Tech Pharmacy Services, LLC v. Alixa Rx LLC et al
MEMORANDUM OPINION AND ORDER re 220 SEALED MOTION Defendants' Motion for Partial Summary Judgment Regarding Patent Invalidity Under 35 U.S.C. 102(b) (on-Sale Bar Affirmative Defense) filed by Golden Gate National Senior Care, Fi llmore Strategic Investors, LLC, Fillmore Strategic Management, LLC, Fillmore Capital Partners, LLC, Alixa Rx LLC. Defendants Motion for Partial Summary Judgment Regarding Patent Invalidity Under 35 U.S.C. § 102(b) (Dkt. #220) is DENIED. Signed by Judge Amos L. Mazzant, III on 7/24/17. (cm, )
United States District Court
EASTERN DISTRICT OF TEXAS
TECH PHARMACY SERVICES, LLC
ALIXA RX LLC, GOLDEN GATE
NATIONAL SENIOR CARE LLC d/b/a
GOLDEN LIVINGCENTERS, FILLMORE
CAPITAL PARTNERS, LLC, FILLMORE
STRATEGIC INVESTORS, LLC, and
Civil Action No. 4:15-CV-766
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants’ Motion for Partial Summary Judgment
Regarding Patent Invalidity Under 35 U.S.C. § 102(b) (On-Sale Bar Affirmative Defense) (Dkt.
#220). After reviewing the relevant pleadings, the Court denies Defendants’ motion.
On November 2, 2015, Tech Pharmacy filed suit against Golden Gate National Senior
Care LLC d/b/a Golden LivingCenters (“GLC”) and Alixa Rx LLC (“Alixa”), alleging patent
infringement. Specifically, Tech Pharmacy asserts Claims 7, 9, and 10 from U.S. Patent No.
7,698,019; Claims 5, 7, and 8 from U.S. Patent No. 8,209,193; Claims 1, 2, and 6 from U.S.
Reissue Patent No. RE44,127; Claims 1 and 4 from U.S. Patent No. 8,612,256; and Claim 1 from
U.S. Patent No. 8,954,338 (collectively, the “patents-in-suit”). The patents-in-suit articulate a
system and method for enhanced distribution of pharmaceuticals in long-term care facilities.
On January 22, 2016, Tech Pharmacy amended its complaint to add state law claims of
fraud, breach of contract, trade secret misappropriation, and equitable estoppel to the original
patent infringement claims. On September 1, 2016, Plaintiff further amended its complaint to
add Fillmore Capital Partners LLC, Fillmore Strategic Management LLC, and Fillmore Strategic
Investors LLC (collectively with Alixa and GLC, “Defendants”) to the state causes of action
On March 31, 2017, Defendants’ filed their motion for partial summary judgment (Dkt.
#220). On April 21, 2017, Tech Pharmacy filed it response (Dkt. #245). On April 28, 2017,
Defendants’ filed a reply (Dkt. #249). On May 4, 2017, Tech Pharmacy filed a sur-reply (Dkt.
The purpose of summary judgment is to isolate and dispose of factually unsupported
claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). Summary judgment
is proper under Rule 56(a) of the Federal Rules of Civil Procedure “if the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A dispute about a material fact is genuine when “the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). Substantive law identifies which
facts are material. Id. The trial court “must resolve all reasonable doubts in favor of the party
opposing the motion for summary judgment.” Casey Enters., Inc. v. Am. Hardware Mut. Ins.
Co., 655 F.2d 598, 602 (5th Cir. 1981).
The party seeking summary judgment bears the initial burden of informing the court of its
motion and identifying “depositions, documents, electronically stored information, affidavits or
declarations, stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials” that demonstrate the absence of a genuine issue of
material fact. Fed. R. Civ. P. 56(c)(1)(A); Celotex, 477 U.S. at 323. If the movant bears the
burden of proof on a claim or defense for which it is moving for summary judgment, it must
come forward with evidence that establishes “beyond peradventure all of the essential elements
of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where
the nonmovant bears the burden of proof, the movant may discharge the burden by showing that
there is an absence of evidence to support the nonmovant’s case. Celotex, 477 U.S. at 325; Byers
v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its
burden, the nonmovant must “respond to the motion for summary judgment by setting forth
particular facts indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing
Anderson, 477 U.S. at 248–49). A nonmovant must present affirmative evidence to defeat a
properly supported motion for summary judgment. Anderson, 477 U.S. at 257. Mere denials of
material facts, unsworn allegations, or arguments and assertions in briefs or legal memoranda
will not suffice to carry this burden.
Rather, the Court requires ‘“significant probative
evidence’” from the nonmovant to dismiss a request for summary judgment. In re Mun. Bond
Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982) (quoting Ferguson v. Nat’l Broad.
Co., 584 F.2d 111, 114 (5th Cir. 1978)). The Court must consider all of the evidence but “refrain
from making any credibility determinations or weighing the evidence.”
Turner v. Baylor
Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
Defendants move for summary judgment based on the patents-in-suit being invalid under
the on-sale bar doctrine articulated in 35 U.S.C. § 102(b).
