Telectronics Pacing Systems, Inc. v. Ventritex, Inc.

• Decision Date: 21 December 1992
• Citation: 25 USPQ2d 1196,982 F.2d 1520
• Parties: TELECTRONICS PACING SYSTEMS, INC., Plaintiff-Appellant, v. VENTRITEX, INC., Defendant-Appellee. 91-1289.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1520

982 F.2d 1520

25 U.S.P.Q.2d 1196

TELECTRONICS PACING SYSTEMS, INC., Plaintiff-Appellant, v. VENTRITEX, INC., Defendant-Appellee.

91-1289.

United States Court of Appeals, Federal Circuit.

Dec. 21, 1992.

Michael I. Rackman, Gottlieb, Rackman & Reisman, P.C., New York City, argued for plaintiff-appellant. With him on the brief were William C. Nealon, Suffield, CT and William H.G. Norman, Bronson, Bronson & McKinnon, San Francisco, CA, of counsel.

George H. Gerstman, Gerstman & Ellis, Ltd., Chicago, IL, argued for defendant-appellee. With him on the brief were Denis R. Salmon and Madison Jellins, Brobeck, Phileger & Harrison, Palo Alto, CA, of counsel.

RICH, MICHEL and PLAGER, Circuit Judges.

PLAGER, Circuit Judge.

In this case, plaintiff Telectronics charged defendant Ventritex with patent infringement, alleging that Ventritex had engaged in activities that were not exempt under 35 U.S.C. § 271(e)(1) (1988) as activities "solely for uses reasonably related" to obtaining FDA approval of its implantable defibrillator. In addition, plaintiff sought a declaratory judgment that, upon FDA approval, sales of Ventritex's device would infringe Telectronics' patents. Defendant moved to dismiss the action. The United States District Court for the Northern District of California converted the motion to dismiss to a motion for summary judgment, and granted summary judgment to defendant Ventritex. Telectronics appealed the district court's judgment pursuant to 28 U.S.C. § 1295(a) (1988). We affirm.

I. FACTUAL BACKGROUND

The basic facts are undisputed. Pursuant to an Investigational Device Exemption (IDE) from the Food and Drug Administration (FDA), Ventritex began conducting clinical trials of its implantable defibrillator in July of 1989. The IDE allowed Ventritex to sell its device, at cost, for implantation in patients in order to obtain data on the device's clinical operation. See 21 C.F.R. part 812 (1989). This data is required by the FDA for securing pre-market approval of the device. Id. part 814.

Ventritex displayed its defibrillator at seven medical conferences, at which the device was demonstrated to physicians and to some non-physicians. Some of Ventritex's clinical investigators also submitted an abstract to the American College of Cardiology and presented results of the clinical trial at the conference.

In his fund-raising efforts as President and CEO of Ventritex, Frank M. Fischer described the on-going clinical trial to investors, analysts and journalists. Specifically, Fischer compared Ventritex's defibrillator to those of other companies, reported on the number of implants and the number of centers doing these implants, and distributed a handout which stated that "Early clinical results are quite promising."

Ventritex also mailed a Private Placement Memorandum to potential investors along with a cover letter and a research note from an investment banking firm, both of which described the size and progress of the clinical trial. The funds raised were to be used, among other purposes, for continuing the clinical trials and for manufacturing equipment.

II. PROCEDURAL HISTORY

On October 4, 1989 plaintiff Telectronics filed a complaint seeking five counts of declaratory judgment that defendant Ventritex's activities in making, using, or selling its implantable defibrillator would infringe plaintiff's patents ¹ upon expiration of the clinical testing exemption under 35 U.S.C. § 271(e)(1). On October 25, 1989 Ventritex moved to dismiss the complaint for failure to state a claim upon which relief could be granted, and because the complaint sought an advisory opinion.

Telectronics amended its complaint on November 14, 1989 to include five additional counts of patent infringement, alleging that defendant had engaged in activities that were not exempt under 35 U.S.C. § 271(e)(1) as activities solely for uses reasonably related to obtaining FDA approval of the device. Ventritex again moved to dismiss on December 11, 1989, on the grounds that the declaratory judgment counts sought an advisory opinion, and that all counts failed to state a claim upon which relief could be granted.

On December 20, 1990 the district court ordered that defendant's motion to dismiss be converted to a motion for summary judgment. On February 4, 1991 the court entered a brief order granting the defendant's motion for summary judgment. The judge stated that he was unpersuaded by plaintiff's arguments and agreed with defendant that its activities were exempt under § 271(e)(1).

