UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION SURGIBIT IP HOLDINGS PTY, LIMITED ) An Australia Corporation ) 13 Lancaster Crescent ) Collaroy NSW 2097 ) AUSTRALIA ) ) Civil Action No. 1:13-cv-8839 -and- ) Judge ) Magistrate-Judge ORTHOPEDIC INNOVATION PTY, LTD. ) An Australia Corporation ) 13 Lancaster Crescent ) (Electronically Filed) Collaroy NSW 2097 ) AUSTRALIA ) Plaintiffs ) ) v. ) ) ORCHID ORTHOPEDIC SOLUTIONS, LLC ) A Delaware Limited Liability Company ) SERVE: Corporation Service Company ) 2711 Centerville Rd Ste 400 ) Wilmington, DE 19808 ) ) -and- ) ) LIAM PATRICK ELLIS ) 125A Fassifern Road ) Blackalls Park NSW 2283 ) AUSTRALIA ) SERVE: Through Hague Convention ) ) -and- ) ) CINGULAR PTY, LTD. ) a/k/a Cingular Orthopaedics ) An Australian Corporation ) 1 Ocean Street ) Port Macquarie NSW 2444 ) AUSTRALIA ) SERVE: Through Hague Convention ) ) Defendants ) COMPLAINT FOR PATENT INFRINGEMENT (JURY TRIAL DEMANDED)
Plaintiffs, Surgibit IP Holdings Pty, Limited ( Surgibit ) and Orthopedic Innovation Pty. Ltd. ( OI ) (sometimes, OI and Surbibit are collectively referred to as Plaintiffs ), by their undersigned counsel, for its Complaint against Defendants, Orchid Orthopedic Solutions, LLC ( Orchid ), Liam Ellis ( Mr. Ellis ) and Cingular Pty, Ltd. a/k/a Cingular Orthopaedics ( Cingular ) (sometimes, Orchid and Mr. Ellis and Cingular are collectively referred to as Defendants ), allege as follows: INTRODUCTION 1. This is an action for patent infringement under 35 U.S.C. 271. Plaintiffs seek monetary damages, enhanced damages (including treble damages), attorneys fees, costs, and preliminary and permanent injunctive relief preventing continuing acts of infringement of Defendants. THE PARTIES 2. Surgibit is a corporation organized and existing under the laws of Australia, with its corporate headquarters at 13 Lancaster Crescent, Collaroy New South Wales, Australia. Sometimes hereinafter, Surgibit and OI are collectively referred to as Plaintiffs. 3. OI is a corporation organized and existing under the laws of Australia, with its corporate headquarters at 13 Lancaster Crescent, Collaroy New South Wales, Australia. Sometimes hereinafter, Surgibit and OI are collectively referred to as Plaintiffs. 4. Surgibit and OI are, respectively, the owner and the exclusive licensee of U.S. Patent Nos. 7,892,235 ( the 235 Patent ), 8,172,845 ( the 845 Patent ) and 8,475,459 ( the 459 Patent ) (collectively sometimes, the Patents-in-Suit ). 5. Upon information and belief, Orchid is a Delaware Limited Liability Company with its principal place of business in Holt, Michigan which transacts business nationwide and 2
has committed acts of patent infringement of one or more of the Patents-In-Suit within the United States, including within this judicial District. 6. Upon information and belief, Mr. Ellis is a citizen and resident of Australia who is a former Director of OI and the named inventor on all the Patents-in-Suit. Mr. Ellis through his own actions and/or through Cingular and/or Orchid has committed acts of patent infringement of one or more of the Patents-In-Suit, including within this judicial District. 7. Upon information and belief, Cingular is a corporation of Australia controlled by Mr. Ellis which has committed acts of patent infringement of one or more of the Patents-In-Suit, including within this judicial District. JURISDICTION AND VENUE 8. This Court has subject matter jurisdiction by virtue of the fact that this is a civil action under the Patent Act, 35 U.S.C. 1 et seq., jurisdiction being conferred in accordance with 28 U.S.C. 1331 and 1338(a) and (b). 9. Orchid, according to public documents filed with the Delaware Secretary of State, is a Delaware Limited Liability Company and thereby a resident of the State of Delaware. Upon information and belief, Orchid transacts business nationwide, including within the State of Delaware and including within this judicial District. Further, Orchid s infringement of one or more of the Patents-in-Suit has occurred and is occurring within the State of Illinois, including within this judicial District. Specifically, infringing products, namely surgical drill bits sold under the mark CingleBit have been sold, are being sold, and/or are offered for sale and/or made by Orchid to practicing surgeons, medical establishments, orthopedic companies, surgical implement providers or potential distributors within this judicial District. 10. Further, upon information and belief Orchid regularly solicits and conducts business in the State of Illinois, derives substantial revenue from goods sold in Illinois, and has 3
