Karl Storz Endoscopy-Am., Inc. v. Steris Instrument Mgmt. Servs., Inc.

• Decision Date: 18 May 2022
• Docket Number: Case No.: 2:12-CV-02716-RDP
• Citation: 603 F.Supp.3d 1111
• Parties: KARL STORZ ENDOSCOPY-AMERICA, INC., Plaintiff, v. STERIS INSTRUMENT MANAGEMENT SERVICES, INC., Defendant.
• Court: U.S. District Court — Northern District of Alabama

603 F.Supp.3d 1111

KARL STORZ ENDOSCOPY-AMERICA, INC., Plaintiff,

v.STERIS INSTRUMENT MANAGEMENT SERVICES, INC., Defendant.

Case No.: 2:12-CV-02716-RDP

United States District Court, N.D. Alabama, Southern Division.

Signed May 18, 2022

Filed May 19, 2022

Michael J. Kosma, Stephen Ball, F.W., Jr., Wesley W. Whitmyer, Jr., Christopher J. Stankus, Pro Hac Vice, Patrick D. Duplessis, Pro Hac Vice, Whitmyer IP Group LLC, Stamford, CT, John G. Dana, Gordon Dana Gilmore & Maner LLC, Birmingham, AL, for Plaintiff.

Kyle T. Smith, Robert Richardson Baugh, Alyse Nicole Windsor, Dentons Sirote, P.C., Birmingham, AL, Dabney J. Carr, IV, Pro Hac Vice, Troutman Sanders, LLP, Richmond, VA, Dustin B. Weeks, Pro Hac Vice, Troutman Sanders LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION

R. DAVID PROCTOR, UNITED STATES DISTRICT JUDGE

This patent infringement case is before the court on six motions: Plaintiff's Motion for Partial Summary Judgment as to certain infringement claims and patent validity (Doc. # 172); Defendant's Motion for Summary Judgment based on the affirmative defense of repair (Doc. # 174); the parties’ Daubert motions to exclude expert witness testimony at trial (Docs. # 173, 175); and Plaintiff's Motion for Sanctions based on alleged spoliation of evidence (Doc. # 171). The Motions have been fully briefed (Docs. # 176, 177, 178, 179, 180, 190, 191, 192, 196, 197, 202-1, 202-2, 212, 213, 214) and are under submission. After careful review, and for the reasons discussed below, Defendant's Motion for Summary Judgment (Doc. # 174) is due to be granted and all other Motions (Docs. # 171, 172, 173, 175, 210) are due to be denied.

I. Background¹

This case concerns endoscopes. An endoscope is a tubular device used by medical professionals to see inside body cavities. (Doc. # 104 at 2). Endoscopes have various components. The outermost body of a rigid endoscope

is an inflexible tubular shaft. (Doc. # 169-1 at 1, ¶ 1). The shaft houses an inner tube called the optical relay assembly. (Id. at 1, ¶¶ 1-2). The optical relay assembly is a series of lenses and spacers arranged in a specific order. (Id. at 1, ¶ 2). The purpose of the optical relay assembly is to pass the image from one end of the endoscope to the other. (Id. ). The user can look through an eyepiece attached to the proximal end of the endoscope to see the image from the distal end. (Id. at 1-2, ¶¶ 1, 6).

Plaintiff Karl Storz Endoscopy-America, Inc. ("KSEA") manufactures and services endoscopes. It owns two patents at issue in this case: U.S. Patent No. 7,530,945, entitled "Endoscope and Method for Assembling Components of an Optical System" ("the ‘945 Patent"), and U.S. Reissued Patent No. RE46,044, also entitled "Endoscope and Method for Assembling Components of an Optical System" ("the ‘044 Patent"). (Docs. # 93-1, 93-2). The ‘945 Patent is a method patent covering a process of assembling endoscopes and the ‘044 Patent is a machine patent covering the endoscopes themselves. (See id. ). The patents are substantially similar; that is, they cover the same devices and the method of assembling those devices. (See id. ). Through the patents, KSEA claims right to the process of creating an endoscope with an interior tube (the optical relay assembly), which is encased in transparent shrinkable material that encloses and fixes the optical components (lenses and spacers) and allows for a visual check of the alignment of the optical components before assembly of the entire endoscope. (Docs. # 93-1 at 7; 93-2 at 7).

Without the claimed invention, the quality check of the optical relay assembly in an endoscope is normally performed after the endoscope is completely assembled. (Id. ). "If optical errors are found, it is then very expensive to correct these, and in most cases the endoscope has to be completely dismantled." (Id. ). The invention solves this issue because "it is now possible to produce [an optical relay assembly] outside the endoscope and to check this unit visually" through the transparent shrinkable material. (Id. ).

