Exhibit 2002
`Exhibit 2002
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`Exhibit 2002
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 1 of 10
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MINNESOTA
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`Biomedical Device Consultants &
`Laboratories of Colorado, LLC,
`
`Plaintiff,
`
`v.
`
`TA Instruments – Waters, LLC,
`
`Defendant
`
`Civil File No. 0:17-cv-03403
`
`DECLARATION OF CRAIG
`WEINBERG IN SUPPORT OF
`MOTION FOR PRELIMINARY
`INJUNCTION
`
`I, Craig Weinberg, hereby declare and state as follows:
`
`1.
`
`I am the President and CEO of Plaintiff Biomedical Device Consultants &
`
`Laboratories of Colorado, LLC (“BDC”). I make this Declaration in connection with
`
`BDC’s motion for a preliminary injunction. I have personal knowledge of the matters set
`
`forth below and, if called as a witness, I could and would testify as follows.
`
`Background
`
`2.
`
`I received my Ph.D. in the area of Mechanical Engineering with a focus in
`
`cardiovascular fluid dynamics from the University of Colorado in 2003. In early 2011, I
`
`began to serve on the US sub-committee and then, as of January of 2015, began serving
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`on the parent international committee ISO/TC 150/SC 2/WG 1, which is the group that
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`creates the international guidance documents for design verification/validation evaluation
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`of heart valves and heart valve repair devices. As a result, I am very familiar with all the
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`commercially available products that are part the functional performance evaluation, both
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`real-time and accelerated, utilized during the verification/validation testing of the
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`4830-1944-9171\4
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`REDACTED
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`Water Techs. Corp. v. Biomedical Device Consultants & Labs
`IPR2018-00498
`Ex. 2002
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`Page 1 of 10
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 2 of 10
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`associated devices.
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`3.
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`In 2006, I joined BDC as its president. In about February 2008, a team of
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`three people—myself, Benjamin McCloskey, and Dr. Steven Weinberg—began
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`researching and designing a new prosthetic heart valve and venous valve durability
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`testing system. The dedication of a three person research team to this project was a
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`significant investment for BDC. Though BDC currently has five or six employees solely
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`devoted to working on its testing equipment business, back at the time of the invention in
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`2008, the entire company was only on the order of five full time employees.
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`4.
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`The nature of BDC’s business requires that it make these types of significant
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`investments in research and development. BDC’s customers are those that wish to test
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`medical devices, often the medical device manufacturers themselves testing the device to
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`obtain regulatory approval. The medical device industry is an innovative industry—new
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`and improved medical devices enter the market all the time. These new devices often
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`require state of the art testing systems for their evaluation. For example, prosthetic heart
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`valves have seen significant improvements in recent years resulting in larger sizes and
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`different methods of for securing in place within the human body (e.g. transcatheter heart
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`valves). This has required similar innovations in the equipment available to test the
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`valves. Therefore, to stay competitive, BDC must keep pace with the innovation of both
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`its customers and its competitors.
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`5.
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`Our research, with respect to heart valve durability test equipment,
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`eventually led to the issuance of four patents, U.S. Patent Nos. 8,584,538 (“the ’538
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`Patent”), 8,627,708 (“the ’708 Patent”), 9,186,224 (“the ’224 Patent”), 9,237,935 (“the
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`REDACTED
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`Page 2 of 10
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 3 of 10
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`’935 Patent”) (collectively, “the Patents-in-Suit”). I am a named inventor for all four
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`patents.
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`BDC’s Innovative VDT-3600i System is Market Leading Test System
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`6.
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`Before the Patents-in-Suit, heart valve durability testing systems on the
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`commercial market used drive motors that resulted in minimal control of the differential
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`pressure rate and spikes associated with valve closure that could result in unnecessary
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`early deterioration of the test valves and potential false test failures. To better manage
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`valve closing dynamics and differential pressure spikes, and thus better comply with the
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`durability testing standards, myself and the co-inventors of the Patents-in-Suit developed
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`a novel test system that placed an excess volume area on the outflow side of a test sample
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`valve. We also developed a method of operating the test system to help control and
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`minimize differential pressure loading and associated spikes.
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`7.
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`The reduction in differential pressure spikes during closure in the
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`accelerated flow system was further aided by the use of a “compliance chamber.” A
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`compliance chamber is an area usually filled with air or gas within a test system that
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`permits a change in its volume with an associated change in system pressure. In our
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`design, we positioned a compliance chamber downstream of the test sample. It acts
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`similar to a spring and stores pressure in the system during the “drive” phase (the phase
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`the opens the test valve) and then releases it during the “return” phase (the phase that
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`closes the valve).
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`8.
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`The Patents-in-Suit revolutionized the market for heart valve durability
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`testing systems by providing an accelerated testing device with a compliance chamber on
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 4 of 10
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`the outflow side of the valve and a non-symmetrical waveform driving signal. BDC has
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`commercialized the Patents-in-Suit through a product known as the VDT-3600i heart
`
`valve durability tester.
