2011.05.06 Sagent Counterclaim Against Infusive

Arthur B. Berger (6490)
Samuel C. Straight (7638)
Ray Quinney & Nebeker P.C.
36 South State Street, Suite 1400
P.O. Box 45385
Salt Lake City, Utah 84145-0385
Telephone: (801) 532-1500
Facsimile: (801) 532-7543
aberger@rqn.com
sstraight@rqn.com
Attorneys for Defendant Sagent Holding Co.
Edwin E. Brooks (admitted pro hac vice)
Gary Y. Leung (admitted pro hac vice)
Steven D. Hamilton (admitted pro hac vice)
MCGUIREWOODS LLP
77 W. Wacker Drive, Suite 4100
Chicago, Illinois 60601
Tel: (312) 849-8100
ebrooks@mcguirewoods.com
gleung@mcguirewoods.com
shamilton@mcguirewoods.com
______________________________________________________________________________
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
INFUSIVE TECHNOLOGIES, LLC,
Plaintiff/Counter-Defendant,
v.
SAGENT HOLDING CO.,
Defendant/Counter-Plaintiff.
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DEFENDANT’S ANSWER AND
AFFIRMATIVE DEFENSES TO
PLAINTIFF’S FIRST AMENDED
COMPLAINT
and
DEFENDANT’S COUNTERCLAIMS
Case No. 1:10-CV-220-TC
Defendant, SAGENT HOLDING CO. (“Sagent” or “Defendant”)1
, by its attorneys,
hereby answers and pleads its affirmative defenses to the First Amended Complaint of Plaintiff
Infusive Technologies, LLC (the “First Amended Complaint”) as follows:
1
Sagent Holding Co. (a Cayman Islands company) was converted to Sagent
Pharmaceuticals, Inc. (a Delaware corporation), effective on April 26, 2011.
Case 1:10-cv-00220-TC Document 38 Filed 05/16/11 Page 1 of 39

