Cave Consulting Group, LLC v. Ingenix, Inc.

Filing 281

REDACTED ORDER granting in part and denying in part 139 Motion for Summary Judgment; denying 148 Motion for Summary Judgment. Signed by Judge Edward J. Davila on 2/20/2015. (ejdlc1S, COURT STAFF) (Filed on 2/20/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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CAVE CONSULTING GROUP, LLC,

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Plaintiff(s),

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United States District Court
Northern District of California

Case No. 5:11-cv-00469-EJD

v.

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OPTUMINSIGHT, INC.,

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Defendant(s).

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ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT’S
MOTION FOR SUMMARY
JUDGMENT; DENYING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
Re: Dkt. Nos. 139, 148

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Plaintiff Cave Consulting Group, LLC, (“CCGroup” or “Plaintiff”) brings the instant
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action for patent infringement against Defendant OptumInsight, Inc., f/k/a Ingenix, Inc.,
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(“OptumInsight” or “Defendant”). Presently before the Court are the parties’ cross-motions for
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summary judgment. 1 Having carefully reviewed the parties’ briefing and considered the parties’

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arguments from the hearing on December 12, 2014, the Court GRANTS in part and DENIES in
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part OptumInsight’s motion for summary judgment, and DENIES CCGroup’s motion for
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summary judgment for the reasons explained below.
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I.

BACKGROUND

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CCGroup is a California corporation with a principal place of business in San Mateo,
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California. 2 OptumInsight is a Delaware corporation with a principal place of business in

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Dkt. Nos. 139, 148.
Dkt. No. 89 at 2.

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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Minnesota. 3 CCGroup is the owner by assignment of all right, title and interest in the U.S. Patent

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No. 7,739,126 (“the Cave ‘126 Patent” or “the ‘126 Patent”). 4 OptumInsight is the owner by

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assignment of all right, title, and interest in the U.S. Patent Nos. 7,222,079 (“‘079 Patent”) and

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7,774,252 (“‘252 Patent”) (collectively “the Seare Patents”). 5 CCGroup and OptumInsight both

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develop and market software and services used to evaluate various parameters of healthcare

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delivery, including the efficiency of healthcare providers. 6 The patents-in-suit are related to

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technology for measuring and evaluating physician efficiency. 7 “Efficiency” means comparing

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the cost of care provided by an individual physician to the cost of care provided by a relevant peer

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group. 8
CCGroup claims that OptumInsight’s Impact Intelligence product infringes claims 1, 9,

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United States District Court
Northern District of California

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10, 11, 22, and 29 of its ‘126 Patent. 9 OptumInsight claims that CCGroup’s Cave Grouper

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product infringes claim 1 of the Seare Patents. 10 The Seare Patents have a priority date of June 23,

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1994. 11

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A.

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Relevant here are asserted claims 22 and 29 of the Cave ‘126 Patent, 12 which state as

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The Patent Claims

follows:

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22. A method implemented on a computer system of determining
physician efficiency, the method comprising:

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obtaining medical claims data stored in a computer readable medium
on the computer system;

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performing patient analysis using said obtained medical claims data
to form episodes of care utilizing the computer system;

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Id.
Id. at 2-3.
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Id.
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Id.
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Id.
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See Dkt. No. 139 at 3:10-11.
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Dkt. No. 140 at 2; CCGroup has withdrawn claims 1, 9, 10, and 11.
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Id.
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‘079 Patent at 1; ‘252 Patent at 1.
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Claims 22 and 29 are identical other than the preamble, which is not relevant for purposes of this motion.
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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

performing output process based on performed patient analysis
utilizing the computer system, the output process comprising:
assigning episodes of care to physicians; and
applying a first maximum duration rule to identify episodes of care;

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assigning at least one physician to a report group utilizing the
computer system;

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determining eligible physicians and episode of care assignments
utilizing the computer system;

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calculating condition-specific episode of care statistics utilizing the
computer system;

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calculating weighted episode of care statistics across medical
conditions utilizing a predefined set of medical conditions for a
specific specialty type utilizing the computer system; and

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determining efficiency scores for physicians from said calculated
condition-specific episode of care statistics and said weighted
episode of care statistics calculated across medical conditions
utilizing the computer system. 13

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United States District Court
Northern District of California

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Asserted claims 1 of the Seare Patents 14:

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A computer-implemented process for processing medical claims
comprising a computer performing the following:

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(a) reading a medical claim data, input as at least one of a plurality
of data records, into a computer memory;

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(b) validating each of the at least one of a plurality of data records
for at least one of a diagnosis code and a treatment code;

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(c) reading at least one pre-defined relationship between the at least
one of a diagnosis code and a treatment code in the validated at least
one of a plurality of data records and pre-defined episode
treatment categories; and

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(d) grouping the validated at least one of a plurality of data records
to an episode treatment category based upon the pre-defined
relationship, each episode treatment category having a dynamic
time window defining a time period which validated at least one of
plurality of data records may be grouped to an episode treatment
category.

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(e) classifying the patient data records into at least one of a plurality
of episode treatment groups, each of the plurality of episode
treatment groups being defined by an episode treatment category. 15

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U.S. Patent 7,739,126.
Claims 1 of the Seare Patents are identical except for the addition of step (e).
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U.S. Patent 7,774,252.

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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B.

Procedural History

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This suit is an outgrowth of a lawsuit filed by OptumInsight against CCGroup in

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Minneapolis, Minnesota. OptumInsight dismissed the Minnesota lawsuit. CCGroup filed its

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Complaint in this Court seeking a declaratory judgment on the patent infringement allegations

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made against it by OptumInsight. 16
In its Second Amended Complaint (“SAC”), CCGroup claims that OptumInsight infringes

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its Cave ‘126 Patent, and seeks a declaratory judgment that CCGroup does not infringe

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OptumInsight’s family of Seare Patents and that the Seare Patents are invalid. 17
In its Answer to CCGroup’s SAC, OptumInsight claims that it does not infringe the ‘126

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Patent and that the ‘126 Patent is invalid, and counterclaims that CCGroup directly infringes the

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United States District Court
Northern District of California

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Seare Patents. 18
On August 9, 2012, the Court held a claim construction hearing. 19 The Court construed

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“weighted episode of care statistics” to mean “cost or length of care statistics for a group of

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medical conditions calculated using the relative importance of each condition to the others of the

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group.” 20 The Court ruled that the ordinary meaning of “determining eligible physicians and

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episode of care assignments” applied. 21 The Court construed “maximum duration rule” to mean a

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“rule based on a maximum time period(s) that is used to group claim data pertaining to a patient’s

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medical condition(s) into an episode(s) of care.” 22

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CCGroup now moves for summary judgment of noninfringement of the Seare Patents, and

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invalidity of the Seare Patents. 23 OptumInsight moves for summary judgment of noninfringement

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of the Cave ‘126 Patent, invalidity of the Cave ‘126 Patent, and validity of the Seare Patents. 24

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CCGroup has also moved to exclude the testimony of OptumInsight’s expert witness Dr. Mark

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Dkt. No. 89 at 5-7.
See Dkt. No. 89.
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See Dkt. No. 96.
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Dkt. No. 92.
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Id. at 6.
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Id. at 9.
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Id. at 11.
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Dkt. No. 148.
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Dkt. No. 139.
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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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Rattray (“Rattray”), Dr. J. William Thomas (“Thomas”), and Catharine Lawton (“Lawton”). 25

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OptumInsight has moved to exclude testimony of CCGroup’s damages expert witness Michael

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Lewis concerning CCGroup’s alleged damages. 26

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II.

LEGAL STANDARD

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A motion for summary judgment should be granted if “there is no genuine dispute to any

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material fact and the movant is entitled to a judgment as a matter of law.” Fed. R. Civ. R. 56(c);

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Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The moving party bears the

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initial burden of informing the court of the basis for the motion and identifying the portions of the

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pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the
absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

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United States District Court
Northern District of California

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If the moving party meets this initial burden, the burden then shifts to the non-moving

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party to go beyond the pleadings and designate specific materials in the record to show that there

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is a genuinely disputed fact. Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 324. The court must draw

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all reasonable inferences in favor of the party against whom summary judgment is sought.