sold and/or offered for sale and/or made, infringing goods in the State of Illinois, namely, surgical drill bit products that are involved in the present lawsuit, as set forth in more detail below. 11. On information and belief, venue is properly laid in this Court under 28 U.S.C. 1391(b) and (c), and/or 28 U.S.C. 1400(b), because a substantial part of the events or omissions giving rise to the claims occurred within this District, namely the transacting of business which transactions were and on information and belief continue to be acts of infringement of the Patents-in-Suit. FACTS COMMON TO ALL CLAIMS The Plaintiff and the Patents-in-Suit 12. OI manufactures and sells a variety of high quality orthopedic surgical instruments, including, inter alia, surgical drill bits marketed under the brand Surgibit sold to surgical implement providers and/or orthopedic companies and/or surgeons and/or hospitals throughout the United States, including within Illinois. OI marks it surgical bits as required by 35 U.S.C. 287. 13. This action involves allegations of infringement by Defendants of the Patents-In- Suit, which relate to OI s surgical drill bits. 14. Surgibit and OI are, respectively, the owner and the exclusive licensee of, and claim rights under, the 235 Patent, which was issued by the United States Patent and Trademark Office ( PTO ) on February 22, 2011. A copy of the 235 Patent is attached hereto as Exhibit 1 and incorporated by reference herein. 15. Defendant Mr. Ellis is the inventor of the 235 Patent. On or about July 22, 2004 Mr. Ellis assigned all rights, title and interest in and to the patent application that later issued as the 235 Patent, the subject matter disclosed in the application that later issued as the 235 patent, and all future technology related to the subject matter disclosed in the application that later 4
issued as the 235 patent to Surgibit in a Deed of Assignment, a copy of which is attached hereto as Exhibit 2 and incorporated herein by reference. The Deed of Assignment was duly recorded in Assignment Records of the PTO on October 4, 2011 at Reel No. 027011 Frame No.0525. By virtue of that assignment, the 235 Patent was issued to and is now owned by Surgibit. 16. On or about May 11, 2005, Mr. Ellis in connection with the prosecution of the 235 Patent filed with the PTO a document entitled Declaration for Utility or Design Patent Application (37 CFR 1.63) ( Inventor s Oath & Declaration ) in which Mr. Ellis declared, inter alia, under pain and penalty of perjury that He believed himself to be the original and first inventor of the subject matter described and claimed in the 235 Patent; He had reviewed and understand[s] the contents of Application which became the 235 Patent; He acknowledge[d] the duty to disclose information material to the patentability as defined in 37 CFR 1.56, including for continuation-in-part applications. A copy of Mr. Ellis s Inventor s Oath and Declaration is attached hereto as Exhibit 3 and incorporated herein by reference. 17. On or about July, 2004, Surgibit entered into an Exclusive License Agreement with OI, a copy of which is attached hereto as Exhibit 4 and incorporated herein by reference. By virtue of that Exclusive License Agreement, OI has the right to enforce the Patents-in-Suit. 18. By virtue of its exclusive license under the 235 Patent, OI has the right to exclude others from making, using, selling or offering to sell, or importing into the United States embodiments of the inventions claimed in the 235 Patent. Neither OI nor Surgibit has 5
authorized any Defendant to make, use, sell or offer to sell, or import into the United States any invention claimed in the 235 Patent. 19. OI is the exclusive licensee of, and claims rights under, the 845 Patent, which was issued by the PTO on May 8, 2012. The named inventor of the 845 Patent is Mr. Ellis. A copy of the 845 Patent is attached hereto as Exhibit 5 and incorporated by reference herein. 20. Surgibit is the owner of the 845 Patent. 21. By virtue of its exclusive license under the 845 Patent, OI has the right to exclude others from making, using, selling or offering to sell, or importing into the United States embodiments of the inventions claimed in the 845 Patent. Neither OI nor Surgibit has authorized any Defendant to make, use, sell or offer to sell, or import into the United States any invention claimed in the 845 Patent. 22. OI is the exclusive licensee of, and claims rights under, the 459 Patent, which was issued by the PTO on July 2, 2013. The named inventor of the 459 patent is Mr. Ellis. A copy of the 459 Patent is attached hereto as Exhibit 6 and incorporated by reference herein. 23. By virtue of its exclusive license under the 459 Patent, OI has the right to exclude others from making, using, selling or offering to sell, or importing into the United States embodiments of the inventions claimed in the 459 Patent. Neither OI nor Surgibit has authorized any Defendant to make, use, sell or offer to sell, or import into the United States any invention claimed in the 459 Patent. 24. On or about May 27, 2005, Mr. Ellis and Surgibit and OI entered into a Deed of Settlement and Release under terms of which Mr. Ellis surrendered his shares in Surgibit. The Deed of Settlement and Release is confidential among the Parties and is therefore not attached hereto. As part and parcel of his obligations under said Deed of Settlement and Release, Mr. Ellis agreed to covenants that are inconsistent with and bar his current actions in the marketplace. 6
