Abbott Laboratories et al v. Medtronic, Inc. et al

Filing 51

ORDER GRANTING 33 MOTION to Stay Proceedings Pending PTO Review of Patent Term Extension Application. All pretrial proceedings in this case are vacated and the parties are asked to notify the Court as to any material decisions of the PTO in its ongoing review of the extension eligibility issue.. Signed by Judge D. Lowell Jensen on 3/24/09. (fs, COURT STAFF) (Filed on 3/24/2009)

1 ABBOTT LABORATORIES, INC., and) ABBOTT CARDIOVASCULAR SYSTEMS,) 2 INC., ) Plaintiffs, ) 3 ) v. ) 4 ) 5 MEDTRONIC, INC. and MEDTRONIC ) VASCULAR, INC., ) 6 Defendants. ) 7 ______________________________) 8 9 10

No. C-08-4962-DLJ

In January 2009, the defendants filed a Motion to Stay Proceedings Pending PTO Review of Patent Term Extension Application. Robert

United States District Court

11 This Court held a hearing on the matter on March 12, 2009.
For the Northern District of California

12 Van Nest, Ashok Ramani, and James Elacqua appeared for the Medtronic 13 defendants. 14 15 16 17 18 19 I. 20 Background ACS and Medtronic are companies engaged in developing, David Headrick, Lily Lim and Scott McBride appeared for Having considered the arguments of counsel,

the Abbott plaintiffs.

the papers submitted, the applicable law, and the record in this case, the Court hereby grants defendants' request for a stay.

21 manufacturing, promoting, and selling medical devices, including 22 23 24 25 26 catheters used in percutaneous transluminal coronary angioplasty (PTCA). Over the years they have been involved in multiple complex Abbott

patent infringement suits involving their products.

Laboratories is the successor in interest to ACS on the Yock patent,

27 which is at the center of the dispute in this case. 28 On May 17, 2000 in case No. 95-3577 DLJ, this Court entered an injunction against Medtronic from infringing claim 3 of the Yock

1 patent, U.S Patent No. 5,451,233 ('233). 2 until October 29, 2008. 3 4 5 6

The term of the patent ran

The expiration provision of the injunction

stated that the injunction would stay in effect "until October 29, 2008 or other legal expiration of the patent." On July 25, 2008, Yock filed an application for extension of

7 the term of the `233 patent with the Patent and Trademark Office 8 (PTO) pursuant to the Hatch-Waxman Act, as codified in 35 U.S.C § 9 156. 11
For the Northern District of California

This section provides for an additional period of patent

10 protection for the time the patent holder was precluded from

United States District Court

benefitting from the patent during its term because a medical device using the patent was pending FDA approval. The Abbott application

12 13 14

was based upon the time spent by the FDA in regulatory review of

15 Abbott's XienceTM EECSS (Everolimus Eluting Coronary Stent System) 16 prior to its Pre-market Approval on July 2, 2008. The Yock patent

17 covers a component part of the Xience device, the delivery system 18 used by the device. 19 Abbott was granted an interim extension by the PTO to be valid 20 until October 29, 2009 (although this interim extension could be 21 affected by final action by the PTO on the extension application 22 23 proper). By Order of October 21, 2009 this Court dissolved the 24 injunction in case No. 95-3577 DLJ. Medtronic then began sale of This action followed. The

25 its competing PTCA product, the Endeavor.

26 Medtronic defendants have filed for a stay of these proceedings, 27 citing the fact that the PTO process for extension of the Yock 28 2

1 patent is ongoing. 3 4 5 6 7

From the state of the record, the PTO extension

2 review process appears to be proceeding apace, and the plaintiffs stated at the hearing that the PTO may make a final decision on the extension application as soon as six months from now. II. Legal Standard A court has inherent authority to stay proceedings, for the

8 power to stay "is incidental to the power inherent in every court to 9 control the disposition of the causes on its docket with economy of 10 time and effort for itself, for counsel, and for litigants." Landis 11
For the Northern District of California

United States District Court

v. N. Am. Co., 299 U.S. 248, 254 (1936); Filtrol Corp. v. Kelleher, 467 F.2d 242, 244 (9th Cir. 1972). In exercising its discretion to stay an action, courts often consider: (1) the judicial resources

12 13 14

15 that will be saved by avoiding duplicative litigation; (2) the 16 hardship and inequity to the moving party if the action is not 17 stayed; and (3) the potential prejudice to the non-moving party. 18 Negotiated Data Solutions, LLC v. Dell Inc., No. 03-05755, 2008 U.S. 19 Dist. LEXIS 77229, at *3-4 (N.D. Cal. Sept. 16, 2008). 20 II. Discussion 21 Before even reaching the merits of the action, however, Abbott 22 23 argues that Medtronic is judicially estopped by its behavior in the 24 prior lawsuit from requesting a stay of proceedings in the current 25 suit. 26 27 28 3 A. Is Medtronic Estopped from Arguing for a Stay?

