ERBE Elektromedizin GmbH v. Canady Tech. LLC

• Decision Date: 09 December 2010
• Docket Number: Nos. 2008-1426,Nos. 2008-1425,s. 2008-1425,s. 2008-1426
• Parties: ERBE ELEKTROMEDIZIN GMBH and ERBE USA, Inc., Plaintiffs-Appellants, and ConMed Corporation, Plaintiff-Appellee, v. CANADY TECHNOLOGY LLC, and Dr. Jerome Canady, Defendants-Cross Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

629 F.3d 1278

97 U.S.P.Q.2d 1048

ERBE ELEKTROMEDIZIN GMBH and ERBE USA, Inc., Plaintiffs-Appellants,

and

ConMed Corporation, Plaintiff-Appellee,

v.CANADY TECHNOLOGY LLC, and Dr. Jerome Canady, Defendants-Cross Appellants.

Nos. 2008-1425, 2008-1426.

United States Court of Appeals,Federal Circuit.

Dec. 9, 2010.

Philip G. Hampton, II, Dickstein Shapiro, LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Laurence E. Fisher. Of counsel was Steven M. War.

John G. Powers, Hancock & Estabrook, LLP, of Syracuse, NY, argued for plaintiff-appellee. With him on the brief was Ashley D. Hayes. Of counsel was Eric C. Nordby.

Timothy R. Dewitt, 24IP Law Group USA, PLLC, of Annapolis, MA, argued for defendants-cross appellants.

Before RADER, NEWMAN, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge PROST. Opinion concurring-in-part, dissenting-in-part filed by Circuit Judge NEWMAN.

PROST, Circuit Judge.

Appellants ERBE Elektromedizin GmbH and ERBE USA, Inc. (collectively, "ERBE") appeal from a final decision of the United States District Court for the Western District of Pennsylvania. Following the parties' various motions for summary judgment, the district court granted summary judgment of non-infringement of U.S. Patent No. 5,720,745 ("'745 patent") in favor of Cross-Appellants Dr. Jerome Canady and Canady Technology LLC (collectively, "Canady"). The court also granted summary judgment on ERBE's trademark and trade dress claims in Canady's favor based on the lack of a legally protectable mark. Canady cross-appeals the court's grant of summary judgment on its antitrust counterclaims in favor of ERBE and Plaintiff-Appellee ConMed Corporation ("ConMed"). We affirm.

Background

This is a patent infringement case involving three competitor companies that create argon gas-enhanced electrosurgical products for electrosurgery. Argon gas-enhanced electrosurgery is typically performed with an electrosurgical generator to which various surgical accessories, including endoscopic probes, are attached. The generator delivers a high frequency current to the human tissue through a stream of argon gas to create uniform hemostasis of bleeding tissue, which enhances surgical effects by limiting blood loss. Three different patents are implicated here.

ConMed is the owner by assignment of U.S. Patent No. 4,781,175 ("'175 patent"), issued in 1988. The '175 patent is directed at argon gas-assisted electrosurgical products used in argon beam coagulation ("ABC"), where the gas molecules move substantially parallel to one another long enough to strike the target tissue. It discloses an electrosurgical instrument that aims a directed, laminar stream of argon gas. '175 patent col.8 ll.10-14.

Dr. Canady is the named inventor of U.S. Patent No. 5,207,675 ("'675 patent"), issued in 1993, and is Canady Technology's founder, CEO, and partial owner. The '675 patent discloses a "surgical tissue coagulator" that includes a "flexible tube" with a handle that is used to maneuver the tube within an endoscope for argon gas-assisted electrosurgery.¹

ERBE is the owner by assignment of the '745 patent, issued in 1998. The ' 745 patent was filed in 1995 as Continuation-in-Part Application Serial No. 08/579,879 ("'879 CIP") ofU.S. Patent Application Serial No. 981,009 ("'009 application") from 1992. The '879 CIP application added forty-eight new claims and disclosures of argon gas rates and a not directed, non-laminar stream of argon gas. The patent examiner issued an Office Action, dated March 28, 1997, rejecting nearly all of the pending claims as indefinite and obvious in light of the prior art. J.A. 1068-77. The examiner noted that the Canady '675 patent disclosed argon flow rates ranging from 1 to 12 liters per minute, but did not disclose argon flow rates of "less than 1 liter per minute." J.A. 1073. On June 27, 1997, in response to that Office Action, the applicants filed an amendment to overcome the deficiencies in which it argued for the patentability of its pending claims over the Canady '675 patent because of the invention's claimed low gas flow rate. J.A. 1088-99. The examiner then issued its notice of allowance of the '745 patent. The ' 745 patent is directed to electrosurgical systems and methods for coagulating biological tissue with a high frequency current using argon plasma, i.e., ionized argon gas, through flexible endoscopic probes. This is known as argon plasma coagulation ("APC").

