United States Court of Appeals for the Federal Circuit
2008-1269, -1270
TYCO HEALTHCARE GROUP LP
(doing business as United States Surgical, a division of Tyco Healthcare Group LP),
Plaintiff-Appellant,
v.
ETHICON ENDO-SURGERY, INC.,
Defendant-Cross Appellant.
Drew M. Wintringham,III, DLA Piper US LLP, of New York, New York, argued for
plaintiff-appellant. With him on the brief was Mark W. Rueh.
Barbara L. Mullin, Woodcock Washburn LLP, of Philadelphia, Pennsylvania,
argued for defendant-cross appellant. With her on the brief were Dianne B. Elderkin,
Richard B. LeBlanc, Steven D. Maslowski, and Ruben H. Munoz.
Appealed from: United States District Court for the District of Connecticut
Judge Janet Bond Arterton
United States Court of Appeals for the Federal Circuit
2008-1269, -1270
TYCO HEALTHCARE GROUP LP,
(doing business as United States Surgical, a division of Tyco Healthcare Group LP),
Plaintiff-Appellant,
v.
ETHICON ENDO-SURGERY, INC.,
Defendant-Cross Appellant.
Appeals from the United States District Court for the District of Connecticut in case
no. 3:04-CV-1702, Judge Janet Bond Arterton.
__________________________
DECIDED: December 7, 2009
__________________________
Before MICHEL, Chief Judge, NEWMAN and PROST, Circuit Judges.
Opinion of the court filed by Chief Judge MICHEL. Dissenting opinion filed by Circuit
Judge NEWMAN.
MICHEL, Chief Judge.
Tyco Healthcare Group LP (“Tyco Healthcare”) appeals the dismissal of its
patent infringement suit against Ethicon Endo-Surgery, Inc. (“Ethicon”). The district
court dismissed without prejudice the infringement suit because Tyco Healthcare had
failed to prove ownership of the asserted patents, and thus lacked standing to sue.
Ethicon cross-appeals, arguing that the dismissal should have been with prejudice. We
affirm the district court’s decision to dismiss without prejudice.
I. BACKGROUND
The present litigation concerns three patents, presently at issue (“the patents-in-
suit”), directed to medical instruments that employ ultrasonic energy to cut and
coagulate vessels in surgery. 1 While the applications for these patents were pending,
the respective inventors assigned their rights to either U.S. Surgical Corporation
(“USSC”) or Misonix. Misonix had previously granted USSC an exclusive license and
the right to sue on any inventions and patents concerning the subject matter of the
involved patents. Thus, as of March 1999, all necessary rights to enforce the patents
resided in USSC.
On April 1, 1999, USSC entered into two agreements: a Contribution
Agreement and a Settlement Agreement. The Contribution Agreement was executed
by USSC and Kendall LLP. With the Contribution Agreement, USSC agreed to
“assign[], transfer[], and deliver[] to [Kendall] . . . all of the assets, properties, and
business,” excepting certain “Excluded Assets,” existing as of April 1, 1999. The
transferred assets included patents, except “[a]ny and all patents and patent
applications relating to any pending litigation involving USSC,” as set forth by the
Excluded Assets provision. Section 4.21 of the Contribution Agreement stated in part
that “there are no actions pending or threatened by or against, or involving USSC,”
except “as set forth on Schedule 4.21.” Shortly after the execution of the Contribution
Agreement, Kendall changed its name to Tyco Healthcare. Thus, any rights transferred
to Kendall via the Contribution Agreement are now held by Tyco Healthcare.
1
U.S. Patent Nos. 6,063,050; 6,468,286; and 6,682,544. A fourth patent,
U.S. Patent No. 6,280,407, was asserted in the complaint.
2008-1269, -1270 2
On the same day the Contribution Agreement was signed, USSC and Ethicon
executed the Settlement Agreement, which purported to resolve “five pending patent
litigations” and several interference proceedings between the two companies. The
Settlement Agreement granted immunity from infringement liability to certain then-
existing products made or sold by Ethicon. USSC and Ethicon also agreed to dismiss
with prejudice the litigations listed in the agreement. Presently, both Ethicon and Tyco
Healthcare concur that the type of products accused of infringement in the current suit
are the same type of products immunized by the Settlement Agreement. Both parties
also agree that the current products accused of infringement are not immunized
because they were made or sold after April 1, 1999, the effective date of the Settlement
Agreement.
