DCT

5:10-cv-00254

Johnston v. Reset Medical Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 5:10-cv-00254, E.D. Pa., 01/20/2010
  • Venue Allegations: Venue is based on allegations that a substantial part of the acts and omissions giving rise to the claims occurred in the district, and that Defendant's conduct has injured Plaintiffs, who are citizens of Pennsylvania.
  • Core Dispute: Plaintiffs allege that Defendant, a licensee of Plaintiffs’ cryosurgery technology, breached a license agreement by failing to pay royalties, improperly asserting joint ownership of licensed patents, and filing new patent applications on Plaintiffs' alleged inventions without authorization or proper inventorship.
  • Technical Context: The technology involves methods and devices for cryospray ablation, a medical procedure that uses a spray of liquid nitrogen to destroy unwanted tissue, particularly pre-cancerous lesions in the gastrointestinal tract.
  • Key Procedural History: The central event underlying this dispute is a License Agreement effective October 2, 1997, through which Dr. Johnston granted an exclusive, worldwide license to his "Johnston Invention" and related "Patent Rights" to Defendant's predecessor. The case will likely require a detailed interpretation of this agreement, specifically the clauses defining the scope of "Patent Rights" and Dr. Johnston's contractual right to "control the filing and prosecution" of those rights.

Case Timeline

Date Event
1997-05-23 Provisional Patent Application (60/047,484) Filing Date
1997-10-02 License Agreement between Dr. Johnston and Defendant's predecessor executed
1998-03-30 Parent Patent Application (09/050,150) Filing Date
2000-02-22 U.S. Patent No. 6,027,499 Issue Date
2002-05-07 U.S. Patent No. 6,383,181 Issue Date
2006-04-11 U.S. Patent No. 7,025,762 Issue Date
2006-04-21 Defendant obtains FDA clearance for cryosurgical tool
2007-07-01 Defendant first markets and sells the "CSA Medical Cryoablation System" (approx. date)
2007-08-10 Defendant files U.S. Patent Application No. 11/889,294
2007-08-14 U.S. Patent No. 7,255,693 Issue Date
2007-12-14 Defendant files U.S. Patent Application No. 11/956,890
2008-12-05 Defendant files U.S. Patent Application No. 12/314,245
2010-01-20 Complaint Filing Date

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 6,027,499 - "Method and Apparatus for Cryogenic Spray Ablation of Gastrointestinal Mucosa"

The Invention Explained

  • Problem Addressed: The patent describes prior art methods for treating Barrett's esophagus (a pre-cancerous condition) as being slow, costly, dangerous, and lacking precise control, often damaging healthy underlying tissue because the depth of treatment could not be reliably controlled (’499 Patent, col. 2:3-21).
  • The Patented Solution: The invention proposes a system where liquid nitrogen is sprayed at low pressure through a flexible catheter inserted into an endoscope (’499 Patent, Abstract). This allows a physician to directly visualize the target tissue as it freezes—indicated by the tissue turning white—providing real-time feedback to control the procedure and limit damage to the thin mucosal layer without harming deeper tissues (’499 Patent, col. 4:20-33). The complaint includes a diagram from the provisional application illustrating this overall setup (Compl. ¶17).
  • Technical Importance: The use of a low-pressure spray, as opposed to a direct-contact solid cryoprobe, was designed to avoid the probe sticking to tissue and to create a very shallow, controlled freeze, which was a significant challenge in the field (’499 Patent, col. 3:30-59).

Key Claims at a Glance

The complaint seeks a declaratory judgment of ownership over the entire patent, not infringement of specific claims. Claim 4 is a representative independent apparatus claim.

  • An endoscope with an imaging camera, light source, and at least one lumen.
  • A catheter extending through the endoscope lumen.
  • The catheter terminates in a means for spraying cooled fluid in a radial direction.
  • A source of cooled liquified gas connected to the catheter.
  • A means for controlling the flow of the liquified gas at low pressure.

U.S. Patent No. 6,383,181 - "Method and Apparatus for Cryogenic Spray Ablation of Gastrointestinal Mucosa"

The Invention Explained

  • Problem Addressed: As a continuation-in-part of the ’499 patent's application, the ’181 patent addresses the same fundamental problem of providing a safer, more controllable method for cryo-ablation of gastrointestinal tissue (’181 Patent, col. 2:3-21).
  • The Patented Solution: The ’181 Patent further refines the method of using a low-pressure cryogenic spray, emphasizing the use of a heated catheter to prevent the catheter itself from becoming brittle or freezing to the endoscope, a significant operational hazard (’181 Patent, col. 9:41-48, col. 17:28-35).
  • Technical Importance: The introduction of a heated catheter addresses a key practical limitation of using cryogenic liquids in endoscopic tools, enhancing the safety and reliability of the procedure.

Key Claims at a Glance

The complaint seeks a declaratory judgment of ownership over the entire patent. Claim 1 is a representative independent method claim.

  • Applying to internal lesions of the intestinal tract a low pressure cryogenic spray to ablate said lesions.
  • The low pressure is defined as being in the range of 3-45 psi.
  • The cryogenic spray is applied by means of a heated catheter so that non-target areas are not affected by the cold of the catheter.

U.S. Patent No. 7,025,762 - "Method and Apparatus for Cryogenic Spray Ablation of Gastrointestinal Mucosa"

  • Technology Synopsis: As a divisional of the application leading to the ’181 patent, this patent covers the same core cryospray technology. It claims a cryosurgical apparatus that includes an endoscope, a catheter for delivering cryogen, and means for evacuating moist air from the treatment area to prevent fogging of the endoscope's lens (’762 Patent, Claim 19).
  • Asserted Claims: Ownership of the entire patent is in dispute (Compl. ¶¶ 87-94).
  • Accused Features: The complaint alleges this patent is part of the "Patent Rights" licensed to Defendant and that Defendant has improperly asserted ownership and failed to pay royalties on products covered by these rights (Compl. ¶¶ 24, 46, 90).

