United States District Court, D. Massachusetts
MEMORANDUM & ORDER
NATHANIEL M. GORTON UNITED STATES DISTRICT JUDGE
dispute arises out of alleged breaches of two agreements
between Covidien LP and Covidien Holding Inc.
(“plaintiffs” or “Covidien”), on the
one hand, and Brady Esch (“defendant” or
“Esch”), Covidien's former employee, on the
other. Plaintiffs allege defendant breached an employment
agreement and a separation agreement by 1) assigning rights
to three patents to his new company rather than to Covidien
and 2) disclosing plaintiffs' confidential information in
the patent applications. Pending before the Court are the
parties' cross-motions for summary judgment and
defendant's motion for leave to file newly discovered
information relevant to the pending motions for summary
Esch began working for Covidien in 2009, when Covidien
acquired his employer at the time, VNUS Technologies. In
December, 2009, Esch entered into a “Non-Competition,
Non-Solicitation, and Confidentiality Agreement”
(“NNC Agreement”) with Covidien, in which he
agreed to assign his “Inventions” (defined
broadly) to Covidien. The NNC Agreement, which is governed by
a Massachusetts choice-of-law provision states that
[I]n order to avoid any dispute as to the date on which
Inventions were made or conceived by you, they shall be
deemed to have been made or conceived during your employment
with the Company if you take affirmative steps to have them
reduced to practice either during the term of your employment
or within one year after separation from employment.
his time at Covidien, Esch worked on Project Merge/Cattleya
(“Project Cattleya”), which focused on a new
radio frequency (“RF”) ablation device. As
director of the project, he led the engineers during
development and maintained “veto power” over key
aspects. While at Covidien, he expressed disfavor of a
“premium” feature that provided a selectable or
switchable heating element for the RF ablation device.
2013, Esch signed a “Separation of Employment Agreement
and General Release” (“the Separation
Agreement”) following his termination. Esch, with
counsel, provided edits to the Separation Agreement which
Covidien rejected. Nevertheless, Esch signed the Separation
Agreement, which reaffirmed the Invention assignment
provision of the NNC. Although parts of the Separation
Agreement superseded provisions of the NNC, the Separation
Agreement provides that
any provisions of such Employee Agreement concerning
disclosure or ownership of inventions, methods, processes or
improvements shall continue in full force and effect and
shall not be superseded by any provision of this Agreement.
disputes the validity of this provision as he asserts that he
assumed that California law would render terms relating to
competition, solicitation and confidentiality unenforceable.
February, 2014, Esch organized the incorporation of Venclose
Inc. (“Venclose”), a direct competitor to
Covidien. One month later, he filed provisional patent
application No. 61/970, 498 (“the ‘498
provisional patent”) which describes designs,
technology and improvements to venous RF ablation devices.
That application was assigned to Venclose. Covidien alleges
that the stated subject matter directly relates to Esch's
work at Covidien. For example, the ‘498 provisional
patent describes a selectable heating element similar to the
dimensions disclosed in Project Cattleya.
2015, Venclose filed 1) utility patent application No.
14/670, 338 (“the ‘338 patent”) and 2) a
foreign Patent Cooperation Treaty application (“the PCT
application”). Darius Pryzgoda, Rory Chrstian and Cody
Schlindler are also listed as inventors on the ‘338
patent. While Covidien alleges that those follow-on patent
applications claim priority to Esch's early provisional
patent application (‘498) and include additional
advancements, the four named inventors assigned the rights to
the applications to Venclose.
January, 2017, this Court issued a preliminary injunction in
favor of Covidien enjoining Esch and his agents, successors,
representatives or assignees from making, developing,
manufacturing or selling products that disclose or use any
confidential information from Covidien. Esch, who was then
CEO of Venclose, has since been discharged by that company.
Cross-Motions for Summary Judgment
Standard of Review
role of summary judgment is to assess the proof in order to
see whether there is a genuine need for trial. Mesnick v.
Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991). The
burden is on the moving party to show, through the pleadings,
discovery and affidavits, that there is “no genuine
dispute as to any material fact and that the movant is
entitled to judgment as a matter of law”. Fed.R.Civ.P.
56(a). A fact is material if it “might affect the
outcome of the suit under the governing law”.
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A genuine issue of material fact
exists where the evidence with respect to the material fact
in dispute “is such that a reasonable jury could return
a verdict for the nonmoving party”. Id.
moving party has satisfied its burden, the burden shifts to
the nonmoving party to set forth specific facts showing that
there is a genuine, triable issue. Celotex Corp.
v. Catrett, 477 U.S. 317, 324 (1986). The
Court must view the entire record in the light most favorable
to the nonmoving party and indulge all reasonable inferences
in that party's favor. O'Connor v.
Steeves, 994 F.2d 905, 907 (1st Cir. 1993). Summary
judgment is appropriate if, after viewing the record in the
nonmoving party's favor, the Court determines that no
genuine issue of material fact exists and that the moving
party is entitled to judgment as a matter of law. Celotex
Corp., 477 U.S. at 322-23.
parties file cross-motions for summary judgment on a
particular count, the Court must assess each motion
separately and determine whether there is any genuine issue
of material fact and whether either movant is entitled to
judgment. Phillip Morris Inc. v.
Harshbarger, 122 F.3d 58, 62 n. 4 (1st Cir.1997).
Defendant's Motion for Summary Judgment
argues that Counts I, II and III should be dismissed because
the Massachusetts choice-of-law provision within the subject
contracts is unenforceable pursuant to fundamental California
public policy. Plaintiffs rejoin that the California public
policy of open competition and employee mobility has not been
extended to assignments of Inventions following termination
Court will not honor a choice-of-law provision if 1)
Massachusetts has no substantial relationship to the parties
or the transaction and there is no other reasonable basis for
the parties' choice, 2) where application of
Massachusetts law would be “contrary to a fundamental
policy” of California, which has a “materially
greater interest” than Massachusetts and 3)
California law would apply in the absence of the
Massachusetts choice-of-law provision. Oxford Glob. Res.,
LLC v. Hernandez, 106 N.E.3d 556, 564 (2018).
the parties entered into the subject contracts,
Covidien's principal place of business was Massachusetts.
Thus, the “substantial relationship” prong is
satisfied. Id. at 564.
respect to the second prong of the analysis, California has a
strong and well-settled public policy against non-competition
and non-solicitation clauses. Cal. Bus. & Prof. Code
§ 16600. Neither the Oxford decision nor
California courts have, however, set forth a clear public
policy with respect to holdover provisions. In anticipation
of that claim, defendant argues that the decision in
Applied Materials, Inc. v. Advanced
Micro-Fabrication Equip. (Shanghai) Co. demonstrates
that California has a fundamental policy of striking down
holdover provisions. 630 F.Supp.2d 1084, 1090-91 (N.D. Cal.
2009). There, however, the Northern District of California
held that holdover provisions function as unlawful
non-compete provisions but that they are enforceable to the
relate . . . to ideas and concepts which were based upon
secrets or confidential information of the employer.
Id. Because the Court is not convinced that the
California decisions with respect to non-compete and
non-solicitation clauses extend to holdover provisions and
because this case turns, in part, on the disclosure of
confidential information, Esch has failed to ...