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Zdeb v. Baxter International Inc.

June 26, 1998

BRIAN ZDEB AND PRIME MEDICAL PRODUCTS, INC., PLAINTIFFS-APPELLEES AND CROSS-APPELLANTS,
v.
BAXTER INTERNATIONAL, INC., AND BAXTER HEALTHCARE CORPORATION, DEFENDANTS-APPELLANTS AND CROSS-APPELLEES.



The opinion of the court was delivered by: Justice Greiman

Appeal from the Circuit Court of Cook County

Honorable Willard J. Lassers, Judge Presiding.

In a cause of action for tortious interference with a prospective economic advantage, a jury entered a verdict against defendants Baxter International, Inc., and Baxter Healthcare Corporation (collectively referred to as Baxter) and awarded approximately $8 million in damages to plaintiffs Brian Zdeb (Zdeb) and Prime Medical Products, Inc. (Prime) (collectively referred to as plaintiffs). We affirm.

On appeal, Baxter asserts that the trial court erred (1) in denying Baxter's motion for judgment non obstante veredicto; (2) in ruling that absolute privilege did not apply to a letter 1written by Baxter's in-house counsel that denied Zdeb a release to market a device he had developed (hereinafter referred to as the January 1991 letter); and (3) in failing to rule that a qualified privilege applied to the January 1991 letter. In addition, Baxter challenges certain evidentiary rulings, jury instructions, and the damage award.

On cross-appeal, plaintiffs request this court to consider several issues if we were to remand the matter for a new trial. Since we affirm the judgment, we do not address the issues raised on cross-appeal.

The product at issue in the present case is an infuser designed by Zdeb. An infuser is a medical device used to infuse drugs into a patient on a constant flow basis. Infusers used for this purpose are worn by the patient so that the patient can be ambulatory and receive drug treatment outside the hospital. Infusers are disposable and portable so that a patient can wear an infuser in a pant or coat pocket and it injects drugs into the patient without altering the patient's routine. It basically is a syringe, prefilled with medicine, that regulates a constant flow of the medicine into an administration tubing that then infuses the drug into the patient. Infusion therapy is used to inject chemotherapy for cancer patients and antibiotics for serious infections.

Baxter is a health care company that develops, manufactures, and markets a wide variety of health care products and services, including intravenous drug delivery systems known as infusers. Baxter launched the first disposable elastomeric or balloon-type infuser and marketed them during the 1980s. In 1990, Block Medical, a competitor of Baxter, launched another elastomeric infuser called the Homepump. In 1992, McGaw, a third competitor, distributed another elastomeric infuser called Readymed. The marketplace for disposable infusers is well established and profitable. During the 1980s and currently, Baxter's I.V. Systems Division, located in Round Lake, Illinois, was and is responsible for developing and improving infuser products.

During the 1980s Baxter employees developed improvements to the existing infuser technology. In 1984, Steve Pearson, a Baxter engineer, devised a model for a disposable vacuum-powered infuser. In 1984, Derek Walsh, a Baxter technician, created an improved infuser model that included a connector which is referred to by his name, the Walsh connector. In March 1988, Richard Mitchell, another Baxter employee, invented "preload" to be used in vacuum infusion devices to produce a constant rate of flow of the drug throughout the entire infusion, which had previously been problematic. To prevent the preloaded vacuum from dissipating during storage, preload in Mitchell's device also called for the chamber holding the drugs to be disconnected from the vacuum chamber. Baxter's position was, and is, that Zdeb had been exposed to Baxter technology during his tenure as a Baxter employee and that three parts of the infuser created by Zdeb, after leaving its employment, incorporated Baxter technology: (1) preload; (2) the Walsh connector; and (3) storage.

From January 14, 1980, through December 6, 1988, Zdeb worked as an engineer at Baxter in Round Lake. When hired, Zdeb signed an employment agreement that required him to protect the confidentiality of Baxter's trade secrets and other confidential information. The agreement further provided that Baxter would own any inventions that related to its business which Zdeb conceived or reduced to practice during his tenure at Baxter or during a period of 90 days after his termination. When his position with Baxter was eliminated in December 1988, Zdeb entered into a severance agreement that amended his employment contract and provided in relevant part that "[a]ll inventions or trade secrets developed by Brian Zdeb shall be the property of Brian Zdeb after 3/6/89 *** and shall not be treated as confidential information to Baxter." Zdeb received compensation from Baxter until March 6, 1989, his effective date of termination.

