Will Nevro win its patent suit against Boston Scientific over its high-frequency SCS therapy?
Nevro Corp. ($NVRO) claims to have invented pioneering technology for improving the life of individuals suffering from chronic pain. Nevro’s product, the Senza® system, received FDA-approval in May 2015. Rather than relying upon opioids, the Senza® system uses innovations for spinal-cord stimulation (SCS) therapy. In 2016, Nevro sued Boston Scientific ($BSX) for copying its patents protecting its innovative SCS therapy. The case is scheduled to go to trial in November of this year, but the Court has already issued preliminary rulings that show a mixed bag of wins and losses for both parties. Where is this case heading?
SCS therapy works by delivering short electrical pulses to the spinal cord. SCS therapy has traditionally utilized low-frequency pulses. The goal was to generate the sensation known as parethesia. Parethesia is a tingling or numbness sensation that can mask the patient’s pain. Low-frequency SCS therapy had a number of drawbacks. Among others, it was not effective for large portions of the population, and it included uncomfortable side-effects such as jolting sensations during movement that impaired sleep and driving.
Nevro claims to have invented a new form of SCS therapy that uses high-frequency pulses rather than low-frequency pulses. Further, Nevro’s therapy does not rely upon generating parathesia in patients. Nevro claims this was a paradigm-shift in the field of SCS therapy, which for 40 years focused on inducing parathesias.
Given the paradigm-shift, Nevro’s new technology was rigorously tested by the FDA. Nevro conducted FDA-monitored clinical trials that compared its high-frequency SCS therapy to a low-frequency therapy commercialized by Boston Scientific ($BSX). The trial purportedly showed that Nevro’s therapy was twice as effective as the low-frequency, parathesia-based therapy, and Nevro was awarded a “superiority” label for its technology.
Nevro now claims that Boston Scientific is copying its pioneering technology. Beginning in 2014, Boston Scientific initiated clinical trials utilizing high-frequency SCS devices. Nevro believed that Boston Scientific’s high-frequency SCS devices infringed its patents. In 2016, Nevro commenced a patent lawsuit against Boston Scientific. Nevro asserted six patents that it claimed are either being infringed by Boston Scientific, or will be imminently infringed upon launch of Boston Scientific’s launch of high-frequency SCS products. (See Nevro Corp. v. Boston Scientific, Case No. 16-cv-6830 (N.D. Cal.)).
The case is currently scheduled to go to trial in November 2018. Yet, in advance of that, the parties previously moved for summary judgment showing that Nevro has gained some initial success that bodes well for the remainder of the case. Among other things, Nevro moved for summary judgment of infringement of two patents (the ‘533 and ‘102) based upon one of Boston Scientific’s accused products, the Precision with MultiWave. By contrast, Boston Scientific moved for summary judgment that Nevro’s patents were invalid based upon prior art, or invalid as directed to ineligible subject matter.
On July 6, 2018, the Court heard oral argument on the parties cross-motions for summary judgment. The day before the hearing on July 6, the Court issued a tentative ruling. Some courts, mostly in California, will issue “tentative” rulings prior to oral argument on dispositive motions. While not a final ruling, tentative rulings are typically a fairly strong indication of where the court is leaning based upon the briefing alone.
The Court’s tentative ruling made a number of preliminary findings. It was a mixed bag, with many wins and losses for both parties. For instance, the Court rejected Boston Scientific’s argument that the patents are invalid as directed to abstract ideas. If this holding stands, that will be a win for Nevro. On the other hand, the court found that a number of the patents were invalid on a different ground, namely for being indefinite. Some of the patents were directed to spinal-cord modulation systems that include, for example, a signal generator for generating a “non-paresthesia-producing therapy signal.” While this feature appears to be touted by Nevro as something that makes its technology especially pioneering, the Court found that the phrase “non-paresthesia-producing therapy signal” is indefinite. That is another way of saying that it is too vague for an accused infringer to determine, in advance, whether a proposed product would infringe or not. If this holding stands, then that will likely knock out two of Nevro’s patents from the case (the ‘533 and ‘125 patents). This will be a win for Boston Scientific.
