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Poly-Med Inc v. Novus Scientific Pte. Ltd

United States District Court, D. South Carolina, Anderson Division

April 24, 2018

POLY-MED, INC., Plaintiff,


         Plaintiff Poly-Med, Inc. (“Poly-Med” or “PMI”) filed this action seeking monetary damages, injunctive and equitable relief from Defendants Novus Scientific Pte. Ltd. (“Novus Singapore”), Novus Scientific, Inc. (“Novus USA”), and Novus Scientific AB (“Novus Sweden”) (collectively “Novus Defendants”) as a result of alleged violations of the parties' business agreement. (ECF No. 181.)

         This matter is before the court pursuant to Novus Defendants' Motion for Partial Summary Judgment (ECF No. 209) on the basis that Poly-Med's “‘hernia only' and ‘patent application' breach of contract claims are barred by the statute of limitations.” (Id. at 3.) Poly-Med opposes the Motion in its entirety. (ECF No. 216.) For the reasons set forth in detail below, the court GRANTS Novus Defendants' Motion for Partial Summary Judgment.


          Founded by Dr. Shalaby W. Shalaby in 1993, Poly-Med is a South Carolina corporation with its principal place of business at 6309 Highway 187, Anderson, South Carolina 29625. (ECF Nos. 1 at 1 ¶ 1 & 104-1 at 1 ¶ 3.) “Poly-Med designs, develops, and manufactures products and materials [out of bio-absorbable and biodegradable polymers] for use in medical, pharmaceutical and biotechnology applications.” (ECF No. 1 at 3 ¶¶ 8-9; see also ECF No. 104-1 at 1 ¶ 3.) “Poly-Med has numerous trademarks, more than one hundred thirty patents and patent applications and has successfully licensed and manufactured technologies found in many commercially available medical applications.” (ECF No. 104-1 at 2 ¶ 5.) “In addition to creating its own products and materials, Poly-Med offers manufacturing services and consulting, analytic and research and development services to a variety of firms in the medical, pharmaceutical and biotechnology industries.” (Id. at ¶ 6.)

         In December 2004, a Swedish company called Radi Medical Systems AB (“Radi”) applied for a patent entitled “Mesh Implant for Use in Reconstruction of Soft Tissue Defects.” (ECF No. 126-2 at 2 ¶ 4.) Radi's goal was “to commercialize the invention in order to reconstruct soft tissue defects to promote optimal healing and tissue restoration.” (Id.) Even though Radi “possessed the background and know-how regarding degradable polymers, polymerization, and processing into final medical devices, ” it “did not have all of the physical equipment needed.” (Id. at 2-3 ¶ 5.)

         In early 2005, Poly-Med began negotiations with and eventually entered into a Sale of Materials and License Agreement (the “Agreement”) with Radi on or about June 8, 2005. (ECF No. 104-1 at 2 ¶ 7-4 ¶ 15.) The Agreement required Poly-Med to “develop and manufacture at least six different types of Absorbable Composite Meshes[1] for sale to and use by Radi” in “hernial repair products.” (ECF No. 126-1 at 4 ¶ 2(a).) Additionally, the Agreement contained the following provisions relevant to this action:

• This license shall include the right of RADI AB to arrange for manufacture of Select Absorbable Composite Hernial Meshes used in RADI Absorbable Composite Hernial Meshes with an independent manufacturing company at any location selected by RADI AB, at prices and on terms and conditions acceptable to RADI AB; provided however that (i) in no event may RADI AB manufacture, deliver or sell, or cause the manufacture for delivery and sale, of Select Absorbable Composite Meshes except for use in RADI Products for hernial repair; . . . .

(ECF No. 126-1 at 10 ¶ 6(c)

• RADI AB shall neither acquire nor possess any right, title or interest in or to the POLY-MED Know-How or other POLY-MED Intellectual Property with respect to the specific fiber combinations used in construction, creation, manufacture or production of Absorbable Composite Hernial Meshes. POLY-MED may file patent applications in the United States with respect to any Absorbable Constructs at any time, will have all right, title and interest in and to any patent applications with respect thereto, and will own any and all patents on any Absorbable Composite Mesh developed pursuant to this Agreement.

(Id. at 11 ¶ 7(a).

• If POLY-MED declines, after RADI AB's written request, to prepare and file or maintain a patent application with respect to a Select Absorbable Composite Hernial Mesh in a specified territory, including but not limited to the United States, RADI AB shall have the right (but not the obligation) to prepare and file or to maintain or prosecute a patent application in such territory in POLY-MED's name and on POLY-MED's behalf, at RADI AB's sole cost and expense, and shall have authority and power in POLY-MED'S name and on POLY-MED's behalf but at RADI AB's expense, to seek, file or execute (and pay the filing fees or other costs associated with) any continuations, continuations-in-part or divisionals thereof and any patents issuing thereon together with all reissues and extensions thereof; provided however that RADI AB shall in all such cases keep POLY-MED advised of the progress of any such applications, continuations, continuations-in-part or divisionals and first consult with POLY-MED about the desired course of action.