"Judicial estoppel is an equitable doctrine that precludes a

1 party from gaining an advantage by asserting one position, and then 2 later seeking an advantage by taking a clearly inconsistent 3 4 5 6 position." Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, In order to find judicial estoppel, the court

782 (9th Cir 2001).

must find that (1) a party's later position is "clearly

7 inconsistent" with its earlier position; (2) the party succeeded in 8 persuading the court to the accept the earlier position; and (3) the 9 party would derive an unfair advantage on the opposing party if not 10 estopped. New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001). 11
For the Northern District of California

United States District Court

The basis for Abbott's argument is that in the prior litigation, Medtronic admitted that even if the Court dissolved the injunction, Abbott could still sue Medtronic for infringement.

12 13 14

15 Abbott characterizes this admission by Medtronic as Medtronic 16 agreeing that the new suit could "proceed", which Abbott then 17 interprets as meaning "proceed with no opposition" from Medtronic. 18 Review of the record does not support such an interpretation. See 19 10/3/08 transcript at 13:4-20 where counsel for defendant Medtronic 20 states "we understand that we will have to compensate [plaintiffs] 21 also if Yock is properly extended. We accept that burden" and "if 22 23 they want to sue us for infringement or seek a preliminary 24 injunction, they can do that." 25 While Medtronic did concede that Abbott could bring a new suit,

26 and in such a suit might even seek a preliminary injunction, at no 27 point did Medtronic state that it would not defend itself in such a 28 4

1 suit. Medtronic's positions are not "clearly inconsistent." 2 3 4 5 6 Nor is Abbott correct in its argument that the Court relied on these representations in making its prior Order. While the Court discussed a potential future suit with the parties, the availability of a new lawsuit, and any particular party's position in a putative

7 future suit, the Court did not ground its Order on those 8 circumstances. 9 10 B. The Merits of the Stay Request

The specific factual and legal scenario before the Court appears to be one of first impression. The parties have not

United States District Court

11
For the Northern District of California

12 13 14

presented to the Court, nor is the Court aware of any other infringement action brought by a patent holder during a section 156 In order to determine the

15 interim extension of the patent term.

16 appropriateness of staying the suit, the Court looks to the factors 17 of judicial economy and prejudice. 18 19 20 21 22 1. Conservation of Judicial Resources The parties do not agree as to whether a stay will conserve resources. Medtronic argues that granting a stay and awaiting a

decision by the PTO on whether the Yock patent is eligible for

23 extension will promote the efficient and fair litigation of this 24 action. Underlying Medtronic's argument is the circumstance that

25 the PTO has the power to decide that extension of the Yock patent is 26 not warranted and to declare the existing extension status as void 27 ab initio. Abbott argues that the record to date suggests a 28 5

1 conclusion that the PTO will ultimately grant an extension. 2 that is by no means certain. 3 4 5 6 7

But

As the Court has noted in its previous

Order, there are powerful arguments in support of a contrary conclusion. At this point in the litigation the Court will conclude

that this is an open question. It is clear, however, that the PTO does have administrative

8 authority to determine whether this patent is eligible for 9 extension. See 35 U.S.C. §156. Medtronic argues that the Court 10 should not have to rule on the merits of the extension application 11
For the Northern District of California

United States District Court

before the PTO and FDA have had an opportunity to complete their review. As support for their proposition they cite to a number of patent re-examination cases where courts have granted stays pending

12 13 14

15 PTO determinations. In cases where a patent is undergoing re16 examination, courts in this District have frequently stayed 17 proceedings to permit the PTO to conclude its re-examination. See