The Defendants and the Infringing Products 25. Upon information and belief, Orchid is a manufacturer of orthopedic tools and equipment, including surgical drill bits (see www.orchid-orthopedics.com). Orchid is a direct competitor of OI with respect to surgical drill bits. 26. Upon information and belief, Orchid is marketing in the USA surgical drill bits under the name CingleBit under an arrangement with Cingular and/or Mr. Ellis. See excerpt from Orchid s website at www.orchid-orthopedics.com/cutting-instrument-solutions, a printout of which is attached as Exhibit 7 and incorporated herein by reference. See also brochure downloaded from Orchid s website entitled CingleBit TM and CinglePin TM Technology, a copy of which is attached as Exhibit 8 and incorporated herein by reference. 27. On information and belief, Mr. Ellis derived the design of the CingleBit surgical drill bit based on knowledge gained or was imparted to him while in the employ of and while he owed a fiduciary duty to OI and/or Surgibit IP Holdings because he was a Director of both OI and Surgibit. 28. On information and belief, Defendants demonstrated the use of CingleBit surgical drill bits and offered same for sale at the Annual Meeting of the American Academy of Orthopaedic Surgeons ( AAOS ) held March 13-19, 2013 at McCormick Place, Chicago IL. 29. On information and belief, Defendants demonstrated the use of CingleBit surgical drill bits and offered same for sale at the Orthopedic Manufacturing and Technical Conference ( OMTEC ) held June 12-13, 2013 at the Stevens Convention Center in Rosemont (Chicago area) IL. 30. On information and belief and as detailed below, the CingleBit surgical drill bits marketed by Defendants in the USA violate the exclusive rights of Plaintiffs derived from the Patents-n-Suit. 7
OI s Attempts to Make Orchid and/or Mr. Ellis Aware of OI s Patent Rights 31. By letter dated March 13, 2013 OI s agent contacted Orchid and informed Orchid of the existence of the 235 Patent and the 845 Patent (the 459 Patent had not yet issued) and stated that the CingleBit and CinglePin products appear to be the same as or nearly identical to the drill bits claimed in the 235 and 845 Patents. OI s agent invited Orchid s careful review of OI s patent rights. 32. In response to the contact by OI s agent, Orchid through its attorneys Carter, DeLuca, Farrell & Schmidt, LLP responded on March 20, 2013 that the March 13 letter does not apply any claim of any patent to any product manufactured by Orchid and concluded by stating, [w]e consider this matter to be closed. 33. OI on multiple occasions has urged Mr. Ellis to honor his inventor and assignor obligations, without success. 34. On information and belief, Orchid continues to market CingleBit surgical drill bit products in the USA including within this judicial district. Mr. Ellis Campaign to Disparage the Patents-in-Suit 35. On information and belief, notwithstanding that he is the inventor on each of the Patents-in-Suit and despite his Oath made to and filed with the PTO (Exhibit 3); and contrary to his obligations under the Deed of Assignment (Exhibit 2); and contrary to his obligations under the Deed of Settlement and Release; and contrary to law, Mr. Ellis acting on his own and/or through his corporation Cingular and/or acting as agent for Orchid has embarked on a campaign to unlawfully disparage and discredit the validity of the Patents-in-Suit. COUNT I Infringement of the 235 Patent (35 U.S.C. 271) 8
36. Plaintiffs repeat and reallege paragraphs 1 through 35 of this Complaint as if set forth herein and further state: 37. Upon information and belief, Orchid, acting in privity with Mr. Ellis and/or Cingular and without permission or license from OI or Surgibit, has unlawfully and wrongfully made, sold or offered for sale, and is now making, selling or offering for sale, in direct competition with OI within the United States, including within this judicial district, the CingleBit surgical drill bits. 38. On information and belief, Orchid s CingleBit surgical drill bits contain, embody and employ the invention(s) described and claimed in the 235 Patent, in violation of OI s exclusive rights thereunder, and infringe at least one claim of the 235 Patent, including but not necessarily limited to claim 1, to the great loss and injury to OI. 39. Upon information and belief, Orchid s unlawful making, selling or offering for sale, or contributing to the making, using, selling or offering to sell, or unlawfully inducing others to make, use, sell or offer to sell, CingleBit surgical drill bits within the United States including within this judicial district constitutes infringement of the 235 Patent as aforesaid. 