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, the mere

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suggestion that facts are in controversy, as well as conclusory or speculative testimony in

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affidavits and moving papers, is not sufficient to defeat summary judgment. See Thornhill Publ’g

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Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Instead, the non-moving party must come

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forward with admissible evidence to satisfy the burden. Fed. R. Civ. P. 56(c); see also Hal Roach

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Studios, Inc. v. Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1990).
A genuine issue for trial exists if the non-moving party presents evidence from which a

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reasonable jury, viewing the evidence in the light most favorable to that party, could resolve the

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material issue in his or her favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49

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(1986); see also Barlow v. Ground, 943 F.2d 1132, 1134-36 (9th Cir. 1991). Conversely,

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summary judgment must be granted where a party “fails to make a showing sufficient to establish

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Dkt. No. 157.
Dkt. No. 160.

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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the existence of an element essential to that party’s case, on which that party will bear the burden

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of proof at trial.” Celotex, 477 U.S. at 322.

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III.

DISCUSSION
CCGroup asserts that OptumInsight infringes method claim 22 and apparatus claim 29 of

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the Cave ‘126 Patent. 27 OptumInsight asserts that CCGroup infringes claim 1 of both Seare

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Patents. 28 The parties both deny infringement and contend that the asserted claims of the patents

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of the other side are invalid. 29 Thus, the primary factual issues in dispute are: 1. whether the

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claims of the asserted patents are invalid; and 2. whether the asserted patents are infringed.

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A.

Invalidity
The Court begins by addressing the parties’ invalidity arguments. OptumInsight contends

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United States District Court
Northern District of California

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that the asserted claims of the ‘126 Patent are invalid because they do not meet the requirements

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set forth in 35 U.S.C. §§ 102(a), 102(b), 102(g), or 112. 30 OptumInsight contends that Seare

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Patents are valid over the asserted prior art. 31 CCGroup contends that the asserted claims of the

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Seare Patents are invalid because they do not meet the requirements set forth in 35 U.S.C. §§

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102(b) or 112. 32

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i.

The Cave ‘126 Patent

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OptumInsight argues that the asserted claims are invalid as anticipated under 35 U.S.C. §§

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102(b) and 102(g) because Impact Intelligence works the same as its predecessor product, Impact

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Analysis, therefore, Impact Analysis satisfies every element of the asserted claims and qualifies as

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prior art because it was:

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(a) sold or offered for sale more than a year before the March 2, 2004 filing date of the

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‘126 Patent;

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See Dkt. No. 147-4 at 1-2.
See Dkt. No. 139 at 1-4.
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See id.; see also Dkt. No. 147-4 at 1-2.
30
See Dkt. No. 96.
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See Dkt. No. 139 at 34-38.
32
See Dkt. No. 144-4.
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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
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(b) publicly used by others in the United States more than a year before the March 2, 2004

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filing date of the ‘126 Patent; and

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(c) made in the United States before the invention date (March 2, 2004) of the ‘126 Patent

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claims and was not abandoned, suppressed, or concealed. 33

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OptumInsight also argues that the asserted claims of the ‘126 Patent are invalid as

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anticipated under 35 U.S.C. § 102 because the Cave webpage article (the “Cave Advertisement”)

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satisfies every element of the asserted claims and qualifies as prior art because it was posted on the

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Internet more than a year before the March 2, 2004 filing date of the ‘126 Patent. 34
Finally, OptumInsight argues that the asserted claims of the ‘126 Patent are invalid under

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35 U.S.C. § 112, first paragraph, because there is no description of “Applying a … maximum

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United States District Court
Northern District of California

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duration rule to identify episodes of care.” 35
a. Whether Impact Analysis was “on sale” and was ready for patenting before

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March 2, 2003 pursuant to 35 U.S.C. § 102(b)?

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OptumInsight believes it is entitled to summary judgment on the grounds that a June 4,

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2002 contract with Presbyterian Healthcare Services (“PHS”) provided that “IHCIS will deliver

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the Impact Analysis applications and associated supporting databases via mutually agreed upon

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formats and transmission media” invalidates the asserted claims under the § 102(b) on sale bar. 36

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The Court disagrees.

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Section 102(b) of the Patent Act bars the patentability of inventions that were on sale in

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this country more than one year prior to the date of the application for the patent. 37 The on-sale

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bar rule generally applies when two conditions are satisfied: 1. the product embodying the asserted

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See Dkt. No. 168 at 5-12.
See Dkt. No. 168 at 22.
35
See Dkt.No. 139 at 29.
36
See Dkt. No. 168 at 6-7; see also SB Ex. 7 at ING00081396 ¶ 10.
37
See 35 U.S .C. § 102(b) (“A person shall be entitled to a patent unless the invention was … on sale in this country,
more than one year prior to the date of the application for patent in the United States.”); see also Cargill, Inc. v.
Canbra Foods, Ltd., 476 F.3d 1359, 1368 (Fed. Cir. 2007) (holding that any attempt to commercialize the patented
invention more than one year prior to filing the patent application creates an “on-sale bar” that invalidates a
subsequently-issued patent).
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ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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claims must be the subject of a commercial offer for sale, and 2. the invention must be ready for

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patenting. 38
As an initial matter, the ‘126 Patent claims priority to a provisional patent application filed

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on March 2, 2004. 39 For purposes of § 102(b), the “critical date” is March 2, 2003. 40 Here,

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OptumInsight proffers evidence of a June 4, 2002, contract with PHS that “IHCIS will deliver the

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Impact Analysis applications …” 41 As such, the evidence establishes that OptumInsight’s contract

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with PHS is more than a year before March 2, 2004.

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Next, the question whether an invention is the subject of a commercial offer is a matter of

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Federal Circuit law, analyzed under the law of contracts as generally understood. 42 To prove that
an invention was the subject of a commercial sale, a defendant must demonstrate by clear and

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United States District Court
Northern District of California

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convincing evidence that there was a definite sale or offer to sell more than one year prior to the

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application for the patent, and that the subject matter of the offer to sell fully anticipated the

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claimed invention or would have rendered the claimed invention obvious by its addition to the

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prior art. 43
Here, OptumInsight cites to the contract with PHS to sell the outputs of the Impact

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. 44 OptumInsight demonstrates that there

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Analysis process

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was an offer to sell because the contract required that PHS pay IHCIS a substantial Impact

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Analysis License Fee on an annual basis, which included 20 licensed users of Impact Analysis. 45

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However, the contract with PHS to sell the outputs of the Impact Analysis is a process, which is a

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series of acts or steps, and is not sold in the same sense as is a claimed product, device, or

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38

See Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998).
Dkt. No. 168 at 1.
40
Id.
41
See Dkt. No. 168 at 6-7.
42
Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1047 (Fed. Cir. 2001) (“As a general proposition, we will
look to the Uniform Commercial Code (‘UCC’) to define whether … a communication or series of communications
rises to the level of a commercial offer for sale.”).
43
STX, LLC v. Brine, Inc., 211 F.3d 588, 590 (Fed. Cir. 2000).
44
See Dkt. No. 168 at 6-7; see also SB Ex. 7 at ING00081396 ¶ 10.
45
SB Ex. 7 at ING00081396 ¶ 11; see also In re Caveney, 761 F.2d 671, 676 (Fed. Cir. 1985) (A sale is a contract
between parties wherein the seller agrees “to give and to pass rights of property” in return for the buyer’s payment or
promise “to pay the seller for the things bought or sold.”).
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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
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AIA 53 version of § 102(b), sales or offers for sale, kept secret from the public, may trigger the on-

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sale bar. 54 Although these secret activities likely do not disclose claimed inventions to the general

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public, the statutory language of §102(b) is nevertheless broad enough to cover these actions.

