Bos. Scientific Corp. v. Nevro Corp.

415 F.Supp.3d 482

BOSTON SCIENTIFIC CORP. and Boston Scientific Neuromodulation Corp., Plaintiffs,

v.NEVRO CORP., Defendant.

Civil Action No. 18-0644-CFC

United States District Court, D. Delaware.

Signed November 25, 2019

Karen L. Pascale, Pilar G. Kraman, YOUNG CONAWAY STARGATT & TAYLOR LLP, Wilmington, Delaware; Matthew M. Wolf, Edward Han, Marc A. Cohn, Amy DeWitt, ARNOLD & PORTER KAYE SCHOLER LLP, Washington, District of Columbia; Krista M. Carter, Thomas T. Carmack, ARNOLD & PORTER KAYE SCHOLER LLP, Palo Alto, California, Counsel for Plaintiffs

Rodger D. Smith, Michael J. Flynn, MORRIS, NICHOLS, ARSHT, & TUNNEL LLP, Wilmington, Delaware; Bradford J. Badke, Ching-Lee Fukuda, Ketan V. Patel, SIDLEY AUSTIN LLP, New York, New York; Thomas A. Broughan III, Sharon Lee, Benjamin H. Huh, SIDLEY AUSTIN LLP, Washington, District of Columbia, Counsel for Defendant

MEMORANDUM OPINION

COLM F. CONNOLLY, UNITED STATES DISTRICT JUDGE

Plaintiffs Boston Scientific Corporation and Boston Scientific Neuromodulation Corporation (collectively "Boston Scientific") have sued Nevro Corporation for patent infringement, trade secret misappropriation, and tortious interference with contract. D.I. 5. Nevro has moved pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss all eleven counts of Boston Scientific's First Amended Complaint for failure to state a claim on which relief can be granted. D.I. 10. For the reasons discussed below, I will deny-in-part and grant-in-part Nevro's motion.

I. BACKGROUND¹

Boston Scientific is a medical device manufacturer that develops and sells spinal cord stimulation (SCS) systems for the treatment of chronic back pain. D.I. 5 ¶ 12. Boston Scientific launched its first SCS system, the Precision™ System, in 2004 and has since launched four improved Precision™ Systems. Id. ¶ 13. Boston Scientific has obtained several patents covering the core technologies of SCS systems. Id. ¶ 14.

Nevro also produces SCS systems. Id. ¶¶ 15, 17. In the first nine counts of its amended complaint, Boston Scientific alleges that Nevro's Senza® Spinal Cord Stimulation System (the Senza I System) and Senza II® Spinal Cord Stimulation System (the Senza II System) infringe nine of Boston Scientific's patents: U.S. Patent Nos. 7,496,404 (the #404 patent), 7,127,298 (the #298 patent), 8,682,447 (the #447 patent), 6,993,384 (the #384 patent), 7,853,330 (the #330 patent), 7,822,480 (the #480 patent), 6,381,496 (the #496 patent), 7,177,690 (the #690 patent), and 9,162,071 (the #071 patent). Id. ¶¶ 34–146. All nine counts allege direct, induced, and contributory infringement, and seek enhanced damages for willful infringement. Id. Counts I through IV and VI through VIII also allege export infringement. Id. ¶¶ 40–44, 53–57, 66–67, 79–83, 103–07, 116–20, 129–33.

The accused Senza Systems are devices "designed to deliver electrical stimulation to spinal cord nerves for the treatment of chronic intractable pain." Id. ¶¶ 15, 17. To deliver stimulation, they use percutaneous leads and "a rechargeable, implantable pulse generator (‘IPG’)." Id. ¶ 15. "The IPG is transcutaneously recharged using an external charger and is controlled by a patient remote control and/or clinician programmer." Id. Other components of the Senza Systems "include an external trial stimulator, lead extensions, adaptors, operating room ... cables, and surgical accessories." Id.

Nevro launched the Senza I System for sale in Europe and Australia in 2011 and in the United States in 2015. Id. ¶ 16. It received regulatory approval to market the Senza II System in Europe in 2017 and in the United States in 2018. Id. ¶ 17.

Boston Scientific also accuses Nevro of trade secret misappropriation under the California Uniform Trade Secret Act (CUTSA) (Count X) and tortious interference with contract (Count XI). Id. ¶¶ 147–77. Both claims are based on Boston Scientific's allegation that "one or more of the dozens of former Boston Scientific employees that Nevro has recruited and hired disclosed trade secrets relating to Boston Scientific's [SCS] systems to Nevro, in violation of those employees' contractual obligations." Id. ¶ 1.

