Exergen Corporation v. KAZ USA, Inc.

Filing 246

Judge Richard G. Stearns: ORDER entered granting 137 Motion for Summary Judgment. "For the foregoing reasons, Exergen's motion for summary judgment on the inequitable conduct defense is ALLOWED." (RGS, int2)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 13-10628
EXERGEN CORPORATION
v.
KAZ USA, INC.
MEMORANDUM AND ORDER ON EXERGEN’S MOTION
FOR SUMMARY JUDGMENT ON
KAZ’S INEQUITABLE CONDUCT DEFENSE
August 10, 2015
STEARNS, D.J.
Plaintiff Exergen Corporation accuses defendant Kaz USA, Inc., of
infringing U.S. Patent Nos. 6,292,685 (the ’685 patent) and 7,787,938 (the
’938 patent). 1 Kaz asserts, inter alia, the defense that the patents-in-suit

The ’685 and ’938 patents are both entitled “Temporal Artery
Temperature Detector” and list Dr. Francesco Pompei as the inventor. The
’685 patent was issued on September 18, 2001, and the ’938 patent was
issued on August 31, 2010. The ’938 patent is a continuation of the
application that matured into the ’685 patent, and the two patents share
virtually the same specification. As described in the court’s memorandum
and order construing the disputed claim terms, the patents disclose
methods and apparatuses for detecting the temperature at the forehead
over the temporal artery, and for computing an internal body temperature
based using the arterial heat balance approach. Of the asserted claims,
claim 14 of the ’685 patent is representative:
1

14.
A method of detecting human body temperature
comprising:

are unenforceable because Exergen intentionally withheld material art
references during the prosecution before the Patent and Trademark Office
(PTO).

Exergen moves for summary judgment, contending that Kaz

cannot shoulder the heavy evidentiary burden of proving inequitable
conduct. 2
The burden of proof is indeed weighty. “Inequitable conduct is an
equitable defense to patent infringement that, if proved, bars enforcement of
a patent.” Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1285
(Fed. Cir. 2011). As the Federal Circuit recognized in Therasense, the “farreaching consequence” of this “atomic bomb” remedy made inequitable
conduct “a common litigation tactic” that “plagued not only the courts but
also the entire patent system.” Id. at 1288, 1289. Over time, “low standards
for meeting the intent requirement” and “a broad view of materiality” have

detecting temperature at a forehead through a lateral
scan
across
the
temporal
artery;
and
computing an internal body temperature of the body as a
function of ambient temperature and sensed surface
temperature.
The court has previously issued a memorandum and order on the
parties’ cross-motions for summary judgment on Kaz’s license defense.
Kaz’s additional motions for summary judgment of non-infringement, no
willful infringement, and invalidity because of obviousness are currently
pending.
2
2

led to “many unintended consequences, among them, increased adjudication
cost and complexity, reduced likelihood of settlement, burdened courts,
strained PTO resources, increased PTO backlog, and impaired patent
quality.” Id. In Therasense, the Court “tighten[ed] the standards for finding
both intent and materiality in order to redirect a doctrine that has been
overused to the detriment of the public.” Id. at 1290.
Like other equitable doctrines, “inequitable conduct hinges on basic
fairness.” Id. at 1292. “Because inequitable conduct renders an entire patent
(or even a patent family) unenforceable, . . . this doctrine should only be
applied in instances where the patentee’s misconduct resulted in the unfair
benefit of receiving an unwarranted claim.” Id.
“Intent and materiality are separate requirements” of an inequitable
conduct claim. Id. at 1290.
[A]s a general matter, the materiality required to establish
inequitable conduct is but-for materiality. When an applicant
fails to disclose prior art to the PTO, that prior art is but-for
material if the PTO would not have allowed a claim had it been
aware of the undisclosed prior art. In making this patentability
determination, the court should apply the preponderance of the
evidence standard and give claims their broadest reasonable
construction.3