PARTIES
1. Defendant denies the allegations contained in Paragraph 1 of the First Amended
Complaint.
2. Regarding the allegations set forth in Paragraph 2 of the First Amended
Complaint, Defendant admits that Sagent was a holding company incorporated under the laws of
the Cayman Islands, with its principal place of business in Schaumburg, Illinois. Defendant
denies all remaining allegations in Paragraph 2 of the First Amended Complaint.
Complaint, Defendant denies that this Court has personal jurisdiction over Defendant pursuant to
Utah Code Ann. §§ 78-27-22 and 78-27-24, both of which were repealed or renumbered in 2008.
Further answering, Defendant denies the remaining allegations in Paragraph 3 of the First
Amended Complaint.
4. Defendant admits the allegations contained in Paragraph 4 of the First Amended
Complaint.
Complaint, Defendant admits that venue is proper pursuant to 28 U.S.C. § 1391, but further
states that as set forth in Sagent’s pending motion for a transfer of venue, Defendant has
requested that this Court transfer the matter to the United States District Court for the Northern
District of Illinois, in accordance with 28 U.S.C. § 1404(a).
Complaint, Defendant lacks sufficient information to admit or deny the allegations contained in
Paragraph 6 of the First Amended Complaint, and therefore denies the same.
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Complaint.
Complaint, but further states that in violation of the Asset Acquisition Agreement, Infusive did
not in fact assign the ‘910 patent, the ‘720 patent, and the ‘354 patent to Sagent until fall 2010,
two years after the execution of the Asset Acquisition Agreement.
Complaint, Defendant incorporates by reference its answers to Paragraphs 1 through 8 above as
if fully set forth herein.
Complaint.
Complaint, Defendant admits that Paragraph 7.1 of the Asset Acquisition Agreement has been
correctly quoted. To the extent that Paragraph 11 of the First Amended Complaint contains any
other allegations, Defendant denies such allegations.
Complaint, Defendant admits that “Reasonable Commercial Efforts” is a defined term in the
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Asset Acquisition Agreement. Defendant denies the remaining allegations in Paragraph 13 of
the First Amended Complaint.
Complaint.
Complaint.
Complaint.
Complaint.
Complaint.
Complaint, Defendant admits that by December 2008 Sagent Technologies (a device division
that Sagent established specifically for Bradley Robinson to develop and commercialize the
Infusive-technology based products) received a deficiency letter from the federal Food and Drug
Administration, explaining that it would not approve the 510k application. Further answering,
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Defendant denies all other allegations in Paragraph 20 of the First Amended Complaint
inconsistent with the foregoing.
Complaint.
22. Defendant lacks sufficient information to admit or deny the allegations in
Paragraph 22 of the First Amended Complaint, and therefore denies the same.
Complaint.
Complaint.
Complaint.
Complaint, Defendant admits that Plaintiff properly quotes certain parts of Paragraph 3.1(a), and
the entirety of Paragraph 3.1(b) of the Asset Acquisition Agreement. Further answering,
Defendant otherwise denies all other allegations in Paragraph 26, (a) and (b) inclusive, of the
First Amended Complaint.
Complaint.
Complaint.
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Complaint.
Complaint.
Complaint, Defendant admits that Plaintiff properly quotes parts of Paragraph 2.1(a), and the
entirety of Paragraph 2(b) of the Asset Acquisition Agreement. To the extent that Paragraph 31
of the First Amended Complaint contains any other allegations, Defendant denies such
allegations.
Complaint, Defendant admits that Plaintiff properly quotes parts of Paragraph 11.1 of the Asset
Acquisition Agreement. To the extent that Paragraph 32 of the First Amended Complaint
contains any other allegations, Defendant denies such allegations.
Complaint.
Complaint.
Complaint.
Complaint, Defendant admits that Plaintiff properly quotes certain parts of an e-mail sent to
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Robinson on November 1, 2010 and denies all other allegations in Paragraph 36 of the First
Amended Complaint.
Complaint.
Complaint.
Complaint.
Complaint.
Complaint, and denies that Plaintiff is entitled to damages.
42. Defendant incorporates by reference its answers to Paragraphs 1 through 41 above
as if fully set forth herein.
Complaint.
Complaint.
Complaint.
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46. Defendant denies each and every allegation made in Paragraph 46, A through H
inclusive, of the First Amended Complaint.
Complaint.
Complaint.
Complaint, and further denies that Plaintiff is entitled to any damages.
Complaint.
Complaint.
Defendant further denies the allegations contained in the “Wherefore” paragraph, parts A
through D inclusive, in the First Amended Complaint, and denies that Plaintiff is entitled to any
damages or relief.
DEFENDANT’S AFFIRMATIVE DEFENSES
By alleging the matters set forth below, Defendants do not allege or admit that they have
the burden of proof and/or the burden of persuasion with respect to any of these matters, or that
Plaintiff is relieved of its burden to prove each and every element of the First Amended
Complaint and the damages, if any, to which it is entitled. Furthermore, Defendants incorporate
by reference, each and every numbered paragraph in Sagent’s Counterclaims and Third Party
Claims below.
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First Affirmative Defense
(Failure to State a Claim)
The First Amended Complaint is barred, in whole or in part, to the extent that Plaintiff
has failed to state a claim. In the Complaint at bar, both causes of action Plaintiff alleges fail to
plead sufficient facts to meet all the elements of each claim. Additionally, Plaintiff’s breach of
contract claim fails because its alleged consideration, a completed and approvable 510k
application, completely failed, and its damages are unsupported and speculative. Similarly,
Plaintiff’s breach of the covenant of good faith and fair dealing claim fails to allege specific
facts, but instead, lists bare and conclusory statements that fail to properly state a claim. Thus,
the First Amended Complaint must be dismissed for failure to state a claim upon which relief
may be granted.
Second Affirmative Defense
(Laches)
The First Amended Complaint is barred, in whole or in part, by the doctrine of laches.
Third Affirmative Defense
(Estoppel)
The First Amended Complaint is barred, in whole or in part, by the doctrine of estoppel.
While Defendant denies that it breached the Agreement, Plaintiff is nevertheless estopped from
asserting any breaches because any alleged breaches were caused by Plaintiff through its agent,
Brad Robinson. Upon the execution of the Agreement, Defendant hired Mr. Robinson as
President of its newly-created device division, called Sagent Technologies. In that role, Mr.
Robinson’s duties were to commercialize and market the Patented Products pursuant to the
Agreement. At the same time, however, Mr. Robinson, upon information and belief, in part
owned and controlled Plaintiff. He therefore, wore two hats, one as President of the Sagent
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Technologies where he was responsible for execution of the terms of the Agreement, and another
as owner and manager of Plaintiff who now complains that the Defendant breached the
Agreement. As such, to the extent any breaches of the Agreement occurred, Plaintiff is estopped
from asserting any claims under the Agreement.
Second, Plaintiff, through its agent Brad Robinson, intentionally concealed material facts,
including knowledge that former employees did not properly assign their patent rights to
Infusive; was responsible for, and did not properly complete the 510k application process; and
failed to notify Sagent of botched international patent filings, all of which, if known, would have
caused Sagent not to execute the Agreement. Furthermore, Plaintiff’s intent was for Sagent to
rely on the facts asserted, and it knew that Sagent had no reasonable means by which to learn of
such facts. As Sagent has relied on these facts to its detriment, Plaintiff should be estopped from
claiming any relief.
Fourth Affirmative Defense
(Waiver)
The First Amended Complaint is barred, in whole or in part, by the doctrine of waiver.
Fifth Affirmative Defense
(Failure of Consideration)
The First Amended Complaint is barred, in whole or in part, because the Agreement is
not supported by consideration. Plaintiff’s purported consideration in this matter, i.e. intellectual
property, including U.S. Patent Nos. 6,997,910, 7,048,720, and 7,101,354, and a related 510k
application for the proposed ChaSyr device, proved to be worthless. Accordingly, nothing of
value was given in consideration for Sagent’s executing the Agreement, thus Plaintiff’s breach of
contract claim is unsupported by consideration and should be dismissed.
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Sixth Affirmative Defense
(Release)
The First Amended Complaint is barred, in whole or in part, by the doctrine of release.
Seventh Affirmative Defense
(Statute of Frauds and Limitations)
The First Amended Complaint is barred, in whole or in part, by the statute of frauds
and/or limitations.
Eighth Affirmative Defense
(Failure to Mitigate Damages)
The First Amended Complaint is barred, in whole or in part, to the extent that Plaintiff
has failed to mitigate its damages by commercializing the intellectual property assigned to
Sagent under the Agreement, and subsequently assigned back to Infusive.
Ninth Affirmative Defense
(Unclean Hands)
The First Amended Complaint is barred, in whole or in part, by the doctrine of unclean
hands. Upon the execution of the Agreement, Defendant hired Brad Robinson as President of its
newly-created device division, called Sagent Technologies. In that role, Mr. Robinson’s duties
were to commercialize and market the Patented Products pursuant to the Agreement. At the
same time, however, Mr. Robinson, upon information and belief, in part owned and controlled
Plaintiff. He therefore, wore two hats, one as President of Sagent Technologies, where he was
responsible for execution of the terms of the Agreement and another as owner and manager of
Plaintiff who now complains that the Defendant breached the Agreement. As such, to the extent
any breaches of the Agreement occurred, Plaintiff is barred from asserting any claims under the
Agreement due to its unclean hands.
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Also, Plaintiff falsely induced Sagent into executing the Agreement by, inter alia,
misrepresenting the status and quality of its pre-prepared 510k application, failing to disclose
that certain employees failed to properly assign their rights to the intellectual property that
formed the basis of the parties’ Agreement, and that it had incorrectly prepared certain
international patent applications assigned to Sagent under the Agreement. Plaintiff is thus barred
by its wrongdoing in executing and performing the Agreement.
Tenth Defense
(Lack of Harm)
The First Amended Complaint is barred, in whole or in part, to the extent Plaintiff has
suffered no damages or harm or injury to a legally protected or cognizable interest as a result of
the matters alleged in the First Amended Complaint. Plaintiff’s purported damages in its
Complaint are speculative and incapable of calculation with specificity, thus Plaintiff’s claims
fail for lack of any cognizable harm to its interests.
Eleventh Defense
(Failure to State A Claim for Attorneys’ Fees, Interest and Compensatory Damages)
Plaintiff fails to allege facts or a cause of action against Defendant sufficient to support a
claim for compensatory damages, prejudgment interest, attorneys’ fees and/or legal fees, or any
other relief. Furthermore, Plaintiff’s claims for damages are speculative and incapable of
calculation with specificity, which thus serves to bar Plaintiff from relief.
Twelfth Defense
(Implied Duty of Good Faith and Faith Dealing)
The First Amended Complaint is barred, in whole or in part, to the extent Plaintiff
breached its duty of good faith and fair dealing. Plaintiff exercised its discretion to the detriment
of Sagent by its wrongful conduct and representations in the negotiation and execution of the
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Agreement regarding, inter alia, misrepresenting the status and quality of its pre-prepared 510k
application, failing to disclose that certain employees failed to properly assign their rights to the
intellectual property that formed the basis of the parties’ Agreement, and that it had incorrectly
prepared certain international patent applications assigned to Sagent under the Asset Acquisition
Agreement. Defendant further relied on these misrepresentations in executing and performing the
Agreement. Thus, Plaintiff breached the covenant of good faith and fair dealing implied in the
Asset Acquisition Agreement, and is not entitled to relief.
Thirteenth Defense
(In Pari Delicto)
The First Amended Complaint is barred, in whole or in part, barred by Infusive’s own
wrongful conduct. Upon the execution of the Agreement, Defendant hired Brad Robinson as
President of a newly-created device division, called Sagent Technologies. In that role, Mr.
Robinson’s duties were to commercialize and market the Patented Products pursuant to the
Agreement. At the same time, however, Mr. Robinson, upon information and belief, in part
owned and controlled Plaintiff. He therefore, wore two hats, one as President of Sagent
Technologies where he was responsible for execution of the terms of the Agreement and another
as owner and manager of Plaintiff who now complains that the Defendant breached the
Agreement. As such, to the extent any breaches of the Agreement occurred, Plaintiff is barred
from asserting any claims under the Agreement because it was the wrongdoer.
Also, Plaintiff falsely induced Sagent into executing the Asset Acquisition Agreement by,
inter alia, misrepresenting the status and quality of its pre-prepared 510k application, failing to
disclose that certain employees failed to properly assign their rights to the intellectual property
that formed the basis of the parties’ Agreement, and that had incorrectly prepared certain
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international patent applications assigned to Sagent under the Agreement. Thus, Plaintiff’s
wrongdoing in executing and performing the Agreement bars it from recovery.
Fourteenth Defense
(Mutual Mistake)
The First Amended Complaint is barred, in whole or in part, by the doctrine of mutual
mistake. Pleading in the alternative, Infusive and Sagent, at the time of contract formation,
shared a misconception about a vital fact upon which they based their bargain, namely, that if
filed, Infusive’s pre-prepared 510(k) application for a pre-filled dual chamber syringe which
incorporated certain of the intellectual property assigned under the Asset Acquisition Agreement
would be quickly approved by the FDA. Because the Infusive pre-prepared 510(k) application
was not approved and instead rejected in its submitted form, the doctrine of mutual mistake bars
Infusive from recovering on its First Amended Complaint.
Defendant hereby gives notice that it intends to rely upon any other and additional
defenses that are now or may become available or appear during, or as a result of, the discovery
proceedings in this action and hereby reserves its right to amend its answer to assert such
defenses.
SAGENT’S COUNTERCLAIMS
For its Counterclaims, Defendant-Counterclaimant Sagent Holdings Co., n/k/a Sagent
Pharmaceuticals, Inc. (“Sagent”), alleges the following causes of action against
Plaintiff/Counter-Defendant Infusive Technologies, LLC (“Infusive”):
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PARTIES
1. Sagent is a corporation, organized and existing under the laws of the state of
Delaware, with its principal place of business in Schaumburg, Illinois. Sagent focuses on
developing, manufacturing, and marketing injectable pharmaceutical products in the United
States.
2. Infusive was a limited liability company, organized and existing under the laws of
the State of Nevada, until January 2009, when the Nevada Secretary of State revoked Infusive’s
status as a valid entity. Infusive did not restore its active corporate status until March 16, 2011,
after the filing of this lawsuit and after Sagent revealed that the corporate status was revoked.
JURISDICTION AND VENUE
3. Federal diversity jurisdiction over this matter exists because the parties are
citizens of different states and the matter in controversy exceeds the sum of $75,000. 28 U.S.C.
§ 1332.
4. Venue is proper in this judicial district under 28 U.S.C. § 1391(a). However, for
the reasons set forth in Sagent’s March 4, 2011 motion to transfer venue, this matter should be
transferred to the United States District Court for the Northern District of Illinois in accordance
with 28 U.S.C. § 1404(a).
5. By virtue of the original complaint filed by Infusive against Sagent on January 3,
2011, there is an actual justiciable controversy between Sagent and Infusive in relation to the
parties’ commercial relationship.
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STATEMENT OF FACTS
The Commercial Failure of Infusive’s 510(k) Application
6. Each person who wants to market a medical device in the United States, for which
a Premarket Approval (PMA) is not required, must submit a 510(k) to the FDA.
7. A 510(k) is a premarket submission made to FDA to demonstrate that the device
to be marketed is at least as safe and effective—i.e., substantially equivalent—to a legally
marketed device (21 CFR 807.92(a)(3)) that is not subject to Premarket Approval. In order for a
510(k) to be successfully reviewed by the FDA, the author of the 510(k) must compare the
proposed device to one or more similar legally marketed devices and make and support its
substantial equivalency claims.
8. On September 16, 2008, Sagent and Infusive executed an Asset Acquisition
Agreement (“Agreement”) relating to the assignment of certain intellectual property by Infusive
to Sagent.
9. Prior to execution of the Agreement, Infusive, through its agents, Brad Robinson
and others, represented to Sagent that it had prepared a complete, ready-to-be-filed 510(k)
application for a pre-filled dual syringe which incorporated certain patented inventions included
in the assigned intellectual property (the “Pre-Prepared Infusive 510(k) Application”).
10. Infusive repeatedly represented, prior to and subsequent to contract formation,
that once filed, the Pre-Prepared Infusive 510(k) Application would be approved by the FDA in
approximately 90 days. For example, on August 17, 2007, Mr. Robinson, as Infusive’s
managing member and agent, traveled to Schaumburg to meet with Joe Mase, Sagent’s Director
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of Marketing. At that meeting, Mr. Robinson represented that Infusive had prepared a 510(k)
application and that he expected regulatory approval within 90 days of the application.
11. Most significantly, the Pre-Prepared Infusive 510(k) Application was a dual
chamber syringe (called “ChaSyr”) that would be pre-filled with any appropriate medication
prior to being supplied to physicians and other medical professionals.
12. On September 11, 2008, shortly before the Agreement was executed, Mr.
Robinson confirmed to Sagent that “[t]he 510k is ready to file and only requires Sagent, the
sponsor, going on the FDA website and paying the fee.”
13. Pursuant to the Agreement, Infusive agreed to assign certain intellectual property
to Sagent. The intellectual property assigned by Infusive consisted of “Patent Rights,”
“Technical Information,” and “Technology Rights,” which the Agreement defines as follows:
A. “Patent Rights” are defined as U.S. Patent Nos. 6,997,910 (the ‘910
patent), 7,048,720 (the ‘720 patent), and 7,101,354 (the ‘354 patent) (all
claiming syringe-related inventions), and certain patent applications in the
same field of invention. (Agreement at Art. 1.9).
B. “Technical Information” is defined as all Infusive inventions, know-how,
and trade secrets relating to the “Patent Rights.” (Agreement at Art. 1.12).
C. “Technology Rights” is defined as all other intellectual property
“developed by Infusive” which “relat[e] to infusion therapy,” even if this
intellectual property does not intersect with the “Patent Rights.”
(Agreement at Art. 1.13).
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14. In return for the assignment of the intellectual property (hereinafter “Patented
Products”), Sagent agreed to pay to Infusive certain set payments as follows:
A. Sagent agreed to pay Infusive a First Assignment Payment of $1.25
million five days after signing the Agreement (Art. 3.1(a)). Infusive
required this payment to be made at the same time as filing the Pre-
Prepared Infusive 510(k) Application because Infusive had prepared the
that application and the parties’ intended to file the Pre-Prepared Infusive
510(k) Application without any modifications because it was for a specific
product—i.e., a pre-filled dual chambered syringe.
B. Sagent agreed to pay Infusive a Second Assignment Payment of $1.25
million, which was due 10 days after regulatory approval of the Pre-
Prepared Infusive 510(k) Application for the first product to market which
practices the “Patent Rights” (Art. 3.1(b)), or due on December 15, 2008
in the event that Sagent failed to file the 510(k) within five business days
after contract execution. However, because Infusive filed the 510(k)
within five business days after contract execution, this payment did not
become due until after regulatory approval of the Pre-Prepared Infusive
510(k) Application as prepared by Infusive for a pre-filled dual syringe.
C. Third, Sagent agreed to pay Infusive two types of “Commercialization
Payments”—a sliding scale percentage of net proceeds if Sagent later sold,
assigned, or licensed the Infusive intellectual property to a third-party
(Art. 3.2(a)), and a sliding scale percentage of net sales for Sagent
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products covered by the “Patent Rights.” (Art. 3.2(b) (10% for first $2
million in net sales during contract year, 4% on sales in excess of $2
million during the same year)).
15. Pursuant to the Agreement, Sagent filed the Pre-Prepared Infusive 510(k)
Application after the parties’ execution of the Agreement, and paid the initial $1.25 million
assignment payment to Infusive.
16. On or around the same time, Sagent executed an employment agreement with Mr.
Robinson (the “Employment Agreement”), and hired him to become the President of Sagent’s
newly-created device division, called Sagent Technologies. Sagent specifically established that
division for Robinson to develop and commercialize the Infusive-technology based Patented
Products pursuant to the Agreement.
17. As set forth in his Employment Agreement, Robinson was “responsible for the
commercialization of the technology acquired from Infusive Technologies, Inc. and shall have
such other and further responsibilities, duties and authority reasonably assigned by [Sagent] from
time to time.” Robinson was paid an annual salary of $200,000 and was also entitled to bonus
compensation based upon his performance and the commercial success of the Patented Products.
18. Thereafter, as the President of Sagent Technologies, Robinson led Sagent’s efforts
to perform under the Agreement including to secure FDA approval of the Patented Products and
to develop commercial opportunities for the Patented Products and related technology.
19. The Pre-Prepared Infusive 510(k) Application proved to be seriously deficient.
On November 18, 2008, only two months after the Agreement was executed, the FDA issued a
deficiency letter, in which it determined that the Pre-Prepared Infusive 510(k) Application had
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failed to “identify a legally marketed predicate device” for the proposed dual-chamber syringe—
i.e., the ChaSyr syringe.
20. In a December 9, 2008 letter submitted under Infusive’s letterhead, Robinson
wrote the FDA in an effort to explain the Pre-Prepared Infusive 510(k) Application’s predicate
device position, which was essentially a “combination” of predicate devices argument.
21. After meeting with Robinson and Sagent in January 2009, the FDA continued to
have strong reservations about the Pre-Prepared Infusive 510(k) Application. By September
2009, the FDA had made it clear that it would not approve the 510(k) application as prepared by
Infusive. Rather, the FDA determined that 510(k) approval was dependent on, at least: (i) the
proposed device being filled by a medical professional in a hospital pharmacy, rather than pre-
filled; and (ii) limitations on and a specific identification of the exact drugs that would be
delivered by the ChaSyr syringe. Under those conditions, the Pre-Prepared Infusive 510(k)
Application could not be approved as filed.
22. By early 2010, a viable alternative to the Pre-Prepared Infusive 510(k)
Application had not been identified by the parties.
23. In reliance on Infusive’s pre-contract formation misrepresentations concerning the
speedy FDA approval of the Pre-Prepared Infusive 510(k) Application, Sagent executed the
Agreement, paid Infusive an initial assignment payment of $1.25 million, and made additional
significant and substantial monetary expenditures, including hiring Robinson, to develop
Patented Products which—contrary to Infusive’s representations—were not approvable by the
FDA and otherwise could not form the basis of a viable business opportunity.
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Infusive’s Failure to Cooperate in the Prosecution of the
Assigned Intellectual Property
24. After the Agreement was executed, Infusive did not cooperate, as it was required
to do by the parties’ Agreement, in the prosecution of the assigned intellectual property.
25. The Agreement defines the assigned Patent Rights, in full, as:
[T]he patents and patent applications listed on Exhibit 1.2, and all patents
and patent applications filed in any country which claim the benefit of the
filing date of any of the patents or applications listed on Exhibit 1.2,
including all continuing, divisional, and renewal applications thereof, all
patent applications, all patents which may be granted thereon, and all
reissues, re-examinations and extensions thereof, and including all related
patents and patent applications.
(Agreement at Art. 1.9). Exhibit 1.2 lists: (i) the ‘910 patent, the ‘720 patent, and the ‘354
patent; (ii) four pending U.S. utility patent applications; and (iii) 16 pending international patent
applications.
26. Article 8.2 of the Agreement provides that:
The Parties shall provide each other with reasonable opportunity to advise
the other, and shall cooperate with each other, regarding the prosecution of
all patent applications included in the Patent Rights.
27. After execution of the Agreement, the relevant patents remained in Infusive’s
name and Infusive failed to take the appropriate action to protect the intellectual property and
failed to apprise Sagent of the regulatory status of the intellectual property, which resulted in,
among other things, the abandonment of several patent applications.
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Infusive’s Failure to Notify Sagent of and Take Appropriate Action
In Connection With the Later-Issued Thorne Improvement Patent
28. Under Article 2.1, Infusive agreed to not only assign the Patent Rights, but also to
assign certain Technical Information and Technology Rights to Sagent. (Agreement at Art. 2.1).
29. “Technology Rights” is defined by the Agreement as:
Infusive’s rights in any technical information, inventions, processes,
devices, procedures, compositions, methods, formula, protocol, technique,
data, trade secrets and other intellectual property developed by Infusive, as
well as improvements thereof, relating to infusion therapy, which are not
covered by Patent Rights.
(Agreement at Art. 1.13) (emphasis added).
30. In Article 13.4(c) of the Agreement, Infusive expressly warranted and represented
that:
All former and current employees of Infusive have executed written
contracts with Infusive that assign to Infusive all rights to any
inventions, improvements, discoveries or information relating to the
Patent Rights or Technology Rights.
(Agreement at Art. 13.4(c)) (emphasis added).
31. Article 7.3 of the Agreement provides that:
During the Term of this Agreement, Infusive shall promptly disclose to
Sagent in writing the existence and nature of any additional Patent Rights,
Technical Information, and Technology Rights not in existence or known
to Sagent as of the Effective Date . . . Infusive acknowledges that its
failure to promptly disclose such information to Sagent could result in loss
of intellectual property rights, loss of competitive advantage, and other
harm to Sagent.
32. On information and belief, Gale H. Thorne and Gale H. Thorne Jr. are currently
non-managing members of Infusive.
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33. On information and belief, Gale H. Thorne was a manager of Infusive prior to
spring 2007. During the time of their involvement with and management of Infusive, Gale H.
Thorne and Gale H. Thorne Jr. invented and prosecuted the ‘910 patent, the ‘720 patent, and the
‘354 patent, which were the three issued patents that Infusive was to assign to Sagent under the
Agreement.
34. Gale H. Thorne and Gale H. Thorne Jr. are listed as named inventors of: (i) the
‘354 patent, which discloses a “Mixing Syringe With and Without Flush” invention; (ii) the ‘720
patent, which discloses a “Multi-Chamber, Sequential Dose Dispensing Syringe”; and (iii) the
‘910 patent, which also discloses a “Multi-Chamber, Sequential Dose Dispensing Syringe”
invention.
35. Gale H. Thorne is listed as the patent agent who prosecuted the patent
applications which issued into the ‘910 patent, the ‘720 patent, and the ‘354 patent.
36. On information and belief, Gale H. Thorne was removed as a manager of Infusive
on or about spring 2007 due to personal conflicts between Thorne and Robinson.
37. The patent applications for the ‘354 patent, the ‘720 patent, and the ‘910 patent
were filed by Thorne in 2004 to 2006, prior to Thorne’s departure from Infusive.
38. Shortly after leaving Infusive, and unbeknownst to Sagent, Thorne filed U.S.
patent application No. 11/899,254 on September 5, 2007. The inventor of the claimed invention
was stated to be Gale H. Thorne Jr. The September 5, 2007 patent application claimed a “multi-
chamber, sequentially dispensing syringe apparatus,” and it issued into U.S. Patent No.
7,789,862 on September 7, 2010.
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39. The invention disclosed by the Thorne’s September 5, 2007 patent application
was closely related to the inventions previously patented under the ‘720 patent and ‘910 patent
(which were to have been assigned to Sagent under the Agreement).
40. All three patents claimed a multi-chamber syringe apparatus, and indeed, the ‘720
patent and ‘910 patent were expressly disclosed in the patent specification for the ‘862 patent as
relevant prior art. The ‘862 patent purports to be an improvement over the ‘720 patent and ‘910
patent prior art.
41. It was “a basic object [of Thorne’s later invention] to provide a discharge
assembly which deters gas from being dispensed from the proximal chamber,” or stated simply, a
dual-chamber syringe which prevents air in the second chamber from being injected into the
patient. While the ‘720 patent and the ‘910 patent also achieved this outcome, the invention
claimed by the Thorne’s later-issued ‘862 patent claimed to solve the following problem
associated with the earlier patents:
It should be noted that solution for the problem of retaining gas within the
proximal chamber as disclosed in [the ‘910 patent] and [the ‘720 patent] is
an intermediary filter which passes liquid, but not gas.
* * *
It is Applicants’ opinion that the filter disclosed in [the ‘910 patent and the
‘720 patent] can only be injection molded in relatively low cavitation
molds, therefore limiting production efficiency and leading to increased
cost. Similarly, a requirement to slit a molded part requires at least one
additional step after molding, again leading to increased cost.
Instead of the slit filter disclosed in the ‘910 patent and the ‘720 patent, the ‘862 patent uses a
stopper structure which incorporates a “hollow, proximally-extending conduit sleeve,” i.e., a
sleeve that uses surface tension in the same manner as a baby bottle.
- 24 -

