Mallinckrodt, Inc. v. Medipart, Inc.
| Decision Date | 24 September 1992 |
| Docket Number | Nos. 90-1138,90-1272,s. 90-1138 |
| Citation | 976 F.2d 700,24 USPQ2d 1173 |
| Parties | , 24 U.S.P.Q.2d 1173 MALLINCKRODT, INC., Plaintiff-Appellant, v. MEDIPART, INC., and Jerry A. Alexander, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Federal Circuit |
G. Franklin Rothwell, Bernard, Rothwell & Brown, P.C., Washington, D.C., argued for plaintiff-appellant. With him on the brief were Raymond A. Kurz and Bart G. Newland, of counsel.
Lee F. Grossman, Wood, Phillips, Mason, Recktenwald & Van Santen, Chicago, Ill., argued for defendants-appellees. With him on the brief were James C. Wood and Jeffrey L. Clark.
Before NEWMAN, LOURIE, and CLEVENGER, Circuit Judges.
This action for patent infringement and inducement to infringe relates to the use of a patented medical device in violation of a "single use only" notice that accompanied the sale of the device. Mallinckrodt sold its patented device to hospitals, which after initial use of the devices sent them to Medipart for servicing that enabled the hospitals to use the device again. Mallinckrodt claimed that Medipart thus induced infringement by the hospitals and itself infringed the patent.
The district court held that violation of the "single use only" notice can not be remedied by suit for patent infringement, and granted summary judgment of noninfringement. 1
The district court did not decide whether the form of the "single use only" notice was legally sufficient to constitute a license or condition of sale from Mallinckrodt to the hospitals. Nor did the district court decide whether any deficiencies in the "single use only" notice were cured by Mallinckrodt's attempted subsequent notice, the release of which was enjoined by the district court on the ground that it would harm Medipart's business. Thus there was no ruling on whether, if the initial notice was legally defective as a restrictive notice, such defect was cured in the subsequent notice. The district court also specifically stated that it was not deciding whether Mallinckrodt could enforce this notice under contract law. These aspects are not presented on this appeal, and the factual premises were not explored at the summary judgment proceeding from which this appeal is taken.
Instead, the district court held that no restriction whatsoever could be imposed under the patent law, whether or not the restriction was enforceable under some other law, and whether or not this was a first sale to a purchaser with notice. This ruling is incorrect, for if Mallinckrodt's restriction was a valid condition of the sale, then in accordance with General Talking Pictures Corp. v. Western Electric Co., 304 U.S. 175, 58 S.Ct. 849, 82 L.Ed. 1273, 37 USPQ 375, aff'd on reh'g, 305 U.S. 124, 59 S.Ct. 116, 83 L.Ed. 81, 39 USPQ 329 (1938), it was not excluded from enforcement under the patent law.
On review of these issues in the posture in which the case reaches us:
1. The movant Medipart did not dispute actual notice of the restriction. Thus we do not decide whether the form of the restriction met the legal requirements of notice or sufficed as a "label license", as Mallinckrodt calls it, for those questions were not presented on this motion for summary judgment.
2. Nor do we decide whether Mallinckrodt's enjoined subsequent notice cured any flaws in the first notice, for that issue was not reached by the district court.
We conclude, however, on Mallinckrodt's appeal of the grant of this injunction, that the notice was improperly enjoined.
3. We also conclude that the district court misapplied precedent in holding that there can be no restriction on use imposed as a matter of law, even on the first purchaser. The restriction here at issue does not per se violate the doctrine of patent misuse or the antitrust law. Use in violation of a valid restriction may be remedied under the patent law, provided that no other law prevents enforcement of the patent.
4. The district court's misapplication of precedent also led to an incorrect application of the law of repair/reconstruction, for if reuse is established to have been validly restricted, then even repair may constitute patent infringement.
