Baxter International, Inc. v. CareFusion Corporation et al

Filing 108

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 3/20/2017:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BAXTER INTERNATIONAL, INC.,
Plaintiff,
v.
CAREFUSION CORPORATION and BECTON,
DICKINSON AND COMPANY,
Defendants.

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No. 15-cv-9986
Hon. Amy J. St. Eve

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, United States District Court Judge:
Defendants CareFusion Corporation and Becton, Dickinson and Company (collectively,
“Defendants”) have moved for leave to amend their answer and counterclaims to assert
inequitable conduct pursuant to Federal Rule of Civil Procedure 15. (R. 79.) Plaintiff Baxter
International, Inc. (“Baxter”) opposes Defendants’ motion on the grounds that amendment is
futile and that Defendants failed to act diligently in seeking leave to amend. (R. 94.) For the
following reasons, the Court grants Defendants’ motion.
BACKGROUND
I.

Baxter’s Allegations and the Patents at Issue
In its First Amended Complaint, Baxter alleges that Defendants’ Alaris System—an

infusion pump system that enables the delivery of intravenous (“IV”) fluids and drugs—infringes
three of Baxter’s patents, U.S. Patent Nos. 5,764,034 (’034 Patent); 5,782,805 (’805 Patent); and
6,321,560 (’560 Patent). (R. 29 at ¶¶ 9, 11, 25–45.)1

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Defendants assert that only the ’034 Patent and the ’805 Patent are unenforceable based on inequitable conduct.
(R. 77-1, 24, ¶¶ 26–44.) Thus, the ’560 Patent is not pertinent to the current motion.

The ‘034 Patent, entitled “Battery Gauge For A Battery Operated Infusion Pump” was
filed on April 10, 1996. (R.29-1, ‘034 Patent, 1). The ‘034 Patent lists two inventors, George
Bowman and Grace Esche, and is assigned to Baxter. (Id.). The ‘034 Patent is directed to an
infusion pump capable of estimating the amount of time left on a battery by monitoring both the
voltage available from the battery and the amount of current flowing from the battery. (Id., col.
2: 14-16, 20-23). The summary of the ‘034 Patent recites: “[t]he present invention provides a
medical infusion pump which incorporates cost-effective, sensitive battery monitoring.” (Id.,
col. 2: 11-13). The summary further discloses an electric circuit which enables a “sampling
technique [that] alternates between sampling battery voltage and sampling current drain.” (Id.,
col. 2: 25-28). “A method is then applied to the sampling signals by a microprocessor which
determines the amount of time left under battery power.” (Id., col. 2: 28-30). The specification
recites that the “invention also provides several troubleshooting alert, alarm and failure
messages” to health care providers. (Id., col. 8: 15-16). The alert condition includes “a battery
low alert, which indicates that the auxiliary battery has less than a predetermined amount of
infusion time left.” (Id., col. 8: 29-32). The alarm condition “indicates that the auxiliary battery
charge has diminished below the level necessary to continue infusion.” (Id., col. 8: 34-35).
The ’805 Patent, entitled “Medical Infusion Pump,” was also filed on April 10, 1996. (R.
29-2, ’805 Patent, 1.) It lists the following inventors: Randolph Meinzer, Grace Esche, Eric
Michael, Kimball Knowlton, Cynthia Bennett, Eric Linner, Kenneth Lynn, Joseph Kruft, Eileen
Hirotsuka, Daniel Kusswurm, Jane Zeisloft, Janice Stewart, Debra Gelhar, and Gilbert Rivas.
(Id.) The summary of the ’805 Patent indicates that “[t]he present invention provides a medical
infusion pump which is readily adaptable to use in multiple clinical settings without unduly
burdening the user with programming parameters for such a variety of uses.” (Id. col. 1:65–67,

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col. 2:1–3.) The invention “allows the user to select the number of flow channels available or to
allow for existing pumps to add flow channels as needed.” (Id., col. 2:2–5.) The pump contains
“a display area for displaying user interface information” on the main body portion as well as “an
auxiliary display area for displaying supplemental user interface information.” (Id. col. 2:12–
14.)
II.

Defendants’ Inequitable Conduct Allegations
Defendants seek to amend their answer and counterclaims to assert inequitable conduct

based on Baxter’s prosecution of the applications that led to the issuance of the ’034 and ’805
Patents. (R. 77-1, Defs.’ Proposed Am. Answer & Counterclaims, 21, 24–29.) In short,
Defendants claim that Baxter omitted material information during the course of prosecuting the
two patents—specifically, the existence of two infusion pumps that anticipated and/or rendered
obvious Baxter’s patent claims—that would have caused the PTO not to issue the ’034 and ’805
Patents.
Defendants allege that the ’034 and ’805 Patents are “based on a Baxter product
alternatively called the ‘Colleague’ or ‘Odyssey’ infusion pump.” (Id. at 24, ¶ 27.) When Baxter
was developing the Colleague/Odyssey infusion pump, “its primary competitors in the infusion
pump market included CareFusion’s predecessors IVAC Corporation (‘IVAC’) and IMED
Corporation (‘IMED’).” (Id. at 25, ¶ 28.) At that time, IVEC marketed the Signature Edition
(“SE”) infusion pumps, which were available in single-channel (“model 7100” or “SE I”) and
dual-channel (“model 7200” or “SE II”) configurations. (Id. at 25, ¶ 29.) “The only material
difference between the [two SE] pumps was the number of pumping channels. The other
relevant aspects of the pumps, including the battery monitoring user interface features, were the