In October 2004, Tyco Healthcare commenced the present action against
Ethicon, claiming infringement of the patents-in-suit. After discovery, a trial was held in
December 2008 before Judge Arterton. Tyco Healthcare called its first witness,
Mr. Steven Amelio, a Tyco Healthcare vice-president and its Rule 30(b)(6) witness.
During Mr. Amelio’s cross-examination, Ethicon challenged Tyco Healthcare’s asserted
ownership of the patents for the first time.
The following day, a Saturday, Tyco Healthcare produced the Contribution
Agreement, which allegedly documents the 1999 transfer of title of the patents from
USSC to Kendall (now named Tyco Healthcare). On the Monday, Mr. Amelio was
recalled as a witness and testified that ownership of the patents-in-suit was transferred
from USSC to Kendall.
2008-1269, -1270 3
At the close of Tyco Healthcare’s case-in-chief, Ethicon moved for judgment as a
matter of law on the issue of standing, contending that Tyco Healthcare did not own the
patents-in-suit. The district court held Ethicon’s motion in reserve but ultimately granted
it and dismissed the case without prejudice.
Tyco Healthcare timely appealed, and Ethicon timely cross-appealed. We have
jurisdiction under 28 U.S.C. § 1295(a)(1).
II. DISCUSSION
A plaintiff generally has the burden of proving standing to sue. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992). “[T]o assert standing for patent
infringement, the plaintiff must demonstrate that it held enforceable title at the inception
of the lawsuit.” Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1309 (Fed.
Cir. 2003).
The ownership of the patents-in-suit here rests, in part, on the correct
interpretation of a particular phrase of the Contribution Agreement. Under Delaware
law, which governs the Contribution Agreement, “the role of a court [when interpreting a
contract] is to effectuate the parties’ intent.” Lorillard Tobacco Co. v. Am. Legacy
Found., 903 A.2d 728, 739 (Del. 2006).
The contractual phrase in dispute is “related to pending litigation.” If the patents-
in-suit are “related to” any litigation involving USSC pending at the time the Contribution
Agreement became effective, then the patents were not transferred to Kendall (and thus
Tyco Healthcare) but stayed with USSC. If the patents were not related to the pending
litigation, they are beyond the scope of the “Excluded Assets” provision and therefore
Kendall received ownership of the patents.
2008-1269, -1270 4
The contract gives no explicit definition of the phrase “related to pending
litigation.” Tyco Healthcare argues that the phrase includes only patents asserted in a
pending litigation or patent applications in the same family as an asserted patent. But
that view is too narrow based on the language of the Contribution Agreement. In
general, “related to” means one thing has some relationship or connection to another
thing. See Random House Webster’s Unabridged Dictionary 1626 (1998) (defining
“related” to mean “associated, connected” and “allied by nature, origin, kinship,
marriage, etc.”); see also Lorillard, 903 A.2d at 740 (“When a term’s definition is not
altered or has no gloss in the [relevant] industry it should be construed in accordance
with its ordinary dictionary meaning.”) (quotation marks omitted). In legal parlance,
“related” takes meanings with similar breadth. See Black’s Law Dictionary 1288 (6th ed.
1991) (defining “related” as “[s]tanding in relation; connected; allied; akin”); see also 28
U.S.C. § 1367(a) (granting supplemental jurisdiction over claims “so related to” a claim
based on original jurisdiction); Times Mirror Magazines, Inc. v. Field & Stream Licenses
Co., 294 F.3d 383, 390 (2d Cir. 2002) (“Possession of a famous or strong mark entitles
the possessor to broad protection for related goods.”). In many patent contexts, the
term “related” adopts a similarly encompassing meaning. See, e.g., In re Fallaux, 564
F.3d 1313, 1315 (Fed. Cir. 2009) (discussing related patent applications in the
obviousness-type double patenting context); Teva Pharms. USA, Inc. v. Novartis
Pharms. Corp., 482 F.3d 1330, 1344 (Fed. Cir. 2007) (explaining that “related litigation
involving the same technology and the same parties is relevant in determining whether
a justiciable declaratory judgment controversy exists on other related patents”).