One of the former Boston Scientific employees that Boston Scientific names in the amended complaint is Jim Thacker, Nevro's Director of Field Engineering.

Id. ¶ 27. Thacker worked for Boston Scientific and its predecessor Advanced Bionics from 2000 to 2006 as Manager of Field Clinical Engineering. Id. As a condition of his employment at Boston Scientific, Thacker agreed to an Employee Invention and Confidential Information Agreement that required him to "keep confidential and refrain from disclosing to others all confidential information and trade secrets of [Advanced Bionics], which [Thacker] develop[ed] or learn[ed] about during the course of [his] employment." Id. ¶¶ 151–52.

Thacker left Boston Scientific in August 2006. Id. ¶ 155. "As part of the exit process," Thacker acknowledged that "he did not have in his possession any Boston Scientific-owned property." Id. But on August 18, 2017, Nevro's outside counsel informed Boston Scientific that "Thacker in fact took thousands of confidential Boston Scientific documents with him, including five of his own laboratory notebooks detailing the work he performed during the ‘Stimulus’ clinical trials for Boston Scientific's Precision™ SCS system." Id. ¶ 156. The amended complaint further alleges that Thacker took "Boston Scientific-owned thumb drives, actual Precision™ demonstration devices, Physician lead manuals, Physician implant manuals, and Precision™ media kits." Id.

Boston Scientific alleges that, after taking these confidential and proprietary items, "[o]n multiple occasions, while employed by Nevro, Thacker disclosed Boston Scientific's confidential, proprietary information to Nevro." Id. ¶ 159. Boston Scientific alleges in detail two specific instances when Thacker disclosed such information. The first occurred on April 16, 2009 when Thacker sent to a fellow Nevro employee an email with an attached "Stimulus™ Confirmatory Study" authored by Boston Scientific's predecessor, Advanced Bionics. Id. The Confirmatory Study was "Boston Scientific's protocol to run the clinical investigation for its Precision™ product." Id. ¶ 161. It contained confidential information such as "subject enrollment criteria ..., study design, methodology/testing requirements, and monitoring requirements." Id. Boston Scientific alleges that the study "would not have been disclosed to anyone not involved with the clinical investigation," and that each investigator involved in the study agreed to keep confidential all data related to the study. Id.

The second alleged disclosure occurred on May 4, 2009 when Thacker sent to another Nevro employee an email with an attachment titled "Spinal Cord Stimulator Clinician's Programming System, Module Specification." Id. ¶ 163. The Module Specification was "a compilation of information necessary for the design and development of Boston Scientific's SCS products." Id. ¶ 166. Boston Scientific alleges that the specification was a Boston Scientific internal document that included "such confidential information as software functional requirements, including specific programming requirements." Id.

II. LEGAL STANDARDS FOR STATING A CLAIM

To state a claim on which relief can be granted, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not required, but the complaint must include more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). The complaint must set forth enough facts, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). Deciding whether a claim is plausible is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937 (citation omitted).

III. DISCUSSION

A. Direct Infringement Claims

1. Legal Standards

Liability for direct infringement arises when a party "without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent." 35 U.S.C. § 271(a). To plead direct infringement, a plaintiff must allege facts "that plausibly indicate that the accused products contain each of the limitations found in the claim." TMI Sols. LLC v. Bath & Body Works Direct, Inc. , 2018 WL 4660370, at *9 (D. Del. Sept. 28, 2018) (citations omitted).

"The complaint must place the potential infringer on notice of what activity is being accused of infringement." Nalco Co. v. Chem–Mod, LLC , 883 F.3d 1337, 1350 (Fed. Cir. 2018) (internal quotation marks, alterations, and citation omitted). To provide notice, a plaintiff must generally do more than assert that the product infringes the claim; it must show how the defendant plausibly infringes by alleging some facts connecting the allegedly infringing product to the claim elements. See SIPCO, LLC v. Streetline, Inc. , 230 F. Supp. 3d 351, 353 (D. Del. 2017) (granting the motion to dismiss because "[t]he complaint contains no attempt to connect anything in the patent claims to anything about any of the accused products").

2. Counts I through VII and IX

Counts I through VII and IX each allege infringement of a different patent. D.I. 5 at 12. In each count, Boston Scientific identifies accused products, points to "exemplary materials" extraneous to the amended complaint that...