42. Infusive attempted to have Gale H. Thorne and Gale H. Thorne Jr. execute new
assignment agreements and inventor declarations for all pending patent applications in the
Infusive intellectual property portfolio. Gale H. Thorne and Gale H. Thorne Jr. eventually
prepared the requested inventor declarations, but refused to sign assignment agreements.
43. On information and belief, Gale H. Thorne and Gale H. Thorne Jr. have never
executed invention assignment agreements with Infusive, thus rendering Infusive’s express
warranty and representation in Article 13.4(c) of the September 16, 2008 Agreement false.
44. Infusive and Mr. Robinson never disclosed to Sagent in writing the existence and
nature of the September 7, 2007 Thorne patent application, as required by Article 7.3 of the
Agreement.
45. Sagent did not learn of the September 7, 2007 Thorne patent application until
2011.
46. Infusive, however, has known of the Thorne patent application since at least
November 2009 and was aware of options for thwarting the Thorne’s later patent application
(which was then still pending). For instance, Infusive could have filed a continuation application
on either the ‘910 patent or ‘720 patent which would cover the improvement described in the
Thornes’ new multi-chamber syringe patent application; because those patents issued out of a
parent application that had been filed in 2005, they would have priority over the Thornes’ later
application.
47. Despite those options, Infusive took no action. Infusive did not advise Sagent of
the Thornes’ pending patent application for a dual-chamber syringe technology that was closely-
related to the assigned Patent Rights. Infusive did not advise Sagent of any of the options for
- 25 -