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Additionally, even when a claimed invention itself is not the object of a sale or offer to sell, courts

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have applied a similar bar to patentability under a forfeiture rationale when a sale or offer for sale

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amounts to an indirect “secret commercialization” of a claimed invention. This gap-filling theory

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is illustrated by the disparate treatment applied to secret commercialization of unpatented methods

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depending on the identity of the commercializing party. When an inventor uses a secret,

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unpatented method to produce and sell goods that do not reveal the method, and does so for longer

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than the one-year grace period, these sales may bar the inventor from later patenting the method. 55

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United States District Court
Northern District of California

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OptumInsight misstates patent law by suggesting that evidence of a secret commercial sale by a

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third party can invalidate the ‘126 Patent. However, when a third party uses a secret, unpatented

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method to produce and sell such goods, this activity will not create a bar preventing a different

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inventor from later patenting the same method. 56 Thus, under pre-AIA § 102(b) and the related

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forfeiture doctrine, an inventor faces a simple choice: “he must content himself with either

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secrecy, or legal monopoly.” 57
Early public disclosure is a linchpin of the patent system. As between a prior inventor who

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benefits from a process by selling its product but suppresses, conceals, or otherwise keeps the

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process from the public, and a later inventor who promptly files a patent application from which

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the public will gain a disclosure of the process, the law favors the latter. 58
Accordingly, a reasonable jury might find that OptumInsight has not met its burden of

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proving by clear and convincing evidence that the commercial sale by IHCIS of the claimed

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The Leahy–Smith America Invents Act (AIA) is a United States federal statute that was passed by Congress on
September 16, 2011.
54
In re Caveney, 761 F.2d 675-76
55
See D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1147-48 (Fed. Cir. 1983).
56
See W.L. Gore & Associates v. Garlock, Inc., 721 F.2d 1540, 1549-50 (Fed. Cir. 1983).
57
Metallizing Eng’g Co. v. Kenyon Bearing & Auto Parts Co., 153 F.2d 516,518 (2nd Cir. 1946).
58
W.L. Gore & Assoc.s, Inc., 721 F.2d 1540; RCA Corp. v. Data Gen. Corp., 887 F.2d 1056, 1062 (Fed. Cir. 1989)
(“one policy underlying the [on-sale] bar is to obtain widespread disclosure of new inventions to the public via patents
as soon as possible.”).

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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invention constituted an on-sale bar because
Therefore, the Court DENIES OptumInsight’s summary judgment as to invalidity

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under the § 102(b) on-sale bar based on the Federal Circuit’s holding that where an invention is

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kept secret, and remains secret after a sale of the product, that sale will not bar another inventor

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from the grant of a patent on that method. 59
b. Whether Impact Analysis was in public use before March 2, 2003 pursuant to

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U.S.C. § 102(b)?

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OptumInsight moves for summary judgment on the grounds that IHCIS commercially

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exploited Impact Analysis and that the Impact Analysis methodology was accessible to the public
before March 2, 2003. 60 Having reviewed the evidence, the Court disagrees.
The public use bar under 35 U.S.C. § 102(b) arises where the invention is in public use

United States District Court
Northern District of California

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before the critical date and is ready for patenting. 61 As explained by the Federal Circuit,

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The proper test for the public use prong of the § 102(b) statutory bar
is whether the purported use: (1) was accessible to the public; or (2)
was commercially exploited. Commercial exploitation is a clear
indication of public use, but it likely requires more than, for
example, a secret offer for sale. Thus, the test for the public use
prong includes the consideration of evidence relevant to
experimentation, as well as, inter alia , the nature of the activity that
occurred in public; public access to the use; confidentiality
obligations imposed on members of the public who observed the
use; and commercial exploitation ….

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Id. at 1380.
CCGroup argues that Impact Analysis methodologies and technical documents describing

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the software were maintained in confidence and not publicly available. 62 As such, the

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confidentiality restrictions imposed by ICHIS preclude a finding that Impact Analysis is prior

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art. 63 OptumInsight does not contest that some confidentiality agreements existed. Rather,

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OptumInsight argues that while some details were confidential, the underlying methodology used

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59

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See D.L. Auld Co., 714 F.2d 1144
See Dkt. No. 168 at 8-11.
61
Invitrogen Corp. v. Biocrest Manufacturing L.P., 424 F.3d 1374 (Fed. Cir. 2005).
62
See Dkt. 189-4 at 6-12.
63
See Dkt. No. 147-4 at 16-18.
60

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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OptumInsight cites that: (1) the contract with PHS included a “Fees and Payment Schedule” that

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included a substantial “Impact Analysis License Fee” as well as other licensing fees; 71 (2) a

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September 25, 2002 press release publicly announced that Presbyterian Health Plan (PHP), New

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Mexico’s largest managed care organization, will deploy IHCIS’ Impact Analysis; 72 and (3) that

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IHCIS maintained a publicly available website targeting customers and potential customers of

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Impact Analysis and describing IHCIS products, including Impact Analysis. 73 OptumInsight

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contends that this record of commercial sales and promotional activity by IHCIS illustrates

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commercial exploitation. 74 This is not a persuasive argument, though, because the Federal Circuit

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has held that mere knowledge of the invention by the public does not warrant rejection under §
102(b). 75 Section 102(b) bars public use or sale, not public knowledge. 76 Moreover, in the case of

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United States District Court
Northern District of California

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third-party uses, as in this case, “being accessible to the public still requires public availability;

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secret or confidential third-party uses do not invalidate later filed patents.” 77
Accordingly, in light of the clear and convincing evidence standard for proving invalidity,

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the court concludes a reasonable jury could find that OptumInsight has not met its burden of

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showing that the Impact Analysis was accessible to public before March 2, 2003. Therefore, the

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Court DENIES OptumInsight’s summary judgment of invalidity under the public use prong of §

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102(b) based on the confidentiality agreements.
c. Does Impact Analysis represent a prior invention under 35 U.S.C. § 102(g)

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that was not abandoned, suppressed, or concealed?

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OptumInsight asserts that the claims of the ‘126 Patent, if read to cover Impact Analysis,

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are invalid under 35 U.S.C. § 102(g)(2). 78 The Court disagrees.

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71

SB Ex. 7 at ING00081396 ¶ 11
SB Ex. 8
73
SB Ex. 1 at ¶¶ 23 & 24
74
See Dkt. No. 168 at 9.
75
TPLabs., Inc. v. Professional Positioners, Inc., 724 F.2d 965, 970 (Fed. Cir. 1984).
76
Id.
77
Dey, L.P. v. Sunovion Pharm.s, Inc., 715 F.3d 1351 (Fed. Cir. 2013); see also Dunn Feb. 2014 Depo. at 40:7-13.
78
See Dkt. No. 168 at 11.
72

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

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Section 102(g)(2) provides that a patent is invalid if “before such person’s invention

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thereof, the invention was made in this country by another inventor who had not abandoned,

3

suppressed or concealed it.” 79
Here, OptumInsight argues that Impact Analysis was in public use before March 2, 2003,

4
5

and that Impact Analysis was invented before March 2, 2004. 80 CCGroup argues that Impact

6

Analysis is not invalidating art because the methodologies and technical documents describing

7

that software were maintained in confidence and not publicly available. 81
Under 35 U.S.C. § 102(g) “the courts have consistently held that an invention, though

8
9

completed, is deemed abandoned, suppressed, or concealed if, within a reasonable time after
completion, no steps are taken to make the invention publicly known. Thus failure to file a patent

11
United States District Court
Northern District of California

10

application; to describe the invention in a publicly disseminated document; or to use the invention

12

publicly, have been held to constitute abandonment, suppression, or concealment.” 82 In Correge,

13

an invention was actually reduced to practice, seven months later there was a public disclosure of

14

the invention, and eight months thereafter a patent application was filed. The court held that filing

15

a patent application within one year of a public disclosure is not an unreasonable delay, therefore

16

reasonable diligence must only be shown between the date of the actual reduction to practice and

17

the public disclosure to avoid the inference of abandonment. 83 Unlike Correge, OptumInsight’s

18

Impact Analysis methodologies and technical documents were maintained in confidence and not