ERBE unsuccessfully tried to register the color blue as applied to these "flexible endoscopic probes for use in argon plasma coagulation" on the U.S. Patent and Trademark Office's ("PTO's") Principal Register. J.A. 3848-59. Thereafter, in 2002, ERBE did register the color blue as applied to the tube portion of the APC probes on the PTO Supplemental Register as U.S. Trademark Registration No. 2,637,630 ("'630 trademark"). J.A. 3846.

The patents have been the subject of a variety of litigation since their issuance. First, Dr. Canady sued ERBE in the United States District Court for the District of Columbia for infringement of the '675 patent in 1996 based on ERBE's importation of its APC probes. The district court held that the accused ERBE APC probes do not infringe the '675 patent because they do not have handles. This court affirmed. During the pendency of that action, in 2005, Dr. Canady also sued ERBE in the United Kingdom ("U.K.") on its European foreign counterpart to the '675 patent, European Patent No. 0595967. J.A. 2480-97. The U.K. court similarly found no infringement because of the absence of handles in the ERBE APC probes and ordered Dr. Canady to pay ERBE's attorneys fees.

Meanwhile, in 2000, ConMed granted ERBE a nonexclusive license to manufacture products under the '175 patent, such as argon gas-enhanced electrosurgical generators and flexible probes, in consideration for specified royalty payments. Under this agreement, ERBE also received the right to sue for infringement of the '175 patent.

Also in 2000, ConMed filed a lawsuit against ERBE in the United States District Court for the Northern District of New York, seeking a declaratory judgment that the '745 patent was invalid and that ConMed's ABC probes did not infringe the '745 patent. ERBE answered that the asserted patent was valid and infringed. In 2003, upon motion for summary judgment by ConMed, the district court construed the claims of the '745 patent and found that ConMed's ABC probes did not infringe. ERBE appealed, but in accordance with a subsequent settlement agreement, the district court vacated its summary judgment decision upon remand from this court. Under the settlement agreement, ERBE granted ConMed a nonexclusive license allowing ConMed to continue selling its ABC probes.

In 2005, Dr. Canady contracted with KLS Martin GmbH & Co. ("KLS Martin") to manufacture blue 2.3 mm diameter probes ("Canady probes") with black range marking rings along the tip end. In that year, Canady also filed a 510(k) application with the U.S. Food and Drug Administration ("FDA") seeking approval to sell the Canady probes, which operated with ERBE APC generators to perform APC procedures. After receiving approval, Canady Technology began importing and selling the accused Canady probes that it identified as substantially similar to ERBE APC probes, having the same uses, color, and marking rings, to customers of the ERBE APC systems in the United States. In 2006, ERBE filed a complaint with the International Trade Commission ("ITC"), which initiated an investigation of Canady Technology and KLS Martin. The ITC determined that ERBE did not present evidence of direct infringement by Canady customers under the proper construction of the asserted claims, and therefore Canady could not have engaged in contributory or induced infringement. We affirmed the ITC decision in ERBE Elektromedizin GmbH v. International Trade Commission, 566 F.3d 1028 (Fed.Cir.2009).

In addition, on December 5, 2005, ERBE and ConMed brought the instant action against Dr. Canady and Canady Technology. ERBE and ConMed filed an amended complaint alleging, inter alia, contributory infringement and infringement by inducement of the '745 and '175 patents based on Canady Technology's flexible endoscopic argon gas-assisted electrosurgical probes. ERBE also alleged infringement of '630 trademark under Section 32 of the Lanham Act, 15 U.S.C. § 1114, because of the blue color on the Canady probes. Based on its purported trade dress, consisting of the blue tube with black markings at the end, ERBE further asserted a claim for unfair competition in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125. Canady denied all of plaintiffs' claims and asserted, inter alia, antitrust counterclaims against ERBE and ConMed under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2.

The district court held a Markman hearing and construed the '745 patent' s disputed claim terms, including "low flow rate," which appears in independent claims 1 and 35 and dependent claim 38 of the '745 patent. ERBE Elektromedizin GmbH v. Canady Tech., LLC, 512 F.Supp.2d 297 (W.D.Pa.2007) (claim construction order). Claim 1 recites that the "gas flows from the source, through the tube and exits through the opening at the distal end of the tube at a low flow rate of less than about 1 liter/minute." '745 patent col.11 ll.40-43 (emphasis added). Claim 35 states that "supplying the inert gas from the source of said gas through the tube to the distal end opening of said tube with such a low flow rate, that gas exiting through said distal end opening is a not directed, non laminar stream but forms an inert gas atmosphere." Id. col.15 ll.52-57 (emphases added). Dependent claim 38 recites, "[t]he method as claimed in claim 35, whereby the stream of gas exits through said distal end opening with a flow rate of less than about one liter per minute." Id. col.16 ll.21-23 (emphasis added).

Both parties submitted a single definition...