18 Sorensen v. Digital Networks N. Am. Inc., No. C 07-05568-JSW, 2008 19 WL 152179 (N.D. Cal. Jan. 16, 2008) (White, J.) (granting motion to 20 stay during patent reexamination proceedings); Tse v. Apple Inc., 21 No. C 06-06573-SBA, 2007 WL 2904279 (N.D. Cal. Oct. 4, 2007) 22 23 (Armstrong, J.); Ricoh Co. v. Aeroflex Inc., No. C 03-04669-MJJ, 24 2006 WL 3708069 (N.D. Cal. Dec. 14, 2006) (Jenkins, J.); In re 25 Cygnus Telecomm. Tech. LLC, 385 F. Supp. 2d 1022 (N.D. Cal. 2005) 26 (Whyte, J.); ASCII Corp. v. STD Entm't USA, Inc., 844 F. Supp. 1378 27 (N.D. Cal. 1994) (Walker, J.). See also Negotiated Data Solutions, 28 6

1 LLC v. Dell Inc, 3 4 5 6

2008 WL 4279556 (N.D.Cal.,2008)(Fogel, J.) ("A

2 stay may be the most efficient and fairest course when there are `independent proceedings which bear upon the case.'"). Abbott contests the applicability of re-examination cases since the historical data indicates that a patent undergoing re-

7 examination is more likely than not to change in some way, which 8 would be grounds to justify a stay. In contrast here, Abbott

9 argues, the PTO is less likely to change the current posture of the 10 case. As the Court has already noted, this is by no means certain 11
For the Northern District of California

United States District Court

in this case, and in any event, the rationale underlying the common decisions by courts to grant stays in re-examination cases is applicable in this case as well. In both re-examination cases and

12 13 14

15 in the current case there is a risk of inconsistent outcomes when 16 there are two parallel proceedings looking at the same issue -17 whether the `233 patent is eligible for extension. Staying the

18 proceedings in this action will allow the administrative review 19 process to run its course prior to conducting any parallel 20 proceedings in this Court. If the PTO determines that the Yock 21 patent is not eligible for extension, there is the real possibility 22 23 that the interim extension could be declared void ab initio, mooting 24 out the case. If the extension were granted, a concrete 25 administrative determination would then serve as the basis for the 26 parties' dispute in this Court. The Court believes that the factor 27 of judicial economy weighs in favor of granting the stay. 28 7

1 2 3 4 5 6

2.

Prejudice to the Parties

Abbott argues that it would be prejudiced if the stay were granted in that it thereby would be prevented from seeking a preliminary injunction, effectively nullifying its patent extension. Medtronic counters that Abbott will not suffer any prejudice from

7 the proposed stay as Abbott would be able to recover monetary 8 damages for the sale of any infringing products during the stay. It 9 is correct that a stay would prevent Abbott from seeking a 10 preliminary injunction. But such injunctions are no longer 11
For the Northern District of California

United States District Court

available as a matter of course, following the recent Ebay, Inc. MercExchange, LLC, 547 U.S. 388 (2006) decision of the Supreme Court. The Court further notes that it has already considered the

12 13 14

15 relevant Ebay factors in connection with its October 2008 decision 16 and found that an injunction was not warranted under the 17 circumstances then present. At that time the Court found that

18 monetary damages can sufficiently compensate Abbott for the harm it 19 faces from the sale of Medtronic products using the rapid-exchange 20 system covered by the Yock patent. See October 21, 2008 Order, 21 19:15-21:8. In addition, the Court recognized that Abbott has been 22 23 willing to accept license payments in lieu of enforcing its rights 24 to exclusivity granted by the patent. Id., 20:7-13; 20:24-21:8. 25 Medtronic also argues that it would be prejudiced if the

26 proceedings went forward. The prejudice to Medtronic is asserted to 27 be in the nature of the financial burden caused by the need to go 28 8

1 forward with the litigation without sufficient clarity on the scope 2 of the issues. The Ninth Circuit has held, in an unrelated factual 3 4 5 6 scenario, that defense costs alone do not constitute hardship (see, Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005)). The

Court notes that while defense costs may not be prejudice per se,

7 they do represent a collateral consequence of proceeding with the 8 parallel litigation in this Court when it may be wholly unnecessary. 9 The Court finds that a stay in this case will not cause undue 10 hardship to the parties. 11 V. Conclusion 12 Accordingly, the Court finds that in the interest of judicial 13 economy a stay of the current proceedings is warranted to permit the 14 15 PTO to issue a determination on whether the patent is eligible for 16 an extension. All pretrial proceedings in this case are vacated and 17 the parties are asked to notify the Court as to any material 18 decisions of the PTO in its ongoing review of the extension 19 eligibility issue. 20 21 22 IT IS SO ORDERED 24, 2009 ____________________________ D. Lowell Jensen United States District Judge 23 Dated: March 24 25 26 27 28 9

United States District Court

For the Northern District of California