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same.” (Id.) Also at that time, IMED marketed the Gemini line of infusion pumps, “including
the four-channel Gemini PC-4 infusion pump.” (Id. at 25, ¶ 30.)
On approximately June 30, 1995—about nine months before Baxter filed its applications
for what became the ’034 and ’805 Patents—Baxter filed an application with the U.S. Food and
Drug Administration (“FDA”) for clearance to market the Odyssey Volumetric Infusion Pump.
(Id. at 25, ¶¶ 31, 36.) In this application, Baxter identified three infusion pumps that the FDA
had already approved as being “substantially equivalent” to the Odyssey pump: (1) IMED’s
Gemini PC-4 Volumetric Infusion Pump/Controller, cleared on June 9, 1992; (2) Abbott
Laboratories’ LifeCare 175 Breeze Volumetric Infusion System, cleared on April 7, 1993; and
(3) IVAC’s Signature Edition I Volumetric Infusion Pump, Model 7100, cleared on August 19,
1993. (Id. at 25, ¶ 32.) In its FDA submission, Baxter included manuals for the three predicate
devices it identified as well as a “feature comparison chart” comparing the Odyssey pump to the
three predicate pumps. (Id. at 26, ¶ 33.) Based on its comparison of the predicate devices and
the Odyssey pump, Baxter represented that “‘the indication statement for the Odyssey
Volumetric Infusion Pump is almost identical to the indication statement for IVAC’s Signature
Edition™ Volumetric Infusion Pump, Model[] 7100’”2 and that “the Colleague pump ‘does not
have any unique technological features as compared to currently marketed pumps.’” (Id. at 27,
¶ 34.) According to Defendants, Baxter’s FDA submission amounts to an admission that “the
Signature Edition and Gemini PC-4 pumps were known prior art.” (Id. at 25–26, ¶ 32.)
Defendants allege that the PTO would not have issued the ’034 and ’805 Patents if Baxter
“had disclosed the existence of the Gemini PC-4 infusion pump and the Gemini PC-4 manual” or
the “Signature Edition pumps and the Signature Edition I manual,” as it had in its FDA

2

By “indication statement,” Baxter is referring to Indications for Use Statements. See Indications for Use
Statement, FDA, https://www.fda.gov/RegulatoryInformation/Guidances/ucm080275.htm.

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application. (See id. at 27–28, ¶ 39–40.) Specifically, Defendants claim that the SE II (model
7200) pump—which Defendants allege is materially the same as the SE I (model 7100) pump—
“anticipates and/or renders obvious at least asserted claims 1–2, 5, 8–10, 24–26, 28–30, and 35
of the ’805 Patent and asserted claims 1–3 and 9–12 of the ’034 Patent.” (Id. at 27–28, ¶ 39.)
Additionally, Defendants claim that the Gemini PC-4 infusion pump anticipates and/or renders
obvious at least asserted claims 1, 3, 5, 8–10, 24–26, 28–29, 31, and 35 of the ’805 Patent and
claims 1–3 and 9–12 of the ’034 Patent. (Id. at 28, ¶ 40.) To support these contentions,
Defendants rely on charts of the “invalidity of asserted claims,” which Defendants attach to their
proposed amended answer and counterclaims. (Id. at 27–28, ¶¶ 39–40; Exs. A–D.)
Defendants allege that “many of the named inventors of the ’034 and ’805 Patents were
also actively involved in Baxter’s [FDA] submission for the Colleague/Odyssey pump, including
at least Randolph Meinzer, Grace Esche, Eric Michael, Kimball Knowlton, Cynthia Bennett, Eric
Linner, Kenneth Lynn, Joseph Kruft, Eileen Hirotsuka, Daniel Kusswurm, Jane Zeisloft, Janice
Stewart, Debra Gelhar, and Gilbert Rivas.” (Id. at 27, ¶ 37.) Ms. Esche testified at her
deposition that she was aware that IVAC, IMED, and Abbott marketed pumps that were in direct
competition with the Odyssey/Colleague pump, and Mr. Bowman similarly testified that he knew
IVAC was a direct competitor of Baxter. (Id. at 27, ¶ 38.) Both Esche and Bowman did not
provide an explanation of why the documents related to the predicate devices in Baxter’s FDA
application were not submitted to the PTO. (Id. at 28–29, ¶ 42.) Defendants claim that “[g]iven
the involvement of the named inventors of the ’034 and ’805 Patents in Baxter’s [FDA]
application for the Odyssey/Colleague infusion pump (the commercial embodiment of both
patents) and Baxter’s identification of the Signature Edition and Gemini PC-4 infusion pumps as
two of the three most relevant predicate devices to the FDA, the most reasonable inference is that

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Baxter’s named inventors deliberately withheld this prior art from the [PTO] in order to obtain
patent claims that would not otherwise have been allowed.” (Id. at 29, ¶ 43.)
III.

