Masimo Corporation v. Philips Electronics North America Corporation et al
Filing
38
MEMORANDUM AND ORDER Philips' motion to consolidate 15 is GRANTED and its motion to stay 15 is DENIED. Signed by Judge Mary Pat Thynge on 4/16/2012. (cak)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
MASIMO CORPORATION,
:
:
Plaintiff,
:
:
v.
:
:
PHILIPS ELECTRONICS NORTH
:
AMERICA CORPORATION and PHILIPS :
MEDIZIN SYSTEME BÖBLINGEN GMBH, :
:
:
Defendants.
:
Civil Action No. 11-742-LPS-MPT
MEMORANDUM ORDER
I. INTRODUCTION
Presently before the court is a motion to consolidate and stay filed by
defendants, Philips Electronics North American Corporation and Philips Medizin
Systeme Böblingen GmbH (collectively “Philips”), in a patent infringement suit brought
by plaintiff, Masimo Corporation (“Masimo”). For the reasons discussed herein, Philips’
motion will be granted in part and denied in part.
II. BACKGROUND
Masimo and Philips manufacture competing products in pulse oximetry. Pulse
oximetry is a non-invasive procedure for measuring the level of oxygen saturation in a
patient’s arterial blood. Pulse oximetry systems are standard equipment in many
clinical settings, either as stand-alone devices, or, more commonly, as components of
integrated multi-parameter patient monitors which track pulse, temperature, and other
physiological vital signs. They are composed of a sensor; a monitor, also sometimes
referred to as a board, socket, or pulse oximeter, which contains the electronics that
process the signal and produce a saturation reading; and may have a cable which
connects the sensor and monitor.
Modern pulse oximeters permit users to monitor patients continuously and in real
time. Where previous technology could not provide accurate data in the presence of
motion induced “noise,” the products manufactured by both Masimo and Philips remove,
filter, or circumvent the “noise” to generate more accurate data points.
A.
Masimo I1
Masimo brought suit against Philips, asserting infringement of fourteen patents.2
Philips answered asserting ten patents3 and seven antitrust counterclaims.4 After full
briefing, the court bifurcated and stayed Philips’ antitrust counterclaims.5
For litigation and trial management purposes, the parties were ordered to reduce
the number of patents involved to a more manageable level. The parties were initially
able to reduce the original twenty-four patents to fourteen. Thereafter, the court
reduced the number of patents to seven. Masimo had to select four of its remaining
patents, while Philips had to select three of its remaining patents.6 Masimo chose U.S.
Patent No. 6,263,222 (the “‘222 patent”), U.S. Patent No. 5,632,272 (the “‘272 patent”),
U.S. Patent No. 7,215,984 (the “‘984 patent”), and U.S. Patent No. 6,699,194 (the “‘194
1
“Masimo I” refers to C.A. No. 09-080 LPS-MPT. Any citation to this docket will
consist of the docket information followed by “(Masimo I)”.
2
D.I. 1; D.I. 12 at 2-4, ¶¶ 7-20 (Masimo I).
3
D.I. 15 at 53-62 (Masimo I).
4
Id. at 29-37.
5
D.I. 67 at 10; D.I. 86 at 12; D.I. 118 at 3 (Masimo I).
6
D.I. 148 at 3 (Masimo I).
2
patent”).7 Philips selected U.S. Patent No. 5,448,991 (the “‘991 patent”), U.S. Patent
No. 6,122,535 (the “‘535 patent”), and U.S. Patent No. 6,725,074 (the “‘074 patent”).8
On December 1, 2010, a Markman hearing was conducted, and a Report and
Recommendation on claim construction was issued on February 18, 2011.9 Both
parties filed objections.10 On January 17, 2012, Judge Leonard P. Stark adopted the
Report and Recommendation, with the exception of the term “a signal processor,” as
used in claim 17 of the ‘222 patent.11
B.
Masimo II12
Subsequently, Masimo filed a second action against Philips, alleging infringement
of two patents, U.S. Patent No. 7,530,955 (the “‘955 patent”) and U.S. Patent No.