19

publicly available before March 2, 2003. 84

20

For the same reason relating to lack of public disclosure, OptumInsight’s § 102(g)

21

argument fails. Private or confidential sales, those that do not confer knowledge of the invention

22

to the public, do not constitute invalidating art under § 102(g). 85 Accordingly, a reasonable jury

23

might find that OptumInsight has not met its burden of proving by clear and convincing evidence

24
79

25
26
27
28

See 35 U.S.C. § 102(g)(2).
See Dkt. No. 169 at 5-6.
81
See Dkt. No. 189-4 at 6-12.
82
Correge v. Murphy, 705 F.2d 1326, 1330 (Fed. Cir. 1983).
83
See id.
84
See Dkt. 189-4 at 6-12; see also Dunn Feb. 2014 Depo. at 40:7-13.
85
See Apotex USA v. Merck & Co., 254 F.3d 1031, 1038-39 (Fed. Cir. 2010).
80

14
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

that the Impact Analysis methodologies and the technical documents describing that software were

2

not maintained in confidence and publicly available. Therefore, the Court DENIES

3

OptumInsight’s summary judgment as to invalidity under § 102(g).
d. Does the Cave Advertisement anticipate the asserted claims?

4

OptumInsight moves for summary judgment on the grounds that the Cave Advertisement

5
6

anticipates Claims 22 and 29 of the ‘126 Patent. 86 Having reviewed the evidence, the Court

7

disagrees.
A patent claim is invalid as anticipated under 35 U.S.C. § 102 if a single prior art reference

8
9
10

contains, either explicitly or implicitly, all of the elements of the claim. 87 Whether or not a single
reference contains all of the elements of a claim is a question of fact. 88
Although anticipation is a question of fact, where there are no “genuine factual disputes

United States District Court
Northern District of California

11
12

underlying the anticipation inquiry, the issue is ripe for judgment as a matter of law.” 89 Evidence

13

of anticipation, like all questions of invalidity, “must be clear as well as convincing.” 90 The

14

Federal Circuit has held that “the identical invention must be shown in as complete detail as is

15

contained in the … claim.” 91 The elements must be arranged as required by the claim, but this is

16

not an ipsissimis verbis test, i.e., identity of terminology is not required. 92
CCGroup makes a series of argument in response. First, CCGroup argues that there is no

17
18

evidence that the Cave Advertisement was publicly available. 93 As such, without this evidence,

19

CCGroup argues that OptumInsight cannot meet its burden of proof on invalidity. 94 The U.S.

20

Patent and Trademark Office (“PTO”) has held that a website captured by Internet Archive

21
22

86

See Thomas Invalidity Report at Exhibit 18.
See Oakley, Inc. v. Sunglass Hut International, 316 F.3d 1331, 1339 (Fed. Cir. 2003) (A determination that a claim
is invalid as being anticipated or lacking novelty under 35 U.S.C. § 102 requires a finding that “each and every
limitation is found either expressly or inherently in a single prior art reference”).
88
See Beckson Marine, Inc. v. NFM, Inc., 292 F.3d 718, 725 (Fed. Cir. 2002) (Anticipation under 35 U.S.C. § 102
means lack of novelty, and is a question of fact).
89
SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1343 (Fed. Cir. 2005).
90
Schumer v. Lab. Computer Sys., Inc., 308 F.3d 1304, 1315 (Fed. Cir. 2002).
91
Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1236 (Fed. Cir. 1989).
92
In re Bond, 910 F.2d 831 (Fed. Cir. 1990).
93
See Dkt. No. 147-4 at 25-26.
94
Id.
87

23
24
25
26
27
28

15
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

Wayback Machine (“Internet Archive”) 95 was considered as prior art. 96 The PTO will accept date

2

stamps from the Internet Archive as evidence of when a given Web page was accessible to the

3

public. 97 These dates are used to determine if a Web page is available as prior art. 98 Here,

4

OptumInsight provides evidence that the Internet Archive archived the Cave Advertisement as of

5

February 17, 2003. 99 This date proves that there was no barrier to members of the general public

6

accessing the Cave Advertisement at that time. 100
Second, CCGroup argues that the Cave Advertisement does not teach all the essential

7
8

claim limitations required by the asserted Claims 22 and 29 of the ‘126 Patent. 101 Specifically,

9

CCGroup asserts that OptumInsight relies on a single sentence from the Cave Advertisement to
satisfy three limitations of the asserted claims. 102 That sentence reads: “[a] methodology

11
United States District Court
Northern District of California

10

developed by the Cave Consulting Group examines condition-specific, longitudinal episodes of

12

care.” 103 According to OptumInsight, this sentence satisfies the limitations of the following three

13

limitations of CCGroup’s asserted claims 22 and 29:

14

Obtaining medical claims data stored in a computer readable
medium on the computer system;

15
16

Performing patient analysis using said obtained medical claims data
to form episodes of care utilizing the computer system;

17

Applying a first maximum duration rule to identify episodes of care

18

See Exhibit 18 to Thomas Invalidity report.

19

CCGroup contends that this sentence from the Cave Advertisement does not teach these three

20

steps of the asserted claims because:

21

1. It has nothing to do with obtaining medical claims data stored in a
computer readable medium, does not describe how episodes are

22
23
24
25
26
27
28

95

Internet Archive Wayback Machine is a digital archive of the World Wide Web and other information on the
Internet. It enables users to see archived versions of webpages across time.
96
See Ex Parte Hicks, No. 2011-007925, 2013 WL 5882933, at *4 (P.T.A.B. Oct. 31, 2013).
97
See In re Wyer, 655 F.2d at 221, 210 USPQ at 790; see also MPEP 2128.
98
See Ex Parte Molander, No. 2008-2589, 2009 WL 726751, at *3, 5-6 (B.P.A.I. 2009).
99
See Dkt. No. 169 at 26-28.
100
Id.
101
See Dkt. No. 147-4 at 26-29.
102
Id.
103
See Exhibit 18 to Thomas Invalidity Report.

16
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

generated, whether they are provided to CCGroup or are generated
by CCGroup, what information is used to generate the episodes, or
what information is stored in the episodes (e.g. actual medical
claims data vs. overall cost and duration of care information);

1
2
3

2. the … reference to “episodes” relied on by Optum[Insight] could
be created based on a methodology that generates episodes from
data other than claims data (e.g., inpatient hospital records) or
through a methodology that does not involve patient analysis (e.g.,
physician-centric episodes rather than patient-centric episodes);

4
5
6

3. With regard to the third limitation, Thomas properly admits that
nothing in the Cave Advertisement explicitly teaches the step of
applying a maximum duration rule. … (“The paper does not disclose
‘using a first maximum duration rule to identify episodes of care.”).
Instead, Thomas argues that if Impact Intelligence - the product
CCGroup accuses of infringement - is found to infringe, the Cave
Advertisement’s reference to “longitudinal episodes of care” will
similarly anticipate the asserted claims. … Thomas’s reasoning,
which is confusing at best, suggests that those skilled in the art
would simply realize that the reference to “longitudinal episodes of
care” necessarily requires application of a maximum duration rule that is “a rule based on a maximum time period that is used to group
claim data pertaining to a patient’s medical conditions into an
episode of care.”

7
8
9
10

United States District Court
Northern District of California

11
12
13

Dkt. No. 147-4 at 27-28.
14
OptumInsight argues that the Cave Advertisement inherently discloses obtaining medical
15

claims data stored in a computer readable medium on the computer system. 104 Specifically,

16
OptumInsight argues that “it was well known in the art that forming episodes of care and
17
performing physician efficiency measurement was a data intensive process and that claims
18

groupers necessarily operated on electronically stored medical claims records.” 105 OptumInsight

19
also argues that “one of ordinary skill in the art would have understood that, in order to ‘examine
20
condition-specific, longitudinal episodes of care’ as disclosed in the ‘Cave Advertisement,’ the
21

disclosed methodology must first form those episodes of care.” 106

22
However, “[a]nticipation is typically established by one skilled in the art who must identify
23
each claim element, state the witness[’] interpretation of the claim element, and explain in detail
24

how each claim element is disclosed in the prior art reference.” 107 OptumInsight fails to explain in

25
26

104

See Dkt. No. 169 at 22-23.
Id.
106
Id. at 23.
107
Lucent Technologies, Inc. v. Microsoft Corp., 544 F. Supp. 2d 1080, 1091 (S.D. Cal. 2008).
105

27
28

17
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

detail how each claim element is disclosed in the single sentence of the Cave Advertisement.

