CERAbio LLC v. Wright Medical Technology, Inc.

410 F.3d 981 (2005)

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CERAbio LLC v. Wright Medical Technology, Inc.

United States Court of Appeals for the Seventh Circuit
410 F.3d 981 (2005)

Facts

Wright Medical Technology, Inc. (Wright) (defendant) made and sold a medical product used in surgeries to replace missing pieces of bone. CERAbio LLC (plaintiff), a research-and-development company, developed and patented a different bone-replacement product called Apatight. After some negotiations, Wright entered into a contract with CERAbio to purchase the majority of their assets, including the rights to Apatight. During negotiations, CERAbio claimed to have an established process for making Apatight from readily available materials. As part of the sale, CERAbio agreed to train Wright employees and assist them in producing three test lots of Apatight. After the sale, Wright discovered that one of the key ingredients was no longer available on the market. The parties disputed whether CERAbio knew that market availability of the ingredient would be an issue before the sale closed. The parties attempted to create Apatight with a substitute ingredient, but the efforts were not successful. Wright notified CERAbio they had breached the contract, but CERAbio claimed Wright has stopped efforts when they were on the brink of a breakthrough. Because Wright had made only one of two installment payments before it claimed CERAbio had breached the contract, CERAbio sued for the other installment. Wright counterclaimed for fraud and negligence related to representations and performance under the contract. The district court granted summary judgment in favor of CERAbio on all of Wright’s tort claims on the ground that Wright’s claims were barred by the economic-loss doctrine. Wright appealed.

Rule of Law

Issue

Holding and Reasoning (Rovner, J.)

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