Wednesday, June 20, 2018 5:45:34 AM
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Law360 (June 19, 2018, 9:11 PM EDT) -- Medical technology company AngioDynamics Inc. hit Biolitec AG and its fugitive owner with a lawsuit in Massachusetts federal court seeking to gain control of the company’s patents to satisfy a nearly $75 million judgment that Biolitec has dodged for over four years.
New York-based AngioDynamics’ complaint is a new front in its long-running bid to collect on a judgment issued after Biolitec Inc. breached a deal requiring it to defend AngioDynamics from patent suits resulting from distribution of Biolitec’s laser ablation devices.
AngioDynamics expressed little expectation that Biolitec AG’s CEO Wolfgang Neuberger will pay the judgment, saying that he’s repeatedly drawn remonstrations from the court for dodging monetary responsibilities, and that he and his companies owe $70 million in civil contempt fines. AngioDynamics is instead seeking to be paid in patents that cover everything from treatments for varicose veins, ulcers, Barrett’s syndrome and oral diseases in cats, according to the complaint.
“The judgment debtors have refused to pay a penny of this court’s judgment,” AngioDynamics said, adding later, “The court should order an independent appraisal of the U.S. intellectual property nominally held by [Biolitec entities] and then order [them] to assign that property to AngioDynamics, crediting the appraised value of the property against the unsatisfied $74.9 million judgment.”
AngioDynamics originally hit Biolitec Inc. — the American arm of Neuberger’s corporate holdings — with a suit in January 2008 in New York federal court, alleging the company had breached a supply and distribution contract under which it was required to defend and indemnify AngioDynamics against infringement claims. AngioDynamics said two companies sued it for patent infringement over the Biolitec laser ablation technology, and that Biolitec refused to defend it or compensate it for millions of dollars in settlements and legal fees.
AngioDynamics won its first court battle against Neuberger in October 2012, when a New York federal judge ordered Biolitec Inc. to hand over $16.5 million for failing to shield its business partner from the IP litigation.
But in January 2013, with a $23 million final judgment still outstanding, Biolitec Inc. filed for bankruptcy and the company’s trustee entered into a settlement under which AngioDynamics agreed to forego its efforts to get the payout and to pursue Biolitec’s German parent company, Biolitec AG, Biomed Technology Holdings Inc. and Neuberger, all closely related to Biolitec Inc.
In March 2014, a Massachusetts federal court slapped Biolitec AG and its affiliates with the $74.9 million judgment, trebling the $23 million judgment under a Massachusetts consumer protection law and tacking on millions more in interest and attorneys’ fees.
Since then, Biolitec AG has refused to pay the judgment order as well as a $70 million civil contempt order, while Neuberger has been a fugitive from a court-issued arrest warrant, Monday’s suit says.
Biolitec AG and its affiliates have also refused to comply with postjudgment discovery orders about ownership and control of the intellectual property imposed in March, racking up $25,000 in sanctions each month it doesn’t produce evidence, the complaint says.
“In sum, despite repeated attempts and multiple orders by this court, the judgment debtors have provided no substantive discovery to AngioDynamics for over five years,” the company said.
AngioDynamics said Monday that despite Biolitec’s “contumacious refusal to provide court-ordered discovery” about U.S.-based intellectual property it owns, it had identified dozens of patents owned by the company.
The complaint further argues that Neuberger has flouted the rules requiring corporations to be kept separate, and has “pervasive control” over all of the Biolitec group of companies, including Austria-based Biolitec AG and Biolitec Unternehmensbeteiligungs II AG, Malaysia-based Biomed Technology Holdings Ltd. and Biolitec Pharma Marketing Ltd., and Latvia-based Biolitec SIA.
AngioDynamics says that Neuberger has shifted business assets between entities and capitalized entities as it has suited his personal interests, ignored corporate formalities, failed to keep corporate records and siphoned funds and assets for his own use, among a host of other claims.
AngioDynamics urged the court in Monday’s complaint to issue an order directing an appraisal of the fair market value of the Biolitec-linked U.S. intellectual property it has identified, and directing Neuberger to transfer the patents to AngioDynamics. If Neuberger refuses to transfer the IP, then the court should issue an order directly handing them over to AngioDynamics, according to the complaint.
AngioDynamics is also seeking injunctive relief to prevent Neuberger and his companies from transferring ownership of the intellectual property to other parties, a declaration that Neuberger’s companies are related and alter egos of each other, and a determination that they are jointly and separately liable for the $75 million judgment, according to the complaint.
Counsel for AngioDynamics did not immediately respond to a request for comment. Biolitec AG and Biomed Technology Holdings Ltd. did not immediately respond to requests for comment.
AngioDynamics is represented by William E. Reynolds of Nixon Peabody LLP.
Counsel information for Biolitec AG was not immediately available.
The case is AngioDynamics Inc. v. Neuberger et al., case number 3:18-cv-30092, in the U.S. District Court for the Western District of Massachusetts.
--Additional reporting by Dani Kass. Editing by Breda Lund.
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