2

Moreover, the testimony is insufficient if it is merely conclusory. 108 It must be clear. For

3

example, OptumInsight’s argument that “if this step is read so broadly as to reach Impact

4

Intelligence, applying the same claim scope, one of the ordinary skill in the art would have

5

understood that the methodology disclosed in the ‘Cave Advertisement’ necessarily discloses this

6

step’ is merely conclusory. 109 It is not “the task of the district court, to attempt to interpret

7

confusing or general testimony to determine whether a case of invalidity has been made out,

8

particularly at the summary judgment stage.” 110
Because the uncontroverted evidence demonstrates that the Cave Advertisement does not

9

anticipate each and every element as set forth in the asserted claims, either expressly or inherently,

11
United States District Court
Northern District of California

10

summary judgment as to invalidity is improper. Therefore, the Court DENIES OptumInsight’s

12

summary judgment as to invalidity under 35 U.S.C. § 102 of the asserted claims by the Cave

13

Advertisement.
e. Whether the claim limitations found in the asserted claims of the ‘126 Patent

14

are invalid under 35 U.S.C. § 112?

15

OptumInsight argues that Claims 22 and 29 are invalid for lack of written description and

16
17

enablement under 35 U.S.C. § 112(a) because the ‘126 Patent specification fails to describe

18

applying a maximum duration rule to identify episodes of care and is devoid of an enabling

19

disclosure of how to apply a maximum duration rule to identify episodes of care. 111 Having

20

reviewed the evidence, the Court disagrees.
The first paragraph of 35 U.S.C. § 112 require that the specification include the following:

21
22

(A) A written description of the invention;

23

(B) The manner and process of making and using the invention (the enablement

24

requirement); and

25
26

108

Schumer, 308 F.3d at 1315-16.
See Dkt. No. 169 at 25.
110
Id. at 1316.
111
See Dkt. No. 139 at 32-34; see also Dkt. No. 188 at 19-20.
109

27
28

18
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

(C) The best mode contemplated by the inventor of carrying out his invention. 112

1

To satisfy the written description requirement, the specification must describe the claimed

2
3

invention in sufficient detail that one skilled in the art can reasonably conclude that the inventor

4

had possession of the claimed invention. 113 Specifically, the specification must describe the

5

claimed invention in a manner understandable to a person of ordinary skill in the art and show that

6

the inventor actually invented the claimed invention. 114 The enablement requirement refers to the

7

requirement that the specification describe how to make and how to use the invention. 115 The

8

invention that one skilled in the art must be enabled to make and use is that defined by the claim(s)

9

of the particular application or patent. 116 In contrast to the written description, the adequacy of
enablement is a question of law, although like claim constructions, enablement findings may have

11
United States District Court
Northern District of California

10

factual underpinnings. 117
OptumInsight argues that Claims 22 and 29 are invalid for lack of written description

12
13

because the ‘126 Patent specification fails to describe applying a maximum duration rule to

14

identify episodes of care. 118 Specifically, OptumInsight argues that CCGroup improperly relies on

15

references in the specification to the use of maximum duration rules to refine episodes of care,

16

when the claim language requires using maximum duration rules to identify episodes of care. 119

17

Further, OptumInsight argues that the specification is devoid of an enabling disclosure of how to

18

apply a maximum duration rule to identify episodes of care. 120 Lastly, OptumInsight argues that

19

this issue can be decided at summary judgment, because claim construction is an issue of law for

20

the court. 121

21
22
23

112

35 U.S.C. § 112(a).
Vas-Cath, Inc. v. Mahurkar, 935 F.2d 1555, 1562-63 (Fed. Cir. 1991).
114
Id.
115
CFMT, Inc. v. Yieldup Int’l Corp., 349 F.3d 1333, 1338 (Fed. Cir. 2003)
116
Id.
117
Martek Bioscis. Corp. v. Nutrinova, Inc., 579 F.3d 1363, 1378 (Fed. Cir. 2009).
118
See Dkt. No. 139 at 32-33.
119
Id.
120
Id.
121
Id.
113

24
25
26
27
28

19
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

Here, OptumInsight requests the Court to construe the phrase “to identify” as to the written

2

description and enablement of the asserted claims under § 112(a). However, the Court has already

3

construed claims and issued an order on that subject. 122 Neither party requested construction of

4

this phrase previously, and the Court will not construe it now.

5

CCGroup argues that the specification of the ‘126 Patent provides ample written

6

description of the invention, including examples of how that invention is implemented. 123 For

7

example, the specification teaches application of a dynamic time window that can be used as a

8

maximum duration rule to identify episodes of care for subsequent analysis:

9

The specified time period, or window period, is based on the
maximum number of days between contact with a provider for
which follow-up care is still reasonable. Each of the medical
conditions has its own unique window period. If the date of service
for a patient’s episode is separated by a longer period than the
window period, the latest date of service considered the start date for
a new condition-specific episode of care.

10

United States District Court
Northern District of California

11
12
13

See ‘126 Patent at 45:65-46:59.

14

CCGroup argues that the specification also discloses the use of a static time window (a second

15

form of maximum duration rule) that controls the maximum duration for chronic episodes of care:

16
The fourth function of the PATAN output process is to implement
the maximum duration rule for episodes of care, which is 180 days.
For chronic conditions (e.g. diabetes, asthma, ischemic heart
disease), an episode of care begins when a CLI is initially found
during the study period that has a defined ICD.9 code that has been
assigned to that medical condition. Then, chronic conditions may
continue on indefinitely as recognized by the window period of 365
days. However, for the purposes of physician efficiency analysis,
chronic conditions are considered to have a 180-day duration.
Therefore, a chronic condition ends 180 days after identifying the
first CLI with a diagnosis (defined ICD.9 code) for the specific
chronic condition.

17
18
19
20
21
22
23

See ‘126 Patent at 67:61-68:10.

24

These disclosures from the specification establish that there is written description support in the

25

specification for the maximum duration rule limitation of the asserted claims. 124

26
122

See Dkt. No. 92.
See Dkt. No. 167-4 at 34.
124
See Dkt. No. 167-4 at 34.

27

123

28

20
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

Further, CCGroup argues that disclosure in the specification establish that there is written

1
2

description support in the specification for the maximum duration rule limitation of the asserted

3

claims. 125 The citations above explain how one skilled in the art would employ both static and

4

dynamic time windows to gather claim data into discreet episodes of care, therefore identifying

5

episodes of care. 126
Finally, at a minimum, OptumInsight’s written description and enablement argument

6
7

presents a factual dispute that should be resolved by the jury after hearing from the experts on the

8

scope, content and disclosure of the ‘126 Patent. 127 Therefore, the Court DENIES OptumInsight’s

9

summary judgment as to invalidity under § 112(a) because the evidence raises a genuine dispute
of material fact as to whether the ‘126 Patent’s specification provides adequate written description

11
United States District Court
Northern District of California

10

and enablement for the asserted claims.

12

ii.

Seare Patents
a. Whether the Seare Patents are anticipated by the Cave Article or by the Aetna

13

Proposal?

