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Polyzen, Inc. v. RadiaDyne, LLC

United States District Court, E.D. North Carolina, Western Division

March 28, 2017

POLYZEN, INC., Plaintiff,
v.
RADIADYNE, LLC, Defendant.

          ORDER

          JAMES C. DEVER III Chief United States District Judge

         On April 18, 2016, RadiaDyne, LLC ("RadiaDyne" or "defendant") moved for summary judgment concerning Polyzen, Inc.'s ("Polyzen" or "plaintiff') patent-infringement claim [D.E. 98] and filed a memorandum in support [D.E. 100]. Essentially, RadiaDyne contends that, as a matter of law, it at least jointly owns the patent at issue in this case, U.S. Patent 8, 740, 845 ("the '845 patent"), that RadiaDyne does not consent to Polyzen's patent-infringement action against RadiaDyne, and that Polyzen lacks standing to pursue the patent-infringement claim absent such consent. See, e.g., Lucent Techs.. Inc. v. Gateway. Inc.. 543 F.3d 710, 722 (Fed. Cir. 2008); Polyzen. Inc. v. RadiaDyne. LLC. No. 5:11-CV-662-D, 2016 WL 5360676, at * 1-9 (E.D. N.C. Sept. 23, 2016) (unpublished) ("Polyzen I"). Polyzen responded in opposition [D.E. 127] and also filed its own motion for summary judgment on ownership [D.E. 92]. On May 25, 2016, RadiaDyne replied [D.E. 167].

         As explained below, the '845 patent is a "continuation" of U.S. Patent 7, 976, 497 ("the '497 patent"), and the issues presented in RadiaDyne's supplemental summary-judgment motion are materially indistinguishable from the issues presented in Polyzen I concerning the '497 patent. As in Polyzen I. the court concludes that it lacks subject-matter jurisdiction over Polyzen's patent- infringement action because RadiaDyne at least jointly owns the '845 patent, RadiaDyne has not consented to Polyzen's patent-infringement action, and Polyzen lacks standing to sue for patent infringement without RadiaDyne's consent. See Polyzen I. 2016 WL 5360676, at *1-10. Accordingly, the court denies RadiaDyne's supplemental motion for summary judgment concerning Polyzen's patent-infringement action [D.E. 98], denies Polyzen's motion for summary judgment regarding ownership [D.E. 92], and dismisses without prejudice Polyzen's patent-infringement action for lack of subject-matter jurisdiction. See Fed.R.Civ.P. 12(b)(1); cf Fed R. Civ. P. 56. Additionally, the court dismisses Polyzen's motion for summary judgment regarding RadiaDyne's defense of inventorship [D.E. 95] and dismisses Polyzen's motion for summary judgment regarding laches, waiver, and estoppel [D.E. 89].

         I.

         For clarity, the court restates many of the facts recounted in Polyzen I. without adding quotation marks. After recounting the facts leading to the issuance of the '497 patent, the court adds information concerning the '845 patent.

         In early 2007, John Isham, founder and president of RadiaDyne, learned of Polyzen when searching the Internet for "medical balloons" and "medical devices." Polyzen 1.2016 WL 5360576, at *1. Isham had an idea for a non-latex rectal medical balloon catheter used in connection with prostate treatment and was looking for someone to assist with producing and manufacturing it. Id. Isham contacted Polyzen, but did not want to reveal the details of his idea until Polyzen entered into a Confidentiality Agreement. See Id. On February 9, 2007, RadiaDyne and Polyzen entered into a Confidentiality Agreement. See ii. The Confidentiality Agreement stated that "[b]oth parties agree that no right or license under any patent or trade secret now or hereafter owned or controlled by either party is granted to the other parry by this agreement." Id. (quotation omitted). On February 12, 2007, RadiaDyne and Polyzen began working together to develop a medical balloon device design and the technology and process necessary to produce and manufacture it. See id.

         On March 26, 2007, Rubin Shah, a Polyzen employee, sent Isham a quote for a project to "Design & Thermoform/RF Weld PU Balloon- Phase I." See id. *2 (quotation omitted). The quote totaled $23, 500, and it included a price of $4, 500 for "design" and a price of $19, 000 for prototype production. Id. Tilak Shah, Polyzen's founder, created the quote. Id. On March 28, 2007, RadiaDyne issued a purchase order to Polyzen for a total of $23, 500. See id On March 29, 2007, Polyzen sent RadiaDyne its first invoice, and RadiaDyne paid a deposit of $4, 500. See id.

         On July 20, 2007, Polyzen's Rubin Shah emailed RadiaDyne's John Isham a "first draft" of the Development and Commercialization Agreement ("DC A") that Polyzen had prepared on July 18, 2007. See Id. The "purpose of [the DCA was] to document various verbal agreements and understandings between the parties and define future expectations of each other as both parties continue the efforts on the product development and manufacturing of samples for a) feasibility study; b) functionality testing; c) clinical trials and future commercialization of specific design of rectal balloon catheter." Id. (quotation omitted). The first draft of the DCA defined "RADIADYNE PRODUCT" in paragraph 2.e as "[s]pecific design of rectal balloon catheter for locating/supporting prostate during brachytherapy with Polyzen's Balloon Process Technology." Id. (quotation omitted). The first draft of the DCA also confirmed that "[t]he parties agree that RADIADYNE TECHNOLOGY and RADIADYNE PRODUCT will remain the properties of RADIADYNE." Id. (quotation omitted). Thereafter, RadiaDyne and Polyzen agreed upon a three-layer balloon that Polyzen would make for RadiaDyne to sell to clinicians for "immobilizing the prostate during radiation therapy treatments for cancer patients." Id. (quotation omitted). The balloon design "included internal welds and a distal bulge when the balloon was inflated." Id. (quotation omitted).