On appeal to us, Telectronics claims that the district court erred by (1) exempting under § 271(e)(1) acts which had nothing to do with the clinical trials; (2) sustaining a clinical trial exemption when the data gathered from the clinical trials were used for commercial purposes totally unrelated to FDA reporting; and (3) refusing to hear the declaratory judgment counts when there was an actual controversy. Telectronics further claims that the district court's judgment must be vacated because it states no reasons for the decision on the declaratory judgment counts. Ventritex's position is that the district court's judgment was proper.

III. SCOPE OF REVIEW

Summary judgment is properly granted only where there is no genuine issue of material fact and the prevailing party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. All evidence must be viewed in a light most favorable to the non-moving party, and all reasonable inferences must be drawn in favor of the non-moving party. Armco, Inc. v. Cyclops Corp., 791 F.2d 147, 149, 229 USPQ 721, 723 (Fed.Cir.1986). We review the grant of summary judgment de novo to determine whether the above standards for summary judgment have been met. Winner Int'l Corp. v. Wolo Mfg. Corp., 905 F.2d 375, 376, 15 USPQ2d 1076, 1077 (Fed.Cir.1990); Armco, 791 F.2d at 149, 229 USPQ at 723.

IV. DISCUSSION

The basic facts are undisputed. What remains to be determined is whether defendant Ventritex was entitled to judgment as a matter of law. The issues before us are: (1) were Ventritex's activities exempt under 35 U.S.C. § 271(e)(1) from charges of infringement, and (2) did the district court judge abuse his discretion in refusing to hear the declaratory judgment counts regarding future infringement?

A.

Appellant Telectronics charges that Ventritex's demonstrations of the defibrillator to non-physicians at medical conferences are non-exempt activities because these demonstrations were not solely for uses reasonably related to FDA approval. Appellee Ventritex responds that demonstrating the device at medical conferences was necessary to obtain clinical investigators for its trials.

Telectronics also argues that Ventritex's other making, using and selling activities, even if originally performed for clinical trial purposes and thus exempt, have now 'lost' their exemption because the clinical trial data was later disseminated to non-physicians for purposes unrelated to FDA reporting requirements. Ventritex answers that the language of § 271(e)(1) concerns only the making, using or selling of a patented invention, and does not deal with activities, such as collateral use of data, which in any other context would be non-infringing. Ventritex notes that none of its defibrillators has been sold or implanted other than under the control of a clinical investigator, and that the FDA, which has its own procedures for controlling the use and sale of investigational devices during clinical trials, has never complained about Ventritex's practices.

We begin our analysis of 35 U.S.C. § 271 with the language of the statute:

(a) Except as otherwise provided in this title, whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent.

. . . . .

(e)(1) It shall not be an act of infringement to make, use, or sell a patented invention ... solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

1.

The language of § 271(a) clearly specifies only the making, using or selling of a patented invention as infringing activities. Under § 271(e)(1), these potentially infringing activities are exempt if performed solely for uses reasonably related to the development of information for FDA approval. The only making, using or selling activity that Telectronics specifically alleges as unrelated to FDA approval is Ventritex's demonstration of its defibrillator to some non-physicians at medical conferences. Ventritex responds that its "demonstrations have all been set up for the purpose of obtaining clinical investigators." Appellee's Br. at 31. Absent some showing that Ventritex's purpose is disputed, Laitram Corp. v. NEC Corp., 952 F.2d 1357, 1363, 21 USPQ2d 1276, 1281 (Fed.Cir.1991) (when a sufficiently supported motion for summary judgment is submitted, burden of showing a genuine issue of material fact shifts to nonmovant), such demonstrations constitute an exempt use reasonably related to FDA approval, because device sponsors are responsible for selecting qualified investigators and providing them with the necessary information to conduct clinical testing. 21 C.F.R. § 812.40 (1989). The fact that some non-physicians may have seen the device at the conferences is merely incidental and of minimal import, since only physicians can implant the device. Observation of the device at medical conferences by non-physicians does not impair the conclusion that such uses satisfy the requirements of § 271(e)(1). During oral argument, Telectronics admitted that the demonstrations were not a sale or an offer to sell. We note that the FDA has its own requirements that prohibit sponsors of medical devices from promoting, test marketing or commercializing ² investigational devices. 21 C.F.R. § 812.7 (1989).

2.

All of the other...