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Best Medical International, Inc v. Accuray

March 9, 2011

BEST MEDICAL INTERNATIONAL, INC., PLAINTIFF,
v.
ACCURAY, INC., A CORPORATION, ROBERT HILL, DAVID SPELLMAN, JOHN DAVID SCHERCH AND MARCUS BITTMAN, DEFENDANTS.



The opinion of the court was delivered by: McVerry, J.

MEMORANDUM OPINION AND ORDER

Pending before the Court is DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(6) (Document No. 37). The motion has been thoroughly briefed by the parties (Document Nos. 38, 39, 43) and is ripe for disposition. The Court has not considered the Declaration of Derek Bertocci submitted by Defendants, as consideration of such is not appropriate at the motion to dismiss stage.

Factual and Procedural Background

Plaintiff Best Medical International, Inc. ("BMI") has alleged a variety of patent infringement claims against a corporation, Accuray, Inc. ("Accuray"), and four former BMI employees, Robert Hill, David Spellman, John David Scherch and Marcus Bittman (collectively, the "Individual Defendants"). In a nutshell, Plaintiff contends that the Individual Defendants used confidential and trade secret information of BMI to help Accuray develop a new cancer treatment system, the CyberKnife VSI System, which allegedly infringes three of BMI's patents. The parties are embroiled in separate litigation regarding BMI's trade secret claims.

On December 2, 2010, the Court issued a Memorandum Opinion and Order which granted Defendants' motion to dismiss the original Complaint filed by BMI in this case. The Court granted BMI leave to file an Amended Complaint, but recited several shortcomings identified by Defendants and cautioned: "If Plaintiff chooses to file an amended complaint, it will be important to address these alleged shortcomings as well, to assure that the amended complaint contains sufficient factual allegations to render the claim(s) 'plausible' as to each Defendant in compliance with the pleading standard set forth in Twombly and Iqbal." (Emphasis added).

On December 16, 2010, BMI filed a 46-page, thirteen-count Amended Complaint. BMI now alleges infringement by Defendants of three patents which it obtained through its acquisition of the assets of NOMOS Corporation in 2007. BMI alleges that it owns and continues to commercially market the patented technologies. Amended Complaint ¶ 26. Plaintiff further alleges that all products offered for sale under the patents contain appropriate patent markings and that it has provided appropriate notice of the alleged infringement to Defendants.

United States Patent No. 5,596, 619 (the "'619 Patent") describes a method and apparatus for conformal radiation therapy, with a radiation beam having a pre-determined, constant beam intensity, treats the entire tumor volume of a patient's tumor, and the beam intensity of the radiation beam is spatially modulated across the tumor, by separating the radiation into a plurality of treatment beam segments and independently modulating the beam intensity of the plurality of radiation beam segments. Amended Complaint ¶ 9. This technology is generally referred to in the oncological community as Intensity Modulated Radiation Therapy ("IMRT"). Because the intensity of the radiation in IMRT can be shaped to approximate the shape of the tumor, an increased dose of radiation can be delivered to the tumor while sparing the adjoining normal tissue.

United States Patent No. 7,266,175 (the "'175 Patent") describes a method and apparatus for controlling the correlation between the factors of treatment plan efficiency and dosimetric fitness to optimize the radiation therapy, or radiotherapy plan, including providing user control of the segment count, user control of total monitor units, and selection of an optimization algorithm as a method of controlling treatment efficiency. Amended Complaint ¶ 12.

United States Patent No. 6,038,283 (the "'283 Patent") describes a method and apparatus for determining an optimized radiation beam arrangement for applying radiation to a tumor target volume while minimizing radiation of a structure volume in a patient, which uses an iterative cost function based on a comparison of desired partial volume data, which may be represented by cumulative dose volume histograms and proposed partial volume data, which may be represented by cumulative dose volume histograms for target tumors and tissue structures for delivery of the optimized radiation beam arrangement to the patient by a conformal radiation therapy apparatus. Amended Complaint ¶ 14. The '619, '175 and '283 Patents are attached as exhibits to the Amended Complaint.