8,019,400 (the “‘400 patent”).13 Philips answered, again raising seven antitrust
counterclaims.14 On November 22, 2011, Philips filed a motion to consolidate and stay
Masimo I and Masimo II.15 Masimo opposes this motion.16
III. DISCUSSION
A.
Consolidation of the Masimo I “Limbo” Patents17 and the Masimo II
7
D.I. 164 at 2 (Masimo I).
D.I. 163 at 3 (Masimo I).
9
D.I. 210 (Masimo I).
10
D.I. 218; D.I. 219 (Masimo I).
11
D.I. 319 (Masimo I).
12
“Masimo II” refers to C.A. No. 11-742 LPS-MPT. Any citation to this docket will
consist of the docket information followed by “(Masimo II)”.
13
D.I. 1; D.I. 7 at 2-4 (Masimo II).
14
D.I. 11 at 18-25 (Masimo II). These counterclaims were similar to those stayed
in Masimo I.
15
D.I. 15; D.I. 16 (Masimo II).
16
D.I. 23 (Masimo II).
17
D.I. 148 (Masimo I). As noted, seven out of the fourteen remaining patents
were selected for trial. The remaining seven unselected patents are referred to as the
8
3
Patents18
Under FED. R. CIV. P. 42(a), “courts have the authority to consolidate actions
involving a common question of law or fact.”19 The court has broad discretionary power
in deciding whether to consolidate cases and typically “balance considerations of
efficiency, expenses, and fairness.”20 Although there may be common issues between
actions, a prerequisite to consolidation, this does not mandate a joint trial.21
1.
Similarity of Patents
Philips argues “Masimo II involves the same family of patents, the same
technology and the same accused products as Masimo I.”22 Similar technologies at
issue and the same parties in each case may “lead the court to conclude that judicial
resources likely will be conserved by consolidating [the] cases.”23 In determining
whether the technologies at issue are similar, the court can look to which class, or
subclass, the United States Patent and Trademark Office (“PTO”) has classified each of
the patents.24
The four Masimo limbo patents25 and their United States Patent Classification
Class/Subclass include: U.S. Patent No. 7,509,154 (the “‘154 patent”) (600/323;
“limbo” patents.
18
March 28, 2012 Teleconference Transcript (“Tr”) at 74:20-21 (Masimo I).
19
Abbott Diabetes Care, Inc. v. Dexcom, Inc., C.A. No. 06-514 GMS, 2007 WL
2892707, at *3 (D. Del. Sept. 30, 2007).
20
Id.
21
Cedars-Sinai Med. Ctr. v. Revlon, Inc., 111 F.R.D. 24, 32 (D. Del. 1986).
22
D.I 16 at 5 (Masimo I).
23
Abbott, 2007 WL 2892707, at *4.
24
Id. at *4 n.5.
25
D.I. 140 at 2; D.I. 162 at 3 (Masimo I).
4
600/324; 600/336),26 U.S. Patent No. 6,157,850 (the “‘850 patent”) (600/323; 600/336;
600/509; 600/529),27 U.S. Patent No. 7,530,949 (the “‘949 patent”) (600/300; 600/323),28
and U.S. Patent No. 6,002,952 (the “‘952 patent”) (600/310; 600/481; 600/502)29. The
three Philips limbo patents30 and their United States Patent Classification
Class/Subclass include: U.S. Patent No. 5,820,550 (the “‘550 patent”) (600/323;
600/336; 356/41),31 U.S. Patent No. 5,337,745 (the “‘745 patent”) (128/633; 128/664;
128/665; 356/39),32 and U.S. Patent No. 5,170,786 (the “‘786 patent”) (128/633;
128/665)33. The two Masimo II patents34 and their United States Classification
Class/Subclass include the ‘955 patent (600/502; 600/324)35 and the ‘400 patent
(600/323; 600/336)36.
Similarly to the finding in Abbott,37 the Masimo II patents and all but two of the
Masimo I limbo patents are in Class 600. Although the other two Masimo I limbo
patents are listed in Class 128, “Class 600 is an integral part of this Class.”38 Further,
all of the Class 600 patents fall within Subclasses 502, 323, 324, or 336. Thus, “[b]ased
26
D.I. 140, Ex. 7 (Masimo I).