Procedural History
Pursuant to Local Patent Rule 2.3, Defendants served Baxter with their Initial Non-

Infringement, Unenforceability, and Invalidity Contentions in July 2016. (R. 81-3.) In those
contentions, Defendants asserted that the Gemini PC-4 pump and the SE II (model 7200) pump
anticipated or rendered obvious many of the claims in the ’034 and ’805 Patents. (Id. at 5, 8–9.)3
Defendants included detailed claim charts explaining where the elements of Baxter’s asserted
patent claims are found in the prior art. (Id., D-4, D-6, E-1, E-2.) Defendants also noted that
they “reserve[d] the right to amend or supplement [their] contentions if discovery or further
investigation reveals evidence of inequitable conduct or other bases of unenforceability, such as
the failure to disclose knowledge of a competitor’s on-sale, directly competing products during
prosecution of the ’034 patent[ and the] ’805 patent.” (Id. at 23.)
At a December 13, 2016 status conference, Defendants noted that the deposition
testimony of Bowman might reveal additional information related to its invalidity and
unenforceability contentions, but the parties could not schedule his deposition before
Defendants’ final contention deadline. (R. 81-4 at 9–10.) The Court instructed the parties “come
back in shortly after the deposition, and you can let me know at that point orally if there is
something that was brought up that [would warrant amendment].” (Id. at 10.) On December 20,
2016, Defendants took Esche’s deposition. (R. 77-3.) Two days later, Defendants served their
Final Unenforceability and Invalidity Contentions, in which, among other things, Defendants
asserted in a section regarding unenforceability that Baxter was aware of the Gemini PC-4 and
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The claims Defendants contended were obvious or lacking novelty are the same as those Defendants contend the
PTO would not have allowed if Baxter had disclosed the Gemini PC-4 and SE pumps. (See R. 81-3 at 5, 8–9; R. 771 at 27–28, ¶¶ 39–40.)

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the SE I pump but “failed to provide prior art documents in its possession for such infusion
pumps to the [PTO] during the prosecution of the asserted patents.” (R. 77-4 at 28.) On January
18, 2017, Defendants took Bowman’s deposition in which he testified that he was aware of
IVAC as a competing pump manufacturer and did not know why the Gemini PC-4 or the SE
pumps were excluded from the patent applications. (R. 77-5 at 70, 81–82, 84.) On January 23,
2017, Defendants filed the motion now before the Court.
LEGAL STANDARD
Even in patent cases, regional circuit law governs procedural issues that are not specific
to patent law, including the standards of Rule 15(a)(2). See Exergen Corp. v. Wal-Mart Stores,
575 F.3d 1312, 1318 (Fed. Cir. 2009); Waters Indus., Inc. v. JJI Int’l, Inc., No. 11 C 3791, 2012
WL 5966534, at *1 (N.D. Ill. Nov. 28, 2012); see also SunPower Corp v. PaneClaw, Inc., No.
12-1633-MPT, 2016 WL 5107029, at *4, n.65 (D. Del. Sept. 19, 2016). Under Rule 15(a)(2), “a
party may amend its pleading only with the opposing party’s written consent or the court’s
leave.” Here, Baxter does not consent. (R. 94.) While the Rule further provides that “[t]he
court should freely give leave when justice so requires,” Fed. R. Civ. P. 15(a)(2), “district courts
have broad discretion to deny leave to amend where there is undue delay, bad faith, dilatory
motive, repeated failure to cure deficiencies, undue prejudice to the defendants, or where the
amendment would be futile.” Arreola v. Godinez, 546 F.3d 788, 796 (7th Cir. 2008); see also
Heng v. Heavner, Beyers & Mihlar, LLC, 849 F.3d 348, 354 (7th Cir. 2017). “A motion to
amend should state with particularity the grounds for the motion and should be accompanied by
the proposed amendment.” Gonzalez-Koeneke v. West, 791 F.3d 801, 806 (7th Cir. 2015)
(quoting Otto v. Variable Annuity Life Ins. Co., 814 F.2d 1127, 1139 (7th Cir. 1986)). An
amendment is futile if the amended claims could not survive a motion to dismiss under Rule

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12(b)(6). See Runnion ex rel. Runnion v. Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510,
524 (7th Cir. 2015); Naperville Smart Meter Awareness v. City of Naperville, 114 F. Supp. 3d
606, 611 (N.D. Ill. 2015); Waters, 2012 WL 5966534, at *1. When considering a Rule 12(b)(6)
motion, the Court assumes the truth of the counterclaim’s factual allegations. See Roberts v. City
of Chicago, 817 F.3d 561, 564 (7th Cir. 2016); DS Smith, 2016 WL 69632, at *1.
ANALYSIS
Baxter argues that the Court should deny Defendants’ motion because their amendment is
futile and because they failed to act diligently in bringing the current motion. (R. 94 at i.) The
Court addresses these contentions in turn.
I.