preventing the PTO from issuing a patent on the Thorne’s pending application. On information
and belief, Mr. Robinson and Infusive affirmatively decided to conceal these facts from Sagent,
given Mr. Thorne’s prior involvement and ownership stake in Infusive
Infusive’s Failure to Notify Sagent and Take Corrective Action
In Connection with the Thorne’s Botched International Patent Filings
48. Two of the international patent applications listed in Exhibit 1.2 to the Agreement
are International Patent No. PCT/US2006/03957 and International Patent Application No.
PCT/US2007/001848.
49. These two patent applications sought international patents on the inventions
claimed by the U.S. ‘720 patent and ‘354 patent (which were assigned to Sagent under the terms
of the Agreement).
50. Both international applications were prepared and filed by Gale H. Thorne on
behalf of Infusive; however, both applications were incorrectly prepared.
51. The international applications failed to claim priority to the original U.S. patents
on which they were based. Because of that error, nearly all foreign jurisdictions considered the
underlying U.S. ‘720 and ‘354 patents (although prosecuted by the same patent agent and
claiming the same inventions) to be invalidating prior art with respect to the international
applications, thereby limiting international patent protection to Canada and Brazil.
52. Mr. Robinson and Infusive knew of this fact as early as February 2008. Although
the Agreement with Sagent was executed on September 16, 2008, Infusive nonetheless listed
these two incorrectly prepared international patent applications in Exhibit 1.2 as being a
component of the Patent Rights to be assigned.
- 26 -

