Eli Lilly and Co. v. Medtronic, Inc.
| Decision Date | 17 August 1990 |
| Docket Number | No. 90-1207,90-1207 |
| Citation | 915 F.2d 670,16 USPQ2d 2020 |
| Parties | ELI LILLY AND COMPANY, Plaintiff-Appellee, v. MEDTRONIC, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Federal Circuit |
Gregory J. Volger, McAndrews, Held & Malloy, Ltd., Chicago, Ill., argued for plaintiff-appellee. With him on the brief were Timothy J. Malloy, Lawrence M. Jarvis and Alejandro Menchaca. Also on the brief were Leroy Whitaker, John C. Jenkins, M. Therese Crouse, Eli Lilly and Co., Indianapolis, Ind. and Edward P. Gray, Cardiac John F. Lynch, Arnold, White & Durkee, Houston, Tex., argued for defendant-appellant. With him on the brief were Jack C. Goldstein, W. Bryan Farney and Albert B. Deaver. Also on the brief were Ronald E. Lund, John W. Borg and Joseph F. Breimayer, Medtronic, Inc., Minneapolis, Minn., of counsel.
Pacemakers, Inc., St. Paul, Minn., of counsel.
Susan B. Tabler, Ice Miller Donadio & Ryan, Indianapolis, Ind., was on the brief for amicus curiae, Douglas P. Zipes, M.D.
Before NIES, Chief Judge, ARCHER and CLEVENGER, Circuit Judges.
Medtronic, Inc. appeals from the order of the United States District Court for the Eastern District of Pennsylvania, Eli Lilly and Co. v. Medtronic, Inc., 735 F.Supp. 652, 14 USPQ2d 1352 (E.D.Pa.1990) (Ditter, J.) finding Medtronic in willful contempt of its permanent injunction order. The district court issued its injunction on April 21, 1988, pursuant to its judgment entered in accordance with a jury verdict finding that Medtronic had infringed U.S. Patent Re No. 27,757 and U.S. Patent No. 3,942,536 by making, using, and selling certain medical devices known as pacemaker cardioverter defibrillators (PCD's), and with the district court's ruling that the patents were not unenforceable. The injunction prohibited Medtronic, inter alia, from making, using, or selling its devices and from using data from such infringement to market or promote its devices in the United States. On appeal from that injunction, this court held in Eli Lilly and Co. v. Medtronic, Inc., 872 F.2d 402, 10 USPQ2d 1304 (Fed.Cir.1989) aff'd, --- U.S. ----, 110 S.Ct. 2683, 110 L.Ed.2d 605, 15 USPQ2d 1121 (1990), that the district court erred in concluding that the exception from infringement with respect to activities for the purpose of developing and submitting information under certain Federal laws provided by 35 U.S.C. Sec. 271(e)(1) 1 (Supp. V 1987) was not available for any medical devices and in precluding consideration of that issue at trial. This court remanded for trial to determine whether Medtronic's activities in connection with the subject medical devices in fact fell within the statutory exemption. Because we were not certain whether Medtronic asserted the applicability of the section 271 exemption to all of the acts charged and found to be infringements, we left it to the district court to decide whether to vacate, modify or stay its outstanding injunction. Id. 872 F.2d at 406; 10 USPQ2d at 1307. Upon remand, Medtronic asked for the injunction to be vacated, modified or stayed and for a new trial. Without any additional proceedings on the merits of the Sec. 271(e)(1) issue, the district court modified the injunction to exclude activities falling under Sec. 271(e)(1), but left the injunction otherwise intact. The court has not yet granted a new trial. Subsequently, Eli Lilly moved to hold Medtronic in contempt for activities which it asserted were prohibited by the injunction as modified. The district court found Medtronic to have engaged in "infringing" activities and to have violated the terms of the modified injunction, and, therefore, held Medtronic in contempt.
As relief for the contempt, the district court issued an order directing Medtronic to announce in writing its intention to terminate all agreements with persons who engage in any activity for the purpose of sale of the Medtronic PCD's; to cease providing information or data about its PCD's to anyone in the United States, particularly, Dr. Douglas P. Zipes whom Medtronic employed as a consultant; to specifically terminate its affiliation with Dr. Zipes without any payments; to require Dr. Zipes to On February 19, 1990, the district court entered the contempt order of the subject appeal, providing relief similar in all respects to that in the previous order. A full opinion setting out findings of fact and conclusions of law accompanied the order. Medtronic appealed the order to this court and was granted a partial stay of the injunctive relief therein.
return to Medtronic all PCD's and information in his possession; to display a statement with the mock-up Medtronic PCD's in a touring museum exhibit that it is not the device of any particular manufacturer; and to include in its second quarter report a statement concerning the injunction with respect to Medtronic's PCD's and the issuance of the contempt order. Medtronic moved in this court for vacatur of this order of contempt. Because the contempt order was not accompanied by findings or opinion to support that order, this court granted Medtronic's motion.