U.S. Patent No. 7,255,693 - "Heated Catheter Used in Cryotherapy"

  • Technology Synopsis: This patent focuses on an improvement to the cryosurgical catheter itself. It addresses the problem that cryogenic gases can make a catheter stiff, unmanageable, and prone to freezing inside the endoscope (’693 Patent, col. 1:29-39). The solution is a catheter with an integrated electrical heating element to maintain its flexibility and prevent it from sticking (’693 Patent, Abstract).
  • Asserted Claims: Ownership of the entire patent is in dispute (Compl. ¶¶ 87-94).
  • Accused Features: The complaint alleges this patent is part of the "Patent Rights" licensed to Defendant and that Defendant has improperly asserted ownership and failed to pay royalties on products covered by these rights (Compl. ¶¶ 24, 46, 90).

III. The Accused Instrumentality

Product Identification

The "CSA Medical Cryoablation System" (Compl. ¶46).

Functionality and Market Context

The complaint identifies this system as a "cryosurgical tool for the destruction of unwanted tissue... specifically for endoscopic applications," for which Defendant received FDA clearance on or about April 21, 2006 (Compl. ¶45). Defendant began marketing the system in the summer of 2007 to treat pre-cancerous and cancerous lesions in the gastro-intestinal tract (Compl. ¶46). The complaint alleges this system is a "Licensed Product" under the parties' License Agreement, obligating Defendant to pay royalties on its sales (Compl. ¶46).

IV. Analysis of Ownership and Contract Allegations

The complaint does not allege patent infringement. Instead, it seeks declaratory judgment on patent ownership and alleges breach of contract concerning the "Patent Rights." The central disputes revolve around inventorship and the interpretation of the 1997 License Agreement.

Dispute over Ownership of the "Initial Johnston Patents"

The complaint alleges an "actual controversy" over the ownership of the ’499, ’181, ’762, and ’693 patents (Compl. ¶92). Plaintiffs assert that Dr. Johnston is the sole owner of these patents pursuant to the License Agreement (Compl. ¶88). They allege that Defendant has "continuously and frivolously asserted that it jointly owns the Initial Johnston Patents by virtue of assignment from Cartledge" (Compl. ¶90). The complaint further alleges that Jennifer B. Cartledge, a co-inventor listed on the patents, was added to the parent application at Defendant's request and that Defendant represented this would have no impact on Dr. Johnston's rights under the License Agreement (Compl. ¶¶ 40-42).

Dispute over Control of Prosecution and Inventorship of New Applications

A core contractual dispute centers on the allegation that Dr. Johnston "shall control the filing and prosecution of the Patent Rights" (Compl. ¶120). Plaintiffs allege Defendant breached this provision by filing at least three new patent applications ('294, '245, and '890) without Dr. Johnston's knowledge, consent, or participation (Compl. ¶121). These filings allegedly name inventors other than Dr. Johnston for subject matter Plaintiffs claim Dr. Johnston conceived or reduced to practice.

  • The '245 Application relates to the use of the invention in pulmonary conditions, which the complaint alleges Dr. Johnston first conceived of and tested (Compl. ¶¶ 61-62, 70). The complaint provides a figure from this application, which is visually identical to the figure from Dr. Johnston's original provisional application, to support this claim (Compl. ¶¶ 17, 66).
  • The '890 Application relates to a multi-lumen catheter, an improvement the complaint alleges Dr. Johnston developed to improve gastric decompression (Compl. ¶¶ 73, 81). A figure from this application is provided to show the subject matter in dispute (Compl. ¶77).

V. Key Claim Terms for Construction

The complaint does not assert patent infringement claims; therefore, an analysis of claim terms for the purpose of claim construction is not applicable to the primary disputes over ownership and breach of contract.

VI. Other Key Allegations

Breach of Contract - Failure to Pay Royalties

Plaintiffs allege that Defendant breached the License Agreement by refusing to pay an 8% royalty on all sales of "Licensed Products" (Compl. ¶¶ 24, 83). The specific areas of non-payment are alleged to be sales to research institutions where Defendant funded the research and sales to certain government health care facilities (Compl. ¶84).

Constructive Trust and Unjust Enrichment

Plaintiffs seek the imposition of a constructive trust over the '245 and '890 applications and any patents issuing therefrom (Compl. ¶149). The basis for this equitable claim is that Defendant allegedly filed these applications based on inventions conceived by Dr. Johnston, and would be unjustly enriched if allowed to retain patent protection on what is rightfully Plaintiffs' intellectual property (Compl. ¶¶ 145, 148).

VII. Analyst’s Conclusion: Key Questions for the Case

  • A central issue will be one of contractual interpretation: Does the License Agreement's grant to Dr. Johnston of the right to "control the filing and prosecution of the Patent Rights" preclude the licensee, Defendant, from filing its own patent applications on perceived improvements, particularly when those improvements may fall under the agreement's definition of "Patent Rights"?
  • A key factual question will be one of inventorship: Who conceived of the specific improvements claimed in the disputed '245 (pulmonary use) and '890 (multi-lumen catheter) applications? The resolution of this issue will likely determine ownership of these applications and whether Defendant's filing of them constituted a breach of the license agreement and misappropriation of intellectual property.
  • A third dispositive question will concern patent ownership: Did the assignment of rights from co-inventor Jennifer Cartledge to Defendant create a joint ownership interest that supersedes or exists alongside Dr. Johnston's rights under the License Agreement, or is that assignment subject to the terms of the pre-existing exclusive license?