53. Mr. Robinson and Infusive did not inform Sagent prior to the Agreement’s
execution that the obtainable patent coverage for International Patent No. PCT/US2006/03957
and International Patent Application No. PCT/US2007/001848 was limited to only two foreign
jurisdictions.
54. Despite knowing that the international applications were invalid, Mr. Robinson
and Infusive never told Sagent about the existence or impact of Gale Thorne Sr.’s errors in
connection with the PCT/US2006/039576 and PCT/US2007/001848 international patent
applications. On information and belief, Mr. Robinson and Infusive affirmatively decided to
conceal these facts from Sagent, given Mr. Thorne’s prior involvement and ownership stake in
Infusive.
COUNT I
FRAUDULENT INDUCEMENT
55. Sagent realleges Paragraphs 1-54 of its Counterclaims as if fully set forth herein.
56. Sagent and Infusive entered into the Agreement on September 16, 2008.
57. On repeated occasions, including, but not limited to, statements made to Sagent
on August 17, 2007 and September 11, 2008, Infusive falsely represented to Sagent that its Pre-
Prepared Infusive 510(k) Application for a pre-filled dual chamber syringe product was ready to
file and would be approved by the FDA within 90 days of submission.
58. At the time that Infusive made those representations, it either knew that the
representation was false, or knew that it had an insufficient basis for making the representation.
- 27 -