2008-1269, -1270 5
Of course, “related to” can be used by contracting parties in a narrower sense.
Here, however, Tyco Healthcare directs us to nothing in the Contribution Agreement
that suggests the contracting parties intended anything other than the ordinarily broad
understanding of the phrase “related to pending litigation.” Additionally, the other
subsections of the Excluded Assets provision employ the term “related” in a seemingly
broad manner. The Excluded Assets provision, therefore, covers any patents or patent
applications in the same family or so related in subject matter that they were or could
have been reasonably asserted in or affected by a litigation pending at the time the
Contribution Agreement was executed.
Based on our interpretation of the Contribution Agreement, Tyco Healthcare must
prove that the patents-in-suit could not have been asserted in or affected by any
litigation pending as of April 1, 1999. As to what litigation was pending when the
Contribution Agreement was signed, the record before us is silent. Tyco Healthcare
offers nothing that would allow the court to determine which litigations were pending
when the Contribution Agreement was signed.
On its face, the Contribution Agreement purports to answer the question of
whether any USSC litigation was pending at the time. Section 4.21 describes pending
litigation:
Except as set forth on Schedule 4.21 hereto, there
are no actions pending or threatened by or against, or
involving USSC (with respect to the Business only) or
any directors, officers, or employees thereof in their
capacity as such or which question or challenge the
validity of this Agreement, or any action taken or to be
taken by USSC pursuant to this Agreement in
connection with the transactions contemplated hereby
or thereby, and to the knowledge of USSC, there is no
valid basis for any such Action.
2008-1269, -1270 6
Thus, Schedule 4.21 was to list any USSC litigations then pending or threatened, but
Schedule 4.21 is missing. Or it simply never existed, as Tyco Healthcare contends on
appeal. If the latter, that seems to be a significant oversight since Tyco Healthcare
concedes that USSC litigation was pending on April 1, 1999. J.A. 2027. Either way,
Tyco Healthcare is in the unenviable position of having to prove the patents-in-suit are
not related to particular USSC litigation without having the identity of that litigation
available in the record.
The district court seemingly viewed the Settlement Agreement as dispositive of
whether the patents-in-suit were “related to” pending litigation. The Settlement
Agreement, however, appears to cover more subject matter than what was involved in
pending USSC litigation. By its own terms, the Settlement Agreement encompasses
more. The Settlement Agreement includes resolving “unasserted claims of patent
infringement,” which appear distinct from the five litigations recited in the agreement.
Even with its broader scope, the Settlement Agreement may still inform the court as to
whether the patents-in-suit are “related to” a particular litigation pending at the time. A
court may reasonably conclude that USSC included one or more of the unasserted
infringement claims in the Settlement Agreement because USSC thought those
unasserted claims to be “related to” pending litigation. Without knowledge of the
pending litigations, however, it is not possible to ascertain whether the patents-in-suit
are “related to” any relevant USSC litigation.
We also note that the Settlement Agreement appears to distinguish between
“litigation” and “interference proceedings.” The Contribution Agreement, on the other
hand, seems to refer to litigation more broadly and may encompass a broader class of
2008-1269, -1270 7
legal proceedings. Whether this has any bearing on the ownership of the patents was
not addressed by the district court’s analysis.
In sum, Tyco Healthcare bore the burden of proving that the patents-in-suit are
not “related to” any litigation pending at the time the Contribution Agreement was
executed. Tyco Healthcare failed to do this. Therefore, the district court correctly
dismissed the suit.
Turning to the nature of the dismissal, Ethicon feels aggrieved because it had
asked the district court to dismiss the case with prejudice. “A dismissal with prejudice
bars a subsequent action between the same parties or their privies on the same claim,
but a dismissal without prejudice, although it constitutes a final termination of the first
action, does not bar a second suit.” H.R. Techs., Inc. v. Astechnologies, Inc., 275 F.3d
1378, 1384 (Fed. Cir. 2002). We have explained that “[o]rdinarily, dismissal for lack of
standing is without prejudice.” Fieldturf, Inc. v. Sw. Recreational Indus., Inc., 357 F.3d
1266, 1269 (Fed. Cir. 2004). “On occasion, however, a dismissal with prejudice is
appropriate, especially where it is plainly unlikely that the plaintiff will be able to cure the
standing problem.” Id. Within the sound discretion of the district court is the decision of
whether dismissal is with or without prejudice. Wynder v. McMahon, 360 F.3d 73, 76
(2d Cir. 2004) (reviewing “Rule 41(b) dismissals for abuse of discretion”).
