ATTORNEY-CLIENT PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — PREPARED IN ANTICIPATION OF LITIGATION
CALDERWOOD & HARKNESS LLP
PRIVILEGED & CONFIDENTIAL MEMORANDUM
May 15, 2024
FROM: Marcus Delgado, Responsible Partner, intellectual Property, Calderwood & Harkness LLP Catherine Bloom, Billing Partner, intellectual Property, Calderwood & Harkness LLP
TO: Eamon Rourke, General Counsel, Solstice Biomedical Devices Ltd. Brendan Molloy, Chief Financial Officer, Solstice Biomedical Devices Ltd.
RE: Phased Litigation Budget and Fee Estimate — Defense of Apex Surgical Innovations, Inc. v. Solstice Biomedical, Inc., Case No. 1:24-cv-00587-RGA, U.S. District Court for the District of Delaware
MATTER NUMBER: 10294.0017
COPIES: Dr. Fiona Tierney, Chief Executive Officer, Solstice Biomedical Devices Ltd. Niamh Cassidy, Vice President, Regulatory & intellectual Property, Solstice Biomedical Devices Ltd. Christy Bauer, Lead Associate, Calderwood & Harkness LLP
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I. Introduction and Purpose
The purpose of this Memorandum is to provide Solstice Biomedical Devices Ltd. ("Solstice" or "SBD") with a comprehensive, phased budget estimate for the defense of the patent infringement action filed by Apex Surgical Innovations, Inc. ("Apex") on May 9, 2024, in the United States District Court for the District of Delaware, Case No. 1:24-cv-00587-RGA (the "Action"). The Action has been assigned to Chief Judge Richard G. Andrews. Calderwood & Harkness LLP ("C&H" or the "Firm") has been retained to serve as lead defense counsel on behalf of Solstice in connection with this matter.
This budget memorandum covers all anticipated phases of litigation from the initial case assessment through trial, assuming a trial date in approximately September–October 2025, which is consistent with the typical patent case scheduling practices in the District of Delaware under Chief Judge Andrews. We have structured the budget to provide Solstice's management and legal team with a clear, phased view of the expected costs and resource allocation throughout the life of this case. Each phase is described in terms of its substantive scope, the legal work anticipated, and the associated fee and cost estimates.
It is important to note at the outset that this budget is an estimate and is subject to revision based on developments in the case, orders entered by the Court, the strategy and conduct of opposing counsel, and the scope and complexity of discovery that materializes as the case progresses. We are committed to managing this matter cost-effectively while providing the vigorous defense that Solstice's interests require, and we will communicate any material deviations from this budget promptly and in advance where possible.
This budget does not include any settlement amounts, licensing fees, or royalty payments that may arise from resolution discussions between Solstice and Apex at any point during the litigation. Settlement economics, if and when they become relevant, will be addressed in a separate memorandum.
The budget is presented on a phased basis that is consistent with the periodic reporting requirements of Halcyon Specialty Insurance Co. ("Halcyon") under IP Litigation Insurance Policy No. HSI-IP-2023-04891 (the "Policy"). As discussed in further detail in Section IV below, Solstice maintains insurance coverage for patent infringement defense costs, and we have structured the budget and billing procedures to facilitate timely and complete reimbursement of covered costs under that Policy.
We recommend that Solstice authorize this budget and the associated work plan, and we look forward to discussing the contents of this memorandum with Eamon Rourke, Brendan Molloy, Dr. Fiona Tierney, and Niamh Cassidy at your earliest convenience.
II. Matter Overview
A. The Action
On May 9, 2024, Apex Surgical Innovations, Inc. filed a Complaint for Patent Infringement in the United States District Court for the District of Delaware, initiating the above-captioned Action. The Complaint alleges that Solstice's PrecisionEdge™ line of laparoscopic trocar assemblies infringes three Apex utility patents. The asserted patents, their key characteristics, and the specific claims at issue are as follows:
U.S. Patent No. 9,814,237 (the "'237 Patent")
• Title: "Locking Seal Assembly for Minimally Invasive Surgical Access Device"
• Issue Date: November 14, 2017
• Expiration Date: June 22, 2035
• Asserted Claims: Claims 1, 3, 7, and 12
• General Subject Matter: The '237 Patent is directed to a locking seal assembly for use in a minimally invasive surgical access device, with particular emphasis on a multi-stage seal mechanism that provides a gas-tight seal while accommodating instruments of varying diameters.
U.S. Patent No. 10,271,884 (the "'884 Patent")
• Title: "Retractable Blade Deployment Mechanism for Trocar Systems"
• Issue Date: April 30, 2019
• Expiration Date: September 15, 2036
• Asserted Claims: Claims 1, 2, 5, 9, and 14
• General Subject Matter: The '884 Patent relates to a blade deployment mechanism for trocar systems that enables controlled retraction of a cutting blade upon penetration of the abdominal wall, incorporating a spring-loaded safety mechanism.
U.S. Patent No. 10,932,105 (the "'105 Patent")
• Title: "Integrated Insufflation Valve and Seal for Laparoscopic Trocar"
• Issue Date: March 2, 2021
• Expiration Date: January 10, 2038
• Asserted Claims: Claims 1, 4, and 8
• General Subject Matter: The '105 Patent covers an integrated insufflation valve and seal assembly for laparoscopic trocars, with particular emphasis on a dual-channel valve design that permits simultaneous insufflation and instrument insertion.
