582 F.3d 1288 (Fed. Cir. 2009), 2008-1306, Fresenius USA, Inc. v. Baxter Intern., Inc.

Docket Nº:2008-1306, 2008-1331.
Citation:582 F.3d 1288, 92 U.S.P.Q.2d 1163
Opinion Judge:GAJARSA, Circuit Judge.
Party Name:FRESENIUS USA, INC. and Fresenius Medical Care Holdings, Inc., Plaintiffs-Appellants, v. BAXTER INTERNATIONAL, INC. and Baxter Healthcare Corporation, Defendants-Cross Appellants.
Attorney:Juanita R. Brooks, Fish & Richardson P.C., of San Diego, CA, argued for plaintiffs-appellants. With her on the brief were Michael E. Florey, Mathias W. Samuel and Deanna J. Reichel, of Minneapolis, MN, and Robert E. Hillman, of Boston, MA. William F. Lee, Wilmer Cutler Pickering Hale and Door LLP...
Judge Panel:Before NEWMAN, GAJARSA, and DYK, Circuit Judges. Opinion for the court filed by Circuit Judge GAJARSA. Concurring opinions filed by Circuit Judge NEWMAN and Circuit Judge DYK. NEWMAN, Circuit Judge, concurring. DYK, Circuit Judge, concurring.
Case Date:September 10, 2009
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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582 F.3d 1288 (Fed. Cir. 2009)

92 U.S.P.Q.2d 1163

FRESENIUS USA, INC. and Fresenius Medical Care Holdings, Inc., Plaintiffs-Appellants,

v.

BAXTER INTERNATIONAL, INC. and Baxter Healthcare Corporation, Defendants-Cross Appellants.

Nos. 2008-1306, 2008-1331.

United States Court of Appeals, Federal Circuit.

September 10, 2009

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Juanita R. Brooks, Fish & Richardson P.C., of San Diego, CA, argued for plaintiffs-appellants. With her on the brief were Michael E. Florey, Mathias W. Samuel and Deanna J. Reichel, of Minneapolis, MN, and Robert E. Hillman, of Boston, MA.

William F. Lee, Wilmer Cutler Pickering Hale and Door LLP, of Boston, MA, argued for defendants-cross appellants. With him on the brief were Bharat R. Ramamurti; William G. McElwain and Jonathan G. Cedarbaum, of Washington, DC. Of counsel on the brief were Michael J. Abernathy and Sanjay K. Murthy, K & L Gates LLP, of Chicago, IL.

Before NEWMAN, GAJARSA, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge GAJARSA. Concurring opinions filed by Circuit Judge NEWMAN and Circuit Judge DYK.

GAJARSA, Circuit Judge.

In this patent infringement case, Plaintiffs Fresenius USA, Inc. and Fresenius Medical Care Holdings, Inc. (collectively " Fresenius" ) appeal and Defendants Baxter International, Inc. and Baxter Healthcare Corporation (collectively " Baxter" ) cross appeal from the final judgment of the United States District Court for the District of California, which was based on findings that Fresenius infringed claims of three patents asserted by Baxter-U.S. Patent Nos. 5,247,434 (" the '434 patent" ), 5,744,027 (" the '027 patent" ), and 6,284,131 (" the '131 patent" )-all of which disclose and claim a hemodialysis machine integrated with a touch screen user interface. Fresenius Med. Care Holdings, Inc. v. Baxter Int'l, Inc., No. 03-CV-1431 (N.D.Cal. Feb. 12, 2007) (" JMOL Opinion " ). We affirm in part, reverse in part, vacate in part, and remand for further proceedings consistent with this opinion.

BACKGROUND

I. The Technology and Patents

When a person's kidneys fail to function properly, a hemodialysis machine can function in place of the kidneys to cleanse the

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blood of toxins. During hemodialysis, the person's blood is pumped through a hemodialysis machine, which contains a dialysate-a solution formulated to draw toxins out of the blood. Inside the machine, the blood is separated from the dialysate by a semi-permeable membrane that allows toxins to pass from the blood into the dialysate. Because it is important to ensure that toxins are removed without inadvertently filtering essential nutrients out of the blood, the hemodialysis machine must facilitate the monitoring and control of numerous parameters.

All of the patents at issue derived from a parent patent application filed in 1991, and all of the relevant claims are directed to a hemodialysis machine integrated with a touch screen user interface. At the time the parent application was filed, touch screens were known and had been used on other medical devices, such as a heart-lung machine, but a touch screen had not been integrated with a hemodialysis machine. The System 1000, which embodies the patents at issue, was introduced in 1991 and was a commercial success.1 In 1998, Fresenius introduced the alleged infringing device, a hemodialysis machine with a touch screen interface called the 2008K machine.

A. The '027 Patent

The only '027 patent claim at issue in this appeal is claim 11, which is dependent on claim 10, which is in turn dependent on claim 7. Claim 7 reads:

A kidney dialysis machine, comprising:

(a) a dialysate pump for circulating dialysate at a dialysate conductivity through a dialysate circuit including a dialysate compartment for a dialyzer; and

(b) a controller operable to receive non-conductivity data concerning a particular selection of dialysate to be circulated and to calculate from the data an expected conductivity reading of the dialysate.

