Exercising Restraint: Federal Circuit Affirms Dismissal of Declaratory Judgment Action Under Abstention Doctrine

Background

Rick A. Sasso is the inventor of a facet screw instrumentation and a headless facet screw fixation system that is used in spinal surgery (the Invention). Warsaw Orthopedic, Inc., Medtronic, Inc., and Medtronic Sofamor Danek, Inc. (collectively, Medtronic) develop and market medical devices, including implant screws used in connection with spinal surgery. The parties entered into a purchase agreement in December 1999, whereby Dr. Sasso agreed to transfer all rights to his invention (including the right to patent the invention), and Medtronic agreed to make quarterly royalty payments based on Medtronic's sales of certain medical devices (broadly defined as "any device, article, system, apparatus or product including the [i]nvention" and listed in an attachment). Those payments would run until the last patent expired or, if no patents issued with "valid claim coverage" of the covered medical devices, then seven years after the first sale. Two patents ultimately issued as U.S. Patent Nos. 6,287,313 and 6,562,046 (respectively, the "'313 patent" and "'046 patent"). Medtronic made royalty payments from 2002 to 2018.

In June 2014, Dr. Sasso filed suit in Indiana state court for breach of contract. Dr. Sasso alleged that Medtronic was not paying royalties on sales for new products not expressly identified in the Agreement. (The Agreement contemplated that the list of covered Medical Devices "may be updated from time to time by mutual written agreement of the parties" with descriptions of "any Medical Device(s) which utilize the Invention.") Medtronic argued that it owed no royalties for those medical devices because they are not covered by any "valid claim" of the '313 or '046 patents.