The named inventor on all three asserted patents is Dr. Raymond Szabo, who serves as Vice President of Engineering at Apex Surgical Innovations, Inc. All three patents are assigned to Apex. Our preliminary review indicates that the patent family to which these three patents belong includes a total of fourteen (14) issued U.S. patents and six (6) pending continuation applications before the U.S. Patent and Trademark Office. The existence of these additional family members raises the possibility that Apex may seek to amend the Complaint to assert additional patents or claims as the case progresses, which we will monitor closely.
B. Accused Products
The Complaint identifies three product series within Solstice's PrecisionEdge™ laparoscopic trocar assembly line as accused of infringement:
1. PrecisionEdge™ PE-5000 Series (5 mm trocar assembly) — accused of infringing the '237 Patent and the '884 Patent. The PE-5000 Series is Solstice's smallest-diameter trocar product and is widely used for instrument insertion in standard laparoscopic procedures.
2. PrecisionEdge™ PE-12000 Series (12 mm trocar assembly) — accused of infringing all three asserted patents (the '237 Patent, the '884 Patent, and the '105 Patent). The PE-12000 Series is Solstice's highest-volume product in the PrecisionEdge™ line and is used for a broad range of laparoscopic and robotic-assisted surgical applications.
3. PrecisionEdge™ PE-15000 Series (15 mm trocar assembly) — accused of infringing the '884 Patent and the '105 Patent. The PE-15000 Series is Solstice's large-bore trocar product, principally used for specimen retrieval and larger instrument insertion.
Based on information provided by Solstice's finance team, the combined U.S. sales of the accused PrecisionEdge™ products for calendar years 2021 through 2023 were approximately $52.3 million, broken down as follows:
Sales for calendar year 2024 are projected to continue at a rate similar to or exceeding FY 2023 levels, reflecting continued market adoption of the PrecisionEdge™ platform and expansion into new hospital systems and group purchasing organizations. The weighted average gross margin on accused products across the three product series is approximately 61.3%. These figures are directly relevant to the damages exposure analysis set forth in Section IX below and will be a significant focus of the damages discovery and expert phases of this case.
C. Opposing Parties and Counsel
Plaintiff: Apex Surgical Innovations, Inc. is a Delaware corporation with its principal office located at 1220 North Market Street, Suite 550, Wilmington, Delaware 19801. Apex is a well-funded surgical device manufacturer with estimated fiscal year 2023 revenue of approximately $312 million and approximately 1,100 employees. Apex competes directly with Solstice in the laparoscopic trocar and minimally invasive surgical access device market segments, and we understand that this action may be motivated, at least in part, by competitive considerations in addition to legitimate patent enforcement objectives. Apex's financial resources and market position suggest that it is well-positioned to litigate this case aggressively through trial.
Apex's Outside Counsel: Apex is represented by Hargrove, Tate & Bennington LLP, a Wilmington-based intellectual property litigation boutique. The lead partner is Victoria Stanton, a well-regarded patent litigator with substantial experience before the Delaware district court, including multiple jury trials. The associate assigned to the matter is Derek Loomis. Their offices are located at 900 North King Street, Suite 1200, Wilmington, Delaware 19801. Based on our experience with Hargrove, Tate & Bennington, we anticipate that Apex will be represented competently and that the litigation will be pursued vigorously. Ms. Stanton's typical approach involves broad discovery requests and aggressive claim construction positions, and we have built our budget accordingly.
D. Calderwood & Harkness Engagement Team
Calderwood & Harkness has assembled a core team with deep experience in patent infringement defense in the medical device sector and specific familiarity with the District of Delaware's patent case procedures:
• Marcus Delgado — Responsible Partner, intellectual Property. Mr. Delgado will serve as the senior strategic lead on the matter and will be primarily responsible for claim construction, dispositive motions, and trial advocacy. Mr. Delgado has tried seven patent cases to verdict in the District of Delaware over the past twelve years.
• Catherine Bloom — Billing Partner, intellectual Property. Ms. Bloom will oversee billing, budget management, and coordination with Halcyon Specialty Insurance Co. on coverage reporting. Ms. Bloom will also be actively involved in discovery strategy and expert management.
• Christy Bauer — Lead Associate, intellectual Property. Ms. Bauer will serve as the primary day-to-day associate on the case, with responsibility for discovery management, deposition preparation, claim chart analysis, and coordination with patent prosecution counsel and experts.
• Peter Vassiliev — Working Associate, intellectual Property. Mr. Vassiliev will support the team across all phases, with particular focus on document review, legal research, and briefing.
• Additional associates and paralegals will be staffed as needed throughout the various phases of the litigation to ensure efficient handling of document review, production, trial preparation, and administrative tasks.
The engagement letter between Calderwood & Harkness LLP and Solstice Biomedical Devices Ltd. was executed on May 10, 2024. The matter was formally opened in our systems on May 9, 2024, upon receipt of service of the Complaint and initial consultation with Eamon Rourke.
E. Coordination with Patent Prosecution Counsel
Solstice has separately engaged Kendrick & Lau LLP to provide patent prosecution expertise in support of the defense. The lead partner on the Kendrick & Lau engagement is Dr. Jonathan Kendrick, whose office is located at 601 Pennsylvania Avenue NW, Suite 820, Washington, DC 20004. Dr. Kendrick is a registered patent attorney with a Ph.D. in biomedical engineering and extensive experience with surgical device patent prosecution before the USPTO.