59. By representing that its Pre-Prepared Infusive 510(k) Application for a pre-filled
dual chamber syringe product was ready to file and would be approved by the FDA within 90
days of submission, Infusive intended to induce Sagent’s consent to the Agreement’s formation.
60. Before contract formation, Infusive failed to disclose to Sagent that two of the
international patent applications listed in Exhibit 1.2 to the Agreement and assigned to Sagent
(International Patent No. PCT/US2006/03957 and International Patent Application No.
PCT/US2007/001848) had been incorrectly prepared by Gale H. Thorne.
61. No later than February 2008, well in advance of the September 16, 2008
Agreement signing, Infusive knew that Thorne’s errors had limited the obtainable patent
coverage for International Patent No. PCT/US2006/03957 and International Patent Application
No. PCT/US2007/001848 to only two foreign jurisdictions
62. By failing to disclose that the obtainable patent coverage for International Patent
No. PCT/US2006/03957 and International Patent Application No. PCT/US2007/001848 was
limited to only two foreign jurisdictions, Infusive intended to induce Sagent’s consent to the
Agreement’s formation.
63. Sagent justifiably relied on Infusive’s material false representations.
64. Sagent has been harmed by Infusive’s false representation including, but not
limited to, by entering into the Agreement and paying sums to Infusive under the Agreement.
PRAYER FOR RELIEF – COUNT I
WHEREFORE, Sagent requests the following relief:
A. Judgment in favor of Sagent on Count I and rescission of the Agreement,
including an order returning the parties to the position they occupied prior
to contract formation by awarding the return of the $1.25 million initial
assignment payment from Infusive to Sagent;
- 28 -