Ethicon has not shown that Judge Arterton abused her discretion. As best we
can tell, Tyco Healthcare may become able to show that it owned the asserted patents.
Alternatively, Tyco Healthcare may be able to obtain ownership of the patents. Further,
given that the ownership issue was not identified to the court as an issue to be litigated
during trial and was first explicitly raised by Ethicon during Mr. Amelio’s cross-
2008-1269, -1270 8
examination, we do not perceive any undue prejudice to Ethicon. Should Tyco
Healthcare be able to cure the ownership deficiency, most if not all the evidence,
testimony, and rulings developed during trial should be applicable to a subsequent
proceeding between the parties.
III. CONCLUSION
For the foregoing reasons, the district court’s dismissal without prejudice is
affirmed.
AFFIRMED
2008-1269, -1270 9
United States Court of Appeals for the Federal Circuit
2008-1269, -1270
TYCO HEALTHCARE GROUP LP
(doing business as United States Surgical, a division of Tyco Healthcare Group LP)
Plaintiff-Appellant,
v.
ETHICON ENDO-SURGERY, INC.,
Defendant-Cross Appellant.
Appeal from the United States District Court for the District of Connecticut in Case No.
3:04-CV-1702, Judge Janet Bond Arterton.
NEWMAN, Circuit Judge, dissenting.
The question before the court is whether Tyco Healthcare Group LP was the
owner of the patents here in suit on October 8, 2004, the date the complaint was filed in
this case. The answer turns on whether an intra-company transfer document called a
“Contribution Agreement,” dated April 1, 1999 between U.S. Surgical Corp. (USSC) and
Tyco’s nominal predecessor The Kendall Company LP, included USSC’s rights in the
patent application that led to the three patents here at issue. (The Kendall Company
changed its name to Tyco Healthcare Group; for convenience I use “Tyco” in this
discussion.)
The Contribution Agreement implemented a Limited Partnership between USSC
and Tyco. The Agreement transferred USSC’s therein-defined Business, including all
tangible and intangible property associated with the Business, with certain defined
exceptions such as “any and all patents and applications relating to any pending
litigation involving USSC.” The district court, relying on a contemporaneous Settlement
Agreement between USSC and Ethicon, held that the patents here in suit were “relating
to any pending litigation” under the aforementioned exception. The district court
reasoned that USSC’s entire patent portfolio was “related,” because the Settlement
Agreement granted immunity from infringement to certain defined “Immune Products.”
However, it is not disputed that the patents here in suit do not relate in any way to those
Immune Products. Thus the panel majority does not adopt the district court’s reasoning.
However, my colleagues instead find a new and different ground for the same
result, upon which this court misconstrues the agreements. My colleagues ignore the
evidence, and now affirm the dismissal on a ground not asserted against Tyco, to which
Tyco had no opportunity to respond, and that is on its face incorrect. I respectfully
dissent.
DISCUSSION
The relevant provisions of the Contribution Agreement concern the patent rights
contributed to the partnership by USSC, as follows:
1.1 Contribution of the Assets.
(a) Subject to the terms and conditions of this Agreement, USSC
hereby assigns, transfers, and delivers to the Partnership . . . all of the
assets, properties, and business (excepting only the “Excluded Assets,” as
defined in Section 1.2 of this Agreement) of every kind and description;
wherever located; real, personal, or mixed; tangible or intangible; owned
or held; or used primarily in the conduct of the Business as the same shall
2008-1269,-1270 2
exist on the Contribution Date (collectively, the “Assets”), and including,
without limitation, all right, title, and interest of USSC in, to, and under:
....
(iii) Those patents . . . and other intangible property . . . and any
applications for the same, used primarily in the Business . . .
(collectively, the “Intangible Property”) . . . .
