United States Court of Appeals For the Seventh Circuit ____________________ No. 22-2529 THOMAS A. RUSSELL, M.D., et al., Plaintiffs-Appellants, v. ZIMMER, INC., Defendant-Appellee. ____________________

Appeal from the United States District Court for the Northern District of Indiana, Hammond Division. No. 2:20-cv-00200-TLS-JEM — Theresa L. Springmann, Judge. ____________________

ARGUED FEBRUARY 23, 2023 — DECIDED SEPTEMBER 21, 2023 ____________________

Before SYKES, Chief Judge, and ROVNER, and LEE, Circuit Judges. ROVNER, Circuit Judge. All inventors hope that their inven- tions will improve the world and be financially successful. Thomas Russell certainly had this wish for his inventions, but when the financial rewards only came trickling in, Russell and others sued the exclusive distributor of his inventions for breach of the clauses in the contract that required the distrib- utor to use commercially reasonable efforts to sell the 2 No. 22-2529 products. The district court held, however, that given the terms of the agreement, the plaintiffs had failed to state a via- ble claim for relief. We affirm. I. Thomas Russell, M.D., is an orthopedic trauma surgeon who invented numerous products such as bone substitutes and surgical devices to improve outcomes following orthope- dic surgery. He, along with Patrick Burke, Gerard Insley, Amanda Kiely, Paul Burke, Thomas Madden, and Aideen Jennings (collectively, Inventors), were shareholders in Cel- genTek Innovations Corporation, a medical device firm. Ac- cording to the Inventors, Russell’s creations were game changers in the field of orthopedics. On October 7, 2015, the Inventors entered into an agree- ment with Zimmer, Incorporated, a corporation that designs, manufactures, and distributes medical devices. Pursuant to this agreement, Zimmer became the exclusive distributor of certain CelgenTek products. In November 2015, CelgenTek was experiencing dire fi- nancial problems. The Inventors attributed their financial woes to the massive investments, loans, and advances re- quired to fund years of research and development, ensure safety and efficacy, and clear regulatory hurdles. In order to keep CelgenTek solvent, the parties negotiated an agreement in which Zimmer would acquire a 10% ownership of Cel- genTek for $2 million, with the Inventors retaining the re- maining 90% ownership. After the purchase, CelgenTek’s fi- nancial position worsened. In February 2016, Zimmer pro- vided CelgenTek with a purchase order for just under $1 mil- lion at Russell’s request, to help keep CelgenTek afloat. No. 22-2529 3 Zimmer also loaned the company $2 million in April 2016, and in August of that year another approximately $350,000 to meet payroll obligations. The two parties also began discuss- ing potential plans for Zimmer to purchase the remaining 90% of CelgenTek’s stock, which it did in late September, 2016. Under the terms of the September 2016 stock purchase agreement, Zimmer received the remaining 90% of the Cel- genTek shares for the purchase price of $17,118,560 with $2,335,320 of that price used to repay loans that Zimmer had previously made to CelgenTek. In addition, according to the agreement, through 2033, the Inventors would retain the right to a small percent of the net yield on the products it developed (the earnout products), of between 1.5% and 6% of net sales, depending on the product. Pursuant to the agreement, Zimmer agreed that it would use “Commercially Reasonable Efforts” as defined in the agreement to sell the earnout products. R. 56-1 at 19–20. The term “Commercially Reason