14

OptumInsight moves for summary judgment on the grounds that the invention claimed in

15
16

the Seare patents are valid and not anticipated by the two prior art publications: 1. an article

17

describing a study conducted by Douglas Cave (“the Cave Article”); and 2. a June 12, 1994,

18

proposal to Aetna (“Aetna Proposal”). 128 CCGroup moves for summary judgment on the grounds

19

that the invention claimed in the Seare Patents is anticipated by the Cave Article. 129 For the

20

purposes of this motion, OptumInsight focuses on one element common to both Seare Patents:

21

element (d), directed to a “dynamic time window.” 130

22
23
24

125

Id. at 35.
Id.
127
See Scriptpro, LLC v. Innovation Assoc., Inc., 762 F.3d 1355, 1359 (Fed. Cir. 2014) (written description presents a
question of fact for the jury); see also Callicrate v. Wadsworth Mfg., Inc., 427 F.3d 1361, 1373. (Fed. Cir. 2005)
(enablement is a question of law based on underlying facts).
128
See Dkt. No. 139 at 34-38.
129
See Dkt. No. 147-4 at 37-38.
130
Id.
126

25
26
27
28

21
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

First, OptumInsight argues that the Cave Article does not disclose dynamic time windows.

1

The Court has construed the term “dynamic time window” to mean “a time period that can reset

3

based upon receipt of related claim records within a predefined time period.” 131 The Cave Article

4

references “window period[s],” but it does not disclose time periods that reset. Specifically,

5

OptumInsight argues that a person of ordinary skill in the art in 1994 would not have been aware

6

of methodologies used to implement time windows that reset, and the language used in the Cave

7

Article would have been understood to mean a fixed window period from the start of an episode

8

because that is how groupers worked at that time. 132 CCGroup responds that the Cave Article

9

does teach the methodology that incorporates an algorithm for grouping raw medical claim data

10

into episodes of care. 133 Based on the foregoing disclosure, it presents a factual dispute that the

11
United States District Court
Northern District of California

2

Cave Article teaches use of a dynamic time window to build episodes of care that must be

12

resolved by the jury at trial.
Therefore, the Court DENIES OptumInsight’s summary judgment as to validity of the

13
14

Seare Patents because the evidence raises a genuine dispute of material fact as to whether the Cave

15

Article teaches use of a dynamic time window to build episodes of care.
Second, OptumInsight argues that the Aetna Proposal is not prior art because the reference

16
17

was not made publicly available. 134 However, CCGroup argues that the Aetna Proposal is

18

anticipating prior art under 35 U.S.C. § 102(g), where it must only show that the system described

19

in the Aetna Proposal was not “abandoned, suppressed or concealed.” 135
For the same reason relating to the earlier lack of public disclosure arguments under §

20
21

102(b) and § 102(g), CCGroup’s § 102(g) argument fails. Private or confidential sales, those that

22

do not confer knowledge of the invention to the public, do not constitute invalidating art under §

23

102(g). 136 Accordingly, CCGroup has not raised a genuine issue of material fact as to the Aetna

24
25

131

Dkt. 92 at 22.
RR ¶¶ 25, 27, 29.
133
See Dkt. No.167-4 at 37-38.
134
Id. at 37.
135
See Dkt. No. 167-4 at 38.
136
See Apotex, 254 F.3d 1038-39.
132

26
27
28

22
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

Proposal. Therefore, the Court GRANTS OptumInsight’s summary judgment concerning the

2

validity of the Seare Patents relating to the Aetna Proposal.
Finally, CCGroup argues that the asserted claims of the Seare Patents are invalid because

3
4

they are anticipated by the Cave Article. 137 Specifically, CCGroup argues that the Cave Article

5

teaches reading in claims data, validating that data, and reading a pre-defined relationship between

6

the coding in that data and established medical conditions. 138 However, as explained earlier, the

7

Cave Article does not disclose a “dynamic time window.” 139 Accordingly, given the clear and

8

convincing evidence standard, a reasonable jury could find that CCGroup has not met its burden

9

of showing that the Cave Article does not anticipate each and every element as set forth in the
asserted claims of the Seare Patents. Therefore, the Court DENIES CCGroup’s summary

11
United States District Court
Northern District of California

10

judgment as to invalidity of the asserted claims of the Seare Patents.
b. Whether the asserted claims of the Seare Patents are definite and enabled

12

under 35 U.S.C. § 112?

13

CCGroup asserts that element (d), the “grouping” step, is indefinite and lacks enablement

14
15

because they are “fatally vague and are also inoperable.” 140 Specifically, the seemingly two

16

conflicting requirements in the claimed grouping step: (1) satisfying the predefined relationship

17

between the claimed data and the episode treatment category, and (2) satisfying the temporal

18

requirements of the “dynamic time window” for that episode treatment category. 141 The Court

19

disagrees.
Patents are presumed to be valid, and the party challenging the validity of a patent bears

20
21

the burden of proving invalidity by clear and convincing evidence. 142 The Court looks to the

22

intrinsic evidence because it is the primary source for determining the meaning of a claim. 143

23

Here, the patent examiner rejected claim of the ‘079 patent as allegedly failing to provide an

24
137

25
26
27
28

See Dkt. No. 147-4 at 38.
Id. at 40.
139
See Dkt. No. 139 at 34-38.
140
See Dkt. No. 147-4 at 38.
141
See CCGroup Ex. 25 at ¶ 76.
142
35 U.S.C. § 282
143
Phillips v. AWH Corp., et al., 415 F.3d 1303, 1312-1324 (Fed. Cir. 2005).
138

23
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

enabling disclosure for this element. 144 In response, the applicant provided a detailed description

2

of how this feature is enabled by the disclosure, including providing an analysis of the source code

3

appendix. 145 The patent examiner withdrew the rejection. 146
Accordingly, in light of the clear and convincing evidence standard for proving invalidity,

4
5

a reasonable jury could find that CCGroup has not met its burden of showing that the specification

6

in the Seare Patents are not definite and enabling under 35 U.S.C. § 112. Therefore, the Court

7

DENIES CCGroup’s summary judgment of invalidity relating to the asserted claims of the Seare

8

Patents under §112.
B.

9

Non-Infringement

Both parties move for summary judgment on the infringement issue. OptumInsight moves

10

United States District Court
Northern District of California

11

for summary judgment of non-infringement on all of CCGroup’s asserted claims in the ‘126

12

Patent. 147 CCGroup moves for summary judgment of non-infringement on all asserted claims in

13

the Seare Patents. 148 The Court DENIES both motions for summary judgment for the following

14

reasons.
i.

15

The Cave ‘126 Patent

OptumInsight moves for summary judgment on three non-infringement arguments with

16
17

respect to asserted claims 22 and 29 of the ‘126 Patent. 149 Specifically, OptumInsight argues that

18

Impact Intelligence uses a different method, and it does not infringe any of the asserted claims of

19

the ‘126 Patent because Impact Intelligence does not: (1) use a “maximum duration rule to

20

identify” episodes of care; (2) perform a step of “determining eligible physicians and episode of

21

care assignments”; and (3) “calculat[e] weighted episode of care statistics across medical

22

conditions utilizing a predefined set of medical conditions.” 150 Having reviewed the evidence, the

23

Court disagrees.

