R2 Medical Systems, Inc. v. Katecho, Inc., 94 C 3131.

Decision Date19 July 1996
Docket NumberNo. 94 C 3131.,94 C 3131.
Citation931 F. Supp. 1397
PartiesR2 MEDICAL SYSTEMS, INC., Plaintiff, and Cardiotronics, Inc., Plaintiff, v. KATECHO, INC., and Cardiovascular Group of Oregon, Inc., and Padeco, Inc., Defendants.
CourtU.S. District Court — Northern District of Illinois

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Richard P. Steinken, Jenner & Block, Stephen J. Manich, Michael Laszlo Korniczky, Wood, Phillips, VanSanten, Hoffman & Ertel, Gomer Winston Walters, Lindenbaum, Coffman, Kurlander, Brisky & Hayes, Ltd., Chicago, IL, Robert C. Morgan, Frances M. Lynch, Gene W. Lee, Fish & Neave, New York City, for R2 Medical Systems, Inc.

James P. Ryther, Mary Spaulding Burns, Rockey, Rifkin and Ryther, Chicago, IL, Michael G. Voorhees, Daniel J. Cosgrove, Michael R. Crabb, Zarley, McKee, Thomte, Voorhees & Sease, Des Moines, IA, for Katecho Inc.

Joan I. Norek, Chicago, IL, for Cardiovascular Group of Oregon, Inc. Jeffrey A. Sadowski, Steven L. Oberholtzer, Eric J. Sossenko, Harness, Dickey & Pierce, Troy, MI, Joan I. Norek, Chicago, IL, for Padeco, Inc.

MEMORANDUM OPINION AND ORDER

GETTLEMAN, District Judge.

Plaintiffs R2 Medical Systems, Inc. ("R2") and its parent corporation, Cardiotronics, Inc.1 claim that defendants have infringed or caused to be infringed certain patents R2 holds on heart monitoring and resuscitation devices. This memorandum opinion and order disposes of a number of summary judgment motions filed by defendants.

Defendants Katecho, Inc. ("Katecho"), Cardiovascular Group of Oregon, Inc. ("Cardiovascular"), and Padeco, Inc. ("Padeco") have moved for summary judgment against all R2's claims for patent infringement. All defendants move for summary judgment based upon the affirmative defenses of laches and equitable estoppel. Katecho also moves for summary judgment arguing that each of the patents asserted against it are invalid because they allegedly failed to satisfy the best mode requirement under 35 U.S.C. § 112. Finally, defendants move for summary judgment of the claims under the six patents asserted by R2, arguing that there is no genuine issue of material fact that defendants' products did not infringe the patents.

BACKGROUND

The patents at issue involve a system to monitor and treat heart irregularities through the use of disposable physiological electrodes and non-disposable cable systems that are used with ECG monitoring, defibrillation, and electrosurgical/ablation equipment. With traditional defibrillation, electrodes are attached to a patient's chest to monitor his heart beat for irregular behavior. Once heart problems are detected, medical personnel take a separate electronic device attached to two metal paddles, smear the paddles with a conductive gel and hold the paddles to the patient's chest to defibrillate the heart with bursts of electricity. Although life-saving, this system suffers from several difficulties, including the danger of electrical shock to the administering medical personnel and periods following defibrillation when it is impossible to monitor the patient's heart activity accurately.

The patented devices were intended to solve these difficulties by providing cheaper disposable electrodes that could perform a variety of functions and permit medical personnel to apply electric shocks from a safe distance. The first patent, U.S. patent 4,848,345 ("'345 patent"), covers a system of disposable adhesive steel electrodes and cables that replace the traditional paddles for defibrillation. This system permits medical personnel to defibrillate a patient at a safe distance through the adhesive electrodes that are attached to the patient's chest. In addition, medical personnel may switch the electrodes back and forth between the monitoring and defibrillation functions.

U.S. patent 4,852,585 ("'585 patent") and U.S. patent 4,895,169 ("'169 patent") disclose electrodes intended to improve upon this system by better performing all three functions of monitoring, defibrillation and electrosurgical therapy for lower cost. These patents contemplate electrodes that have a surface of conductive metal, preferably tin, with a conductive medium of a saline gel located between the metal surface and the patient's skin. This medium improves the transfer of electricity between the electrode and the patient. The gel is held in a foam layer that covers the conductive metal surface. The primary distinctive feature of these electrodes is that a chloride of the conductive metal, preferably stannous (tin) chloride, be located between the electrode's surface of the conductive metal and the patient's skin. These patents reveal two alternative locations for the stannous chloride: (1) within the gel, or (2) directly "affixed" to the conductive metal surface. If it is "affixed" to the surface, the patent suggests that the stannous chloride may be sprayed onto the surface in a thin layer. The electrode patents' claims require that the stannous chloride be "affixed" to the electrode.