Id., Ex. 2.
28
Id., Ex. 8.
29
Id., Ex. 4.
30
D.I. 140 at 2; D.I. 162 at 3 (Masimo I).
31
D.I. 140, Ex. 12 (Masimo I).
32
Id., Ex. 10.
33
Id., Ex. 9.
34
D.I. 7 at 2, ¶¶ 7-8 (Masimo II).
35
Id., Ex. 1 at 2.
36
Id., Ex. 2 at 81.
37
Abbott, 2007 WL 2892707, at *4 n.5.
38
Class Schedule for Class 128 SURGERY, United States Patent and
Trademark Office,
http://www.uspto.gov/web/patents/classification/uspc128/sched128.htm (last visited Apr.
5, 2012).
27
5
on this evidence, . . . the PTO found the technologies in the . . . [p]atents related.”39
2.
Delay
Masimo contends the court should deny any consolidation that causes
delay. Further, Masimo argues consolidation would place the Masimo II patents into an
indefinite “limbo” status.40 Philips counters that proceeding on the newly asserted
patents at the present stage of Masimo I would be duplicative, wasteful, and
burdensome.41
At the time of the briefing on Philips’ motion, the parties were awaiting a decision
on their objections to claim construction.42 Those issues were resolved on January 17,
2012.43 Thereafter, at the request of the parties, various stipulations and orders were
issued extending certain deadlines in Masimo I.
On March 19, 2012, the parties as ordered submitted a joint status report which
included a joint expert discovery and case dispositive motions schedule for the seven
selected patents in Masimo I; their respective proposed schedules for the limbo patents
in Masimo I and the two patents in Masimo II; and their estimates for the number of
claim terms to be construed for the limbo patents in Masimo I and the patents in
Masimo II.44 Those proposals are presently under consideration by the court.
3.
Injunctive Relief
39
Abbott, 2007 WL 2892707, at *4 n.5.
D.I. 23 at 9 (Masimo II).
41
D.I. 25 at 7 (Masimo II).
42
Id. at 5-6.
43
D.I. 319 (Masimo I).
44
D.I. 327 (Masimo I).
40
6
Masimo contends it has been prejudiced by the delay to date in Masimo I,
and any further delay may prevent injunctive relief in Masimo II.45 It is not clear whether
Masimo is referencing a preliminary or permanent injunction, or both.
a.
Preliminary Injunction
A district court has discretion, under 35 U.S.C. § 283, to grant or deny a
preliminary injunction in a patent infringement case. Under 35 U.S.C. § 283, a court can
“grant injunctions in accordance with the principles of equity to prevent the violation of
any right secured by patent, on such terms as the court deems reasonable.” In order to
obtain a preliminary injunction, a moving party must establish: “(1) a reasonable
likelihood of success on the merits; (2) irreparable harm if an injunction is not granted;
(3) a balance of hardships tipping in its favor; and (4) the injunction’s favorable impact
on the public interest.”46 No one factor is dispositive, as the district court must weigh
each factor.47 The moving party must “demonstrate both a reasonable likelihood of
success on the merits and irreparable harm.”48
Although Masimo suggests prejudice by the delay to date, with future delay
potentially preventing injunctive relief on the Masimo II patents, it never proceeded for a
preliminary injunction in Masimo I. Further, neither party has presented sufficient
45
D.I. 23 at 9-10 (Masimo II).
Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed.
Cir. 2001) (citing Reebok Int’l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555 (Fed. Cir.
1994)).
47
Digene Corp. v. Ventana Med. Sys., Inc., 484 F. Supp. 2d 274, 279 (D. Del.
2007) (citing Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1451 (Fed. Cir. 1988)).
48
Digene, 484 F. Supp. 2d at 279 (citing Reebok, 32 F.3d at 1555-57).
46
7
evidence or information that either party is likely to prevail at trial over the other,49 nor
has Masimo demonstrated irreparable harm. It argues because of expiry, injunctive
relief for certain patents may be unavailable.
b.