Futility
A.

Inequitable Conduct Pleading Standard

“Each individual associated with the filing and prosecution of a patent application has a
duty of candor and good faith in dealing with the [Patent and Trademark Office (‘PTO’)], which
includes a duty to disclose to the [PTO] all information known to that individual to be material to
patentability . . . .” 37 C.F.R. § 1.56(a); see also Honeywell Int’l Inc. v. Universal Avionics Sys.
Corp., 488 F.3d 982, 999 (Fed. Cir. 2007); DS Smith Plastics Ltd. v. Plascon Packaging, Inc.,
2016 WL 69632, at *3 (N.D. Ill. Jan. 6, 2016). “A breach of this duty—including affirmative
misrepresentations of material facts, failure to disclose material information, or submission of
false material information—coupled with an intent to deceive, constitutes inequitable conduct.”
Honeywell, 488 F.3d at 999; see also TransWeb, LLC v. 3M Innovative Properties Co., 812 F.3d
1295, 1303–04 (Fed. Cir. 2016) (“A judgment of inequitable conduct requires clear and
convincing evidence of materiality, knowledge of materiality, and a deliberate decision to
deceive.”); Weber-Stephen Prods. LLC v. Sears Holding Corp., No. 1:13-cv-01686, 2014 WL

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656753, at *2 (N.D. Ill. Feb. 20, 2014). Inequitable conduct is “the ‘atomic bomb’ of patent
law,” because unlike claim-specific validity defenses, it “renders the entire patent
unenforceable.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1288 (Fed. Cir.
2011) (en banc) (quoting Aventis Pharm. S.A. v. Amphastar Pharm., Inc., 525 F.3d 1334, 1349
(Fed. Cir. 2008) (Rader, J., dissenting)).
There are two elements in an equitable conduct claim: “(1) an individual associated with
the filing and prosecution of a patent application . . . failed to disclose material information” to
the PTO, and (2) “the individual did so with a specific intent to deceive the PTO.” Exergen
Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 n.3 (Fed. Cir. 2009); DS Smith, 2016 WL
69632, at *3. While inequitable conduct is a “broader concept than fraud,” a party must plead
inequitable conduct with particularity pursuant to Federal Rule of Civil Procedure 9(b).
Exergen, 575 F.3d at 1326–27; DS Smith, 2016 WL 69632, at *3. “Whether inequitable conduct
has been pleaded with particularity under Rule 9(b) is a question governed by Federal Circuit
law.” Exergen, 575 F.3d at 1318; Weber-Stephen, 2014 WL 656753, at *2. Under Federal
Circuit law, a party pleading inequitable conduct must set forth the “who, what, when, where,
and how of the material misrepresentation or omission committed before the PTO.” Exergen,
575 F.3d at 1327 (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)); DS
Smith, 2016 WL 69632, at *3. Rule 9(b) permits a party to allege a states of mind “generally.”4

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Even where Rule 9’s heightened pleading standards do not apply, Defendants must still plead in accordance with
Rule 8. See Ashcroft v. Iqbal, 556 U.S. 662, 686–87 (2009). Under Rule 8, a pleading must include “a short and
plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and
plain statement under Rule 8(a)(2) must “give the defendant fair notice of what the . . . claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41,
47 (1957)). A plaintiff's “[f]actual allegations must be enough to raise a right to relief above the speculative level.”
Id. Put differently, a pleading “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). In determining a pleading
under the plausibility standard, courts must “accept all well-pleaded facts as true and draw reasonable inferences in
[a plaintiff's] favor.” Roberts v. City of Chicago, 817 F.3d 561, 564 (7th Cir. 2016).

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Nevertheless, a pleading of inequitable conduct “must include sufficient allegations of
underlying facts from which a court may reasonably infer that a specific individual (1) knew of
the withheld material information or of the falsity of the material misrepresentation, and (2)
withheld or misrepresented this information with a specific intent to deceive the PTO.” Exergen,
575 F.3d at 1328–29; see also Delano Farms Co. v. Cal. Table Grape Comm’n, 655 F.3d 1337,
1350 (Fed. Cir. 2011); DS Smith, 2016 WL 69632, *6. “A reasonable inference is one that is
plausible and that flows logically from the facts alleged, including any objective indications of
candor and good faith.” Id. at 1329 n.5; Waters, 2012 WL 5966534, at *4.5
B.

Materiality

In a case like the one before the court alleging inequitable conduct based on an alleged
failure to disclose a prior art reference, Therasense makes clear that the materiality the proponent
of an inequitable conduct claim must prove is “but-for material[ity]”—meaning, the party must
show that the “PTO would not have allowed a claim had it been aware of the undisclosed prior
art.” Therasense, 649 F.3d at 1291; see also TransWeb, 812 F.3d at 1304; Weber-Stephen, 2014
WL 656753, at *2. As previously noted, a party pleading inequitable conduct must set forth the
“who, what, when, where, and how of the material misrepresentation or omission committed
before the PTO.” Exergen, 575 F.3d at 1327 (quoting DiLeo, 901 F.2d at 627)).
1.