The Court carved out a narrow exception – affirmative egregious acts,
such as the filing of a false affidavit, are material without having to satisfy
the but-for test. Id. at 1292. Mere non-disclosure of prior art references does
not constitute affirmative egregious misconduct. Id. at 1295-1293.
3
3

Id. at 1291-1292. In addition to materiality, “the accused infringer must
prove that the patentee acted with the specific intent to deceive the PTO.” Id.
at 1290.
A finding that the misrepresentation or omission amounts to
gross negligence or negligence under a “should have known”
standard does not satisfy this intent requirement. In a case
involving nondisclosure of information, clear and convincing
evidence must show that the applicant made a deliberate
decision to withhold a known material reference. In other words,
the accused infringer must prove by clear and convincing
evidence that the applicant knew of the reference, knew that it
was material, and made a deliberate decision to withhold it.
Id. (internal quotation marks and citations omitted, emphasis in original).
The Court cautioned district courts to refrain from applying a “sliding scale,”
where a weak showing of intent may be found sufficient based on
a strong showing of materiality, and vice versa. Moreover, a
district court may not infer intent solely from materiality.
Instead, a court must weigh the evidence of intent to deceive
independent of its analysis of materiality. Proving that the
applicant knew of a reference, should have known of its
materiality, and decided not to submit it to the PTO does not
prove specific intent to deceive.
Id.
Kaz

contends

that

Exergen,

and

Dr.

Pompei

specifically,

intentionally omitted several key art references during the prosecution of
the patents-in-suit before the PTO that would have defeated patentability.
These include Exergen’s DermaTemp device, Exergen’s § 501(k)

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application 4 to seek the Food and Drug Administration (FDA)’s premarket approval for its TemporalScanner product, the Physicians
Reference Handbook on Temperature (co-authored by Dr. Pompei and
published by Exergen), and an article in the scientific journal Acta
Physiologica Scandinavia by T. K. Bergersen entitled “A search for
arteriovenous anastomoses in human skin using ultrasound Doplar.” 5
DermaTemp is a series of commercial infrared thermographic skin
temperature scanners manufactured by Exergen that was marketed
beginning in 1987.

According to the operating manual, “[t]hese

instruments instantly measure temperature on any surface location of the
human body without the need for tissue contact.” Dkt. # 84-5 at 3. “The
versatility of the products allows for absolute temperature measurement,
The § 501(k) application seeks approval to market a medical device
that is “substantially equivalent” to a pre-existing (and previously
approved) device. See
http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/
DeviceApprovalsandClearances/510kClearances/ (accessed August 5,
2015).
4

Kaz also argues that Exergen committed inequitable conduct by
withholding Exergen’s U.S. Patent No. 5,012,813 during the prosecution of
the ’685 patent. However, because “inequitable conduct, while a broader
concept than fraud, must be pled with particularity” under Fed. R. Civ. P.
9(b), Ferguson Beauregard/Logic Controls, Div. of Dover Res., Inc. v. Mega
Sys., LLC, 350 F.3d 1327, 1344 (Fed. Cir. 2003), and Kaz did not plead this
theory in its Answer and Counterclaims to Exergen’s Third Amended
Complaint, see Dkt. # 86, this contention is barred.
5

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surface scanning, and comparative methods of temperature differential.”
Id. at 12. The manual disclosed several modes of operation (SCAN, MAX,
and MIN), and described numerous clinical applications for the use of the
device, including determining the temperature gradient between the
forehead and the sole to detect shock, measuring temperatures at different
sides of the forehead to determine blood flow anomalies, and monitoring
the extracranial carotid complex for early signs of stroke. 6 Id. at 3, 15, 20,
22. For purposes of shock detection, the manual indicated that a user may
“[a]ssum[e] forehead and abdominal readings [to] correspond to core
temperature, and sole and palm readings to shell temperature.” Id. at 22.
Kaz contends that the DermaTemp was material art because it taught taking
a person’s core temperature by scanning the forehead. 7
In April of 2001, Exergen filed the § 501(k) application for FDA
approval of its TemporalScanner product – Exergen’s own temporal artery
6 The manual also suggested using the DermaTemp in headache clinics,

id. at 22, which Kaz argues would also necessitate taking temperature at the
forehead.