Kendrick & Lau's role in this engagement will include:
• Conducting comprehensive prior art searches directed at the asserted claims of the '237, '884, and '105 Patents;
• Reviewing and analyzing the complete prosecution histories of the three asserted patents and their family members;
• Preparing freedom-to-operate opinions to inform Solstice's product design decisions and potential design-around strategies;
• Assisting Calderwood & Harkness with prosecution history estoppel arguments in connection with claim construction briefing; and
• Providing technical support on invalidity arguments grounded in prior art references identified during the search.
Kendrick & Lau fees will be billed separately and directly to Solstice. Their estimated fees for this engagement are $150,000 – $200,000, which are not included in the Calderwood & Harkness budget set forth below but are reflected in the overall cost summary in Section VI for the purpose of providing Solstice with a comprehensive view of anticipated legal expenditures. Calderwood & Harkness will coordinate closely with Dr. Kendrick and his team throughout the case to ensure that the prosecution counsel work product is efficiently integrated into the litigation defense.
III. Billing Rates
The current Calderwood & Harkness LLP billing rates applicable to this engagement for the 2024–2025 period are as follows:
These rates are consistent with the terms set forth in the engagement letter dated May 10, 2024, and are in line with the rates typically charged by major intellectual property litigation practices for matters of this complexity and magnitude in the District of Delaware.
We note that our standard firm practice is to evaluate and, where appropriate, adjust billing rates on an annual basis, with any increases typically taking effect on January 1 of each year. Given that this engagement is expected to continue through at least October 2025, rate adjustments may occur during the course of the matter. Any mid-matter rate increase will be communicated to Solstice in advance and will be reflected in updated budget estimates. For purposes of this budget memorandum, we have used the current 2024 rates throughout all phases, and any rate adjustment effective January 1, 2025, could result in a modest upward revision of the estimates for Phases 4 through 7.
A detailed rate schedule for the specific timekeepers assigned to this matter is set forth in Appendix A to this memorandum.
IV. Insurance Coverage Context
Solstice maintains an intellectual property litigation insurance policy with Halcyon Specialty Insurance Co. ("Halcyon") that provides coverage for patent infringement defense costs. The key parameters of the applicable coverage are as follows:
• Policy Number: HSI-IP-2023-04891
• Insurer: Halcyon Specialty Insurance Co.
• Coverage: Patent infringement defense costs, including attorney fees, expert fees, and litigation-related disbursements
• Per-Occurrence Limit: $5,000,000
• Aggregate Limit: $10,000,000
• Self-Insured Retention (SIR): $250,000 — Solstice is responsible for the first $250,000 of defense costs incurred in connection with the Action before Halcyon's payment obligations attach
A formal coverage notification letter was transmitted to Halcyon on May 13, 2024, directed to Sandra Keene, Claims Adjuster, providing notice of the Action and Solstice's claim for defense cost coverage. As of the date of this memorandum, Halcyon's acknowledgment of coverage is pending, and we recommend that Solstice follow up promptly with Ms. Keene to confirm receipt and initiate the coverage approval process.
Several important limitations of the Halcyon coverage bear emphasis for budgeting and financial planning purposes:
• The insurance does not cover settlement payments, licensing fees, royalty obligations, or any damages awards that may result from an adverse judgment in the Action. Accordingly, any settlement or resolution costs will be entirely borne by Solstice.
• The insurance does not automatically cover fees incurred by Kendrick & Lau LLP or other separately retained counsel or consultants unless such fees are approved by Halcyon as covered defense costs under the Policy. We recommend seeking Halcyon's advance approval for the inclusion of patent prosecution counsel fees, expert fees, and e-discovery vendor costs within the scope of covered defense costs.
• Halcyon requires periodic reporting of defense costs, which we have accounted for in the phased structure of this budget. Monthly invoices and quarterly budget-to-actual reports will be prepared and submitted in a format that satisfies Halcyon's reporting requirements, as described further in Section X.
Based on the phased budget set forth herein, Solstice should anticipate that the $250,000 Self-Insured Retention will be exhausted during Phase 1 or early in Phase 2 of the litigation. Once the SIR is satisfied, Halcyon's coverage obligations will attach, and the insurer will be responsible for reimbursement of covered defense costs up to the per-occurrence limit. Given the anticipated total defense budget of $2.5 million to $3.4 million (Calderwood & Harkness fees and costs alone), the entire engagement is expected to remain within the $5,000,000 per-occurrence limit, providing Solstice with substantial insured coverage for the defense.
V. Phased Litigation Budget
The following sections describe, phase by phase, the substantive scope of legal work anticipated, the key deliverables and activities within each phase, and the estimated fees and costs. Where phases overlap in timing, we have noted the overlap and the allocation of shared attorney resources.