The Excluded Assets are defined in the Agreement as follows, to the extent pertinent to
this case:
1.2 Excluded Assets.
(a) [USSC] expressly understands and agrees that there shall be
excluded from the Assets any assets not used in connection with the
Business and the following assets and properties of USSC which are used
in connection with the Business:
....
(ix) Any and all patents and patent applications relating to any
pending litigation involving USSC. . . .
The court elaborates on the contract, to find that “[t]he Excluded Assets provision,
therefore, covers any patents or patent applications in the same family or so related in
subject matter that they were or could have been reasonably asserted in or affected by
a litigation pending at the time the Contribution Agreement was executed.” Maj. op. at
6. However, even with this broad interpretation, the Excluded Assets provision does not
cover the patents here in suit, for it is undisputed that neither they nor any patent in the
same family were affected by litigation pending as of April 1, 1999. Nonetheless,
despite the lack of any factual dispute on this aspect, the court now rules that Tyco did
not meet its “burden” by showing that the patents in suit could not have been
“reasonably asserted in or affected” by any other, unidentified litigation. This ruling is
beyond what Ethicon argued, beyond the reasoning applied by the district court, and
contrary to the unrebutted evidence. There was no suggestion of any such litigation.
The district court’s ruling
2008-1269,-1270 3
The district court relied on a Settlement Agreement between USSC and Ethicon
whereby, effective April 1, 1999, USSC and Ethicon settled all litigation then pending
between them as to the subject matter defined in the Agreement, and granted reciprocal
immunity as to specified products that were then made and sold. The district court held
that “[the Settlement Agreement] bear[s] directly on who owns the patents in this case,”
deeming it relevant to the Excluded Assets provision of the Contribution Agreement.
The district court ruled that the patents here in suit had not been transferred to Tyco
under the Contribution Agreement because these patents were “related” to the
USSC/Ethicon litigation that the Settlement Agreement resolved.
There are several flaws in the path by which the district court arrived at this
conclusion. There was no evidence contrary to that of Tyco’s Rule 30(b)(6) witness,
Vice President Stephen Amelio. He was asked:
And is it still your testimony today that Tyco Healthcare Group LP holds
title to the patents-in-suit as a result of a transfer from U.S. Surgical
Corporation to the Kendall Company, which subsequently changed its
name to Tyco Healthcare Group LP?
Mr. Amelio responded, “Yes, it is.” Tyco’s counsel asked;
So is it correct that the patent applications were not Excluded Assets
under Section 1.2(a)(ix) of the Contribution Agreement?
Mr. Amelio responded, “That is correct.” He testified that none of the three patents nor
the applications that gave rise to those patents were “relating to any pending litigation
involving USSC,” the words of the Contribution Agreement. He pointed out that the
patents in suit had not even issued at the time of the Contribution Agreement. 1
1
The application that led to U.S. Patent No. 6,063,050 was filed on August
14, 1997, and issued on May 16, 2000. The other two patents are in a chain of
2008-1269,-1270 4
On cross-examination, Ethicon’s counsel proposed to Mr. Amelio that the patents
here in suit were “related” to the litigation between USSC and Ethicon that was settled
on April 1, 1999, pointing to the litigations named in the Settlement Agreement and the
provision that immunized certain existing Ethicon products from future suit by USSC.
Ethicon’s counsel asked Mr. Amelio whether these aspects of the Settlement
Agreement showed that the patents in suit were “expressly excluded” from the
Contribution Agreement. Mr. Amelio responded: “I do not believe that to be correct.”
Mr. Amelio directly disagreed with Ethicon’s proposed interpretation of the Contribution
Agreement. Ethicon presented no contrary evidence, testimonial or documentary, in
support of its proposed meaning. In contrast, the parties to the Contribution Agreement
agreed as to its meaning.