24
144

25
26
27
28

See Ex. 28 at ING00001552-56.
See id. at ING00001559-68.
146
See id. at ING00001731-33.
147
Dkt. No. 139.
148
Dkt. No. 169.
149
Dkt. No. 139 at 11-12.
150
Id.
145

24
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

A claim for patent infringement must be proven by a preponderance of evidence. 151 Patent

1
2

infringement is a two-step inquiry. First, the court must construe the asserted patent claim(s) as a

3

matter of law. 152 Second, the fact finder – here, the court for purposes of summary judgment –

4

must determine whether the accused product, composition, system, or process contains each

5

limitation of the properly construed claims, either literally or under the doctrine of equivalents. 153

6

The first step is a question of law; the second step is a question of fact. 154
“Summary judgment on the issue of infringement [or noninfringement] is proper when no

8

reasonable jury could find that every limitation recited in a properly construed claim either is or is

9

not found in the accused device either literally or under the doctrine of equivalents.” 155 To be

10

entitled to summary judgment of noninfringement, the moving party must demonstrate that the

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United States District Court
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7

facts and inferences, when viewed in the light most favorable to the nonmoving party, would not

12

persuade a reasonable jury to return a verdict in favor of the nonmoving party – the patent

13

owner. 156
First, the Court has already heard and resolved these issues through the claim construction

14
15

hearing. 157 For example, the Court construed “‘maximum duration rule’ shall mean ‘rule based on

16

a maximum time period(s) that is used to group claim data pertaining to a patient’s medical

17

condition(s) into an episode(s) of care.’” 158 The Court based its definition on its recognition that

18

the ‘126 Patent’s specification and claims “make clear [that] the maximum duration rule is used to

19

control the formation of episodes of care …” 159 Now, OptumInsight requests the Court for

20

construction of the new term “identify.” 160 However, a “trial judge need not repeat or restate

21
22

151

Advanced Cardiovascular Sys., v. Scimed Life Sys., Inc., 261 F.3d 1329, 1336 (Fed. Cir. 2001).
Markman v. Westview Instruments, Inc., 517 U.S. 370, 372-74 (1996); Cybor Corp., v. FAS Techs., Inc., 138 F.3d
1448, 1454 (Fed. Cir. 1998).
153
Id.
154
Markman, 517 U.S. at 372-74; Ferguson Beauregard v. Mega Sys., Inc., 350 F.3d 1327, 1338 (Fed. Cir. 2003).
155
PC Connector Solution LLC v SmarDisk Corp., 406 F.3d 1359, 1364 (Fed. Cir. 2005).
156
Bus. Objects, S.A. v. Microstrategy, Inc., 393 F.3d 1377, 1378 (Fed. Cir. 2005) (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986)).
157
Dkt. No. 92.
158
Dkt. No. 92 at 11.
159
Id.
160
Dkt. No. 139
152

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

every claim term in order to comply with the ruling that claim construction is for the court as it is

2

not an obligatory exercise in redundancy.” 161 OptumInsight’s argument for the new term

3

“identify” is an attempt to re-litigate the scope of the “maximum duration rule” limitation. As

4

such, “restating a previously settled argument does not create an ‘actual dispute regarding the

5

proper scope of the claims’ within the meaning of the “maximum duration rule” limitation. 162

6

Similarly, OptumInsight’s argument regarding “predefined set” term is an attempt to re-litigate the

7

“calculating weighted episode of care statistics across medical conditions utilizing a predefined set

8

of medical conditions.” 163 The Court has already construed “‘Weighted Episode of Care

9

Statistics’ shall mean ‘cost or length of care statistics for a group of medical conditions calculated
using the relative importance of each condition to the others of the group.” 164 These are both

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arguments the Court heard and construed during claim construction. 165 Because the Court has

12

already resolved these issues through the construction of the terms, the Court is not obligated to

13

provide another claim construction to these new terms. 166
Finally, the Court has construed that the ordinary meaning of the term “determining

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15

eligible physicians and episode of care assignments” shall apply. 167 OptumInsight argue that

16

Impact Intelligence does not have a step of “determining eligible physicians and episode of care

17

assignments,” rather it simply assigns the physicians to report groups and episodes to physicians

18

using a peer group definition, and does not perform an additional step of “determining” whether

19

such previously made assignments are “eligible.” 168 Further, OptumInsight argues that the claims

20

require that the “determining” step come after the “assigning” steps. 169 In response, CCGroup

21
161

22
23
24
25
26
27
28

U.S. Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1568 (Fed. Cir. 1997); see also Finjan, Inc. v. Secure
Computing Corp., 626 F.3d 1197, 1207 (Fed. Cir. 1997) (“Defendants attempted to resurrect a claim construction that
the district court already rejected, without offering a new definition. Restating a previously settled argument does not
create an ‘actual dispute regarding the proper scope of the claims’ within the meaning of 02 Micro. In this situation,
the district court was not obligated to provide additional guidance to the jury.”).
162
See Finjan, 626 F.3d 1207.
163
Dkt. No. 139
164
Dkt. No. 92 at 6.
165
Id.
166
See id.
167
Dkt. No. 92 at 9.
168
See Dkt. 139 at 18-19; see also Dkt. No. 188 at 5-12.
169
Id.

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

argues that there is nothing in the asserted claims requiring that the determining step be performed

2

in a specific order relative to the assigning steps of the asserted claims. 170 Moreover, CCGroup

3

argues that a proper claim interpretation allows the determining step to be performed before, after,

4

or contemporaneously with the assigning step. 171

5

This is a dispute between parties as to how a skilled artisan would interpret the plain and

6

ordinary meaning of the terms at issue. However, disputes over how one skilled in the art would

7

understand the plain meaning of term raises a factual question that must be resolved by the jury. 172

8

Therefore, “at trial parties may introduce evidence as to the plain and ordinary meaning of the

9

terms not construed by the Court to one skilled in the art, so long as the evidence does not amount

10

to arguing claim construction to the jury.” 173

United States District Court
Northern District of California

11

All three of OptumInsight’s non-infringement arguments for Claims 22 and 29 turn on the

12

factual question of how one skilled in the art would interpret the plain meaning of the claim terms.

13

Because such questions must be resolved by the jury, it would be inappropriate for the Court to

14

entertain OptumInsight’s request for summary judgment of non-infringement at this point. 174

15

Accordingly, OptumInsight’s motion for summary judgment of non-infringement is DENIED in

16

view of the factual dispute as to how a skilled artisan would interpret the plain and ordinary

17

meaning of the terms at issue.

18

ii.

CCGroup moves for summary judgment of non-infringement and argues that its Cave

19
20

The Seare Patents

Grouper does not infringe the asserted claims of the Seare Patents. 175 The Court disagrees.

21
22
170

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24
25
26
27
28

See Dkt. No. 164-4 at 12-17.
Id.
172
See Apple, Inc. v. Samsung Electronics Co., Ltd., 2014 WL 660857, at *3 (N.D. Cal. 2014) (“Where, as here,
parties did not seek construction of the terms at issue, courts give those terms their ordinary and customary meaning to
a person of ordinary skill in the art in question at the time of the invention. ”).
173
Id.
174
See id. (“The parties did not seek construction of this limitation, accordingly, it must be given its ordinary and
customary meaning to a person ordinary skill in the art in question at the time of the invention … Because reasonable
minds could differ both as to the meaning and presence of this final limitation, the court declines to grant either
parties’ motion for summary judgment with respect to the [] patent.”).
175
Dkt. No. 147-4.
171

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

While claim construction is a matter of law, infringement itself is a question of fact. 176

1
2

Therefore, a plaintiff is only entitled to summary judgment on the question of infringement “if the

3

facts and inferences, when viewed in the light most favorable to [non-moving party], would not

4

persuade a reasonable jury to return a verdict in favor of ...the non-moving party.” 177 As such,

5

OptumInsight can defeat the summary judgment motion by presenting evidence from which a

6

reasonable jury could resolve the issue in its favor. 178
Claim 1 of the Seare Patents requires a step of “(c) reading at least one pre-defined

7
8

relationship between the at least one of a diagnosis code and a treatment code in the validated at

9

least one of a plurality of data records and pre-defined episode treatment categories.” 179 The
Court has construed that “Episode Treatment Category” shall mean “a classification that includes

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10

one or more episode treatment groups” and that the plain meaning of the term “validate” shall

12

apply. 180

13

CCGroup asserts that OptumInsight has failed to point to any evidence that the Cave

14

Grouper performs the “reading” function of this step. 181 OptumInsight’s expert, Dr. Rattray,

15

points to a pre-programmed table in the Cave Grouper to satisfy this step (c) limitation. 182

16

However, CCGroup argues that the pre-programmed table in the Cave Grouper does not satisfy

17

the claim limitation because it “has nothing to do with reading a diagnosis or treatment code from

18

a claim data record ….” 183 In response, OptumInsight argues that CCGroup’s argument is

19

premised on an improper reading of the claim language. 184 In step (c), “the claim requires reading

20

a relationship between [A] and [B], where A is the diagnosis code or the treatment code in the

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22
23
24
25
26
27
28

176

See Frank’s Casing Crew and Rental Tools, Inc. v. Weatherford International, Inc., 389 F.3d 1370,1376 (Fed. Cir.
2004)
177
Business Objects, S.A. v. Microstrategy, Inc., 398 F.3d 1366, 1371 (Fed. Cir. 2004); see also Catalina Mktg. Int’l,
Inc. v. Coolsavings.com, Inc., 289 F.3d 801, 812 (Fed. Cir. 2002).
178
Armco, Inc. v. Cyclops Corp., 791 F.2d 147, 149 (Fed. Cir. 1986) (“[t]he party opposing the motion is required
merely to point to an evidentiary conflict created on the record”).
179
See ‘079 Patent at 38:51-54; ‘252 Patent at 30:45-48.
180
See Dkt. No. 92.
181
See Dkt. No. 147-4 at 31-32.
182
See Rattray Report at ¶¶ 73-74; see also Rattray Dep. Tr., 121:12-129:11.
183
See Dkt. No. 189-4 at 21-22.
184
See Dkt. No. 168 at 31-32.