Under 35 U.S.C. § 102(b), a patent is invalid if “the invention was . . . in public use or on
sale in this country more than one year prior to the date of the application for patent in the
United States.” 35 U.S.C. § 102(b). In Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), the
Supreme Court established a two-part test for determining when the on-sale bar invalidates a
patent. The Pfaff test requires that more than one year before the date of the patent application,
the invention (1) be the subject of a commercial sale or offer for sale; and (2) be ready for
patenting. Id. at 66–67. The “critical date” for assessing the validity of a patent is the date that
falls one year before the date the patent application was filed or the date a patent application
claims priority. Here, the parties agree the critical date is November 3, 2002 because each of the
patents-in-suit claim priority to November 3, 2003 patent application. Determining whether an
invention is “on-sale” within the meaning of Section 102(b) is a question of law based on
underlying facts. Dana Corp. V. Am. Axle & Mfg., Inc., 279 F.3d 1372, 1375 (Fed. Cir. 2002)
(citing Intel Corp. v. Int’l Trade Comm’m, 946 F.2d 821, 829 (Fed. Cir. 1991)). Issued patents
generally enjoy a presumption of validity. Ruiz v. A.B. Chance Co., 234 F.3d 654, 662 (Fed. Cir.
2000). Defendants bear the burden of proving invalidity by clear and convincing evidence, and
the burden never shifts to Tech Pharmacy to prove validity.
Defendants assert Tech Pharmacy sold and offered to sell pharmacy services to long-term
care facilities using its KVM Envoy machine (“Envoy”). Defendants refer to alleged sales to
Country Village Care, Gulf Health Care Center, Pine Tree Lodge, and the Rosemont facilities
that all took place between January 2002 and September 2002 (Dkt. #220 at p. 6). Each sale
included a fee provision directed specifically to use of the Envoy (Dkt. #220 at p. 3). By
September 2002, Defendants contend the Envoy machine was fully optimized, and Tech
Pharmacy used a September 9, 2002 letter from one of its customers to sell services to other
long-term care facilities (Dkt. #220, Exhibit F at 170:16–19; Dkt. #220, Exhibit H at ¶ 17).
Tech Pharmacy maintains the on-sale bar does not apply since the patents-in-suit were
neither sold nor offered for sale before November 3, 2002 critical date. Tech Pharmacy argues
the inventors of the patents-in-suit conceived and reduced the claimed inventions to practice in
2003. As part of the inventors’ development, Tech Pharmacy entered into agreements between
January and September 2002 with five long-term health facilities that used the Envoy machine.
Tech Pharmacy contends the purpose of the 2002 agreements was experimental testing rather
than selling or offering to sell the Envoy machine.
The record reveals there are genuine issues of material fact with regard to whether the
Envoy machine was the subject of a commercial sale or offer for sale before the November 3,
2002 critical date. Tech Pharmacy presents evidence that establishes a fact issue as to whether
the fees charged under the 2002 agreements were for the Envoy machine alone or the entire
claimed system as Defendants suggest (Dkt. #220, Exhibit G at 4 (“[T]he remote automated
dispensing machine was to be provided free of charge for the first six months, whereby,
thereafter the parties would negotiate an appropriate fee . . . .”). Further, the summary judgment
evidence indicates a fact issue as to whether the fees charged under the 2002 agreements were
actually sales (Dkt. #245, Exhibit 1 at 132:5–15 (“Q. Did Tech Pharmacy bill the facilities as
part of these agreements? A. Early on I think all we billed them for was just for the meds being
dispensed. Then I think we added on – later on we added – a fee for the machine but there was
no – no fee for the services. It was just we billed you for the drugs and there was a fee for the
machines. . . . We were licensing or leasing the machines.”)). Although Defendants’ evidence
may support an inference that Tech Pharmacy offered the Envoy machine for sale before the
critical date, it does not establish that fact conclusively, particularly when the evidence is viewed
in the light most favorable to Tech Pharmacy.
Even if the Envoy machine was offered for sale before the critical date, the Court finds a
genuine issue of material fact as to whether the Envoy machine was ready for patenting. The
requirement that an invention be ready for patenting can be satisfied in at least two ways: “ by
proof of reduction to practice before the critical date; or  by proof that prior to the critical date
the inventor had prepared drawings or other descriptions of the invention that were sufficiently
specific to enable a person skilled in the art to practice the invention.” Pfaff, 525 U.S. at 67–68.
Tech Pharmacy presents evidence that the claimed inventions were not reduced to practice or
complete when it entered into the 2002 agreements. Specifically, Tech Pharmacy points to
Defendants’ own summary judgment evidence that shows the claimed inventions may not have
been complete before April 2003 (Dkt. #220, Exhibit G at 11 (“In April 2003, the initial version
of the long-term care facility pharmacy management software designed by Mr. Martin and Mr.
Moncrief was preliminarily complete and the above-referenced ‘bits and pieces’ were
accumulated to form a preliminary system and methods of the above-referenced patent
application.”). In addition, the inventors state in their joint declaration, “At no time before this
April 2003 experimental implementation were the systems, software, and methods of the abovereferenced patent application ever tested in their entirety.” (Dkt. #220, Exhibit G at 12).
Because there are genuine disputes of material fact regarding the applicability of the onsale bar under 35 U.S.C. § 102(b), the Court is unconvinced Defendants have met their burden of
showing invalidity by clear and convincing evidence.
Accordingly, it is therefore ORDERED Defendants’ Motion for Partial Summary
Judgment Regarding Patent Invalidity Under 35 U.S.C. § 102(b) (Dkt. #220) is DENIED.
SIGNED this 24th day of July, 2017.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?