reach it.

Judge Scheindlin began the laches analysis by noting that while Medinol’s delay might have been excusable until after the litigation over the Israel patents ended in 2004, the delay after that was not. Critical to the Court’s analysis was the lack of notice to Cordis of any potential claims on the Pinchasik patents. Medinol argued that Cordis knew or must have known of the claims, but the Court found that “various Cordis representatives testified credibly that they did not know and had no reason to know that Medinol was considering a suit on the Pinchasik patents.” After carefully reviewing the facts, and even crediting some of Medinol’s explanations, the Court found that the “shortest delay is still 5 years, 10 months and 5 days – just short of the presumptively unreasonable six years. It is within [the Court’s] discretion to find that a delay of less than six years is unreasonable.”

. Judge Scheindlin then concluded that Cordis suffered economic prejudice from the delay. Specifically, the Court found that “Cordis would not have entered into a business relationship with Medinol [in which it indemnified Medinol against certain third party claims] if Medinol had sued on the Pinchasik patents earlier of if Cordis knew that Medinol was clinging to a Pinchasik lawsuit in the event that the business relationship deteriorated.” The Court also found prejudice “because Medinol has waited to sue until after Cordis has exited the stent industry altogether, [and] Cordis lacks the ability to offset its losses with profits on existing sales.”
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