'027 Patent col.36 ll.14-21. Dependent claim 11 additionally requires only a " data input device" that " comprises a touch screen." Id. at col.36 l.32-33. The additional limitation of claim 10 is not at issue in this appeal.

B. The '131 Patent

Regarding the '131 patent, independent claim 1 and claims 2, 3, and 13-16, which are dependent on claim 1, are at issue in this appeal. Claim 1 reads: A hemodialysis apparatus, comprising:

(a) a dialysate-delivery system for supplying dialysate to a hemodialyzer, the dialysate-delivery system comprising at least one unit selected from the group consisting of (i) a dialysate-preparation unit, (ii) a dialysate-circulation unit, (iii) an ultrafiltrate-removal unit, and (iv) a dialysate-monitoring unit; and

(b) a user/machine interface operably connected to the dialysate-delivery system, the user/machine interface comprising a touch screen that displays information corresponding to a setting of a parameter pertinent to operation of the hemodialysis apparatus, the touch screen being operable to display an indicium permitting the user to perform, using the touch screen, at least one step of a procedure for changing the setting of the parameter, and to display a time-variable profile of the operational parameter, the profile being representable as a plot of coordinates, the plot being with respect to an ordinate of values of the operational parameter and a time-based abscissa.

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'131 Patent col.36 ll.1-21. Claim 14 additionally requires only that " the touch screen is operable to display a plurality of indicia, each corresponding to a different time-variable hemodialysis parameter." Id. at col.36 ll.64-67. Claim 16 additionally requires that " the user/machine interface is operable to require the user to verify a parameter after a value of the parameter is selected." Id. at col.37 ll.4-6. The additional limitations recited in claims 2, 3, 13, and 15 were not argued on appeal.

C. The '434 Patent

Regarding the '434 patent, independent claim 26 and claims 27-31, which are dependent on claim 26, are at issue in this appeal. Claim 26 reads:

A hemodialysis machine comprising:

(a) means for controlling a dialysate parameter selected from a group consisting of dialysate temperature and dialysate concentration, and means for delivering the dialysate to a dialysate compartment of a hemodialyzer; and

(b) a user/machine interface operably coupled to said dialysate-delivery means, the user/machine interface comprising a touch screen adapted to display an indicium corresponding to a parameter pertinent to operation of the hemodialysis machine for performing hemodialysis and to permit the user, by touching the indicium, to cause a change in the parameter.

'434 Patent col.40 ll.29-42. Dependent claims 27-31 include additional limitations, but only the additional limitation in claim 30 is relevant to this appeal. That limitation requires a " means for delivering an anticoagulant to a patient wherein the touch screen further provides an indicium soliciting input from the user corresponding to a rate of anticoagulant delivery." Id. at col.40 ll.61-64.

II. Litigation Background

Fresenius initially filed suit against Baxter in 2003, seeking a declaratory judgment that the '027, '131, and '434 patent claims are invalid and not infringed by Fresenius's hemodialysis machines.2 Baxter counterclaimed, alleging that Fresenius infringes claims 7, 11, and 14-16 of the '027 patent; claims 1-3 and 13-16 of the '131 patent; and claims 26-31 of the '434 patent. On Baxter's motion, the district court granted partial summary judgment that Fresenius infringes claim 1 of the '131 patent and claim 26 of the '434 patent. Baxter continued to allege that Fresenius infringes the other asserted claims, and Fresenius continued to allege that all asserted claims are invalid. Following claim construction, Fresenius stipulated that it infringes Baxter's remaining asserted claims. A jury trial on validity followed, and the jury found claims 7 and 14-16 of the '027 patent invalid as anticipated and all asserted claims invalid as obvious.

The district court determined that substantial evidence does not support the jury's obviousness verdict and granted Baxter's motion for judgment as a matter of law (" JMOL" ) that its asserted patent claims are not invalid as obvious. Namely, the district court found that Fresenius had not presented evidence that specified limitations of claim 11 of the '027 patent, claims 1 and 14 of the '131 patent, and claims 26-31 of the '434 patent were present in the prior art. JMOL Opinion, slip op. at 8-13, 18-19. In addition, the district court found that Fresenius did not present substantial evidence of a motivation to combine the elements of the prior art to produce the invention claimed in the '131

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and '434 patents. Id. at 13-16. The court did not evaluate the jury's findings that claims 7 and 14-16 of the '027 patent are invalid as anticipated, stating that Baxter had not challenged the anticipation verdict. Id. at 6 n. 1.

After a jury trial on damages, the jury awarded Baxter a total of $14,266,000 in damages, $91,000 of which was attributable to unpatented disposable products. The district court, after considering the four factors articulated in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), concluded that injunctive relief was appropriate and permanently enjoined Fresenius. Fresenius Med. Care Holdings, Inc. v. Baxter Int'l, Inc., No. 03-CV-1431, slip. op. at 8-10 (N.D.Cal. March 21, 2008) (" Injunction Order " ). The district court ordered that the injunction take effect on January 1, 2009, because Fresenius indicated it could develop a non-infringing machine by that date. Id. at 8-9. The district court also ordered Fresenius to pay an...

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