28
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

validated data record and B is the pre-defined episode treatment categories. The reference to ‘in

2

the validated at least one of a plurality of data records’ modifies the source of the diagnosis and

3

treatment codes and is clearly not specifying where the pre-modified relationship or the pre-

4

defined episode treatment categories are being read from.” 185
The Court looks to the intrinsic evidence because it is the primary source for determining

5
6

the meaning of a claim. 186 The specification supports this plain reading of the claims language.

7

For example, the patent discloses “that CPT treatment codes and ICD-9 diagnosis codes are read

8

from the medical claims data. The index code described in the ‘079 patent however, which is one

9

example of the ‘predefined relationship,’ is read from a look up table in the software.” 187 As such,
OptumInsight argues that “the predefined relationship between an index code and an ICD-9 code

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United States District Court
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10

is certainly ‘read’ – but it is read from a database that is part of the Cave Grouper medical

12

‘knowledgebase’ and not from the medical data records.” 188
Next, CCGroup disputes that the Cave Grouper performs step “(d) grouping the validated

13
14

at least one of a plurality of data records to an episode treatment category based upon the

15

predefined relationship, each episode treatment category having a dynamic time window defining

16

a time period which validated at least one of plurality of data records may be grouped to an

17

episode treatment category.” 189
Here, CCGroup argues that the Cave Grouper does not group claim data to an “episode

18
19

treatment category” or use “dynamic time windows” to determine which episode treatment

20

category a claim data record will be assigned. 190 Rather, CCGroup argues that since the Cave

21

Grouper forms episodes of care and an episode of care is different from an episode treatment

22

category, the Cave Grouper does not use an episode treatment category. 191 As construed by the

23

Court, an episode treatment category is a classification that includes one or more episode

24
185

25
26
27
28

Id.
Phillips v. AWH Corp., et al., 415 F.3d 1303, 1312-1324 (Fed. Cir. 2005).
187
See ‘079 Patent at 24:11-15.
188
Dkt. No. 168 at 32.
189
‘079 Patent at 38:55-61; ‘252 Patent at 30:49-55.
190
See Dkt. No. 147-4 at 35-37.
191
Id.
186

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1

treatment groups. 192 An episode of care is a “group of all healthcare services provided to a patient

2

for the diagnosis, treatment, and aftercare of a specific medical condition(s) within a period of

3

interest.” 193 Both parties agree that the Cave Grouper forms episodes of care and an episode

4

treatment category is not the same as an episode of care. 194 However, CCGroup argues that the

5

Cave Grouper does not group data records to an episode treatment category which necessarily

6

requires grouping claims data to a “group of medical conditions.” 195 OptumInsight contends that

7

what CCGroup calls a “medical condition” in the Cave Grouper is properly viewed as an episode

8

treatment group. 196 Under the Court’s construction, a single episode treatment group may

9

constitute an episode treatment category. Thus, the data records are grouped to an episode
treatment category (the mechanism by which claims data records are grouped), as opposed to an

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10

episode of care, which is the final product resulting from the operation of the claimed process. 197
CCGroup also argues that the Cave Grouper does not use a “dynamic time window” to

12
13

group data records to an episode treatment category. 198 OptumInsight argues that a “dynamic time

14

window” is performed by the Cave Grouper when forming episodes of care for acute conditions,

15

as confirmed by CCGroup’s corporate representative, who testified that “[e]ach medical condition

16

acute has a certain predefined duration of days window period” assigned by CCGroup. 199 The

17

Court has construed that “dynamic time window” shall mean “a time period that can reset based

18

upon receipt of related claim records within a predefined time period.” 200 CCGroup distinguishes

19

the Cave Grouper by reading the claim limitation as requiring “the use of dynamic time window to

20

select or alter an episode treatment category.” 201

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22
23

192

See Dkt. No. 92.
Dkt. No. 92 at 24.
194
See Dkt. No. 169 at 34.
195
Dkt. No. 189-4 at 21-22.
196
Dkt. No. 169 at 33-36.
197
Id.
198
See Dkt. No. 189-4 at 24.
199
See Dkt. No. 169 at 36-37; see also SB Ex. 29 at 50:7-12.
200
Dkt. No. 92 at 22.
201
Dkt. No. 147-4 at 35.
193

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

Again, the Court looks to the intrinsic evidence because it is the primary source for

1
2

determining the meaning of a claim. 202 The dynamic time window feature of the claim was

3

discussed in the file history of the ‘079 Patent. 203 Specifically, in an amendment dated January 25,

4

2002, the applicant explained how the process of “grouping validated data records to episode

5

treatment category” and the dynamic time window” were implemented in the Seare Patents. 204

6

OptumInsight argues that this explanation makes it clear that the episode treatment category has an

7

associated dynamic time window and that dynamic time window is used to group claims data

8

associated with the episode treatment category. 205 This Court must walk the fine line of using the

9

specification to interpret the meaning of a claim without importing limitations from the
specification into the claim. 206 However, the claim language, when properly construed, a genuine

11
United States District Court
Northern District of California

10

issue of material fact existed as to whether accused Cave Grouper contained, literally, every

12

limitation of properly construed claims of the Seare Patents, precluding summary judgment of

13

noninfringement.

14

Accordingly, CCGroup’s summary judgment for non-infringement is DENIED because the

15

Court finds that there is a material factual dispute as to whether CCGroup’s Cave Grouper directly

16

infringes Claims 1 of the Seare Patents.

17

IV.

18

For the foregoing reasons, the Court GRANTS in part and DENIES in part OptumInsight’s

19

summary judgment. The Court DENIES CCGroup’s summary judgment.

CONCLUSION

20

1. Court DENIES OptumInsight’s summary judgment as to the invalidity of the ‘126 Patent.

21

2. Court DENIES OptumInsight’s summary judgment as to the noninfringement of the ‘126
Patent.

22

3. Court DENIES OptumInsight’s summary judgment as to the validity of the Seare Patents

23

relating to the Cave Article.

24
25
202

26
27
28

Phillips, 415 F.3d 1312-1324.
See SB Ex. 28 at ING00001559-68 at 4-7
204
See id.; see also Dkt. No. 169 at 37.
205
See Dkt. No. 169 at 37.
206
Phillips, 415 F.3d 1323.
203

31
Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT

1
2
3
4
5

4. Court GRANTS OptumInsight’s summary judgment as to the validity of the Seare Patents
relating to the Aetna Proposal.
5. Court DENIES CCGroup’s summary judgment as to the noninfringement of the Seare
Patents.
6. Court DENIES CCGroup’s summary judgment as to the invalidity of the Seare Patents.

6
7
8
9
10

IT IS SO ORDERED.
Dated: February 20, 2015
_
_ __ _____________
EDWARD J. DAVILA
United States District Judge

___________

United States District Court
Northern District of California

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Case No.: 5:11-cv-00469-EJD
ORDER GRANTING IN PART AND DENYING IN PART OPTUMINSIGHT’S SUMMARY
JUDGMENT; DENYING CCGROUP’S SUMMARY JUDGMENT