The manual cautioned, however, that skin temperature could vary
with “skin characteristics, wet skin, and environmental influences.” Id. at
12. In particular, “absolute temperature readings must be interpreted in
relation to [ambient temperature], and the practitioner should be careful to
protect the patient from drafts or exposure to large cold surfaces, to position
the extremities to minimize pooling, and to allow time for the surface
temperature to equilibrate to its environment.” Id.
7

6

thermometer.

In

the

application,

Exergen

compared

the

TemporalScanner with two predicate devices in a chart – the DermaTemp,
and the Braun Thermoscan IRT 3020/3520. With respect to “Technology
Used,” Exergen identified the “Arterial Heat Balance” approach for all
three devices. Dkt. # 86-5 at 6-1. Although the § 501(k) application was
not prior art, Kaz asserts that it was material because it characterized the
DermaTemp, which taught taking a person’s core temperature at the
forehead, as also using the same arterial heat balance approach as the
patents-in-suit. 8
Chapter 5 of the Physicians Reference Handbook, published in 1996,
provides a “Tutorial on Arterial Thermometry via Heat Balance at the
Ear.”

Underwood Decl. Ex. 14.

The Tutorial explains that while

Dr. Pompei attested that for manufacturing efficiency, the firmware
(software) of the DermaTemp was the same as that for its ear thermometer,
which did use the arterial heat balance approach. The DermaTemp,
however, was programmed with a k-factor of 1 and therefore did not
compensate for ambient heat loss. This explanation is consistent with some
of the disclosures within the § 501(k) application. With respect to “Display
modes,” the § 501(k) application noted that while the TemporalScanner’s
“[d]isplayed temperature is the actual temperature of the temporal artery
plus a mathematical adjustment to approximate the familiar rectal range,”
the DermaTemp’s “[d]isplayed temperature is the actual temperature of
the surface of the skin at the point of measurement.” Id. at 6-2. The
application also noted that “[t]he temperature displayed by the
[DermaTemp] is the temperature of the skin at any surface of the body.
The conversion to a familiar range by the [DermaTemp] is not made,
although the firmware would permit such a conversion.” Id. at 6-3.
7
8

temperature measured at the tympanic membrane deep within the ear
correlates to the pulmonary artery temperature and thus the core
temperature of a person, a measurement taken at the outer ear canal (a
more convenient target) is subject to variation as a result of ambient
cooling and heat loss. The loss, however, can be computed as a function
of the ambient and ear canal temperatures using a series of equations. The
taking of the ear canal temperature adjusted by the arterial heat loss
compensation can lead to an accurate measurement of the core
temperature. The significance of the Physicians Reference Handbook,
according to Kaz, is that it disclosed the arterial heat balance equations in
the exact form that was included in the patents-in-suit. 9
The Bergensen study, published in 1993, reported on the search for
arteriovenous anastomoses (AVAs) in skin regions of the head and the
thorax using Doplar ultrasound. AVAs are “direct links between arterioles
and venules. Their structural characteristics include a thick muscular wall
and usually a very rich nerve supply. The functional significance of the
AVAs is their great capacity to adjust blood flow through the skin. They
thus play a central role in temperature regulation.” Sternberg Decl. Ex. S

