Cordis v. Medtronic

Medtronic, Inc. (defendant) owned two patents that it licensed to Cordis Corporation (Cordis) (plaintiff) under a license agreement for which Cordis paid royalties. Subsequently, Cordis sued Medtronic, seeking a declaratory judgment that the two patents were invalid and the parties’ license agreement was void at inception. Cordis moved for an order establishing an escrow account in which Cordis would deposit remaining royalty payments and a preliminary injunction to stop Medtronic from terminating the license agreement due to Cordis’s nonpayment of royalties while the invalidity issue was being litigated. Cordis provided the affidavit of a competitor of Medtronic to support its request for a preliminary injunction. The competitor declared that it had publicly disclosed or developed certain devices covered by the patents before Medtronic’s invention date. Further, Cordis asserted that it would suffer irreparable harm without a preliminary injunction because it might be sued for patent infringement by Medtronic while the invalidity action was pending, Cordis might forfeit the royalties paid, and Cordis might have to terminate its sales of products covered by Medtronic’s patents. The court granted Cordis’s motions, thus effectively stopping Medtronic from terminating the license agreement and from asserting patent-infringement and breach-of-contract claims. Medtronic appealed.