The “who” of the material omissions

To plead the “who” aspect of materiality, Defendants must identify “the specific
individual associated with the filing or prosecution of the [patent] application . . ., who both
knew of the material information and deliberately withheld or misrepresented it.” Exergen, 575
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In 2011, the Federal Circuit, sitting en banc, tightened the proof requirements of inequitable conduct with respect
to the elements of materiality and intent. See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285,
1290–95 (Fed. Cir. 2011) (en banc); Waters, 2012 WL 5966534, at *4. It did not, however, “override Exergen’s
pleading requirements.” See Delano Farms, 655 F.3d at 1350, Waters, 2012 WL 5966534, at *4; accord WeberStephen, 2014 WL 656753, at *3 n.3.

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F.3d at 1329. It is not enough to refer generally to “[Baxter], its agents and/or attorneys.” Id.;
see also DS Smith, 2016 WL 69632, at *3. Defendants argue that they adequately plead the
“who” of inequitable conduct by “expressly identif[ying] Baxter’s named inventors Randolph
Meinzer, Grace Esche, Eric Michael, Kimball Knowlton, Cynthia Bennett, Eric Linner, Kenneth
Lynn, Joseph Kruft, Eileen Hirotsuka, Daniel Kusswurm, Jane Zeisloft, Janice Stewart, Debra
Gelhar, and Gilbert Rivas.” (R. 77 at 11.) Baxter does not dispute this. The Court therefore
accepts that Defendants have adequately pled the “who” component of materiality.
2.

The “what” and “where” of the material omissions

With respect to the “what” and “where” of the material omissions, Defendants must
identify “which claims, and which limitations in those claims, the withheld references are
relevant to, and where in those references the material information is found.” Exergen, 575 F.3d
at 1329; see also Weber-Stephen, 2014 WL 656753, at *3. Defendants contend that their
counterclaim meets these requirements as it (1) identifies the patent claims that the prior art
anticipates and/or render obvious, and (2) includes detailed claim charts “comparing the
limitations of those claims to the withheld prior art.” (R. 77 at 12.) Baxter argues that
Defendants have failed to plead the “what” and “where” of the allegedly material omissions for
two reasons. (R. 94 at 6–10.) Baxter’s arguments fall short.
First, Baxter contends that “not having submitted the same materials [it gave to the
FDA] . . . does not support any claim of inequitable conduct because there is no relationship
between ‘predicate device’ similarity and the claim element invalidity analysis required to show
but-for materiality.” (R. 94 at 10.) Baxter is correct to the extent that it argues that the
substantial similarity of medical devices for the purposes of FDA approval is irrelevant to the
question of patent infringement. See Johns Hopkins Univ. v. Datascope Corp., 543 F.3d 1342,

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1349 n.3 (Fed. Cir. 2008) (explaining that FDA equivalence is not relevant to whether patent
infringement occurred); see also Zenith Labs., Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418,
1423 (Fed. Cir. 1994) (“As we have repeatedly said, it is error for a court to compare in its
infringement analysis the accused product or process with the patentee’s commercial
embodiment or other version of the product or process; the only proper comparison is with the
claims of the patent.”). FDA proceedings, however, are not necessarily entirely irrelevant in
patent cases. Indeed, one of the cases Baxter cites, Abbott Point of Care, Inc. v. Epocal, Inc.,
CV-08-S-543-NE, 2012 U.S. Dist. LEXIS 54435, at *7–15 (D. Ala. Apr. 18, 2012), notes that
evidence of substantial similarity for FDA purposes may be relevant for purposes other than
proving infringement. While the Epocal court excluded such evidence because of the risk of
prejudice and jury confusion, this Court need not make evidentiary rulings at this juncture. 2012
U.S. Dist. LEXIS 54435, at *14.6
Defendants respond, however, that Baxter’s “inconsistent submissions to the FDA and
[PTO] are evidence of its knowledge and deceptive intent,” rather than evidence supporting the
“what” or “where” of materiality. The Court agrees. Thus, Baxter’s argument regarding FDA
equivalence is inapposite to the matter now under consideration. Furthermore, Defendants are
correct that an individual’s submission to the FDA may be relevant to show knowledge and
deceptive intent. See Bruno Indep. Living Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d

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The other cases Baxter cites are not on point. Two deal with similarity or equivalence for FDA purposes being
irrelevant to the question of patent infringement. See Ethicon Endo-Surgery, Inc. v. Hologic, Inc., 689 F. Supp. 2d
929, 936 (S.D. Ohio 2010); Retractable Techs., Inc. v. Becton, Dickinson & Co., No. 2:7-cv-250, 2009 WL
8725107, at *5 (E.D. Tex. Oct. 8, 2009). The other case Baxter cites concerns trade secret misappropriation. See
Cardiovention, Inc. v. Medtronic, Inc., 483 F. Supp. 2d 830, 840 (D. Minn. 2007). In that case, the court drew on
other courts having refused to allow FDA substantial equivalence evidence as an admission of infringement. See id.
Additionally, the court cited concerns related to unfair prejudice, delay, and time waste. See id. The court further
noted that FDA substantial equivalence “means that the proposed device has the same intended use as the predicate
device and that it either has the same technological characteristics as the predicate device or is as safe and effective
as the predicate device.” Id. The Court concluded that these issues were not relevant to the issue of whether two
devices were similar for purposes of the trade secret misappropriation claim. Id. at 840–41.

