Medical Equipment And Device Manufacturers Company Hollister Won A $9 Million Patent Fraud Suit Against Zassi Holdings Inc.

14th March, 2022 - 7:46 am Categories: Legal Issues 0 Comments

Medical Equipment And Device Manufacturers Company Hollister Inc. won a fraud suit against Zassi Holding Inc. which was for $9.2 million. The dispute was over a bowel management system patent deal where the Eleventh Circuit found that the Zassi’s proposed issues regarding liability were already resolved in an earlier appeal or forfeited.

Facts of the case

In September 2006, Medical device company Hollister Incorporated entered into an agreement with Zassi Holdings, Inc., to purchase technology and patented intellectual property rights to a bowel management system for bedridden medical patients. The parties formalized the terms in a written asset purchase agreement. Unbeknownst to Hollister, Zassi had previously encumbered the same intellectual property in an agreement with a competitor, ConvaTec, Inc. In settling a patent infringement dispute between Zassi and ConvaTec, Zassi agreed to release ConvaTec and its allegedly offending products from future claims of infringement of the Zassi technology, including the relevant intellectual property in exchange for a payment of 5.9 million dollars from ConvaTec. The 2005 release was not an assignment of the patent or associated rights, but simply a “go away, leave us alone, and don’t come back” release in favor of ConvaTec. ConvaTec paid Zassi, in effect, for permission to continue its infringement without recourse by Zassi. In 2010, Medical Equipment And Device Manufacturers Company Hollister noticed the same apparent infringement by ConvaTec that Zassi had alleged in its 2005 dispute with ConvaTec. Unaware of the release, Hollister filed suit against ConvaTec and C.R. Bard in the Northern District of Illinois, claiming that their products infringed the intellectual property that Medical device company Hollister had purchased from Zassi. ConvaTec responded by producing the settlement agreement and release, and Hollister was thereby defeated on a motion for summary judgment. Hollister then filed this suit to recover damages from Zassi and Peter von Dyck, the chairman and chief executive officer of Zassi.

An Eleventh Circuit panel reversed the district judge’s decision in 2018 and remanded the case for a new trial, finding that Hollister was entitled to some amount of damages and that patent law allows royalties to be calculated by how much ConvaTec would have hypothetically paid Hollister for a license after the patent was issued. Following a damages bench trial, Judge Corrigan awarded Medical Equipment And Device Manufacturers Company Hollister $9.2 million.

Excerpts taken from – https://media.ca11.uscourts.gov/opinions/unpub/files/202010636.pdf

Author: Saransh Chaturvedi (Advocate, LLM (IIT Kharagpur) – an associate at Khurana & Khurana, Advocates and IP Attorney,  in case of any queries please contact/write back to us via email saransh@iiprd.com.