The ‘945 Patent has seven claim limitations. (Doc. #93-1 at 9). Claim 1 is representative of the claimed method:

1. A method for assembling an endoscope having a tubular shaft, an optical system having several components, said components of said optical system are contained in an interior of said tubular shaft, said components of said optical systems are at least partially surrounded by a tube made of both a transparent² and a shrunk material, said method comprising the following steps a) introducing said components into a tube of transparent and shrinkable material to form a unit,

b) shrinking said shrinkable material of said tube for fixing the position of said components contained within said tube relative to one another,

c) checking a position of said components relative to one another through said transparent shrunk material, of said shrunk tube and

d) introducing said unit comprised of said shrunk tube and said components contained therein into said tubular shaft.

(Id. ).

The ‘044 Patent has 32 claim limitations. (Doc. # 93-2 at 9-11). Claim 1 is representative of the claimed device:

1. An endoscope, comprising:

A tubular shaft, having an inside face,

An optical system having several components, said components of said optical system are contained in an interior of said tubular shaft,

said components comprising at least two of the following: a lens, a spacer, a diaphragm, a prism and a filter, said components directly surrounded by a support piece made of a shrunk material, wherein

said shrunk material is a transparent material,

said support piece made of said transparent material has a shape of a tube, and

said tube containing said components of said optical system has been shrunk prior to inserting said tube into said interior of said tubular shaft, for allowing a visual check of a position of said components relative to one another, and

a gap located between an outside surface of said tube of shrunk material and said inside face of said tubular shaft.

(Id. at 9). Claims 8, 15, and 23 describe substantially similar endoscopes. (Id. at 10). Claims 2, 9, 16, and 24 limit the claimed endoscopes to those with optical components enclosed by transparent material. (Id. ).

In simpler terms, KSEA rigid endoscopes

have a unique "tube within a tube" construction. The outer tube is the rigid body of the endoscope. The inner tube is enclosed with a transparent and shrinkable material, which the parties sometimes refer to as "shrink wrap." The inner tube contains lenses of different diameters and prescriptions separated by spacers of different sizes. So, in the most general sense, the inner tube is a shrink-wrapped row of lenses and spacers. This inner tube can be assembled and inspected separately from the rest of the endoscope and can be removed from the endoscope as one unit. Again, the inner tube is the optical relay assembly.

Defendant STERIS Instrument Management Service, Inc. ("IMS") repairs³ endoscopes. IMS is KSEA's primary competitor in servicing rigid endoscopes

. (Doc. # 169-1 at 2, ¶ 7). A common repair that IMS makes related to KSEA rigid endoscopes is to fix a broken rod lens caused by an operator torquing the endoscope during surgical procedures or some other misuse. (Id. at 3, ¶¶ 12-13). Generally speaking, when called upon to repair an endoscope with a damaged rod lens or an optical relay that is not functioning properly for any reason, IMS will replace the optical relay. (Id. at 3-4, ¶¶ 15, 24). More specifically, the parties stipulated to the following facts regarding IMS's repair process:

1. When IMS receives a rigid endoscope for repair, a technician first evaluates the endoscope to determine the extent of repairs necessary. (Id. at 3, ¶ 9).

2. If this evaluation reveals that the endoscope is not providing an acceptable optical image, then the technician will remove and inspect the optical relay. (Id. at 3, ¶ 15).

3. To access the optical relay, "the technician opens the endoscope by heating the adhesive sealing the eyepiece utilizing the flame from a HydroFlux Welder, placing the endoscope in a jig, breaking the seal with a specialized tool, and then removing the eyepiece and the screws that hold the ocular base in place." (Id. at 4, ¶ 16).

4. The technician slides the optical relay out of the tubular shaft and cuts open the shrink wrap. (Id. at 4, ¶¶ 17-18).

5. The technician discards any damaged lenses and spacers and places any reusable lenses and spacers in inventory. (Id. at 4, ¶¶ 20-21).

6. The technician slides a replacement optical relay -- assembled by a separate IMS sub-assembly department (more on that below) -- into the tubular shaft. (Id. at 4-5, ¶¶ 24-25).

7. The technician "assembles the eyepiece and ocular base over the optical relay" and "performs optical alignments." (Id. at 5, ¶¶ 25-26).

8. "The endoscope and eyepiece are then placed in an oven to remove any moisture." (Id. at 5, ¶ 27).

9. Finally, the technician seals the endoscope by "appl[ying] glue over the threads of the endoscope and secures the eyepiece to the threads." (Id. at 5, ¶ 28).

The parties also stipulated about how a technician in the IMS sub-assembly department assembles replacement optical relays for KSEA rigid endoscopes:

1. The technician lines up a sequence of lenses and spacers in "a tray with a V-shaped notch to hold the components in place." (Id. at 5, ¶ 32).

2. The technician slides and pulls the line of components through a loading tube that covers the components in shrink wrap. (Id. ).

3. The technician heats the sub-assembly to seal the shrink wrap and cuts off any excess. (Id. at 5, ¶ 33).

The lenses and spacers that an IMS technician uses to assemble a replacement optical relay are either new or recycled from previously repaired KSEA endoscopes. (Id. at 5, ¶ 30). "Typically, about two to four [recycled] rod lenses are used per endoscope, though a repaired endoscope may have all replacement lenses." (Id. at 5, ¶ 31). But, IMS does not track the number of...