During this time frame but after briefing of this appeal, the Supreme Court affirmed the decision of this court that the exemption from infringement provided in Sec. 271(e)(1) included medical devices. The Court has now remanded that case to this court for further proceedings consistent with its opinion. Eli Lilly and Co. v. Medtronic, Inc., --- U.S. ----, 110 S.Ct. 2683, 110 L.Ed.2d 605, 15 USPQ2d 1121 (1990). 2 In disposition of the present appeal, we hold that the findings of the district court holding Medtronic in contempt are deficient. Accordingly, we reverse the finding of contempt and vacate the contempt order. Further, we hold that the judgment of the Supreme Court and the prior judgment of this court negate the prior findings of infringement made in the district court. Accordingly, to carry out the mandate of the Supreme Court for further proceedings to be in accordance with its opinion, we vacate the prior judgment of infringement and all injunctive orders issued to date in this case.
The factual and procedural history of the instant suit by Eli Lilly against Medtronic, alleging infringement of claim 1 of the '757 reissue patent and claims 1-6 of the '536 patent, directed to certain medical devices called automatic implantable cardioverter defibrillators and to certain leads used with such defibrillators, is recounted in detail in the district court's initial opinion, Eli Lilly and Co. v. Medtronic, Inc., 696 F.Supp. 1033, 7 USPQ2d 1447 (E.D.Pa.1988), and in the initial appeal to this court, Eli Lilly, 872 F.2d at 404; 10 USPQ2d at 1034-35. These facts need not be repeated here except to the extent necessary to resolve the propriety of the order of the district court holding Medtronic in contempt for violating the injunction of April 21, 1988 as modified June 28, 1989.
After entry of the injunction, Dr. Zipes, whom Medtronic continued to employ as a consultant and senior research investigator, was engaged in lecturing to groups of cardiologists about tachyrhythmia devices. In his lectures, Dr. Zipes specifically discussed both the Eli Lilly and Medtronic devices, referring to the Medtronic PCD as the "Rolls Royce" of such devices. In such presentations, Dr. Zipes used data gathered from the implantation of a Medtronic PCD in Canada. Also after issuance of the injunction, Medtronic began sponsoring a touring museum exhibit in the United States which includes as a display a mock-up of a Medtronic PCD, consisting of an empty PCD can, two patch leads, and a screw-in lead. Finally, Medtronic included in its 1989 Annual Report a two-page section on Medtronic PCD's, detailing the PCD's development, its functions and its potential market in the United States and elsewhere. The Annual Report also included a photograph taken in Europe of a Medtronic PCD manufactured in Europe. These activities are the basis for the district court's contempt order.
urging that such order is not immediately appealable. However, the order from which appeal has been taken not only found Medtronic in contempt but also put into place injunctive relief supplementary to the injunction found to have been violated and, therefore, constitutes an order within the scope of section 1292(a)(1). International Ass'n of Machinists and Aerospace Workers v. Eastern Airlines, Inc., 849 F.2d 1481, 1485-86 (D.C.Cir.1988); In re Arthur Treacher's Franchise Litigation, 689 F.2d 1150, 1155 n. 9 (3d Cir.1982). Thus, this court has jurisdiction over this appeal under 28 U.S.C. Sec. 1292(c)(1) (1988).
Paragraph 1 of the injunction broadly prohibits Medtronic from infringing the patents including "activity which has as its natural or intended purpose the sale of" the Medtronic Model 7210 cardioverter, 7215 PCD or 7216 PCD. Medtronic first asserts that the court based its finding of contempt on activities which the court erroneously found constituted infringements. The court stated:
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3. Medtronic violated paragraph 1 of the injunction ... on each occasion that Medtronic permitted Dr. Douglas P. Zipes, a Medtronic consultant and senior research investigator, to engage in an infringing activity which has as its natural or intended purpose the sale of the Medtronic 7215 PCD or the Medtronic 7216 PCD.
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5. Medtronic violated paragraph 1 of the injunction ... when Medtronic provided the automatic implantable defibrillator can and associated leads for display in the museum exhibit. The inclusion of the can and the associated leads is an infringing activity which has as its natural or intended purpose the sale of the Medtronic 7215 PCD or the Medtronic 7216 PCD.
6. Medtronic violated...
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