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Noble Biomaterials v. Argentum Medical

September 23, 2011

NOBLE BIOMATERIALS, PLAINTIFF,
v.
ARGENTUM MEDICAL, LLC, THOMAS MILLER AND GREGG SILVER, DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court are Counterclaim Defendants' Renewed Motion for Judgment as a Matter of Law and Motion for a New Trial. Because there was sufficient evidence from which the jury could find the Defendants liable, the Court made no error affecting the Defendants' substantial rights, and the jury awards do not shock the conscience, both motions will be denied.

I. Background

A. SILVERLON and SILVERSEAL

Counterclaim Plaintiffs Noble Biomaterials is a company that produces silver-coated nylon fabric using an autocatalytic electroless silver process. Trial Tr. vol. 2, 24:21-25:10, Feb. 2, 2011, ECF No. 283. In approximately 1989, Noble became aware that silver-coated nylon fabric bandages were effective at fighting bacteria in wounds. Trial Tr. vol. 2, 36:25-37:16. It then began selling products that capitalized on the bacteria-fighting qualities of silver. Trial Tr. vol. 2, 51:9-15. Among its customers was Argentum International, a company specializing in wound care products. Trial Tr. 58:16-59:7.

Argentum International sold single-layer wound dressings of coated silver under the name SILVERLON. Trial Tr. vol. 4, 87:21-88:9, Feb. 3, 2011, ECF No. 284. The SILVERLON dressings used silver fabric purchased from Noble, coated using the autocatalytic electroless plating process. Trial Tr. vol. 4, 147:6-19. The use of the autocatalytic electroless plating process has an advantage because the silver is coated uniformly, which makes the dressing more effective as an antimicrobial. Trial Tr. vol. 3, 147:20-148:4. Noble later sold the same products to an entity formed out of Argentum International, Defendant Argentum Medical. Trial Tr. vol. 2, 58:20-59:7; Trial Tr. vol. 4, 89:25-90:4.

In 2004, Noble began developing its own wound contact dressings using its silver-coating technology, calling this line of products "SILVERSEAL." Trial Tr. vol. 4, 16:4-14:15. Noble first publicly introduced the SILVERSEAL brand at a trade show in October 2004. Trial Tr. vol. 4, 199:11-200:7. At that show, Defendant Thomas Miller, President of Argentum Medical, told many attendees that the SILVERSEAL product was "knocking off" SILVERLON. Trial Tr. vol. 4, 199:10-25. One attendee who heard this explained she interpreted it to mean that SILVERSEAL was infringing upon SILVERLON. Trial Tr. vol. 4, 199:10-25. Defendants repeated similar claims at successive trade shows. Trial Tr. vol. 4 205:20-206:4, 207:17-25, 208:21-209:1, 211:1-3, 211:22-25, 212:16-20, 213:17-22, 215:14-18, 219:11-22; Trial Tr. vol. 5, 226:3-227:1, Feb. 4, 2011, ECF No. 285; Trial Tr. vol. 6 4:1-24, Feb. 7, 2011, ECF No. 296.

After learning that Noble had introduced its SILVERSEAL brand, Defendant Gregg Silver, the Chief Executive Officer of Argentum Medical, ordered the filing of a patent application. Trial Tr. vol. 4, 251:20-252:12. The application, filed on April 29, 2005, was for a single layer wound dressing with wound-healing capabilities, and it named as inventor Dr. Bart Flick. Trial Trial Tr. vol 4, 254:7-10; Tr. vol. 5, 7:2-12. The application was filed as a continuation on a previous patent that traced back to Patent Number 6,087,549 (the "'549 patent"). Trial Tr. vol. 4, 253:10-15. The Patent and Trademark Office granted the application and issued Patent Number 7,230,153 (the "'153 patent") on June 12, 2007.

B. Patent Rights Transfers and Georgia Litigation

The '153 patent names A. Bart Flick as its inventor and Argentum International as the assignee. Argentum Med., LLC v. Noble Biomaterials, No. 08-1305, 2010 WL 2650493, at *1 (M.D. Pa. 2010). In November 2000, Flick signed an agreement conveying International's rights in the patent to Argentum Research. Id, at *5; Argentum Intern., LLC v. Woods, 634 S.E.2d 195, 199 (Ga. App. 2006). Then in February 2011, Flick made another assignment, this time from International to Argentum Medical--despite the fact that he had already transferred International's rights in the patent to Research. See Woods, 634 S.E.2d at 199. To remedy this situation, International and Research entered into a nunc pro tunc agreement that was meant to date back and transfer the rights in the '153 patent back to Argentum International. Id.

Flick, Miller, and International would eventually be found liable in a Georgia state court action for fraud and conspiracy, based on the fact that they misrepresented Argentum International's patent rights ownership to investors. Woods, 634 S.E.2d 195 (affirming lower court).

C. Litigation

On December 7, 2007, Argentum Medical filed a patent infringement suit against Noble and its principal distributor, Derma Sciences, Inc. (who tendered its defense to Noble based on their distribution agreement). The patent infringement claim was dismissed for lack of standing on the grounds that Argentum Medical did not at any time have legal title to the '153 patent. Noble Biomaterials, 2010 WL 2650493, at *5. It was determined that Argentum International did not have rights to the patent at the time it transferred it to Argentum Medical, and the nunc pro tunc agreement was invalid. Id.

The case proceeded to a jury trial upon Counterclaim Plaintiff Noble's Lanham Act, product disparagement, and unfair competition counterclaims against Counterclaim Defendants Argentum, Thomas Miller, and Gregg Silver. During the trial, Defendants moved for judgment as a matter of law. The motion was denied, and the case was decided by a jury. The jury found that all Defendants violated the Lanham Act and engaged in product disparagement, and it found that Silver engaged in unfair competition. The jury awarded Noble $1 million in compensatory damages, which it assessed against Argentum. It also awarded Noble $2.25 million in punitive damages, which it assessed against Miller in the amount of $1 million and Silver in the amount of $1.25 million.

Defendants filed the instant motions on March 10, 2011.The motions have been fully briefed and are ripe for disposition.

II. Discussion

A. Judgment as a Matter of Law

Defendants seek judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b). Under Rule 50(a), "[i]f a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue," the court may grant judgment as a matter of law on that issue. Rule 50(b) allows a party whose 50(a) motion has been denied to renew the motion after trial. It also gives a party the option to include a joint request for a new trial under Rule 59.

1. Standard of Review

A court ruling on a Rule 50 motion must determine "whether, viewing the evidence in the light most favorable to the non-movant and giving it the advantage of every fair and reasonable interest, there is insufficient evidence from which a jury reasonably could find liability." W.V. Realty Inc. V. N. Ins. Co. of N.Y., 334 F.3d 306, 311 (3d Cir. 2003). Motions for judgment as a matter of law should be granted "sparingly." CGB Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 383 (3d Cir. 2004). The remedy is appropriate only where "'the record is critically deficient of a minimum quantum of evidence' in support of the record." Johnson v. Campbell, 332 F.3d 199, 204 (3d Cir. 2003). "The question ...


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