Genzyme Corporation v. Atrium Medical Corporation, Civil Action No. 00-958-MPT (D. Del. 7/22/2003)
| Decision Date | 22 July 2003 |
| Docket Number | Civil Action No. 00-958-MPT. |
| Parties | GENZYME CORPORATION, Plaintiff, v. ATRIUM MEDICAL CORPORATION, Defendant. |
| Court | U.S. District Court — District of Delaware |
William J. Wade, Esq., Richards, Layton & Finger, Wilmington, Delaware, Counsel for Plaintiff.
Donald R. Dunner, Esq., Richard L. Stroup, Esq., Robert L. Burns, Esq., Adam Avrunin, Esq., Counsel for Plaintiff, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., Counsel for Plaintiff Genzyme Corporation.
Josy W. Ingersoll, Esq., John W. Shaw, Esq., Christian Douglas Wright, Young Conaway Stargatt & Taylor, Wilmington, Delaware.
William Lee, Esq., Merriann M. Panarella, Esq., Wayne Stoner, Esq., Hale and Dorr, L.L.P., Boston, MA.
In July 2002, this court issued a claim construction opinion after a Markman hearing1 held in May 2002. In November 2002, a trial was held on the patent infringement dispute between Genzyme and Atrium over designs for pulmonary drainage devices. Genzyme sued for damages for the marketing and sale of Atrium's "OASIS" and "EXPRESS" devices, which allegedly infringed Genzyme's "Elliot patents" (U.S. Patent Nos. 4,544,370; 4,715,856; 4,747,844 and 4,822,346) and its "D'Antonio patent" (U.S. Patent No. 4,899,531). Both parties reserved the right at the close of evidence to have the court make a determination of certain issues of law and fact after the jury verdict. After an eight day trial, the jury found that Atrium did not infringe any claims of the patents-in-suit and that all patents-in-suit were invalid.
Presently before the court are post trial motions for a new trial on the defense of laches, for judgement as a matter of law on validity and infringement of both the Elliot and D'Antonio patents and an award for damages. D.I. 284. This opinion is directed only to Atrium's laches motion. D.I. 282.
In 1989, Deknatel released the "first" pulmonary drainage device using a dry suction regulator based on the technology outlined in the `531 D'Antonio patent. D.I. 269 at 576. This patent application was filed in August 1986, and issued in December 1989. In September 1991, Atrium began development of its OASIS chest drainage device with knowledge of the D'Antonio patent. D.I. 272 at 1940 — 1942. During the research and development phase, Atrium sought the opinions of two law firms with regard to potential infringement of the patent. D.I. 272 at 1956 — 1957. In the Spring of 1996, Atrium released the OASIS device and in May 1996, Deknatel approved a competitive testing protocol which specified Atrium's new OASIS device. Deknatel obtained an OASIS device and analyzed it. D.I. 269 at 512 — 513. Thereafter, a recommendation was made to Deknatel management concerning the review of the OASIS device and the D'Antonio patent. D.I. 269 at 516.
In the same year, Genzyme acquired Deknatel and the patents-in-suit.2 Shortly after this acquisition, Genzyme introduced its SAHARA device, incorporating technology from the Elliot patents, which it believed would render the OASIS device obsolete. D.I. 269 at 518. In the Fall of 1997, after a corporate reorganization, a new manager joined Genzyme's R&D and in 1998, that manager was advised that Atrium's OASIS product infringed. At that time, Genzyme started to "think seriously" about infringement. D.I. 268 at 336 — 337 and 381. Through information from an industry research report, Genzyme concluded that OASIS sales of 67 thousand units in 1997 accounted for nearly $900,000 in lost profits. During 1998, OASIS sales nearly doubled to approximately 130 thousand units. As a result, Genzyme announced in a 1999 report to shareholders that Atrium was a competitor who hurt performance and sales. D.I. 271 at 1573 — 1574. In 2000, Atrium introduced the EXPRESS device which Genzyme viewed as "knock-off" of its SAHARA device and infringed the Elliot patents. D.I. 268 at 400. After losing over $2 million in profits to OASIS sales (170,000 units) in 1999, and the prospect of new competition from the EXPRESS product, Genzyme determined that no other alternative existed and filed suit. D.I. 268 at 336.
In November 2000, Genzyme filed this action against Atrium alleging that its OASIS and EXPRESS products infringed the D'Antonio and Elliot patents. During trial, Atrium moved, pursuant to Fed.R.Civ.P. 52 and 58, for judgement in its favor on sales of its OASIS product prior to November 14, 2000, relying on the equitable doctrine of laches. The court reserved decision until after post trial briefing was completed.