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1348, 1354 (Fed. Cir. 2005) (“The fact that an official of Bruno, who was involved in both the
FDA and PTO submissions, chose to disclose the Wecolator to the FDA, but not to the PTO,
certainly supports a finding of deceptive intent to withhold the disclosure from the PTO.”); see
also Merck & Co. v. Danbury Pharmacal, Inc., 873 F.2d 1418, 1422 (Fed. Cir. 1989); Dura
Operating Corp. v. Magna Int'l, No. 10-11566, 2011 WL 869372, at *12 (E.D. Mich. Mar. 10,
2011). Accordingly, Baxter’s first argument fails.
Second, Baxter argues Defendants’ claim charts do not show the “what” or “where” of
materiality because they “are largely based on other information about [the IMED and IVAC]
pumps—patents, technical documents, and different manuals—and not the manuals that Baxter
had in its possession, gave to the FDA but purportedly ‘withheld’ from the PTO.” (R. 94 at 7–8.)
Baxter’s argument is unavailing. Its argument is directed toward whether Defendants have
adequately pled that the individuals Defendants have identified knew of the materially withheld
information—a question that the Court takes up later in this opinion—rather than the question at
hand.
The claim charts are specific about which claims and limitations the prior art references
cover as well as where in the prior art there is material information going to the obviousness or
the lack of novelty of the relevant claims. See Power Integrations, Inc. v. Fairchild
Semiconductor Int'l, Inc., No. CIV. 08-309-JJF-LPS, 2009 WL 4928024, at *8 (D. Del. Dec. 18,
2009) (“The claim charts Power appended to the Counterclaims clearly identify ‘where’ in the
alleged prior art the material references can be found, and further identify the limitations in the
’972 patent to which they correspond.”), report and recommendation adopted, No. CIV. 08-309JJF-LPS, 2010 WL 2990039 (D. Del. July 22, 2010); Konami Dig. Entm’t Co. v. Harmonix
Music Sys., No. 6:08cv286-JDL, 2009 WL 5061812, at *2 (E.D. Tex. Dec. 14, 2009) (“The

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Court is similarly persuaded that Viacom has met the ‘what’ and ‘where’ requirements with
pleadings that identify charts of potentially invalidating Konami prior art games—on a claim-byclaim and limitation-by-limitation basis.”). Accordingly, Defendants have satisfied the “what”
and “where” elements of materiality.7
3.

The “why” and “how” of the material omissions

To plead the “why” and “how” aspects of materiality, Defendants must plead facts
indicating why “the withheld information is material and not cumulative” and how “an examiner
would have used this information in assessing the patentability of the claims.” Exergen, 575
F.3d at 1329–30; Weber-Stephen, 2014 WL 656753, at *3. Additionally, given Therasense’s
but-for materiality standard, “the court must determine whether there are sufficient allegations
from which a court may reasonably infer that ‘the PTO would not have allowed the claim if it
had been aware of the undisclosed prior art.’” Sloan Valve Co. v. Zurn Indus., Inc., No. 10-cv204, 2012 WL 1108129, at *5 (N.D. Ill. Apr. 1, 2012) (quoting Therasense, 649 F.3d at 1291–
94); accord DS Smith, 2016 WL 69632, at *4.
Baxter argues that Defendants fail to plead the “how” and “why” components of
materiality because they “fail[] to plead the non-cumulativeness of the allegedly withheld
information, and provide[] no explanation of how the allegedly withheld information would have

7
Baxter also argues that Defendants’ counterclaim fails because they do not “show details explaining the alleged
similarity” between the SE I (the pump Baxter submitted to the FDA) and the SE II (the pump Defendants discuss in
their claim charts). (R. 94 at 8–9.) This presents a question of knowledge—whether Baxter knew about the relevant
aspects of the SE II pump—rather than the question at hand. Moreover, Defendants plead that the SE I and SE II are
materially the same except for the number of pumping channels. (R. 77-1 at 25, ¶ 29.) Defendants need not prove
that this is true at this stage of the litigation.

Baxter also presents an argument in a footnote that omitted portions of a “feature comparison chart” it
submitted to the FDA, which Defendants depict in part in its counterclaim, “appear to refute [Defendants’
materiality] arguments.” (R. 94 at 9 n.2.) This insufficiently developed argument is waived. See Harmon v.
Gordon, 712 F.3d 1044, 1053 (7th Cir. 2013); Long v. Teachers’ Ret. Sys. of Ill., 585 F.3d 344, 349 (7th Cir. 2009);
Keith v. Ferring Pharma., Inc., No. 15 FC 10381, 2016 WL 5391224, at *13 (N.D. Ill. Sept. 27, 2016). Moreover,
this argument fails because it does not explain how the feature comparison chart—which does not address patent
claims and makes comparisons of pumps at a high level of generality—rebuts Defendants’ detailed claim charts.