The equations of the Physicians Reference Handbook were not new,
but were equivalent to equations disclosed in other prior art patents, after
some algebraic manipulation.
8
9

at 195. The study reported that its “results do not indicate the presence of
AVAs in the skin of the forehead.” Id. at 200. Kaz opines that the
Bergensen study was material because it revealed the relatively constant
blood flow of the temporal artery, a feature that made the site particularly
useful for temperature taking. Moreover, it demonstrates that Dr. Pompei
did not discover this useful feature of the temporal artery.
Exergen contends that, whatever the materiality of these four
references, Kaz’s evidence fails to establish that “the specific intent to
deceive [is] the single most reasonable inference able to be drawn from the
evidence.” Therasense, 649 F.3d at 1290. Kaz’s evidence establishes that Dr.
Pompei was aware of these four references, and that he worked with his
patent attorney in selecting the references to be submitted to the PTO during
prosecution. Exergen, for its part, dismisses Kaz’s evidence as precisely what
the court in Therasense warned as failing to demonstrate a deceptive intent
– “[p]roving that the applicant knew of a reference, should have known of its
materiality, and decided not to submit it to the PTO does not prove specific
intent to deceive.” Id. Moreover, Exergen asserts that deceptive intent
cannot be the “single most reasonable inference to be drawn from the
evidence,” because the factfinder could readily conclude, as Dr. Pompei

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attested, that he did not include the contested references because of a good
faith belief that they were not material.
Kaz protests that Exergen seeks to impose an overly stringent standard
at summary judgment. Because Exergen is the moving party and the court
must draw all reasonable inferences in favor of the non-movant, Kaz
maintains that the summary judgment standard requires Exergen to
demonstrate that “no reasonable jury (or no reasonable court, acting as the
factfinder) could find that inequitable conduct had occurred.” Opp’n at 1.
Kaz relies on Ohio Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333 (Fed.
Cir. 2013) for the proposition that a claim of equitable conduct survives
summary judgment so long as “a reasonable jury could conclude that Dr.
Pompei acted with deceptive intent.” Opp’n at 9 (emphasis added). Ohio
Willow, however, does not extend as far as Kaz would stretch it. Ohio Willow
reaffirms that
deceptive intent must be the single most reasonable inference
drawn from the evidence. The inference cannot be based on
gross negligence and when there are multiple reasonable
inferences that may be drawn, intent to deceive cannot be found.
Additionally, because the burden of proof is on the party alleging
inequitable conduct, the patentee need not offer a good faith
explanation for its alleged misconduct unless a threshold level of
deceptive intent has been demonstrated.
Ohio Willow, 735 F.3d at 1351 (internal quotation marks and citations
omitted). Consistent with this understanding, the Court in Ohio Willow
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reversed the denial of summary judgment of no inequitable conduct, not
because deceptive intent was one of the possible inferences, but because “the
collective weight of th[e] evidence supports our conclusion that the evidence
would support a finding of intent that is the single most reasonable inference
to be drawn from the evidence at this stage of the proceedings.”

Id.

(emphasis added).
Evaluating the evidence of intent as an issue independent of
materiality, the court agrees with Exergen that deceptive intent is not the
“single most reasonable inference” to be drawn from Kaz’s evidence. Kaz
argues that “[s]ince Dr. Pompei is the one who chooses (with his attorney)
which references to submit, it follows that he necessarily made a deliberate
decision to withhold the [references,] of which he quite was aware and whose
materiality was clear.” Opp’n at 8 (emphasis in original). The Federal Circuit
has emphatically rejected this very contention: “A court can no[t] infer intent
to deceive from non-disclosure of a reference solely because that reference
was known and material.” 1st Media, LLC v. Elec. Arts, Inc., 694 F.3d 1367,
1372-1373 (Fed. Cir. 2012).

Because Kaz has not adduced competent

evidence to establish the intent element of its inequitable conduct claim, the
claim is not viable as a matter of law and must be dismissed.

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ORDER
For the foregoing reasons, Exergen’s motion for summary judgment
on the inequitable conduct defense is ALLOWED.
SO ORDERED.
/s/ Richard G. Stearns
_____________________
UNITED STATES DISTRICT JUDGE

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