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`9.
`
`The VDT-3600i has been a tremendous success. When it was released it
`
`was a unique and differentiated product. It was the only testing system on the market that
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`used a non-regular signal input to the drive motor and provided an excess volume area in
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`a return chamber, downstream of the valve to store fluid during the driving phase of the
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`system. This excess volume area and use of a non-regular driving waveform are
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`significant improvements in accelerated test system design. The signal form better
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`controlled the test valve loading and reduced the differential pressure spike while better
`
`meeting the test standard for holding a pressure differential across the valve without
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`excessive pressure loading. The excess volume area further provided for storage of
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`pressure which improved our system’s ability to test heart valves at an accelerated rate in
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`an efficient and controlled manner.
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`10. The market for heart valve durability testing systems is highly specialized
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`and therefore is also very small. There are only four competitors in the market. These
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`competitors currently are my company BDC, Defendant TA Instruments-Waters LLC
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`(“TA Instruments”), Dynatek Labs, and ViVitro Labs. When the VDT-3600i was
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`released, the only competitors were Dynatek and ViVitro. Dynatek’s system, however,
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`used old, outdated technology. As a result, it was, and is, not considered a viable
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`alternative in the marketplace for the latest valve technology and currently has few sales,
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`if any. Similarly, ViVitro’s testing system relies on movement of an artificial heart valve
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`4830-1944-9171\4
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 5 of 10
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`through fluid to create the valve opening and closing, not movement of fluid through a
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`valve, which is thus not testing the valve in clinically representative manner. Once the
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`VDT-3600i entered the market, ViVitro’s technology was deemed not commercially
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`relevant or equivalent to the VDT-3600i. Therefore, as a superior and unique product,
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`the VDT-3600i rapidly (within five years) became the industry standard for heart valve
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`durability testing systems.
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`11. BDC’s VDT-3600i currently has about an 80-90% share of the worldwide
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`market for heart valve durability testing systems. Market share in the heart valve
`
`durability testing equipment market is extremely important due to the incumbency
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`effects. A single testing system can only test a few devices at a time. (For example, both
`
`BDC and TA Instruments sell systems that test a maximum of six prosthetic heart valves
`
`at a time). To bring a new prosthetic valve device to market, however, medical device
`
`manufacturers need testing data from many, often dozens, of sample devices. Therefore,
`
`testing system customers need multiple systems. Customers will generally purchase a
`
`single testing system and run a short pilot program. If the pilot test is successful, the
`
`customer will then purchase more of the same test systems from the same manufacturer
`
`as part of a larger testing program for commercial use.
`
`12. Customers generally do not buy testing equipment for a single device from
`
`multiple sources in order to avoid introducing additional testing variables (i.e.,
`
`differences between testing machines from different suppliers) into the test data that
`
`would be submitted to the FDA, or international regulatory agencies. The lifespan of
`
`valve durability testing equipment is often ten to fifteen years, meaning that once a
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`4830-1944-9171\4
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 6 of 10
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`customer has decided which testing equipment to use, it will likely be a long time before
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`a competitor has the opportunity to usurp the place of an incumbent.
`
`13. A company’s ability to maintain market share is crucial to its long-term
`
`success. As I previously mentioned, research and development is vital to a company in
`
`this industry so that it can keep pace with its customers and competitors. In order to fund
`
`this research and development, BDC uses part of its revenue from its sales to fund its
`
`research and development for new devices. The VDT-3600i is of particular significance
`
`to BDC because it is BDC’s best-selling test system. Therefore, lost sales of the VDT-
`
`3600i will negatively impact all of BDC’s business because it will have less revenue to
`
`fund its research and development across its platform.
`
`14.
`
`In this industry, market share is also often linked to reputation for
`
`innovation. As I mentioned before, innovation is extremely important. Accordingly,
`
`customers often make decisions based on reputation for innovation, and a testing system
`
`supplier’s long-term success is dependent on that reputation. BDC has a reputation for
`
`innovation and associated customer goodwill. For example, the BDC website has
`
`numerous customer testimonials discussing BDC’s work to innovatively solve problems
`
`posed by customers. http://www.bdclabs.com/about-us/client-testimonials/.
`
`Contributing to BDC’s reputation for innovation is the fact that the VDT-3600i is a
`
`differentiated, patented product for heart valve durability testing.
`
`DuraPulse System Threatens VDT-3600i Market Position
`
`15. However, the VDT-3600i is no longer a completely unique product because
`
`TA Instruments sells a similar system that infringes the Patents-in-Suit known as the
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`4830-1944-9171\4
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 7 of 10
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`
`
`DuraPulse Heart Valve Test Instrument (the “DuraPulse”).
`
`16.