Phase 1: Case Assessment, Pleadings, and Initial Case Management (May 2024 – July 2024)
Scope of Work
Phase 1 encompasses the foundational activities necessary to understand the claims asserted against Solstice, formulate the initial defense strategy, respond to the Complaint, and establish the procedural framework for the remainder of the case. The principal tasks within this phase are as follows:
Case Assessment and Patent Analysis. Calderwood & Harkness will conduct a thorough review and analysis of the Complaint, including the specific allegations of infringement and the statutory bases for Apex's claims. We will review each of the three asserted patents — the '237 Patent, the '884 Patent, and the '105 Patent — including the patent specifications, claims, figures, and file wrapper histories. This review will be conducted in close coordination with Kendrick & Lau LLP, which will provide detailed prosecution history analyses and preliminary prior art assessments.
Preliminary Non-Infringement Analysis. Using the patent claims and the technical specifications of the PrecisionEdge™ PE-5000, PE-12000, and PE-15000 Series, the team will prepare preliminary claim charts mapping the elements of the asserted claims against the features of each accused product. These claim charts will form the foundation of Solstice's non-infringement defense and will be refined throughout the litigation as claim construction positions are developed and discovery progresses.
Answer, Affirmative Defenses, and Counterclaims. We will prepare and file Solstice's Answer to the Complaint, asserting all available affirmative defenses and asserting Counterclaims for declaratory judgments of non-infringement and invalidity. The Counterclaims will assert invalidity of the asserted patent claims under 35 U.S.C. §§ 102 and 103 (anticipation and obviousness), and we will evaluate the viability of asserting inequitable conduct based on our review of the prosecution histories. The target filing date for the Answer is June 14, 2024, which represents the deadline established under Rule 12(a)(1)(A)(i) of the Federal Rules of Civil Procedure, as extended by any applicable stipulation or court order.
Initial Case Management. We will prepare a proposed Scheduling Order for submission to the Court and attend the Initial Scheduling Conference, which is anticipated for early July 2024. In connection with the Scheduling Conference, we will prepare and file a Joint discovery Plan in accordance with Federal Rule of Civil Procedure 26(f) and the Local Rules of the District of Delaware. We anticipate that the Scheduling Order will establish deadlines for fact discovery, claim construction briefing, expert discovery, dispositive motions, and trial that are generally consistent with the timeline assumed in this budget.
Litigation Hold and Administrative Matters. A litigation hold notice was issued to relevant Solstice custodians on May 11, 2024, directing the preservation of all documents and electronically stored information potentially relevant to the Action. A conflict check was completed and the matter was formally opened in our systems on May 9, 2024. We will coordinate with Solstice's IT department and outside e-discovery counsel to ensure that preservation obligations are fully satisfied.
Insurance Coverage Coordination. We will coordinate with Halcyon Specialty Insurance Co. on initial coverage notifications, submit the required claim documentation, and establish the reporting protocols that will be used throughout the engagement.
Estimated Fees and Costs
The attorney fee estimate for this phase reflects the substantial front-end investment required to develop a thorough understanding of the three asserted patents, the accused products, and the prosecution histories, as well as the work involved in preparing the Answer and Counterclaims. The cost estimate includes the filing fee for the Answer and Counterclaims, service of process fees, and initial travel to Wilmington for the Scheduling Conference.
Phase 2: Fact discovery (July 2024 – November 2024)
Scope of Work
Phase 2 encompasses the full scope of fact discovery in the Action, which we anticipate will be the most resource-intensive phase of the litigation. The principal activities within this phase include propounding and responding to written discovery, managing the collection, review, and production of electronically stored information ("ESI"), conducting and defending fact depositions, and preparing for the transition to the claim construction phase.
Written discovery — Offensive. Calderwood & Harkness will prepare and serve Solstice's First Set of Interrogatories (15 interrogatories) and First Set of Requests for Production of Documents (38 requests for production). These discovery requests will target Apex's development of the patented technology, the scope and basis of Apex's infringement contentions, Apex's knowledge of prior art, the commercial success (or lack thereof) of Apex's own products embodying the patented technology, Apex's damages theories and supporting documentation, and any licensing activity involving the asserted patents or their family members. Supplemental discovery requests, including a Second Set of Requests for Production, will be prepared and served as needed based on Apex's initial responses and document production.
Written discovery — Defensive. We anticipate that Apex will serve approximately 18 interrogatories and 40 or more requests for production on Solstice. Based on our experience with Hargrove, Tate & Bennington's typical discovery approach, we expect broad requests targeting the design and development of the PrecisionEdge™ product line, internal technical documents, testing and validation data, regulatory submissions, sales and revenue data, cost of goods information, marketing materials, competitive intelligence, and communications with customers and distributors. We will prepare thorough, well-reasoned responses and objections and will coordinate closely with Niamh Cassidy and Solstice's engineering and commercial teams to ensure complete and accurate responses.
Document Collection, Review, and Production. The management of ESI will be a significant component of Phase 2. We will coordinate with DataVault Litigation Solutions, LLC ("DataVault"), a Philadelphia-based e-discovery vendor, for the processing, hosting, and production of Solstice's ESI. Based on our preliminary assessment of the relevant custodians and data sources, we estimate a total data volume of approximately 1.0 to 1.5 terabytes, encompassing an estimated 200,000 to 350,000 documents for review.
To manage the review cost-effectively, we will implement a technology-assisted review ("TAR") protocol. TAR uses predictive coding algorithms to prioritize documents for human review, significantly reducing the number of documents that require manual attorney review while maintaining a high degree of accuracy and defensibility. We will work with DataVault to establish and validate the TAR workflow, including seed set selection, iterative training rounds, and quality control sampling. A detailed privilege log will be prepared in accordance with an agreed-upon or court-ordered protocol, and privilege review will be integrated into the TAR workflow.
