Rasmussen Instruments, LLC v. DePuy Synthes Products, Inc. et al. (D. Mass. 20-cv-11807; Fed. Cir. 23-1855).

In 2022, a jury found that DePuy willfully infringed one of two Rasmussen patents relating to knee replacement surgical tools.  The jury awarded $20 million in damages, and Judge Hillman added $392,959 in prejudgment interest.  He further entered a permanent injunction.  DePuy timely appealed the final judgment of infringement and the denial of its motion for judgment as a matter of law on the issue of patent ownership, and Rasmussen cross-appealed on the final judgment of noninfringement of the second patent.

Looking at the issue of ownership of the patents, the Federal Circuit noted that the instrument was developed by inventor Dr. Rasmussen in 1992, and a provisional application on the instrument was filed in 2005.  In the interim, Dr. Rasmussen had started working with an orthopedic instrument company, Wright Medical, on integrating the instrument with Wright’s replacement knee system, and in 2006, he entered into a formal agreement with Wright under which he assigned his intellectual property rights to the instrument to Wright.

In 2013, the parties formally ended their agreement.  They entered into a settlement agreement that amended the earlier agreement, specifically with respect to the assignment of intellectual property.  Still later, Dr. Rasmussen formed Rasmussen Instruments, and executed an assignment of the patents to the company.  At trial, the court denied DePuy’s request to add a question to the jury form related to whether Rasmussen had proven ownership of the patents-in-suit.

A panel consisting of Judges Hughes, Linn and Cunningham of the Federal Circuit noted that a court can only exercise jurisdiction over a case if the plaintiff has standing at the outset of the litigation.  Standing in a patent case is determined by ownership of the patents-in-suit.  To qualify as an owner of a patent, an entity must have received an entire exclusive patent right, an undivided interest in the patent rights, or the entire set of patent rights in a defined geographic area.  Analysis of an agreement purporting to assign a license is done in accordance with the contract law of the state in which the agreement was entered – in this case, under either Tennessee or Utah law, both of which determine the plain meaning of a contract as a matter of law.

Looking to the original assignment to Wright, the agreement assigned “the Product/Royalty Product/Licensed Product.”  The Court noted that the use of the present-tense “hereby assigns” meant that the assignment was immediate and self-executing – no further action was required for the transfer of ownership to take place.  At the point of signing in 2006, therefore, Wright became the sole owner of the invention and of Dr. Rasmussen’s “right, title, and interest in the Know-How and the Inventions… and all patent… and other intellectual property rights relating thereto.”  The Agreement further assigned any after-acquired rights on the technology to Wright.  When the relationship between Dr. Rasmussen and Wright was terminated, however, the termination agreement did not transfer ownership back to Dr. Rasmussen.  The 2013 Agreement instead purported to modify the 2006 Agreement by eliminating the phrase “Licensed Product” but leaving the rest of the assignment language in place.  Rasmussen asserted that this “nunc pro tunc” change effectively rendered the prior assignment nonexistent, but the Court found that the patents, having been assigned in 2006, would have had to be expressly reassigned in writing for Rasmussen again to be deemed the owner.  As the 2013 Agreement contained no such language  Accordingly, Dr. Rasmussen did not have ownership of the patents at the time he purported to assign them to Rasmussen Instruments, and Rasmussen Instruments did not own the patents when it filed suit against DePuy.  The Court therefore vacated the final judgment and remanded to the district court with instructions to dismiss the case for lack of jurisdiction.

The stakes involved in this dispute were considerable.  In addition to the loss of the injunction and the $20 million judgment, Rasmussen asserted that it spent more than $8 million in attorneys’ fees, with DePuy presumably spending something similar in their defense, with each of those excluding fees spent on the appeal.