`
`I first became aware of the DuraPulse in about October 2013, when I
`
`observed a prototype of the DuraPulse system at a tradeshow. The DuraPulse is part of a
`
`product line known as ElectroForce, which at that time was being developed by Bose
`
`Corporation (“BOSE”). Based on my observations of the DuraPulse in late 2013, I was
`
`concerned that it may infringe those of the Patents-in-Suit issued at that time. In July
`
`2014, I learned that BOSE was offering the DuraPulse for sale. I sent a letter to BOSE
`
`notifying it that the DuraPulse may infringe the ’538 Patent and the ’708 Patent, and
`
`would infringe the ’935 Patent once issued (the patent application was still pending at the
`
`time). The application for the ’224 Patent had not yet been filed. At that time, I did not
`
`have detailed information about the operation of the BOSE DuraPulse and thus could not
`
`definitively determine many aspects of its operation.
`
`17. BOSE responded to my letter saying that it did not infringe the ’538 and
`
`’708 Patents and refused to address the application for the ’935 Patent, as it had not yet
`
`issued. At the time, I did not want to file an infringement lawsuit or seek an injunction
`
`for several reasons. I had only limited information about the operation of the DuraPulse
`
`system and did not have access to a product. BDC also still had a patent application
`
`pending that I thought might warrant inclusion in a potential lawsuit. Finally, at the time,
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`BOSE’s potential infringement was not an imminent threat to the market position of
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`VDT-3600i. BOSE’s sales and marketing of the DuraPulse appeared to be negligible and
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`I was not aware of any lost sales. As patent litigation is very expensive and BOSE is a
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`much larger company than BDC (both now and at the time), filing a lawsuit based on
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`4830-1944-9171\4
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 8 of 10
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`limited information and with uncertainty about any actual damage made little sense at the
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`time.
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`18.
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`In late May 2015, BOSE sold the ElectroForce division and product line,
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`which included the DuraPulse, to TA Instruments. After acquiring ElectroForce, TA
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`Instruments dramatically increased its marketing efforts for the DuraPulse.
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`19.
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`I studied the promotional materials for DuraPulse that TA Instruments had
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`made available. It became clear to me that the DuraPulse infringed the Patents-in-Suit,
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`especially the patents that had recently been issued (the ’224 Patent, which issued on
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`November 17, 2015, and the ’935 Patent, which issued on January 19, 2016). Based on
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`information from its marketing materials, TA Instruments makes, sells, and offers to sell
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`the DuraPulse in the United States. TA Instruments also uses the DuraPulse for heart
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`valve durability testing. It makes claims regarding the efficacy of the DuraPulse system
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`for testing in its promotion materials. In order to make these claims, it must have itself
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`used the DuraPulse system. TA Instruments also advertises to customers that the
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`DuraPulse can be used for heart valve durability testing, and instructs customers how to
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`use the DuraPulse for that purpose (which is its only advertised purpose).
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`20. On February 23, 2016, I sent a letter to TA Instruments notifying it of its
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`infringement of the Patents-in-Suit. Because BDC is a small company and patent
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`litigation is expensive both in terms of money and in terms of employee time, I thought it
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`would be prudent to negotiate a resolution with TA Instruments as long as the terms of
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`any potential agreement that could protect BDC’s market position in terms of reputation,
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`price, and innovation. To that end, BDC and TA Instruments engaged in a series of
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`CASE 0:17-cv-03403-DWF-SER Document 40 Filed 11/22/17 Page 9 of 10
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`communications concerning TA Instruments’ defenses to BDC’s claims for over a year.
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`21. While these settlement discussions were ongoing, TA Instruments’ increased
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`marketing efforts for the DuraPulse began to pay off and its infringement became a real
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`threat to BDC.
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`22.
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`In February 2017, while the parties were exchanging settlement
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`correspondence, BDC lost a sale of the VDT-3600i to TA Instruments’ DuraPulse system
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`in head-to-head competitive bidding for a customer. The customer told me that price was
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`a consideration in why the customer purchased from TA Instruments and not BDC. This
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`was surprising because BDC’s list price for the VDT-3600i starts at roughly
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` and
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`the DuraPulse starts at
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`. In order to undercut BDC’s price, TA Instruments is
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`apparently offering discounts to customers to attract business and “buy” market share.
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`BDC is now experiencing price pressure, potential customers for the VDT-3600i are
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`asking for price concessions. As a result of the timing of this sale and the content of TA
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`Instruments’ settlement communications, it became clear to me that TA Instruments was
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`simply trying to draw out the discussion while improving its position in the market.
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`23. Even one lost sale to TA Instruments is a significant threat to BDC because
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`the market is very small. Systems are expensive, and BDC
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`
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` The market is therefore sensitive to change. With TA
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`Instruments winning bids against BDC, BDC is in immediate threat of losing its market
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`lure as a unique, patented product. This will lead to BDC losing more market share and
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`losing its reputation for innovation. BDC will also have less revenue to dedicate to
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`research as a result of less sales and potentially being forced to lower its prices to stay
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