In April 1989, after leaving Baxter, Zdeb designed a device, referred to as the Zdeb infuser. Zdeb conceived the idea of an infuser that used a vacuum to drive the infusion. On October 31, 1989, Zdeb applied for a patent on his infuser and ultimately obtained the patent in August 1992. In July 1989, Zdeb entered into a business relationship with Charles Manker, another former Baxter employee, and formed Prime for the purpose of marketing Zdeb's infuser. Zdeb and Manker first pitched the Zdeb infuser to Baxter.

During December 1989 and January 1990, Zdeb and Manker met with Baxter personnel three or four times to present the Zdeb infuser to Baxter. During the meetings with Baxter personnel, Zdeb and Manker presented various models, diagrams, and engineering drawings of the Zdeb infuser.

After the multiple meetings, Baxter executives informed Manker that Zdeb had incorporated Baxter technology into the Zdeb infuser. Manker responded that he was "totally shocked and taken aback." Manker offered to assign the patents to Baxter if Baxter could show that Zdeb had taken ideas from Baxter to develop his infuser. In subsequent conversations about the Zdeb infuser, Manker conveyed this offer to other Baxter personnel, including James Carne, Baxter's vice president of business development for the pharmacy group. By March 1990, Manker and Zdeb ended their business relationship because of their unsuccessful efforts to market the Zdeb infuser to Baxter.

In March 1990, Zdeb contacted Carne to present again his infuser to Baxter. At Carne's suggestion, Zdeb met with and demonstrated his infuser to Steve Hessel, the person in charge of product development for Baxter's infusion systems group. At this meeting, Hessel asked Zdeb if his device had a preload space in it and Zdeb responded "no." Zdeb acknowledged that there was a gap in his infuser but stated that the gap was filled with silicone oil and was not a vacuum preload.

Prior to March 1990, Zdeb had one or two meetings with Smith and Nephew Solopak (Solopak) about the Zdeb infuser. Smith and Nephew was a multinational health care company headquartered in London, England, had 10 subsidiaries and operated in about 35 different countries. Solopak was the United States subsidiary of Smith and Nephew, and had a significant presence in the infusion therapy market by 1990. If Solopak obtained the Zdeb infuser, Solopak would have been Baxter's competitor in both the domestic and European markets.

Between April and December 1990, Zdeb and Solopak engaged in negotiations, discussing licensing fees, royalties, incentive payments and consulting services. Zdeb and Solopak reached agreement which was set forth in an unexecuted draft dated December 20, 1990.

During these negotiations, various attempts were made by Solopak personnel and Zdeb to confirm with Baxter that Zdeb owned this infuser technology. C. Richard Piazza, president of Solopak in Chicago, was involved in the negotiations with Zdeb. Upon reviewing Zdeb's employment agreement and the addendum to the employment agreement executed at Zdeb's leaving Baxter, Piazza understood that Zdeb "was free to pursue this product," i.e., the Zdeb infuser. In January 1991, Piazza, frustrated by the lack of response from Baxter, talked to Terry Furness, a group president at Solopak. Furness said that he had worked for 10 years at Baxter and he called James Tobin, the second-ranking executive at Baxter. Furness told Tobin that Solopak was about to conclude a deal with Zdeb and they needed a response from Baxter about Zdeb's right to the technology. Tobin said that he would look into the matter.

Zdeb also made efforts to get a response from Baxter in order to conclude his deal with SoloPak. Zdeb contacted Mark McGarvie, a Baxter attorney, and Paul Schaafsma, another Baxter attorney.

Eventually, Baxter's attorney Schaafsma sent a letter dated January 31, 1991, to Zdeb and copied to several Solopak personnel. The January 31 Baxter letter stated in relevant part: "With regard to the vacuum infuser described in your January submission, it is Baxter's position that this infuser was not solely developed by you while you were employed at Baxter. It is based on a Baxter developed vacuum infuser prototype to which you were exposed while employed at Baxter.

While the infuser in your January submission includes superficial design modifications which are different than Baxter's prototype, your infuser uses the same approach as Baxter's prototype to overcome the significant technological hurdles of end of infusion pressure drop, storage of the device without compromising the vacuum, and connection of the administration tubing to the ...


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