B. Judgment in favor of Sagent on Count I, including an award of damages
sufficient to compensate Sagent for the harm suffered by Infusive’s
fraudulent inducement;
C. An award to Sagent of its reasonable costs and attorneys’ fees; and
D. Such other and further relief as this Court and/or a jury may deem just and
appropriate.
COUNT II
BREACH OF EXPRESS CONTRACT
(Pled In the Alternative to Count I under Fed. R. Civ. P. 8(d))
66. Sagent and Infusive entered into the Agreement on September 16, 2008.
67. The Agreement is a valid and binding agreement that is enforceable against
Infusive.
68. Sagent has performed its material obligations to Infusive under the Agreement.
69. Under Article 8.2 of the Agreement, Infusive was contractually obligated to
cooperate with regard to the prosecution of all patent applications included in the Patent Rights.
70. Infusive breached its contractual obligations by working in concert with its owner,
manager, and agent, Mr. Robinson, to fail to properly pay for, direct, and monitor the
prosecution of the patent applications included in the Patent Rights, thereby resulting in, inter
alia, several abandoned patent applications.
promptly disclose to Sagent in writing the existence of any additional Patent Rights, Technical
- 29 -

Information, and Technology Rights not in existence of known to Sagent as of contract signing.
72. Infusive breached Article 7.3 of the Agreement by concealing and failing to
disclose the September 5, 2007 patent application filed by Gale H. Thorne and Gale H. Thorne
Jr. for an invention that was closely related to the assigned ‘720 patent and ‘910 patent. The
invention claimed by the September 5, 2007 patent application was in all likelihood conceived of
while Thorne and Thorne Jr. were affiliated with Infusive.
73. In Article 13.4(c) of the Agreement, Infusive expressly represented and warranted
that:
All former and current employees of Infusive have executed written
contracts with Infusive that assign to Infusive all rights to any inventions,
improvements, discoveries or information relating to the Patent Rights or
Technology Rights.
(Agreement at Art. 13.4(c)).
74. On information and belief, Infusive breached this express warranty because Gale
H. Thorne and Gale H. Thorne Jr. have never executed invention assignment agreements with
Infusive.
assign to Sagent “all rights, title and interest to the Patent Rights” “[c]oncurrent with the
execution of this Agreement.” (Agreement at Article 2.1).
76. Infusive breached its contractual obligations by failing to assign, concurrent with
the signing of the Agreement, the Patent Rights to Sagent. Assignment did not occur until
September 2010.
- 30 -

77. Sagent has been harmed by Infusive’s various breaches of the Agreement in an
amount to be determined at trial.
PRAYER FOR RELIEF – COUNT II
A. Judgment in favor of Sagent on Count II, including an award of damages
sufficient to compensate Sagent for the harm suffered by Infusive’s breach
of the Agreement;
B. An award to Sagent of its reasonable costs and attorneys’ fees; and
C. Such other and further relief as this Court and/or a jury may deem just and
appropriate.
COUNT III
BREACH OF COVENANT OF GOOD FAITH AND FAIR DEALING
(Pled In the Alternative to Count I under Fed. R. Civ. P. 8(d))
79. Sagent and Infusive entered into an Agreement on September 16, 2008.
80. The Agreement is a valid and binding agreement that is enforceable against
Infusive.
81. Sagent has performed its obligations to Infusive under the Agreement.
82. Infusive owes Sagent a duty of good faith and fair dealing with respect to the
rights and obligations it obtained from Infusive under the Agreement; however, Infusive
breached that duty of good faith and fair dealing by depriving Sagent of the fruits of the bargain
under the Agreement.
- 31 -

83. Infusive exercised its discretion in a manner outside the contemplation of the
parties and deprived Sagent the fruits of the bargain by failing to provide Sagent with a pre-
prepared 510(k) application that would be approved by the FDA in a commercially viable form.
parties and deprived Sagent the fruits of the bargain by failing to advise Sagent that, because of
Gale H. Thorne’s mistakes when preparing the applications, the obtainable patent coverage for
International Patent No. PCT/US2006/03957 and International Patent Application No.
PCT/US2007/001848 was limited to only two foreign jurisdictions.
parties and deprived Sagent the fruits of the bargain by failing to protect the intellection
property; failing to apprise Sagent on the status of the intellection property; and failing to make
the timely payments necessary to avoid the abandonment of patent applications included within
the assigned Patent Rights.
parties and deprived Sagent the fruits of the bargain by concealing from Sagent the Gale H.
Thorne, Sr. and Gale H. Thorne, Jr.’s September 7, 2007 patent application for a dual-chamber
syringe technology that was closely-related to and purported to be an improvement on certain of
the assigned Patent Rights, and by failing to take action that would have prevented the issuance
of the Thorne’s ‘862 patent.
87. Sagent has been harmed by Infusive’s breach of its covenant of good faith and fair
dealing in an amount to be determined at trial.
- 32 -

PRAYER FOR RELIEF – COUNT III
A. Judgment in favor of Sagent on Count III, including an award of damages
sufficient to compensate Sagent for the harm suffered by Infusive’s breach
of the implied covenant of good faith and fair dealing;
appropriate.
COUNT IV
UNJUST ENRICHMENT
(Pled In the Alternative to Count II under Fed. R. Civ. P. 8(d))
89. On or about September 16, 2008, Sagent paid Infusive $1.25 million, thereby
conferring a benefit on Infusive, which Infusive was aware of and had appreciation for.
90. Because Infusive failed to provide Sagent with a pre-prepared 510(k) application
that would be approved by the FDA in a commercially viable form and failed to deliver and
protect the Patented Products, it would be inequitable for Infusive to retain the $1.25 million paid
to it by Sagent.
91. Infusive’s inability to provide Sagent with a pre-prepared 510(k) application that
would be approved by the FDA in a commercially viable form has caused Sagent to expend, to
no avail, significant and substantial amounts of money in an effort to develop and commercialize
an irretrievably flawed product.
- 33 -