On the offensive side, we will review and analyze Apex's document production, which we anticipate will be substantial given the breadth of the patent family and the development history of the asserted technology.
Third-Party Subpoenas. We will identify and issue third-party subpoenas to obtain prior art documents and other relevant materials from non-parties. Potential targets include prior art holders, academic institutions, and industry organizations that may possess documents relevant to the invalidity defense.
Fact Depositions. We estimate that 8 to 12 fact depositions will be taken during this phase, including both depositions of Apex witnesses and preparation sessions for Solstice witnesses. Key deposition targets include:
• Dr. Raymond Szabo — Named inventor on all three asserted patents and VP Engineering at Apex. Dr. Szabo's deposition will be critical to establishing the scope of the inventions, the state of the prior art known to the inventor, and any admissions regarding the differences between the patented technology and the accused products.
• Apex Rule 30(b)(6) Designee(s) — We anticipate designating approximately 12 topics for a corporate representative deposition of Apex, covering areas such as patent prosecution and maintenance, licensing history, product development, damages and financial performance, and knowledge of Solstice's products.
• Relevant Solstice Engineers — We will prepare Solstice's engineering personnel for their depositions by Apex, including thorough preparation sessions covering the design and development of the PrecisionEdge™ products, the technical distinctions between the accused products and the asserted claims, and the independent development history of Solstice's trocar technology.
• Additional Apex witnesses — Depending on the documents produced in discovery, additional depositions of Apex employees involved in patent prosecution, product development, and licensing may be warranted.
discovery Disputes. We have budgeted for a moderate level of discovery dispute practice, including meet-and-confer correspondence and telephonic discovery conferences with the Court. Should more extensive motion practice be required — such as formal motions to compel or motions for protective orders — additional fees may be incurred above the estimated range.
Claim Construction Preparation. As Phase 2 overlaps with the initial stages of Phase 3, the fact discovery phase will include preparatory work for claim construction, including identification of disputed claim terms and initial analysis of the prosecution histories and intrinsic evidence relevant to claim construction.
Estimated Fees and Costs
The attorney fee estimate for this phase reflects the substantial work involved in managing broad discovery across three patents and three accused products, including written discovery, ESI management, deposition practice, and discovery dispute resolution. E-discovery vendor costs are estimated based on the anticipated data volume and assume implementation of TAR to control review costs. Actual e-discovery costs are highly variable and will depend on the final volume of data collected, the number of custodians identified, and the extent of Apex's discovery requests.
Phase 3: Claim Construction (Markman) Proceedings (October 2024 – December 2024)
Scope of Work
Claim construction is often the most pivotal phase of a patent infringement action, and the Court's construction of the disputed claim terms in the '237, '884, and '105 Patents will have a material impact on the ultimate outcome of this case. Phase 3 encompasses all activities related to the identification, briefing, and argument of claim construction issues before Chief Judge Andrews.
Identification and Analysis of Disputed Claim Terms. Calderwood & Harkness will conduct a comprehensive analysis of the asserted claims to identify all terms and phrases that are subject to genuine dispute between the parties. Based on our preliminary review, we estimate that 8 to 12 claim terms across the three asserted patents will be in dispute. Disputed terms are expected to include technical limitations relating to the locking seal assembly, the retractable blade deployment mechanism, and the integrated insufflation valve and seal, as well as broader functional and structural limitations that go to the heart of the infringement and invalidity contentions.
Claim Construction Analysis Memorandum. We will prepare a detailed internal claim construction analysis memorandum for each disputed term, setting forth the intrinsic evidence (claim language, specification, prosecution history) and any relevant extrinsic evidence (technical dictionaries, expert testimony, prior art) supporting Solstice's proposed constructions. This memorandum will also assess the strengths and weaknesses of the likely constructions advanced by Apex and will identify the claim terms whose construction is most critical to the non-infringement and invalidity defenses.
Exchange of Proposed Claim Constructions. In accordance with the procedures established by the Court's Scheduling Order, we anticipate that the parties will exchange proposed claim constructions in late October 2024. This exchange will include each party's proposed construction of the disputed terms, the intrinsic and extrinsic evidence supporting each proposed construction, and identification of any terms for which the parties agree on construction.
Claim Construction Briefing. Calderwood & Harkness will draft and file Solstice's individual claim construction brief, setting forth Solstice's proposed constructions and the supporting legal and evidentiary arguments. We will also collaborate with Hargrove, Tate & Bennington LLP on the preparation of a Joint Claim Construction Brief (also referred to as a "Joint Claim Construction Chart"), which is anticipated to be filed in early November 2024. This joint brief will present both parties' proposed constructions side by side, together with each party's supporting arguments.
Markman Hearing. We anticipate that Chief Judge Andrews will schedule a Markman hearing for mid-to-late November 2024. Marcus Delgado will present oral argument on behalf of Solstice at the hearing. Preparation for the hearing will include the development of demonstrative exhibits illustrating the claim limitations and the differences between the parties' proposed constructions, as well as moot court sessions to prepare for anticipated questions from the Court.