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been used.” Defendants’ counterclaim, however, includes detailed claim charts explaining how
the Gemini PC-4 pump and the SE II pump anticipate and/or render obvious each element of a
number of claims in the ’805 and ’034 Patents. Additionally, Defendants allege that Baxter did
not submit any information regarding the Gemini PC-4 or SE II pumps to the PTO and that the
failure to do so resulted in the allowance of claims that the PTO would have otherwise denied.
In similar circumstances, courts, including some within this district, have found that parties have
adequately pled the “how” and “why” aspects of materiality. In Cumberland Pharmaceuticals v.
Mylan Institutional LLC, for example, the court rejected the counter-defendant’s argument that
the counter-plaintiff “failed to explain how or why the withheld information would have affected
the PTO’s allowance of the ’356 patent, and why the withheld information is not cumulative.”
No. 12 C 3846, 2012 WL 6567922, at *6 (N.D. Ill. Dec. 14, 2012) (Pallmeyer, J.) (citation
omitted). The court explained that “[b]y asserting that the withheld information would anticipate
and/or render obvious each and every claim of the ’356 patent, [the counter-plaintiff] is clearly
alleging that the patent application would not have been granted had that information been
disclosed.” Id. Furthermore, based on these allegations, “the court [could] reasonably infer that
the undisclosed information was not cumulative of the information before the PTO.” Id.; see
also, e.g., Ameranth, Inc. v. GrubHub, Inc., No. 12-CV-739 JLS (NLS), 2012 WL 12847584, at
*4 (S.D. Cal. Oct. 4, 2012) (“[T]o the extent that GrubHub has alleged that Ameranth failed to
disclose an anticipatory reference to the patent examiner and charted how the reference
anticipates the asserted claims of the ’850 and ’325 patents, GrubHub has adequately alleged
why the withheld reference is material and not cumulative. To require GrubHub to further state
that the anticipatory reference is material and not-cumulative because it anticipates the asserted
claims of the patents, thereby restating the definition of an anticipatory reference, would be

15

redundant.”); Eon Corp. IP Holdings, LLC v. T-Mobile USA, Inc., No. 6:10-CV-379-LED-JDL,
2011 WL 13134896, at *4 (E.D. Tex. Dec. 13, 2011), report and recommendation adopted, No.
6:10-CV-379-LED-JDL, 2012 WL 12893881 (E.D. Tex. Jan. 18, 2012); Pollin Patent Licensing
v. Capital One Auto Fin., Inc., No. 1:10-CV-07420, 2011 WL 5118891, at *3 (N.D. Ill. Oct. 25,
2011) (Hibbler, J.); Bone Care Int’l, LLC v. Pentech Pharm., Inc., No. 08-CV-1083, 2010 WL
1655455, at *5–7 (N.D. Ill. Apr. 23, 2010) (Dow, J.) (emphasizing that Rule 9(b) “does not
require adherence to blind formalism” and concluding that the defendants sufficiently had
alleged non-cumulativeness by identifying withheld references that allegedly anticipated or
rendered obvious patent claims, thereby implicitly alleging that those references were “not
merely repetitive of other prior art references”). The sound reasoning of these cases applies here.
Accordingly, Baxter’s argument fails.
C.

Intent

Therasense made clear that courts “may not infer intent solely from materiality.” 649
F.3d at 1290. In other words, “[i]ntent and materiality are separate requirements,” and “[a]
district court should not use a ‘sliding scale,’ where a weak showing of intent may be found
sufficient based on a strong showing of materiality, and vice versa.” Id. As previously noted, a
pleading of inequitable conduct “must include sufficient allegations of underlying facts from
which a court may reasonably infer that a specific individual (1) knew of the withheld material
information or of the falsity of the material misrepresentation, and (2) withheld or
misrepresented this information with a specific intent to deceive the PTO.” Exergen, 575 F.3d at
1328–29; see also Delano Farms, 655 F.3d at 1350. The inference “need not be probable, only
plausible.” Indep Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012).

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Baxter primarily argues that Defendants have failed to allege facts from which the Court
can draw any reasonable inference of a specific intent to deceive the PTO. (R. 94 at 11–14.)
Baxter, however, also somewhat obliquely argues that Defendants have failed to allege that a
specific individual knew of withheld material information because Defendants’ claim invalidity
charts “are largely based on other information about [the IMED and IVAC] pumps—patents,
technical documents, and different manuals—and not the manuals that Baxter had in its
possession, gave to the FDA but purportedly ‘withheld’ from the PTO.” (R. 94 at 7–8.) As
Defendants point out, the counterclaim “expressly identif[ies] the undisclosed Signature Edition
and Gemini PC-4 infusion pumps, not just a particular version of their user manuals, as the
material prior art that Baxter intentionally failed to disclose.” (R. 101, Defs.’ Reply, 4 (emphasis
added) (quoting R. 77-1 at 27–28, ¶¶ 39–40; 25, ¶ 32.).) Moreover, it is reasonable to infer from
Defendants’ allegations that the Baxter employees who submitted the FDA application were
intimately familiar with the two competitor pumps at issue as well as their features and how they
functioned. Accordingly, drawing all reasonable inferences in Defendants’ favor, the Court can
plausibly make an inference that the Baxter employees identified in the counterclaim had more
than general familiarity with the two pumps and knew of the withheld material information. Cf.
Exergen Corp., 575 F.3d at 1330 (explaining that a pleading failed to sufficiently allege the
requisite knowledge based on mere general awareness that a reference existed); see also DS
Smith, 2016 WL 69632, at *6 (distinguishing Exergen); Cumberland Pharm., 2012 WL
6567922, at *11.
The Court turns to the last question—do Defendants adequately plead a specific intent to
deceive the PTO? Baxter argues that they do not, contending that the FDA disclosure upon
which Defendants rely is irrelevant and that Defendants are asking the Court to infer intent