These electrodes, in turn, may be used with the remaining three patented systems. U.S. patent 4,850,356 ("'356 patent") provides a system of adapters and cable that permits the use of these disposable electrodes with traditional defibrillation systems. U.S. patent 4,494,552 ("'552 patent") provides a system that permits the use of two electrodes for ECG monitoring. ECG monitoring previously required the use of three electrodes. U.S. patent 4,419,998 ("'998 patent"), which includes a connector and cable system, permits the use of these multifunctional electrodes with all three of the pertinent cardiovascular treatment systems: monitoring, defibrillation, and electrosurgical therapy. With these patents, R2 manufactures and sells multifunctional electrodes and cable and adapter systems to various hospital-related clients.

The '998 patent was issued in 1983. The '552, '345 and '356 patents are collectively known as the "system patents." The '552 patent was issued on January 22, 1985. The '345 and '356 patents were issued respectively on July 18, 1989 and July 25, 1989. The '585 and '169 patents are known as the "electrode patents" and were issued respectively on August 1, 1989 and January 23, 1990.

All three defendants are or were suppliers of hospital-related products. Katecho manufactures and sells electrodes, including the electrodes accused of infringement. Cardiovascular and Padeco are suppliers of hospital-related products, including the electrodes at issue and related products. Cardiovascular purchased and Padeco purchases all of their allegedly infringing electrodes from Katecho.

R2 alleges that Katecho infringes three of the patents at issue. First, R2 asserts that Katecho's packaging, advertising and instructions on certain models of electrodes direct that they be used for either the monitoring, defibrillation or therapeutic function, thereby inducing and contributing to its customers' infringement of the '998 patent. Based upon discovery, R2 has determined that these models were first sold on January 1, 1989, but were not widely distributed until sometime in 1991. Second, R2 contends that Katecho sells electrodes that directly infringe the '585 and '169 patents.

In or about 1986, Katecho began to supply the electrodes at issue to a former customer of R2, the Laerdal Corporation. Sometime in 1986 or 1987, Buddy Rampersaud, procurement manager for Laerdal, informed R2 that his company would be purchasing their electrodes from Katecho instead of R2. In deposition testimony, William J. Smirles, director of R2's department of research and development, indicated that R2 was aware that Katecho was continuing to compete in the sale of electrodes in 1988. The present record also reveals that sometime during the late 1980's, Smirles asked R2's management for additional resources in order to investigate infringement matters. At that time, R2 declined Smirles' request. It is unclear when this took place. Smirles also affirmed that, by April of 1989, he was aware that Katecho supplied Cardiovascular with its competing line of electrodes.

Following 1987, Katecho's overall sales grew steadily, requiring Katecho to invest in additional space, equipment and personnel. However, its sales of the electrodes at issue fluctuated, doubling some years, but then falling close to previous levels in other years. Consequently, while the sales of other electrodes were 60% higher than allegedly infringing sales in 1989, in 1994 such sales were four times higher than allegedly infringing sales. Overall, the allegedly infringing electrodes accounted for approximately 23% of Katecho's sales during the period of 1988 through 1994.

R2 alleges that Cardiovascular and, later, Padeco infringed all six of the patents at issue. First, R2 alleges that these defendants sell electrodes that directly infringe the '585 and '169 patents. Second, R2 charges these defendants with contributory infringement and inducement of infringement of the '998 patent through their packaging, advertising and instructions on certain packaged models of electrodes. R2 also alleges that these defendants manufacture and distribute switch boxes that permit their customers to selectively use the accused electrodes with any of the three devices. Third, R2 charges defendants with contributory infringement and inducement of infringement of the remaining three system patents through their sale of adapter cable systems and R2 switch control cables with multifunctional electrodes that allegedly infringe R2's electrode patents.

Cardiovascular originally began to sell the devices at issue in 1986 under the trade name, "Padeco." In 1991, Cardiovascular ceased selling its hospital-related products, including the electrodes at issue. At that time, a newly incorporated company, Padeco, began to sell the electrodes and related products under the same trade...

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