Coordination with Patent Prosecution Counsel. Throughout the claim construction phase, we will coordinate closely with Dr. Jonathan Kendrick of Kendrick & Lau LLP on prosecution history estoppel arguments. In particular, we will analyze any amendments made during prosecution, arguments submitted to the USPTO in connection with the issuance of the asserted patents, and statements made in related prosecution proceedings involving family members that may bear on the scope of the asserted claims through prosecution history estoppel or the doctrine of claim differentiation.
Post-Markman Strategy Memorandum. Following the Court's issuance of the Claim Construction Order (anticipated in December 2024), we will prepare a comprehensive post-Markman strategy memorandum analyzing the Court's constructions and their impact on the non-infringement and invalidity defenses. This memorandum will assess the implications for each accused product, identify any claims or products that may be resolved as a matter of law based on the claim constructions, and recommend adjustments to the defense strategy for the expert discovery and dispositive motion phases.
Note on Phase Overlap: Phase 3 overlaps temporally with Phase 2, as claim construction preparation typically occurs during the latter months of fact discovery. Some attorney resources — particularly Christy Bauer and Peter Vassiliev — will be shared between Phases 2 and 3 during the October–November 2024 period. The fee estimates for each phase have been allocated to reflect the expected distribution of effort, and we have been careful to avoid double-counting shared resources.
Estimated Fees and Costs
Phase 4: Expert discovery (January 2025 – March 2025)
Scope of Work
Phase 4 covers the retention and management of experts, the preparation and exchange of opening and rebuttal expert reports, and the deposition of all expert witnesses. Expert discovery is a critical phase in patent litigation, as the expert reports and testimony often form the centerpiece of the trial presentation on both infringement and damages issues.
Retention of Technical Expert. We intend to retain Dr. Miriam Ostrowski, Professor of Biomedical Engineering at Halford University in Philadelphia, Pennsylvania, as Solstice's technical expert. Dr. Ostrowski has extensive experience in the design and analysis of minimally invasive surgical instruments, including laparoscopic trocars, and has been qualified as an expert witness in federal patent litigation on multiple occasions. Her hourly rate is $750 per hour. We estimate that Dr. Ostrowski will require approximately 150 to 180 hours over the course of the engagement, encompassing her review of the patents, prior art, accused products, and prosecution histories, as well as the preparation of her opening and rebuttal expert reports and her deposition preparation.
Dr. Ostrowski's opening expert report will address invalidity of the asserted claims, focusing on anticipation and obviousness under 35 U.S.C. §§ 102 and 103 based on prior art references identified by Kendrick & Lau LLP and through our own investigation. Depending on the claim construction rulings, Dr. Ostrowski may also offer opinions on non-infringement from a technical perspective.
Retention of Damages Expert. We intend to retain Dr. Elena Marchetti, Managing Director of Pinnacle Economics Group LLC in New York, New York, as Solstice's damages expert. Dr. Marchetti is a recognized expert in patent damages analysis with particular expertise in reasonable royalty calculations under the Georgia-Pacific framework and in rebutting lost-profits damages claims. Her hourly rate is $850 per hour. We estimate that Dr. Marchetti will require approximately 90 to 120 hours for her review of the financial data, preparation of her damages rebuttal and affirmative analysis, and deposition preparation.
Dr. Marchetti's report will include a detailed Georgia-Pacific reasonable royalty analysis, challenging the royalty rate and royalty base proposed by Apex's damages expert. Depending on the nature of Apex's damages theory, Dr. Marchetti may also address issues of apportionment, the entire-market-value rule, comparable licenses, and the hypothetical negotiation framework.
Review and Analysis of Apex's Expert Reports. We anticipate that Apex will retain:
• Dr. Calvin Ng of Veltrano Polytechnic Institute as its technical expert, who is expected to submit an infringement report opining that the accused PrecisionEdge™ products meet the limitations of the asserted claims under the Court's claim constructions; and
• Hugh Danaher, CFA, of Keystone Valuation Advisors LLC as its damages expert, who is expected to submit a reasonable royalty damages report quantifying Apex's alleged damages.
We will conduct a thorough review and analysis of both Apex expert reports promptly upon receipt and will use that analysis to inform the preparation of Dr. Ostrowski's and Dr. Marchetti's rebuttal reports.
Rebuttal Expert Reports. Both Dr. Ostrowski and Dr. Marchetti will prepare rebuttal expert reports addressing the opinions set forth in Apex's opening expert reports. These rebuttal reports will identify and critique the assumptions, methodologies, and conclusions of Apex's experts and will reinforce Solstice's invalidity, non-infringement, and damages defense positions.
Expert Depositions. We estimate that 4 to 6 expert depositions will be taken during this phase, covering both Solstice's and Apex's experts. Expert depositions are typically taken over the course of a full day (seven hours on the record) and require substantial preparation, including the development of detailed deposition outlines and exhibits.
Coordination with Ridgeline IP Analytics LLC. In addition to the primary expert witnesses, we will coordinate with Ridgeline IP Analytics LLC (Dr. Arthur Gaines) for patent portfolio valuation analysis to support the damages defense. Ridgeline's work will provide an independent assessment of the value of Apex's patent portfolio in the context of the broader laparoscopic surgical access device market, which may be relevant to the Georgia-Pacific reasonable royalty analysis. Ridgeline's consulting fees represent a separate engagement billed directly to Solstice; however, we have included their estimated fees in this phase for completeness.