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“solely from some level of knowledge of a prior art reference.” (R. 94 at 13 (quoting Zvelo, Inc.
v. SonicWall, Inc., No. 06-cv-0045-PAB-KLM, 2013 WL 5443858, at *5 (D. Colo. Sept. 30,
2013) (citing Exergen, 575 F.3d at 1331)).) Defendants first point to Federal Circuit precedent—
which Baxter does not cite—that contradicts Baxter’s argument that disclosing prior art to the
FDA is irrelevant to the question before the Court. As noted above, Bruno states that “[t]he fact
that an official of Bruno, who was involved in both the FDA and PTO submissions, chose to
disclose the Wecolator to the FDA, but not to the PTO, certainly supports a finding of deceptive
intent to withhold the disclosure from the PTO.” 394 F.3d at 1334 (emphasis added). While
Bruno predates Exergen and Therasense, its conclusion that including prior art in an FDA
submission but withholding it from the PTO can constitute circumstantial evidence supporting a
finding of deceptive intent remains authoritative. Consequently, Baxter’s argument that
Defendants are asking the Court to infer intent solely from materiality falls flat. Moreover, the
current case is distinguishable from Exergen, where the proponent of the inequitable conduct
claim relied on the fact that “an applicant disclosed a reference during prosecution of one
application, but did not disclose it during prosecution of a related application.” 575 F.3d at 1331.
In Exergen-, the pleading “d[id] not contain specific factual allegations to show that the
individual who had previously cited the [prior art] knew of the specific information that is
alleged to be material to the [patent at the center of the inequitable conduct claim] and then
decided to deliberately withhold it from the relevant examiner.” Id. As previously discussed,
Defendants properly allege knowledge of specific material information. Given these distinctions
from Exergen and the forgiving pleading standards under Rule 8 (recall, Rule 9 does not apply to
pleading state of mind), the Court can properly make the reasonable inferences necessary to

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support Defendants’ claim. See DS Smith, 2016 WL 69632, at *7 (distinguishing Exergen);
Cumberland Pharm., 2012 WL 6567922, at *11.
II.

Diligence
Baxter argues that Defendants failed to act diligently in bringing the current motion,

pointing out that Defendants filed their motion five months after an August 2016 deadline for
amendment and six months after receiving the FDA documents relevant to their motion. (R. 94
at 14–15.) Defendants, however, provide a satisfactory explanation for any delay. Defendants
filed their motion just days after Bowman’s deposition and about one month after Esche’s.
While Baxter argues that this does not justify any delay because their depositions did not
“provide[] any material support for the proposed amendment,” even if that were the case, it was
prudent for Defendants to depose those inventors before moving to amend their counterclaims.
Additionally, Baxter does not explain how it suffers prejudice based on any delay. See
Life Plans, Inc. v. Sec. Life of Denver Ins. Co., 800 F.3d 343, 358 (7th Cir. 2015) (explaining that
delay must usually be coupled with prejudice to the nonmoving party to justify denying leave to
amend); see also Nolan v. City of Chicago, No. 15-CV-11645, 2017 WL 569154, at *7 (N.D. Ill.
Feb. 13, 2017). At a December 2016 status hearing, Defendants put both Baxter and the Court
on notice that they may seek amendment after Bowman’s deposition. Additionally, much of
Defendants’ inequitable conduct claim is intertwined with their invalidity contentions, which
Defendants disclosed to Baxter prior to filing the current motion. Finally, when Defendants
served their Initial Non-Infringement, Unenforceability, and Invalidity Contentions in the
summer of 2016, they “reserve[d] the right to amend or supplement [their] contentions if
discovery or further investigation reveals evidence of inequitable conduct or other bases of
unenforceability, such as the failure to disclose knowledge of a competitor’s on-sale, directly

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competing products during prosecution of the ’034 patent[ and the] ’805 patent.” (R. 81-3 at 23.)
Thus, Baxter could have anticipated the current motion, which relies in large part on information
Baxter already possessed. Accordingly, Defendants did not fail to act diligently as Baxter
contends.
CONCLUSION
For the foregoing reasons, the Court grants Defendants’ motion.

DATED: March 20, 2017

ENTERED

______________________________
AMY J. ST. EVE
United States District Court Judge

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