40. Upon information and belief, Orchid has derived, received, and will unless restrained and/or enjoined derive and receive from the aforesaid infringement of the 235 Patent, substantial gains, profits, and advantages, including gains profits and advantages from regular making and sales of infringing devices within this judicial district, in amounts to be proven at trial. As a direct and proximate result of the aforesaid infringement, Plaintiffs have been, and will be, greatly damaged and has been, and will be, deprived and prevented from receiving, if such further infringement is not restrained and enjoined by this Court, all the gains and profits to which Plaintiffs are lawfully entitled and which they would have derived and received, but for the aforesaid infringement by Orchid. 9
COUNT II Infringement of the 845 Patent (35 U.S.C. 271) 41. Plaintiffs repeat and reallege paragraphs 1 through 40 of this Complaint as if set forth herein, and further state: 42. On information and belief, Orchid, acting in privity with Mr. Ellis and/or Cingular and without permission or license from OI or Surgibit, has unlawfully and wrongfully made, sold or offered for sale, and is now making, selling or offering for sale, in direct competition with OI within the United States, including within this judicial district, the CingleBit surgical drill bits. 43. Upon information and belief, Orchid s CingleBit surgical drill bits contain, embody and employ the invention(s) described and claimed in the 845 Patent, in violation of OI s exclusive rights thereunder, and infringe at least one claim of the 845 Patent, including but not necessarily limited to claim 1, to the great loss and injury to Plaintiffs. 44. Upon information and belief, Orchid has derived, received, and will unless restrained and/or enjoined derive and receive from the aforesaid infringement of the 845 Patent, substantial gains, profits, and advantages, including gains profits and advantages from regular making and sales of infringing devices within this judicial district, in amounts to be proven at trial. As a direct and proximate result of the aforesaid infringement, Plaintiffs have been, and will be, greatly damaged and has been, and will be, deprived and prevented from receiving, if such further infringement is not restrained and enjoined by this Court, all the gains and profits to which Plaintiffs are lawfully entitled and which they would have derived and received, but for the aforesaid infringement by Orchid. COUNT III Infringement of the 459 Patent (35 U.S.C. 271) 10
45. Plaintiffs repeat and reallege paragraphs 1 through 44 of this Complaint as if set forth herein, and further state: 46. On information and belief, Orchid acting in privity with Mr. Ellis and/or Cingular and without permission or license from OI or Surgibit, has unlawfully and wrongfully made, sold or offered for sale, and is now making, selling or offering for sale, in direct competition with OI within the United States, including within this judicial district, the CingleBit surgical drill bits. 47. Upon information and belief, Orchid s unlawful making, selling or offering for sale, or contributing to the making, using, selling or offering to sell, or unlawfully inducing others to make, use, sell or offer to sell, the CingleBit surgical drill bit products within the United States including within this judicial district constitutes infringement of the 459 Patent as aforesaid. 48. Upon information and belief, Orchid has derived, received, and will unless restrained and/or enjoined derive and receive from the aforesaid infringement of the 459 Patent, substantial gains, profits, and advantages, including gains profits and advantages from regular making and sales of infringing devices within this judicial district, in amounts to be proven at trial. As a direct and proximate result of the aforesaid infringement, Plaintiffs have been, and will be, greatly damaged and has been, and will be, deprived and prevented from receiving, if such further infringement is not restrained and enjoined by this Court, all the gains and profits to which Plaintiffs are lawfully entitled and which they would have derived and received, but for the aforesaid infringement by Orchid. COUNT IV Willful Patent Infringement (35 U.S.C. 284, 285) 49. Plaintiffs repeat and reallege paragraphs 1 through 47 of this Complaint as if set forth herein, and further state: 11