Permanent Injunction
For a permanent injunction, a plaintiff must demonstrate: “(1) that it has
suffered an irreparable injury; (2) that remedies available at law, such as monetary
damages, are inadequate to compensate for that injury; (3) that, considering the
balance of hardships between the plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not be disserved by a permanent
injunction.”50 A district court’s decision to grant or deny permanent injunctive relief is an
act of equitable discretion, “reviewable on appeal for abuse of discretion.”51
Although Masimo and Philips are competitors in the market involving the
technology of the limbo and Masimo II patents, the parties have raised cross-patent
claims, with counterclaims of non-infringement and invalidity, against each other,
making the probability of injunctive relief uncertain. Again, neither has presented
sufficient evidence or information that either party is likely to prevail at trial over the
other,52 nor has irreparable harm been demonstrated. As noted previously, Masimo’s
concern is the unavailability of injunctive relief due to expiration of certain patents
resulting from the passage of time.
49
Masimo Corp. v. Philips Elecs. N. Am. Corp., 742 F. Supp. 2d 492, 497, 50001 (D. Del. 2010).
50
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
51
Id.
52
Masimo, 742 F. Supp. 2d at 497, 500-01 (Masimo I).
8
4.
Analysis
The related technologies at issue in the Masimo I limbo patents and the
Masimo II patents involve the same parties and same products, and thus strongly
indicates judicial resources are likely to be conserved by consolidating the limbo and
Masimo II patents. Although the two matters involve different patents with different
claims, the issues in both cases are closely intertwined, and likely will involve the same
witnesses and similar documentary evidence and exhibits.
B.
Stay of the Masimo I Limbo Patents and the Masimo II Patents
Courts have broad discretionary power to stay proceedings, and in so
determining, apply the following factors: “(1) whether a stay would unduly prejudice or
present a clear tactical advantage to the nonmovant; (2) whether a stay will simplify the
issues and trial of the case; (3) whether discovery is completed; and (4) whether a trial
date has been set.”53 A court may also consider “(1) the length of the requested stay
[and] (2) the ‘hardship or inequity’ that the movant would face in going forward with the
litigation.”54 The party seeking a stay “must make out a clear case of hardship or
inequity in being required to go forward, if there is even a fair possibility that the stay for
which he prays will work damage to someone else.”55
1.
Undue Prejudice or Clear Tactical Advantage to Masimo
Masimo argues a stay is prejudicial by causing further delay and
53
nCube Corp. v. Seachange Int’l. Inc., C.A. Nos. 01-011 JJF, 09-573 JJF, 2010
WL 2266335, at *2 (D. Del. June 4, 2010).
54
St. Clair Intellectual Prop. Consultants, Inc. v. Fujifilm Holdings Corp., C.A. No.
08-373 JJF-LPS, 2009 WL 192457, at *2 (D. Del. Jan. 27, 2009).
55
Id. (quoting Landis v. N. Am. Co., 299 U.S. 248, 255 (1936)).
9
potentially eliminating injunctive relief. Masimo also contends Philips delayed
addressing Masimo’s patents for over a decade, leading Masimo to believe there were
no patent issues. Some of Masimo’s asserted patents have already expired during the
pendency of Masimo I, while the Masimo II patents do not expire until 2015 and 2017.
Masimo maintains Philips’ proposed stay would eliminate any ability to obtain
meaningful injunctive relief,56 specifically the ‘955 patent of Masimo II.57
Philips counters that any delay is not its fault. It notes Masimo delayed filing any
action for ten years and instead sought a business deal.58 Although Philips and Masimo
entered into an OEM agreement, Masimo’s patent concerns were never resolved.59
Importantly, Masimo acknowledged it could have sued Philips for patent infringement at
any time.60
Further, Philips maintains Masimo could have added the ‘955 patent to Masimo
I.61 The issue date of the ‘955 patent was May 12, 2009.62 Although Masimo filed an
amended complaint on the same day, it did not add the ‘955 patent to Masimo I.63 Even
after the deadline to amend pleadings was extended to April 21, 2010,64 Masimo did not
add the ‘955 patent to the first case. Thus, according to Philips, Masimo’s claim of
substantial prejudice from any future delay of Masimo II is specious, and confirms
56
D.I. 23 at 3, 11 (Masimo II).
The ‘955 patent is one of the patents asserted in Masimo II. The other is the
‘400 patent.