Chest drainage devices remove fluid and air from a patient's chest cavity through the use of vacuum suction. Body fluids are drained through a tube into a collection chamber within the device. Because of the negative pressure exerted on the device when a patient inhales, proper operation requires the use of one-way "valves" to prevent the reverse flow of collected fluids. Prior art devices used a water column to act as a one-way valve or "water seal" to prevent reverse flow. The Elliot patents disclose a "waterless" (or "dry") device that replaces water seals with a mechanical one-way valve. The patents further disclose a number of pressure relief and control valves to allow for accurate pressure regulation and reverse flow protection.
Chest drainage devices that used water columns as one way valves to prevent the flow of fluid back into the patient also act to regulate the suction applied to the patient by preferentially allowing air from the atmosphere into the suction and collection chambers. Medical personnel would regulate the suction by varying the amount of water in U-shaped tubes within the device. Instead of employing a water-based control mechanism, the D'Antonio patent utilizes mechanical valves that "self-adjust" to regulate the pressure in the suction chamber. This is accomplished, in part, by a gas port closing member positioned between the vacuum and collection chambers within the device.
The law on laches is rooted in the equitable principle that courts will not assist one who has "slept on his rights." Jarrow Formulas, Inc. v. Nutrition Now, Inc. 304 F.3d 829, 835 (9th Cir. 2002). In the interest of fairness and equity, those who are granted a monopoly under the patent system have an obligation to enforce their rights in a timely manner. Advanced Hydraulics, Inc. v. Eaton Corp., 415 F. Supp. 283, 286 (N.D. III. 1976). Laches protects a potential infringer from unfair damage claims resulting from the intentional or neglectful delay of a patent holder to file suit. Two elements underlie this defense: (a) the patentee's delay in bringing suit was unreasonable and inexcusable, and (b) the alleged infringer suffered material prejudice attributable to the delay. Bayer AG v. Sony Electronics, Inc., 229 F. Supp.2d 332, 366 (Del. 2002).
Laches, as defined under 35 U.S.C. § 282 (1988), is an equitable defense to a claim for patent infringement. This provision in the Patent Act bars recovery of damages for any infringement committed more than six years prior to the filing of the complaint or a counterclaim for infringement. Courts have almost unanimously "borrowed" this six year time provision in order to protect a potential infringer from damages due to either the intentional or negligent delay of a patent holder in bringing suit. This period can be described as the "reasonable" period required to create a presumption of laches. It begins when the patentee knew or should have known of the alleged infringer's activity. The presumption of six years "represents an equitable balancing of the interests of the parties." A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1035 (Fed. Cir. 1992). It also represents the point at which the burden of proof shifts from the defendant to the plaintiff. A six-year delay requires the patentee to rebut the presumption of laches. But where the delay is less than six years, no presumption operates, and an accused infringer relying on laches must demonstrate the existence of both elements, namely, inexcusable delay and resulting prejudice. Id. at 1034-1037.
The degree of infringement may be relevant to the issue of when the period of delay begins. See, Lever Bros. v. Procter & Gamble Distributing Co., 668 F. Supp. 924 (N.J. 1987). A delay of less than 6 years in bringing an infringement action has been excused where the infringer's actions are not commercially significant. Illinois Tool Works Inc. v. Grip-Pak, Inc., 725 F. Supp. 951, 953 (N.D. III. 1989). In ITW, the patentee waited 5 years to determine whether it would be economically prudent to initiate an action against Grip-Pak, an infringer. The court determined that patent owners are not expected to incur considerable expense to silence commercially insignificant infringers. In a similar finding, the court in Mead Digital Systems, Inc. v. A.B. Dick Co., 521 F. Supp. 164, 183 (S.D. Ohio 1981) found that a 3 year wait to file suit after the infringer reached profitability was not unreasonable.
Finally, the court will consider these factors, the evidence, and other relevant circumstances to determine whether equity should intercede to bar pre-filing damages. Aukerman, 960 F.2d at 1036. Ultimately, it is within the court's prerogative, based on its evaluation of all relevant evidence, to determine whether a delay of fewer than 6 years is unreasonable or inexcusable.
In order to satisfy the second element of laches, a defendant must prove that he suffered material prejudice attributable to the delay. Material prejudice is defined to be either...
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