PRAYER FOR RELIEF – COUNT IV
A. Judgment in favor of Sagent on Count IV, including an award of $1.25
million to Sagent;
appropriate.
COUNT V
NEGLIGENT MISREPRESENTATION
93. Infusive owed Sagent a duty to convey accurate information with respect to the
viability of the 510(k) Application because Infusive prepared the application and knew the true
facts relating to the viability of the application. Moreover, by virtue of Mr. Robinson’s
employment as the President of Sagent’s medical device division, Robinson owed Sagent a duty
to convey accurate information as Sagent’s fiduciary.
on August 17, 2007 and September 11, 2008, Infusive and Mr. Robinson falsely represented to
Sagent that its Pre-Prepared Infusive 510(k) Application for a pre-filled dual chamber syringe
product was ready to file and would be approved by the FDA within 90 days of submission.
days of submission, Infusive and Mr. Robinson supplied false information for the guidance of
Sagent in its business transactions.
- 34 -

96. Sagent justifiably relied on that false information when conducting its business
affairs.
97. Infusive failed to exercise reasonable care or competence in communicating its
representation that the Pre-Prepared Infusive 510(k) Application for a pre-filled dual chamber
syringe product was ready to file and would be approved by the FDA within 90 days of
submission.
98. Before contract formation, Infusive and Mr. Robinson failed to disclose to Sagent
that two of the international patent applications listed in Exhibit 1.2 to the Agreement and
assigned to Sagent (International Patent No. PCT/US2006/03957 and International Patent
Application No. PCT/US2007/001848) had been incorrectly prepared by Gale H. Thorne.
99. No later than February 2008, well in advance of the September 16, 2008
Agreement, Infusive knew that Thorne’s errors had limited the obtainable patent coverage for
PCT/US2007/001848 to only two foreign jurisdictions
limited to only two foreign jurisdictions, Infusive and Mr. Robinson supplied false information
for the guidance of Sagent in its business transactions.
101. Sagent justifiably relied on that false information when conducting its business
affairs.
102. Infusive and Mr. Robinson failed to exercise reasonable care or competence in
failing to advise Sagent that the obtainable patent coverage for International Patent No.
- 35 -

PCT/US2006/03957 and International Patent Application No. PCT/US2007/001848 was limited
to only two foreign jurisdictions.
103. Sagent has been harmed by Infusive’s negligent misrepresentation and omission
in an amount to be determined at trial.
PRAYER FOR RELIEF – COUNT V
A. Judgment in favor of Sagent on Count III, including an award of damages
negligent misrepresentation and omission;
B. An award to Sagent of its reasonable costs and attorneys’ fees;
C. An award to Sagent of punitive damages; and
appropriate.
COUNT VI
CONSUMER FRAUD – ILLINOIS CONSUMER FRAUD AND DECEPTIVE BUSINESS
PRACTICES ACT (815 ILCS 505/1 et seq.)
on August 17, 2007 and September 11, 2008, Infusive falsely represented to Sagent that its Pre-
Prepared Infusive 510(k) Application for a pre-filled dual chamber syringe product was ready to
file and would be approved by the FDA within 90 days of submission.
106. At the time that Infusive made that representation, it either knew that the
representation was false, or knew that it had an insufficient basis for making the representation.
- 36 -

days of submission, Infusive engaged in a deceptive act or practice that is prohibited by the
Illinois Consumer Fraud Act. 815 ILCS 505/1 et seq.
108. The circumstances that relate to the foregoing deceptive act and underlying
Agreement of the parties occurred primarily and substantially in Illinois.
109. Before contract formation, Infusive failed to disclose to Sagent that two of the
international patent applications listed in Exhibit 1.2 to the Agreement and assigned to Sagent
(International Patent No. PCT/US2006/03957 and International Patent Application No.
PCT/US2007/001848) had been incorrectly prepared by Gale H. Thorne.
110. No later than February 2008, well in advance of the September 16, 2008 contract
signing, Infusive knew that Thorne’s errors had limited the obtainable patent coverage for
PCT/US2007/001848 to only two foreign jurisdictions
limited to only two foreign jurisdictions, Infusive engaged in a deceptive act or practice that is
prohibited by the Illinois Consumer Fraud Act. 815 ILCS 505/1 et seq.
112. The circumstances that relate to the foregoing deceptive act and underlying
Agreement of the parties occurred primarily and substantially in Illinois.
113. Sagent justifiably relied on Infusive’s deceptive acts.
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114. Sagent has been harmed by Infusive’s deceptive acts in an amount to be
determined at trial.
PRAYER FOR RELIEF – COUNT VI
A. Judgment in favor of Sagent on Count VI, including an award of damages
violations of the Illinois Consumer Fraud Act;
B. An award to Sagent of its reasonable costs and attorneys’ fees;
C. An award to Sagent of punitive damages; and
appropriate.
Dated: May 16, 2011 Respectfully submitted,
RAY QUINNEY & NEBEKER P.C.
/s/ Arthur B. Berger
Arthur B. Berger
Samuel C. Straight
MCGUIREWOODS LLP
Edwin E. Brooks (admitted pro hac vice)
Gary Y. Leung (admitted pro hac vice)
Steven D. Hamilton (admitted pro hac vice)
Attorneys for Defendant Sagent Holding Co.
- 38 -

CERTIFICATE OF SERVICE
I hereby certify that on the 16th
day of May, 2011, I caused and true and correct copy of
the foregoing to be filed with the Clerk of Court using the CM/ECF system, which will send
notification of such filing to the following:
Mark A. Larsen
Lisa C. Rico
Deborah R. Chandler
LARSEN CHRISTENSEN & RICO, PLLC
50 West 300 South, Suite 400
Salt Lake City, Utah 84101
/s/ Lori McGee
- 39 -

2011.05.06 Sagent Counterclaim Against Infusive

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2011.05.06 Sagent Counterclaim Against Infusive