The patented device is an apparatus for delivery of radioactive or therapeutic material in aerosol mist form to the lungs of a patient, for diagnosis and treatment of pulmonary disease. Radioactive material is delivered primarily for image scanning in diagnosis of lung conditions. Therapeutic The device is manufactured by Mallinckrodt, who sells it to hospitals as a unitary kit that consists of a "nebulizer" which generates a mist of the radioactive material or the prescribed drug, a "manifold" that directs the flow of oxygen or air and the active material, a filter, tubing, a mouthpiece, and a nose clip. In use, the radioactive material or drug is placed in the nebulizer, is atomized, and the patient inhales and exhales through the closed system. The device traps and retains any radioactive or other toxic material in the exhalate. The device fits into a lead-shielded container that is provided by Mallinckrodt to minimize exposure to radiation and for safe disposal after use.
agents may be administered to patients suffering various lung diseases.
The device is marked with the appropriate patent numbers, 2 and bears the trademarks "Mallinckrodt" and "UltraVent" and the inscription "Single Use Only". The package insert provided with each unit states "For Single Patient Use Only" and instructs that the entire contaminated apparatus be disposed of in accordance with procedures for the disposal of biohazardous waste. The hospital is instructed to seal the used apparatus in the radiation-shielded container prior to proper disposal. The hospitals whose activities led to this action do not dispose of the UltraVent apparatus, or limit it to a single use.
Instead, the hospitals ship the used manifold/nebulizer assemblies to Medipart, Inc. Medipart in turn packages the assemblies and sends them to Radiation Sterilizers Inc., who exposes the packages to at least 2.5 megarads of gamma radiation, and returns them to Medipart. Medipart personnel then check each assembly for damage and leaks, and place the assembly in a plastic bag together with a new filter, tubing, mouthpiece, and nose clip. The "reconditioned" units, as Medipart calls them, are shipped back to the hospitals from whence they came. Neither Radiation Sterilizers nor Medipart tests the reconditioned units for any residual biological activity or for radioactivity. The assemblies still bear the inscription "Single Use Only" and the trademarks "Mallinckrodt" and "UltraVent".
Mallinckrodt filed suit against Medipart, asserting patent infringement and inducement to infringe. Mallinckrodt also asserted other counts including trademark infringement, unfair competition under section 43(a) of the Lanham Trademark Act, and violation of Illinois unfair competition statutes. Both parties moved for summary judgment on all counts.
The district court granted Medipart's motion on the patent infringement counts, holding that the "Single Use Only" restriction could not be enforced by suit for patent infringement. The court also held that Medipart's activities were permissible repair, not impermissible reconstruction, of the patented apparatus. The court reserved for trial Mallinckrodt's counts of trademark infringement and unfair competition, and entered final judgment on the patent aspects in accordance with Fed.R.Civ.P. 54(b).
The district court also enjoined Mallinckrodt pendente lite from distributing a new notice to its hospital customers. 3 The proposed new notice emphasized the "Single Use Only" restriction and stated that the purpose of this restriction is to protect the hospital and its patients from potential adverse consequences of reconditioning, such as infectious disease transmission, material instability, and/or decreased diagnostic performance; that the UltraVent device is covered by certain patents; that the hospital is licensed under these patents to use the device only once; and that reuse of the device would be deemed infringement of the patents.
Mallinckrodt appeals the grant of summary judgment on the infringement issue, and the grant of the preliminary injunction.
Mallinckrodt describes the restriction on reuse as a label license for a specified field of use, wherein the field is single (i.e., disposable) use. On this motion for summary judgment, there was no issue of whether this form of license gave notice of the restriction. Notice was not disputed. Nor was it disputed that sale to the hospitals was the first sale of the patented device. The issue that the district court decided on summary judgment was the enforceability of the restriction by suit for patent infringement. The court's premise was that even if the notice was sufficient to constitute a valid condition of sale, violation of that condition can not be remedied under the patent law.
Mallinckrodt states that the restriction to single patient use is valid and enforceable under the patent law because the use is within the scope of the patent grant, and the restriction does not enlarge the patent grant. Mallinckrodt states that a license to less than all uses of a patented article is well recognized and a valid practice under patent law, and that such license does not violate the antitrust laws and is not patent misuse. Mallinckrodt also states that the restriction here imposed is reasonable because it is based on health, safety, efficacy, and liability considerations and violates no public policy. Thus Mallinckrodt argues that the restriction is valid and enforceable under the patent law. Mallinckrodt concludes that use in violation of the restriction is patent infringement, and that the district court erred in holding otherwise.
Medipart states that the restriction is unenforceable, for the reason that "the Bauer trilogy and Motion...
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