(Id. at 13 ¶ 8.)

• This Agreement shall be governed by and construed in all matters with respect to the validity, interpretation, legal effect and construction hereof in accordance with the laws of SWEDEN, and in all matters with respect to patent or trademark enforceability, validity, and infringement, in accordance with the patent or trademark laws of the relevant country.

(Id. at 27 ¶ 28.)

• [N]either party to this Agreement may assign its rights or delegate its duties without the prior written consent of the other party, which consent shall be in its sole and absolute discretion; . . .

(Id. at 28 ¶ 30(a).)

         From the group of six proprietary, absorbable surgical meshes, Radi was to select one or two which it believed “hold the most promise for purposes of developing RADI Products (Id. at 7 ¶ 4(a).) Radi would then “have the exclusive right to use any Select Absorbable Composite Mesh used by it in the development, manufacture, sale and distribution of its medical products . . . .” (Id. at 8 ¶ 5.) Per the terms of the Agreement, “Radi was to compensate Poly-Med for its development work, manufacturing and production of the mesh that took place exclusively in South Carolina.” (ECF No. 35-2 at 2 ¶ 11.) In February 2007, Radi selected one prototype surgical mesh which was then developed into a medical device called TIGR®Matrix Surgical Mesh (“TIGR®Mesh”). (ECF No. 126-2 at 4-5 ¶ 14.) In December 2008, Radi transferred its rights under the Agreement to Novus Singapore.[2] (ECF No. 126-5 at 2 ¶ 4.)

         Upon receipt of an application, the U.S. Food and Drug Administration (“FDA”) issued 510(k)[3] clearance of TIGR®Mesh on January 25, 2010, “for surgical use in ‘reinforcement of soft tissue where weakness exists.'” (ECF No. 126-2 at 5 ¶ 17.) Poly-Med helped Novus Defendants obtain FDA approval of the TIGR®Mesh by (1) maintaining their Device Master Record[4] (“DMR”) in South Carolina and (2) allowing them to use “confidential and proprietary information located in South Carolina and substantial consultation, testing and assistance.” (ECF No. 38-3 at 4 ¶¶ 19, 25.) After receiving 510(k) clearance, Novus Singapore began marketing and selling TIGR®Mesh. (ECF No. 126-5 at 2 ¶ 5.)

         On September 27, 2010, Waleed Shalaby, Poly-Med's Chief Science Officer (“CSF”), sent an e-mail to its then President, David Shalaby, [5] in which the CSF observed that a lawyer needed to be contacted because Novus “Defendants were making, selling, and/or using the Medical Device for TRAM flap/breast reconstruction surgery[6]-. . . an application other than hernia repair.” (ECF No. 209 at 7 (referencing ECF No. 209-1 at 1).) In response to this information, Poly-Med told Novus Defendants that “it objected to commercialization of the TIGR®Mesh as a ‘surgical' mesh rather than a ‘hernia' mesh” and allegedly demanded “firm commitments by Novus defendants on further orders for production at substantially increased prices.” (ECF No. 104-1 at 16 ¶ 62; see also ECF No. 126-5 at 2 ¶ 7.) Then, on September 30, 2010, Poly-Med was informed by a consultant that “it could be inferred from the Novus website that the company is indicating its use for ‘soft tissue repair'” and that “if Novus is indeed promoting its use beyond hernia repair, it could be argued that they have violated the terms of the license agreement and it could thus be terminated.” (ECF No. 209 at 8 (quoting ECF No. 209-2 at 6 & 7).) On December 22, 2010, Poly-Med sent a letter to Novus Defendants containing the following language:

Novus has commercialized the TIGR hernia mesh as a ‘surgical mesh' when our agreement clearly identifies product licensure by Novus as a ‘hernia' mesh only. We believe this to be a serious issue that needs to be addressed by Novus immediately.

(ECF No. 209-3 at 5.)

         On or about February 27, 2013, Novus Singapore transferred its interest in the Agreement to its Swedish sister company, Novus Sweden. (ECF No. 126-8 at 1 ¶ 2.) “Since August 2014, using its own manufacturing procedures, Novus Sweden has manufactured TIGR®Matrix Surgical Mesh in its own production facilities, and has continued to sell TIGR® Matrix Surgical Mesh in accordance with the 510(k) clearance and CE registration.” (Id. at ¶ 3.) “Novus Sweden has paid and continues to pay royalties to Poly-Med regardless of the end use of TIGR®Matrix Surgical Mesh . . . and regardless of whether Poly-Med or ...

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