The Court's December 2, 2010 Memorandum Opinion expressly notified BMI that it must allege facts regarding each Defendant's alleged improper conduct. Nevertheless, the Amended Complaint continues to reference all of the Individual Defendants as an undifferentiated group. See, e.g. Amended Complaint ¶¶ 29-35 (referring to "Defendants Hill, Spellman, Scherch, and Bittman"). The Amended Complaint conclusorily alleges that the Individual Defendants, collectively, improperly downloaded confidential, proprietary information of BMI; induced infringement of the BMI patents by Accuray; directly infringed BMI's patents; and contributorily infringed BMI's patents. The Amended Complaint is silent as to the alleged conduct undertaken by each specific Individual Defendant. The only distinction the Court can discern from the Amended Complaint is that Hill apparently resigned from his employment with BMI earlier than the other Individual Defendants. Amended Complaint ¶ 17-18.

There are three other pending lawsuits between these parties. In Civil Action No. 07-1709, Hill sued BMI for benefits allegedly due at the time of his employment termination and BMI counterclaimed regarding his alleged misappropriation of confidential and trade secret information. In Civil Action No. 08-1404, BMI sued the four Individual Defendants for conversion and theft of trade secrets. In Civil Action No. 09-1194, BMI sued Accuray and the Individual Defendants, alleging a conspiracy to steal its confidential and trade secret information. These cases have been consolidated and are currently pending before Judge William Standish of this Court.

Defendants have renewed their motion to dismiss the Amended Complaint for failure to state a valid claim. Notably, Defendants do not seek dismissal of Count 1 (direct infringement of the '619 patent by Accuray) or Count 9 (direct infringement of the '283 patent by Accuray)*fn1 and they have not renewed their motion to transfer this case to United States District Court for the Northern District of California. Defendants do seek to dismiss all claims asserted by BMI against the Individual Defendants.

Defendants move for dismissal of the following claims: Count 2 ( v. Accuray -contributory infringement of the '619 Patent); Count 3 (v. Individual Defendants - inducing Accuray to infringe the '619 Patent); Count 4 (v. Individual Defendants - direct infringement of the '619 Patent); Count 5 (v. Individual Defendants - contributory infringement of the '619 Patent); Count 6 (v. Accuray - inducing the Individual Defendants to infringe the '619 Patent); Count 7 (v. Accuray - contributory infringement of the '175 Patent); Count 8 (v. Individual Defendants - inducing Accuray to infringe the '175 Patent); Count 10 (v. Accuray - contributory infringement of the '283 Patent); Count 11 (v. Individual Defendants - inducing Accuray to infringe the '283 Patent); Count 12 (v. Individual Defendants - direct infringement of the '283 Patent); and Count 13 (v. Accuray - inducing the Individual Defendants to infringe the '283 Patent).

Standard of Review

A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) challenges the legal sufficiently of the complaint filed by Plaintiff. The United States Supreme Court has held that "[a] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (207) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)) (alterations in original).

The Court must accept as true all well-pleaded facts and allegations, and must draw all reasonable inferences therefrom in favor of the plaintiff. However, as the Supreme Court made clear in Twombly, the "factual allegations must be enough to raise a right to relief above the speculative level." Id. The Supreme Court has subsequently broadened the scope of this requirement, stating that only a complaint that states a plausibleclaim for relief survives a motion to dismiss." Ashcroft v. Iqbal, -- U.S. --, 129 S. Ct. 1937, 1950 (2009) (emphasis added).

Thus, after Iqbal, a district court must conduct a two-part analysis when presented with a motion to dismiss for failure to state a claim. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). First, the Court must separate the factual and legal elements of the claim. Id. Although the Court "must accept all of the complaint's well-pleaded facts as true, [it] may disregard any legal conclusions." Id. at 210-211. Second, the Court "must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.' In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Id. at 211 (citing Iqbal 129 S. Ct. at 1949). The determination for "plausibility" will be "'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'" Id. at 211 (quoting Iqbal 129 S. Ct. at 1950).

As a result, "pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss." Id. at 211. That is, "all civil complaints must now set out 'sufficient factual matter' to show that the claim is facially plausible. This then 'allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Id. at 210 (quoting Iqbal, 129 S. Ct. at 1948).

However, nothing in Twombly or Iqbal changed the other pleading standards for a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and the requirements of Fed. R. Civ. P. 8 must still be met. See Phillips v. Co. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (internal citations omitted). Fed. R. Civ. P. 8 requires a showing, rather than a blanket assertion, of entitlement to relief, and "contemplates the statement of circumstances, occurrences, and events in support of the claim presented and does not authorize a ...


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