         On July 27, 2007, Polyzen sent the three-layer balloon design to Isham, which he approved. See Id. On July 31, 2007, Isham sent Rubin Shah an email and told him that RadiaDyne wanted to launch the product at the October 2007 ASTRO trade show. See Id. Rubin Shah responded that same day and told Isham that Polyzen could meet the deadline despite it being "a very aggressive timeline." Id. (quotation omitted). Isham replied later in the day and asked for information on the manufacturing process so he could "submit [an] FDA Registration letter." Id. (quotation omitted).

         On August 16, 2007, Polyzen prepared an updated draft of the DCA. See id Also on August 16, 2007, Ruben Shah of Polyzen forwarded the updated draft to Isham of RadiaDyne for his review. See id The August 16, 2007 updated draft DCA stated:

The purpose of this term sheet is to document various verbal agreements and understandings between the parties and define future expectations of each other as both parties continue the efforts on the product development and manufacturing of samples for a) feasibility study; b) functionality testing; c) clinical trials and future commercialization of specific design of rectal balloon catheter, and this will serve as a reference document during initial stages of work between the parties until further manufacturing/supply agreement to be concluded.

Id. (quotation omitted). The August 16, 2007 updated draft DCA contained the same definitions of "RADIADYNE PRODUCT" and provisions for ownership of "RADIADYNE PRODUCT" as the July 2007 draft DCA. See id (quotation omitted).

         On September 25, 2007, Polyzen filed a provisional patent application for what would become the '497 patent. See Id. Polyzen did not inform RadiaDyne of the provisional patent application, and RadiaDyne was unaware of it. See id Polyzen intended to file the patent application before the balloon was publicly displayed at the October 2007 ASTRO trade show. See id On September 26, 2007, Tilak Shah sent Isham quotes for two new phases: Phase II, which consisted of the production of 100 samples "for testing and trials, " and Phase HI, which consisted of fiill-scale production of the medical balloons. See Id. *3. RadiaDyne completed purchase orders for both phases. See id.

         On October 9, 2007, Polyzen and RadiaDyne entered into a "Development and Commercialization Agreement" that memorialized different rights and obligations of the two parties. See id (quotation omitted). The October 2007 DCA stated:

The purpose of this agreement is to document various verbal agreements and understandings between the parties and define future expectations of each other as both parties continue the efforts on the product development and manufacturing of samples for a) feasibility study; b) functionality testing; c) clinical trials and future commercialization of specific design of rectal balloon catheter.

Id (quotation omitted). The October 2007 DCA defined "RADIADYNE PRODUCT as "[s]pecific design of rectal balloon catheter for locating/supporting prostate during radiation therapy with Polyzen's Balloon Process Technology" and confirmed RadiaDyne's ownership of "RADIADYNE PRODUCT." Id. (quotation omitted). In the October 2007 DCA, at Isham's request, "radiation therapy" was substituted for "brachytherapy." See M.

         On October 25, 2007, at Polyzen's request, RadiaDyne tore up the October 2007 DCA because Polyzen wanted to change paragraph 6.d concerning manufacturing of the "RADIADYNE PRODUCT." See id On February 8, 2008, Polyzen and RadiaDyne entered into a new and almost identical DCA. See id. Polyzen drafted the 2008 DCA with the assistance of Willy Manfroy, an intellectual property licensing specialist. See id.

         The 2008 DCA stated:

The purpose of this agreement is to document various verbal agreements and understandings between the parties and define future expectations of each other as both parties continue the efforts on the product development and manufacturing of samples for a) feasibility study; b) functionality testing; c) clinical trials and future commercialization of specific design of rectal balloon catheter.

Id (quotation omitted). The 2008 DCA defined "RADIADYNE PRODUCT" as "[s]pecific design of rectal balloon catheter for locating/supporting prostate during radiation therapy with Polyzen's Balloon Process Technology." Id. (emphasis and quotation omitted). The 2008 DCA defined Polyzen's Balloon Process Technology as "POLYZEN'S PU film welded balloon technology, including film formulation, thickness and multi-layer film welded, designed to articulate desired shape and profile of balloons for various applications. Functional coating, including anti-adhesion coating formulation and process to apply such formulation onto any device. POLYZEN provided coating services for a fee to cover all out-of-pocket expenses and overhead to prepare samples or coat the products for its customers." Id. (quotation omitted). In the 2008 DCA, "[t]he parties agree[d] that RADIADYNE TECHNOLOGY and RADIADYNE PRODUCT will remain the properties of RADIADYNE and POLYZEN TECHNOLOGY, DEVICE PROCESS TECHNOLOGY and BALLOON PROCESS TECHNOLOGY will remain the property of POLYZEN." Id. (quotation ...


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