The litigations identified in the Settlement Agreement were five district court
cases, two in the United States District Court for the District of Connecticut and one
each in the Eastern District of Virginia, the Southern District of Ohio (Western Division),
and the Southern District of Florida. Three pending interference proceedings were also
identified, by name and number. Ethicon never asserted that any of these prior
litigations or interferences related to the patents here in suit, or the applications that
preceded them, or any family member of these patents. Ethicon has also never
disputed that the subject matter of the patents here in suit, concerning surgical devices
for ultrasonic cutting and coagulation of blood vessels, is not related to the subject
matter of the settled litigations of April 1, 1999, which concerned surgical staples and
trocars. Ethicon’s theory was not that any of these litigations themselves “related” to the
continuations of the ’050 patent, and issued on applications filed on September 6, 2001
and September 11, 2002.
2008-1269,-1270 5
patents now in suit; rather, Ethicon postulated that all future USSC patents could be
encumbered by the grant of immunity, on the possibility that they might relate to any of
the Immune Products identified in the Settlement Agreement.
The district court accepted Ethicon’s theory. It is not disputed, however, that the
patents here in suit have no relation to these Immune Products. The panel majority
correctly rejected this reasoning, explaining that as construed by the district court “[t]he
Settlement Agreement . . . appears to cover more subject matter than was involved in
pending USSC litigation.” Maj. op. at 7. I agree that the district court adopted an over-
broad interpretation of the term “relating” in the Contribution Agreement. And even on
the district court’s interpretation, Tyco correctly points out that the continuing immunity
under the Settlement Agreement has no relation to USSC’s transfer of ownership of its
patent assets, for USSC and Ethicon expressly agreed that any assignee would be
bound to respect such immunity.
However, my colleagues have adopted a new theory, whereby this court now
excludes the patents here in suit from transfer under the Contribution Agreement.
This court’s new theory
The court now goes outside of any provision of any contract, and proposes that
“[a] court may reasonably conclude that USSC included one or more of the unasserted
infringement claims in the Settlement Agreement because USSC thought those
unasserted claims to be ‘related to’ pending litigation.” Maj. op. at 7. I repeat, we have
been told of no unasserted claims, and no witness or advocate has suggested
otherwise. It is indeed obscure as to how “a court could reasonably conclude” that
nonexistent unasserted claims entrained these later-granted patents on unrelated
2008-1269,-1270 6
subject matter. This theory was not mentioned by the district court and not pressed by
any party. Tyco has had no opportunity to respond.
The aspect that appears to have diverted my colleagues is that the Contribution
Agreement did not include a schedule that was referred to in Section 4.21 of the
Agreement:
4.21 Litigation. Except as set forth on Schedule 4.21 hereto, there are no
actions pending or threatened by or against, or involving USSC (with
respect to the Business only) or any directors, officers, or employees
thereof in their capacity as such or which question or challenge the validity
of this Agreement, or any action taken or to be taken by USSC pursuant to
this Agreement in connection with the transactions contemplated hereby
or thereby, and to the knowledge of USSC, there is no valid basis for any
such Action.
Ethicon’s counsel asked Mr. Amelio if the absence of Schedule 4.21 rendered the
Contribution Agreement incomplete. Mr. Amelio answered, “I don’t know if that’s the
case. It could be there is no pending litigations and that’s why there is no schedule.”
My colleagues nonetheless find that “[a]s to what litigation was pending when the
Contribution Agreement was signed, the record before us is silent.” Maj. op. at 6. That
is incorrect.
The record is extensive concerning the Settlement Agreement. Ethicon
presented Mr. Amelio with documents showing that the litigations listed in the
Settlement Agreement were not formally dismissed until several days after April 1,
1999; to which Mr. Amelio responded, “I’m not sure if they’re considered pending or
settled litigation as a result of the settlement.” Whether those litigations were properly
considered “pending” on the day of settlement is irrelevant, however, because those
litigations did not relate to the patents here in suit. Ethicon did not suggest that there
2008-1269,-1270 7
was any other litigation within the scope of Section 4.21, although pending litigation is a
matter of public record.
My colleagues deem it irrelevant that the patents here in suit do not relate to any
Immune Product or any other subject of the Settlement Agreement. My colleagues do
not mention the uncontradicted testimony of Tyco’s Rule 30(b)(6) witness. Instead, the
court now requires Tyco to have established that there was no pending litigation of any
sort on April 1, 1999, to avoid the result whereby the absent Schedule 4.21 negates the
transfer of every USSC patent and application under the Contribution Agreement.