58
D.I. 25 at 3 (Masimo II).
59
D.I. 23, Ex. 1 at 209:22, 210:1-6, 211:11-13 (Masimo II).
60
D.I. 25, Ex. N at 216:12-18 (Masimo II).
61
D.I. 25 at 6 (Masimo II).
62
Id.
63
D.I. 12 (Masimo I).
64
D.I. 104 at 1 (Masimo I).
57
10
Masimo’s intent to undo the court’s narrowing efforts, after significant discovery focusing
on the selected patents, including over 300 hours of deposition, has occurred in Masimo
I.65
However, three of Masimo’s asserted patents have expired, while the two new
asserted patents do not expire until at least 2015 and 2017.66 With the passage of time,
Masimo faces the prospect of litigating expired or nearly-expired patents.67 Further, the
time frame for trial in either Masimo I and II is uncertain.68 Philips’ position likely results
in a stay in the Masimo I limbo patents and the Masimo II patents for years rather than
months. Further, it is uncertain whether resolution of the selected Masimo I patents
would settle any issues relating to the Masimo I limbo patents and the Masimo II
patents.
2.
Simplification of the Issues and Trial of the Case
When the court required the parties to reduce the number of patents for
trial, its focus was not just directed to limiting claim construction, but to develop a clear,
65
D.I. 15 at 8 (Masimo II).
D.I. 23 at 11 (Masimo II).
67
St. Clair, 2009 WL 192457, at *2.
68
D.I. 327 (Masimo I). The parties jointly propose a schedule with a trial date of
June 21, 2013 for the Masimo II patents. Masimo also proposes the same schedule,
including the trial date, for the Masimo I limbo patents. Philips proposed schedule for
the Masimo I limbo patents is approximately nine months later than Masimo’s proposed
schedule. Further, in the parties’ scheduling proposal for Masimo II, the exchange of
expert reports, other expert discovery and summary judgment motions will occur over a
six and a half month period after the Markman ruling issues from the claim construction
hearing occurring on November 2, 2012. Six and a half months from that date is midMay 2013, leaving a month for the court to decide case dispositive motions before the
proposed trial date. The parties proposed schedule assumes no time for objections to
claim construction or case dispositive motions, which obviously would result in further
delays in the schedule. The proposed trial date is probably unrealistic.
66
11
orderly presentation of the matter to the jury and to enable the jury to absorb the
technical information, analyze the facts, and apply the law to the facts dealing with
infringement and the various issues related to invalidity.69 That intent was the guide.
Philips contends “any potential settlement caused by resolution of issues in
Masimo I will almost certainly include all patents currently in litigation between the
parties, obviating the need for a second phase of this case.”70 According to Philips,
“many issues in Masimo I will have a direct and substantial impact on the nine additional
patents, narrowing discovery issues.”71 The accuracy of those comments is at best
theoretical. Despite the considerable discovery that has occurred for the selected
Masimo I patents, Philips represents significant discovery is necessary for the remaining
Masimo I patents, as well as the Masimo II patents. Further, despite the
interrelationship among the sixteen Masimo I and II patents, Philips estimates an
additional twenty-four claim terms require construction.72
3.
Discovery
Philips argues upon consolidation, the ‘955 and ‘400 patents should be
stayed because moving forward “would unnecessarily force additional and duplicative
discovery, depositions, and Markman proceedings.”73 Further, Philips suggests that
new or different discovery will be needed for the remaining Masimo I and Masimo II
patents. Masimo, on the other hand, maintains significant discovery already conducted
69
D.I. 148 (Masimo I).
D.I. 25 at 8 (Masimo II).
71
Id.
72
D.I. 327 at 8 (Masimo I).
73
D.I. 16 at 8 (Masimo II).
70
12
in Masimo I will be applicable to Masimo II,74 so any additional discovery would be “quite
limited.”75 As evidenced by the section above, while certain discovery already
completed in Masimo I will be relevant to both cases, the additional discovery necessary
for the remaining Masimo I patents and the Masimo II patents is disputed.
4.
Trial Date
When a trial date has not been set, a stay may be entered before any
party incurs substantial litigation-related expenses.76 No trial date has been set in either
Masimo I, for any of the patents, or in Masimo II.
