INTERNATIONAL MEDICAL DEVICES, INC. v. CORNELL
Authored by: Jeremy J. Gustrowsky
The Federal Circuit reversed a multimillion-dollar trade secret verdict in a case involving competing cosmetic penile implants. Plaintiffs International Medical Devices, Inc. (IMD) and Dr. James Elist, the makers of the Penuma® implant, had accused Dr. Robert Cornell and several other defendants of misappropriating trade secrets, breaching a non-disclosure agreement, using a counterfeit trademark, and improperly claiming inventorship on two patents. After a jury found for the plaintiffs on all counts, the district court awarded over $17 million in royalties and exemplary damages plus a five-year injunction. On appeal, the Federal Circuit found that none of the four asserted trade secrets were actually protectable under California law.
The case revolved around information Dr. Elist shared with Dr. Cornell during a 2018 surgical training session. Dr. Elist disclosed ideas for improving the Penuma® implant, including incorporating internal pockets within the silicone to add softness, placing mesh tabs near the tip of the implant for tissue ingrowth, and using absorbable sutures to temporarily anchor those tabs. After the training, Dr. Cornell and his associates developed a competing implant and obtained U.S. Patent Nos. 10,413,413 and 10,980,639 without naming Dr. Elist as an inventor.
The Federal Circuit held that each of the first three alleged trade secrets was already disclosed in prior art patents, making them “generally known” and ineligible for protection. U.S. Patent No. 5,088,477 (Subrini) disclosed internal cavities in a silicone penile implant to reduce hardness. U.S. Patent No. 4,204,530 (Finney) disclosed mesh patches near the distal tip of a cosmetic penile implant for tissue ingrowth and suturing. Although Finney did not specify absorbable sutures, the court found that both sides’ experts agreed absorbable sutures were long known and generally preferred for penile surgery. Citing cases from California and other states, the court explained that translating a well-known concept from one closely related environment to another (such as from therapeutic to cosmetic implants) does not create a new trade secret. As for the fourth trade secret (a list of surgical instruments), the court found that plaintiffs failed to maintain its secrecy because the list was emailed to third parties without confidentiality protections.
The court also reversed the jury’s finding that the two patents were invalid for failing to name Dr. Elist as an inventor. Because Dr. Elist’s alleged contributions (the same three ideas found to be generally known) could not qualify as inventive contributions, he could not be considered a co-inventor. The court noted that during prosecution, the patent examiner had rejected claims based on those very concepts, and the patents were only allowed after the applicants added limitations (specifically, a “measured property of hardness” difference) that Dr. Elist never discussed.
One claim survived appeal. The Federal Circuit affirmed the $1 million counterfeiting verdict against Dr. Cornell and his medical practice for advertising themselves as authorized Penuma® surgeons using the registered Penuma® mark. The court rejected defendants’ argument that the mark only covered goods and not services, finding that the jury instructions properly required the jury to find use on “the same goods” as the registration, and that evidence supported a finding that Dr. Cornell offered the Penuma® implant itself for sale on his website.