Estimated Fees and Costs
Note: The Ridgeline IP Analytics LLC consulting fees of $40,000 – $60,000 may be billed separately to Solstice under a direct engagement arrangement. They are included in this phase total for the purpose of providing a comprehensive view of all costs anticipated during the expert discovery period. Whether Ridgeline's fees qualify as covered defense costs under the Halcyon Policy should be confirmed with Sandra Keene.
Phase 5: Dispositive Motions Practice (March 2025 – May 2025)
Scope of Work
Phase 5 covers the evaluation, preparation, filing, and argument of dispositive motions, including any summary judgment motions filed by Solstice and responses to any summary judgment motions filed by Apex. Dispositive motions practice in patent cases can be highly consequential, potentially narrowing or resolving claims and defenses before trial.
Evaluation of Summary Judgment Opportunities. Following the Claim Construction Order and the close of expert discovery, Calderwood & Harkness will conduct a thorough evaluation of the opportunities for summary judgment on both infringement and invalidity grounds. Our primary target for a summary judgment motion is a motion for summary judgment of non-infringement with respect to the PE-5000 Series based on the anticipated claim construction rulings. Depending on the Court's constructions of disputed terms in the '237 and '884 Patents, we believe there is a reasonable likelihood that one or more asserted claims can be shown as a matter of law not to be infringed by the PE-5000 Series. We will also assess the viability of summary judgment motions with respect to the PE-12000 and PE-15000 Series, although the prospects for those motions will depend on the specific claim constructions adopted.
In addition, we will evaluate whether summary judgment of invalidity is available for any of the asserted claims based on identified prior art references and the expert opinions of Dr. Ostrowski.
Drafting and Filing. For each viable summary judgment motion, we will prepare a complete motion package including the memorandum of law in support, supporting declarations (including excerpts from expert reports and deposition testimony), a statement of undisputed material facts, and all supporting exhibits. The briefing will comply with the Local Rules of the District of Delaware and any page limitations imposed by the Court.
Response to Apex's Motions. We anticipate that Apex may file a cross-motion for partial summary judgment, potentially seeking summary judgment of infringement on one or more claims or with respect to one or more accused products. We will prepare a thorough opposition to any such motion, including a responsive statement of material facts and any necessary counter-declarations.
Reply Briefs and Sur-Reply Practice. We will prepare reply briefs in support of Solstice's motions and, if warranted and permitted by the Court, seek leave to file sur-replies addressing new arguments raised by Apex in its opposition papers.
Oral Argument. If the Court schedules oral argument on the dispositive motions, Marcus Delgado will attend and present argument on Solstice's behalf. Preparation for oral argument will include development of demonstrative materials and internal moot sessions.
Estimated Fees and Costs
Phase 6: Pretrial Preparation (June 2025 – September 2025)
Scope of Work
Phase 6 encompasses the comprehensive preparation required in the months leading up to trial. Effective pretrial preparation is essential to ensuring that Solstice's defense is presented in the most compelling and organized manner possible.
Pretrial Filings. We will prepare the Pretrial Order, including the proposed findings of fact and conclusions of law, in accordance with the Court's requirements and any pretrial conference instructions. The Pretrial Order will incorporate the agreed-upon and disputed stipulations, identify all trial witnesses and exhibits, and set forth the legal issues to be resolved at trial.
Trial Witness Preparation. We will conduct thorough preparation sessions with all Solstice fact and expert witnesses who will testify at trial. This includes developing direct examination outlines, preparing witnesses for anticipated cross-examination topics, and conducting full-scale practice sessions to ensure that each witness is comfortable and effective in the courtroom environment.
Trial Exhibit Management. All trial exhibits will be identified, organized, and prepared for presentation. This includes the preparation of exhibit binders, the creation of electronic exhibit presentations for courtroom display, and the resolution of any exhibit authenticity or admissibility disputes with opposing counsel.
Jury Instructions and Verdict Form. If the case proceeds as a jury trial (which we anticipate), we will prepare proposed jury instructions and a proposed verdict form. These submissions will address the substantive legal standards for infringement, invalidity, and damages, and we will work to ensure that the instructions accurately and favorably present Solstice's legal theories.
Motions In Limine. We will prepare motions in limine to exclude prejudicial, irrelevant, or improper evidence that Apex may seek to introduce at trial. We will also prepare oppositions to any motions in limine filed by Apex seeking to exclude Solstice's evidence.
Trial Technology and Demonstratives. We will engage a trial technology vendor to prepare courtroom presentation technology, including the development of visual demonstratives, animations, and electronic presentation systems for use during opening statements, witness examinations, and closing arguments. Effective demonstratives are particularly important in patent cases, where the trier of fact must understand complex technical concepts.
Mediation or Settlement Conference. If the Court orders a mediation or settlement conference prior to trial, we will prepare Solstice for the mediation process, including the preparation of a mediation brief, a damages exposure analysis, and a settlement authority recommendation. Mediation preparation costs are included within this phase estimate. Any settlement amounts that may result are excluded from this budget, as noted in Section I.
Estimated Fees and Costs
Phase 7: Trial (Estimated September–October 2025)
Scope of Work
Phase 7 covers the trial itself, including all in-court proceedings and the daily preparation required for each trial day. We estimate a trial duration of 5 to 7 trial days, which is consistent with the typical trial length for a patent case involving three asserted patents in the District of Delaware.