5.
Length of the Requested Stay
A court has the power to “hold one lawsuit in abeyance to abide the
outcome of another which may substantially affect it or be dispositive of the issues.”77
Masimo argues Philips’ proposal operates as an indefinite stay.78 Philips contends a
stay should continue until the Masimo I selected patents are litigated.79 While the
parties have submitted a proposed schedule for this litigation moving forward, the actual
the length of the stay is unknown, but clearly could last for years considering post trial
briefing and appeal. As noted previously, some of Masimo’s limbo patents have
expired, and others, selected or not, are expected to expire in the near future. Even the
Masimo II patents have a life expectancy of approximately five years.
74
D.I. 23 at 14 (Masimo II).
Id.
76
Alloc, Inc. v. Unilin Decor N.V., C.A. No. 03-253 GMS, 2003 WL 21640372, at
*3 (D. Del. July 11, 2003).
77
Bechtel Corp. v. Laborer’s Int’l Union, 544 F.2d 1207, 1215 (3d Cir. 1976).
78
D.I. 23 at 15 (Masimo II).
79
D.I. 16 at 7-9 (Masimo II).
75
13
Resuming litigation after a protracted stay carries distinct problems associated
with the passage of time, such as stale evidence, faded witnesses’ memories, and lost
documents and information.80 As Philips has emphasized, the discovery in Masimo I
focused on the selected patents, with substantial discovery required for the remaining
Masimo I patents, such as addressing the different claims of the unselected patents,
depositions of the inventors related to those claims and different patents, preparation of
experts on technical and damages issues, and investigating noninfringing alternatives
and other prior art.81
6.
Hardship or Inequity Philips Would Face In Going Forward
With the Litigation
Philips contends that “[a]llowing Masimo to increase and/or reselect
patents for trial will create hardship for Philips.”82 Further, Philips argues moving
forward with the ‘955 and ‘400 patents “would unnecessarily force additional and
duplicative discovery, depositions, and Markman proceedings.”83 Nevertheless, a
showing of hardship or inequity in proceeding with the litigation is not an absolute
requirement for a stay, but “is ‘generally’ needed to show that the balance of equities
favors a stay.”84
The court will not allow Masimo to reselect patents in the Masimo I proceedings,
and recently denied Masimo’s attempt to add one of the limbo patents, the ‘850 patent,
80
Cooper Notification, Inc. v. Twitter, Inc., C.A. No. 09-865 LPS, 2010 WL
5149351, at *4 (D. Del. Dec. 13, 2010).
81
Tr. at 68:4-69:5.
82
D.I. 25 at 10 (Masimo II).
83
D.I. 16 at 8 (Masimo II).
84
Cooper, 2010 WL 5149351, at *2.
14
to the selected patents in Masimo I.85 Additionally, as mentioned above, the impact of
the Masimo I litigation on the Masimo I limbo patents and the Masimo II patents is
uncertain.
7.
Analysis
Having carefully reviewed all of the foregoing factors, the court concludes
the competing interests do not favor a stay.
IV. CONCLUSION
Therefore,
IT IS ORDERED that consistent with the reasoning herein, Philips’ motion (D.I.
15) to consolidate is GRANTED and its motion to stay (D.I. 15) is DENIED.
Date: April 16, 2012
/s/ Mary Pat Thynge
UNITED STATES MAGISTRATE JUDGE
85
Tr. at 72:4-11. During the March 28, 2011 discovery teleconference, Masimo
sought to add the ‘850 patent to the original patents selected in Masimo I. When the
parties were ordered to chose their initial patents (four for Masimo, three for Philips), the
court never directed how that selection should occur. The selection process was left to
the discretion of the parties. At that time, Masimo did not suggest, object, or argue its
number was insufficient, or the court’s approach was inappropriate. Masimo’s request
to add the ‘850 patent came after the completion of claim construction. For the reasons
noted during the discovery teleconference, Masimo’s request to add the ‘850 patent was
denied. The same logic applies to incorporating for trial the ‘955 and ‘400 patents of
Masimo II with the selected patents of Masimo I.
15
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