Ethicon did not identify any litigation beyond that listed in the Settlement Agreement,
despite every opportunity to discover and produce such evidence. Nonetheless, my
colleagues hold that the absence of Schedule 4.21, without more, removes these later-
granted patents from transfer under the Contribution Agreement.
“The cardinal principle of contract interpretation is that the intention of the parties
must prevail unless it is inconsistent with some established rule of law.” 11 Williston on
Contracts §32:2 (4th ed. 2009); see also King v. Dep’t of Navy, 130 F.3d 1031, 1033
(Fed. Cir. 1997) (“The paramount focus is the intention of the parties at the time of
contracting; that intention controls in any subsequent dispute.”); Lorillard Tobacco Co. v.
Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006) (“When interpreting a contract, the
role of a court is to effectuate the parties’ intent.”). As a corollary, when the contracting
parties’ intent is collaterally attacked by a stranger to that contract, the attacker bears
the burden of coming forward with some evidence of its contrary position. Ethicon
provided neither documentary evidence nor opinion testimony in support of its notion
that Tyco and USSC intended to exclude the patents here in suit from the Contribution
2008-1269,-1270 8
Agreement. And even if the burden of proof as to contract interpretation were deemed
to lie with Tyco, as my colleagues suggest, this burden was met, for Tyco’s witness
testified, without contradiction, that there was no pending litigation on April 1, 1999
relating to the three patents here in suit.
Nonetheless, the court holds that the absence of Schedule 4.21 prevents Tyco
from establishing that the patents in suit were not related to any then-pending litigation.
My colleagues require that “Tyco Healthcare must prove that the patents-in-suit could
not have been asserted in or affected by any litigation pending as of April 1, 1999.” Maj.
Op. at 6 (emphasis added). If such proof were indeed required—as I doubt—this
criterion was met. The undisputed testimony and documentary evidence of the terms of
the Contribution Agreement, the explicit terms of the Settlement Agreement, and the
unchallenged contractual intent of the parties to each of these agreements, require the
conclusion that USSC patents and applications that were not related to then-pending
litigation were transferred to Tyco. There was no contrary evidence. Wherever the
placement of the burden of proof, Tyco established that these patents were not within
the Excluded Assets of the Contribution Agreement.
The court’s contrary reading produces the absurd result whereby no USSC
patent, indeed none of the assets transferred by the Contribution Agreement, can be
deemed to have been transferred, merely because Schedule 4.21, listing public
information, was missing. That is not a tolerable reading of the contract, for it renders
the contract ineffective for its purpose and defeats the plain intent of the contracting
parties. Tyco explains that the contracting parties never would have agreed to transfer
USSC’s business assets without also transferring the patents and other intellectual
2008-1269,-1270 9
property rights that protected the transferee’s use of those assets. The contract text
and intent, undisputed by the contracting parties and not seriously challenged by
Ethicon, cannot support the conclusion reached by my colleagues. See NVT Techs.,
Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (“An interpretation that gives
meaning to all parts of the contract is to be preferred over one that leaves a portion of
the contract useless, inexplicable, void, or superfluous.”); NAMA Holdings, LLC v. World
Market Center Venture, LLC, 948 A.2d 411, 419 (Del. Ch. 2007) (“Contractual
interpretation operates under the assumption that the parties never include superfluous
verbiage in their agreement, and that each word should be given meaning and effect by
the court.”).
In sum, Tyco established, and Ethicon does not dispute, that the patents here in
suit were not related to any litigation pending on April 1, 1999, whether or not the settled
USSC/Ethicon litigation is deemed to have remained pending on the settlement
contract’s date. It is not disputed that the subject matter here in suit is not related to any
subject matter then in litigation, and that the now-asserted patents are not related to any
of the products for which immunity was granted in the Settlement Agreement. Thus it is
concluded that these patents were transferred by USSC to Tyco in accordance with the
transfer in the Contribution Agreement. On this conclusion, the court’s denial of
standing is without support in law and fact. I respectfully dissent.
2008-1269,-1270 10
Tyco Healthcare Group LP v. Ethicon Endo-Surgery, Inc.
Court: Court of Appeals for the Federal Circuit
Date filed: 2009-12-07
Citations: 587 F.3d 1375
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