The Court found that Nevro is likely entitled to summary judgment of infringement on at least patent (the ‘472 patent) by Boston Scientific’s Precise with Multiwave system. On the other hand, the Court found that another accused product sold by Boston Scientific, the Spectra Wavewriter, most likely does not infringe. The Court also found that the ‘472 patent is not likely invalid. This could be a very big win for Nevro because for at least one patent, the Court has essentially found that it is infringed and not invalid. Nevro could theoretically obtain an injunction and damages on this alone, without the need for a trial, but only for the Precise with Multiwave product. Thus, the force of this ruling depends on which product—Precise with Multiwave versus Spectra Wavewriter—is more important to Boston Scientific’s SCS product line. On another patent, the ‘842 patent, the Court again found that Boston Scientific’s Precise with Multiwave system infringes, but it was not certain about the Spectra Wavewriter product. The Court also reserved judgment on whether the ‘842 patent is invalid.
Overall, Nevro appears to be standing on relatively firm ground that it may prevail on at least one patent in this case. Technically, depending on which of Boston Scientific’s products are deemed to infringed, Nevro could obtain an injunction and material damages even if it prevails on only a single patent. That said, the Court has yet to issue its final rulings on summary judgment, and those rulings that have issued indicate that the trial will likely proceed in November on some of the outstanding issues. The case appears to be crystallizing around two of the patents, namely the ’472 and ‘842. If Nevro prevails on summary judgment of infringement and no-invalidity of the ‘472 patent for the Precise with Multiwave system, that may drive the parties to a settlement.
Part of the concern for Boston Scientific will be that it faces exposure for willful infringement. If deemed to have copied Nevro’s patents intentionally, that would permit the Court to treble the damages, and also act as another reason to issue an injunction against Boston Scientific’s products. The Court has already indicated that it is aware of evidence showing that Boston Scientific may have actually intentionally copied Nevro’s patents.
Earlier in the case, Boston Scientific moved to seal certain emails produced in the litigation. Boston Scientific also attempted to seal additional emails from inside the company showing technical discussions regarding Nevro’s products. Worse, one of those emails, from a Boston Scientific executive, stated that “clinical research is short term focused (marketing and sales claims), or essentially me-too approaches (DBS), but not innovative in nature . . . [and] [t]hat is why . . . we will need to copy or acquire approaches developed by others (Nevro, Spinal Modulation, Neurosigma, etc).” (See 16-cv-06830 (N.D. Cal.)(Dkt. 294)).
This is not necessarily dispositive evidence of willfulness, but it is nonetheless relatively damning. Indeed, it is rare to seem emails of this sort actually surface in a patent case. The Court firmly rejected Boston Scientific’s claim that these emails constituted trade secrets, but rather found, “it is obvious that Boston Scientific actually wants to seal this information because the company is concerned that the statement creates the impression that Boston Scientific was acting improperly.” (See 16-cv-06830 (N.D. Cal.)(Dkt. 294)).
The trial in November will be a jury trial, rather than a bench trial before the Judge alone. These emails are most likely to be shown to the jury during that trial. Boston Scientific is most likely rightly concerned that they may be hard to explain away to a jury. That is likely going to impact its settlement calculus.
Overall, the next few months are likely to show where the case is headed. The Court’s decision on the cross-motions for summary judgment is likely to provide a strong indication on the possibility of settlement. The docket will require further monitoring in advance of the upcoming trial.
Update: On July 24, the Court issued an order granting Boston Scientific summary judgment on all asserted patents. The prior tentative rulings of infringement by the Precision with MultiWave systems were set aside in favor of non-infringement. The Court found that the products were either permissibly used within a clinical trial, or they could not infringe method claims under the theory of infringement articulated by Nevro. The Court scheduled a conference on August 2 to confirm that no outstanding issues remain prior to entry of judgment for Boston Scientific. The parties are scheduled to file a joint statement by July 27, which should theoretically provide more information. Nevro is most likely going to appeal the case to the Federal Circuit.