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CardiAQ Valve Technologies, Inc. v. Neovasc, Inc.

United States District Court, D. Massachusetts

November 6, 2014

CARDIAQ VALVE TECHNOLOGIES, INC., Plaintiff,
v.
NEOVASC, INC. and NEOVASC TIARA, INC., Defendants

Page 119

For CardiAQ Valve Technologies, Inc., Plaintiff: John W. Holcomb, John B. Sganga, Jr., LEAD ATTORNEYS, PRO HAC VICE, Knobbe, Martens, Olsen & Bear, Irvine, CA; Vito A. Canuso, III, LEAD ATTORNEY, PRO HAC VICE, Villa Park, CA; Randall T. Weeks, Jr., Partridge Snow & Hahn, LLP, New Bedford, MA.

For Neovasc Inc., Neovasc Tiara Inc., Defendants: Charles Tait Graves, LEAD ATTORNEY, PRO HAC VICE, Wilson, Sonsini, Goodrich Rosati, P.C., San Francisco, CA; Douglas H. Carsten, LEAD ATTORNEY, PRO HAC VICE, WILSON SONSINI GOODRICH & ROSATI, San Diego, CA; Michael L. Chinitz, LEAD ATTORNEY, Meredith Wilson Doty, Rose, Chinitz & Rose, Boston, MA; Peter S. Kang, LEAD ATTORNEY, PRO HAC VICE, Wilson Sonsini Goodrich & Rosati, PC, San Diego, CA; Shaun R. Snader, LEAD ATTORNEY, PRO HAC VICE, Wilson Sonsini Goodrich & Rosati, PC, Washington, DC.

Page 120

MEMORANDUM & ORDER

Nathaniel M. Gorton, United States District Judge.

This case arises out of an alleged misuse of confidential information belonging to plaintiff CardiAQ Valve Technologies, Inc. (" CardiAQ" ) with respect to a prosthetic heart mitral valve. CardiAQ's First Amended Complaint (" FAC" ) asserts claims for relief against defendants Neovasc, Inc. (" Neovasc" ) and its wholly-owned subsidiary, Neovasc Tiara, Inc. (" Neovasc Tiara" ), for 1) correction of inventorship, 2) breach of contract, 3) breach of implied covenant of good faith and fair dealing, 4) fraud, 5) misappropriation of trade secrets and 6) unfair and deceptive trade practices.

Pending before the Court is defendants' motion to dismiss the claims for correction of inventorship, fraud and unfair and deceptive trade practices from the FAC. For the reasons that follow, the motion will be allowed, in part, and denied, in part.

III. Background

CardiAQ is a medical device company founded by Dr. Arshad Quadri (" Dr. Quadri" ) that aims to develop and commercialize cost-effective catheter-based heart valve replacement systems. Its platform technology is a Transcatheter Mitral Valve Implantation (" TMVI" ) system designed to be an alternative to open-chest surgery for treating mitral regurgitation in the human heart.

As of 2005, prior to working on mitral valve replacements, Dr. Quadri worked extensively on developing an aortic valve replacement, or Transcatheter Aortic Valve Implantation (" TAVI" ) system. He continued to work on numerous iterations of the TAVI system after founding CardiAQ and establishing its principal place of business in Winchester, Massachusetts.

Building on the research in developing the TAVI system, plaintiff initiated its work on the TMVI system in August, 2008. By April, 2009, CardiAQ began to file patent applications to protect the intellectual property that it developed, and was developing, concerning certain aspects of the TMVI technology.

Plaintiff alleges that, among other inventions, Dr. Quadri and J. Brent Ratz (" Mr. Ratz" ), CardiAQ's President and Chief Operations Officer,

conceived of atrial and ventricular anchoring suitable for a mitral valve prosthetic to engage a portion of the mitral valve from an atrial side of the valve annulus and to engage a portion of the valve from a ventricular side of the valve annulus, as well as a deployment method for such anchoring.

Dr. Quadri and Mr. Ratz each assigned their respective ownership interests in these inventions to CardiAQ.

In June, 2009, CardiAQ received an unsolicited email from Brian McPherson (" Mr. McPherson" ), the Vice President of Operations and President of the Surgical Products division at Neovasc, offering Neovasc's biologic tissue materials and associated development and manufacturing services to CardiAQ. The email and the company introduction presentation attached to it represented that Neovasc viewed its customers as industry partners. They also represented that Neovasc's core products were " implantable pericardial tissue technologies" and the " Reducer[TM] stent for refractory angina."

Page 121

Neovasc and CardiAQ executed a Non-Disclosure Agreement (" NDA" ) later that month and in July, 2009, CardiAQ signed a Purchase Order for Neovasc to perform certain services involving the assembly of heart valves in accordance with CardiAQ's TMVI technology. CardiAQ then began disclosing various aspects of its confidential and proprietary TAVI and TMVI technology to its primary points of contact at Neovasc, Mr. McPherson and Randy Matthew Lane (" Mr. Lane" ). The disclosures included the inventions by Dr. Quadri and Mr. Ratz described above as well as designs, drawings, frames and specifications for successful and unsuccessful devices that CardiAQ developed through its own research.

In February, 2010, CardiAQ transferred its principal place of business to Irvine, California. It notified Neovasc that soon it would no longer need an outside valve manufacturer. From July, 2009 through April, 2010, Neovasc assembled more than ten valves for CardiAQ pursuant to the parties' written Purchase Order contract and under the confidentiality restrictions of the NDA.

At no point during the parties' business relationship did Neovasc disclose that it intended to develop its own TMVI technology or any form of competing mitral valve product. In May, 2010, Neovasc filed its first U.S. patent application covering TMVI technology, listing only Neovasc personnel as inventors. CardiAQ was unaware of the patent application until January, 2012. On November 12, 2013, the United States Patent and Trademark Office issued U.S. Patent No. 8,579,964 (" the '964 Patent" ) to Neovasc. The '964 Patent allegedly discloses various aspects of CardiAQ's TMVI technology, including the inventions by Dr. Quadri and Mr. ...


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