50. Upon information and belief, Orchid and Mr. Ellis and Cingular, and each of them and all of them had notice and knowledge of the Patents-in-Suit, but despite such notice and knowledge have deliberately made, used, sold, offered for sale and/or imported the CingleBit surgical drill bits, and thereby have infringed and continues to infringe, has induced others to infringe and continues to induce others to infringe, and/or has contributed to the infringement and continues to contribute to infringement of the Patents-in-Suit. 51. Because Orchid and/or Mr. Ellis and/or Cingular have infringed or induced others to infringe or contributed to the infringement of the Patents-in-Suit despite notice and knowledge thereof, the Defendants foregoing infringement, inducement of infringement and/or contributing to the infringement of the Patents-in-Suit has been, and continues to be, willful, deliberate, and in conscious disregard for and willfully blind to the rights of OI and Surgibit under the Patents-in- Suit. COUNT V Injunctive Relief 52. Plaintiffs repeat and reallege paragraphs 1 through 51 of this Complaint as if set forth herein, and further state: 53. Upon a finding that Orchid s CingleBit surgical drill bit products infringe any claim of any of the Patents-in-Suit, Plaintiffs are entitled to an order under 35 U.S.C. 283 permanently enjoining Orchid and/or Cingular and/or Mr. Ellis from making, selling or offering for sale, and unlawfully importing the CingleBit products into the United States. COUNT VI Accounting 54. Plaintiffs repeat and reallege paragraphs 1 through 53 of this Complaint as if set forth herein and further state: 12
55. Plaintiffs demand an accounting of all earnings achieved by Orchid and/or Mr. Ellis and/or Cingular, and each of them, as a consequence of Orchid s manufacture, sale and use of CingleBit surgical drill bit products which infringes any claim of any of the Patents-in-Suit. RELIEF REQUESTED WHEREFORE, Plaintiffs Surgibit and OI request a judgment in its favor and against Defendants, Orchid, Mr. Ellis and Cingular ordering: A. That Judgment be entered in favor of Plaintiffs and against Defendants on Counts I through VI of the Complaint; B. That each Defendant, and each of its officers, directors, agents, servants, employees and representatives, and those persons in active concert or participation with them or any of them, be preliminarily permanently enjoined and restrained from directly or indirectly making or causing to be made, offering for sale, selling or causing to be sold, or using or causing to be used any product in accordance with or embodying any invention(s) set forth and claimed in the Patents in Suit, including CingleBit surgical drill bit products; C. That each Defendant be directed to account to Plaintiffs for all gains, profits and advantages realized by each Defendant from manufacturing and marketing of CingleBit surgical drill bit products resulting in infringement of any of the Patents-in-Suit and unlawful use and practice of the invention(s) claimed in and by the Patents-in-Suit, from the beginning of marketing the CingleBit surgical drill bits, and other products or necessary accessories sold in connection therewith, and other products which infringe the Patents-in-Suit and accessories sold therewith, up to and including the time of trial; D. That, in addition, Defendants be ordered to pay to Plaintiffs, pursuant to 35 U.S.C. 284, such damages as have been sustained by each Plaintiff as a result of said 13
infringement by Defendants up to the time of trial, but in no event less than a reasonable royalty for the use made of the inventions by the Defendants, together with interest and costs; E. That Defendants be required to recall from any and all channels of trade, any and all packaging, advertising or promotional materials in connection with marketing the CingleBit surgical drill bit products, including, but not limited to, all necessary and appropriate corrective advertising measures; F. That Plaintiffs recover their reasonable attorneys fees under 35 U.S.C. 285; G. That all damages awarded to Plaintiffs be trebled by the Court pursuant to 35 U.S.C. 284; H. That Plaintiffs recover their costs and disbursements herein; I. That Plaintiffs recover prejudgment interest; and J. That Plaintiffs be awarded such other and further relief as the Court may deem just and proper. JURY DEMAND PLAINTIFF HEREBY DEMANDS A TRIAL BY JURY FOR ALL ISSUES SO TRIABLE Respectfully submitted, Date: December 11, 2013 s/james R. Higgins, Jr. James R. Higgins, Jr. (Member N.D. Ill. Bar) John F. Salazar (KY Bar No. 85460 Robert J. Theuerkauf (Member N.D. Ill. Bar) Brantley C. Shumaker (KY Bar No. 95798) MIDDLETON REUTLINGER 401 South 4 th Street Suite 2600 Louisville, KY 40202 Phone: (502) 584-1135 Facsimile: (502) 561-0442 jhiggins@middletonlaw.com jsalazar@middletonlaw.com rjt@middletonlaw.com bshumaker@middletonlaw.com 14
-and- J. Aron Carnahan (Ill. Bar No. 6242642) HUSCH BLACKWELL, LLP 120 South Riverside 22 nd Floor Chicago IL 60606 Phone: (312) 655-1500 Fax: (312) 655-1501 Aron.carnahan@huschblackwell.com ATTORNEYS FOR PLAINTIFFS SURGIBIT IP HOLDINGS PTY, LIMITED. ORTHOPEDIC INNOVATION PTY, LTD. 15