Jury Selection. If the case is tried to a jury, we will participate in jury selection (voir dire), including the preparation of juror questionnaires (if permitted by the Court), the development of juror profiles, and the exercise of peremptory challenges and challenges for cause.
Opening Statements. Marcus Delgado will deliver the opening statement on behalf of Solstice, presenting a clear and persuasive narrative of the defense themes, including the independent development of the PrecisionEdge™ technology, the significant differences between the accused products and the asserted claims, the existence of invalidating prior art, and the unreasonableness of Apex's damages demand.
Defense Case-in-Chief. We will present Solstice's defense case-in-chief through the testimony of fact and expert witnesses. This will include direct examination of Solstice's engineering witnesses regarding the design and development of the PrecisionEdge™ products, direct examination of Dr. Ostrowski on invalidity and non-infringement, and direct examination of Dr. Marchetti on damages rebuttal.
Cross-Examination. We will conduct cross-examination of Apex's fact witnesses and expert witnesses (Dr. Calvin Ng and Hugh Danaher), challenging the factual and technical bases for their opinions and highlighting weaknesses in Apex's infringement and damages theories.
Closing Arguments. Marcus Delgado will deliver the closing argument, weaving together the evidence presented at trial to support the defense verdict.
Post-Trial Motions. Following the verdict, we will evaluate and, if warranted, prepare post-trial motions, including a renewed motion for judgment as a matter of law (JMOL) under Federal Rule of Civil Procedure 50(b) and/or a motion for new trial under Rule 59. The need for and scope of post-trial motions will depend on the trial outcome and the specific rulings made by the Court during the trial.
Estimated Fees and Costs
VI. Budget Summary Table
The following table summarizes the estimated fees and costs for each phase of the litigation, as well as the overall totals for Calderwood & Harkness and for all counsel and consultants combined.
Calderwood & Harkness LLP — Phased Budget Summary
Additional Costs Outside Calderwood & Harkness Budget
Grand Total — All Counsel and Consultants
The midpoint of the Grand Total estimate is approximately $3,168,000, which represents our current best estimate of the total defense cost investment through trial. As discussed in Section VII below, the substantial majority of these costs are expected to be covered under Solstice's Halcyon insurance policy.
VII. Insurance Recovery Analysis
The following analysis summarizes the expected allocation of defense costs between Solstice and Halcyon Specialty Insurance Co. under the applicable insurance policy.
Policy Parameters:
• Policy No.: HSI-IP-2023-04891
• Self-Insured Retention (SIR): $250,000
• Per-Occurrence Limit: $5,000,000
• Aggregate Limit: $10,000,000
Estimated Allocation of Costs (Based on Midpoint Budget of Approximately $2,940,000 for Calderwood & Harkness Fees and Costs):
• Solstice — Self-Insured Retention: $250,000. Solstice bears the first $250,000 of defense costs before Halcyon's coverage attaches. Based on the Phase 1 budget, the SIR is expected to be exhausted during Phase 1 or early Phase 2.
• Halcyon Coverage: Up to approximately $2,690,000 (midpoint estimate), representing the balance of covered defense costs above the SIR and within the per-occurrence limit. The total Calderwood & Harkness budget at the midpoint is well within the $5,000,000 per-occurrence limit.
• Net Solstice Out-of-Pocket for Covered Defense Costs: $250,000 (SIR only), assuming that the total defense costs remain within the $5,000,000 per-occurrence limit and that Halcyon approves the scope of covered disbursements.
Important Coverage Limitations:
• Halcyon does not cover settlement payments, licensing fees, or damages awards.
• Halcyon does not cover fees incurred by Kendrick & Lau LLP or Ridgeline IP Analytics LLC unless such fees are specifically approved by Halcyon as covered defense costs under the Policy. We strongly recommend seeking Halcyon's advance written approval for the inclusion of these fees.
• We recommend that Solstice seek Halcyon's confirmation that expert fees (Dr. Ostrowski and Dr. Marchetti) and e-discovery vendor costs (DataVault Litigation Solutions, LLC) are covered defense costs under the Policy. Based on our experience with similar IP litigation insurance policies, these categories of costs are typically covered, but advance confirmation with Sandra Keene (Claims Adjuster) is prudent.
Recommendation: Solstice should promptly follow up with Sandra Keene at Halcyon to: (1) confirm acknowledgment of the coverage notification; (2) confirm the scope of covered defense costs, including expert fees, e-discovery vendor costs, and any third-party counsel fees; and (3) establish the format and frequency of cost reporting required by Halcyon. Calderwood & Harkness will assist with these communications as needed.
VIII. Key Assumptions and Caveats
This budget estimate is based on a number of assumptions regarding the course of the litigation, court scheduling, and opposing party conduct. We set forth below the principal assumptions and caveats that should be considered in evaluating the budget:
1. Full Trial Assumption. The budget assumes that the case proceeds through a full jury trial on the September–October 2025 schedule. If the case resolves earlier — whether through settlement, voluntary dismissal, or dispositive motion — fees for later phases will be significantly reduced. By way of illustration, a settlement at the close of expert discovery (end of Phase 4) would reduce total Calderwood & Harkness fees to approximately $1,644,000 – $2,202,000 (Phases 1 through 4 only).