Cardionet, LLC v. Scottcare Corp.

388 F.Supp.3d 442

CARDIONET, LLC, et al., Plaintiffs,

v.The SCOTTCARE CORPORATION, et al., Defendants.

CIVIL ACTION NO. 12-2516

United States District Court, E.D. Pennsylvania.

July 11, 2019

Filed July 12, 2019

Gary D. Colby, James J. Rodgers, John W. Goldschmidt, Jr., Dilworth Paxson LLP, Philadelphia, PA, Bradford J. Badke, Ching-Lee Fukuda, Todd M. Simpson, Sidley Austin LLP, New York, NY, for Plaintiffs.

James L. Weinberg, Shaker Heights, OH, John F. Bennett, Ulmer Berne LLP, Cincinnati, OH, John A. Guernsey, Andrew S. Gallinaro, Kevin Dooley Kent, Meghan A. Farley, Conrad O'Brien, PC, Philadelphia, PA, for Defendants.

MEMORANDUM

Tucker, District Judge.

In the present motion, Defendants, The ScottCare Corporation and Ambucor Health Solutions, Inc., ask that the Court grant their Motion for Judgment On The Pleadings Or, In The Alternative, Summary Judgment ("Motion") (Doc. 211) with respect to Plaintiffs' asserted claims of United States Patent Nos. 7,587,237 (the "'237 Patent") and 7,941,207 (the "'207 Patent"). For the reasons set forth more fully below, Defendants' Motion is GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs, CardioNet, LLC and Braemar Manufacturing, LLC¹ (collectively, "Plaintiffs" or "CardioNet") bring this patent infringement action against Defendants, The ScottCare Corporation and Ambucor Health Solutions, Inc. (collectively, "Defendants" or "ScottCare"), alleging that Defendants are infringing five patents originally owned by CardioNet, which CardioNet assigned to Braemer Manufacturing, LLC.² Pls.' Second Am. Compl., Doc. 58. The patents-in-suit³ —two of which are the subject of the pending motion⁴ —are directed to multiple aspects of an electrocardiographic ("ECG") telemetry device and its software. Pls.' Second Am. Compl., Doc. 58. The ECG telemetry device uses a monitor to record and transmit the electrical activity of the heart over a period of time. Pls.' Second Am. Compl., Ex. C, Doc. 58. This device helps medical professionals monitor a patient's cardiac activity and detect cardiac irregularities. Pls.' Second Am. Compl., Ex. C, Doc. 58. The cardiac data recorded by the ECG telemetry device is transmitted to a remote location where medical technicians review the information. Pls.' Second Am. Compl., Ex. C, Doc. 58. This information can then be sent to a medical professional for further review and diagnosis. Pls.' Second Am. Compl., Ex. C, Doc. 58.

Plaintiffs allege that Defendants have infringed and are continuing to infringe their patents by making, using, selling, and/or offering for sale ScottCare's TeleSentry Mobile Cardiac Telemetry System, which consists of a device that records and processes a patient's ECG signal and a monitoring service whereby personnel at Ambucor evaluate the cardiac data transmitted by the device. Pls.' Second Am. Compl., Doc. 58.

A. Overview of CardioNet's Mobile Cardiac Outpatient Telemetry ("MCOT™") Device

CardioNet LLC, a corporation having its principal place of business in Conshohocken, Pennsylvania, provides continuous, real-time ambulatory "outpatient management solutions for monitoring clinical information regarding an individual's health." Pls.' Second Am. Compl. 1, Doc. 58. CardioNet LLC, through its MCOT™ device, focuses on the diagnosis and monitoring of cardiac arrhythmias, or heart rhythm disorders. Pls.' Opp'n To Defs.' Mot. J. Pleadings 5, Doc. 224. A cardiac arrhythmia is a disorder of the heart rate or rhythm—i.e. a person's heart beats too quickly, too slowly, or with an irregular pattern. Pls.' Opp'n To Defs.' Mot. J. Pleadings 2, Doc. 224. A physician can diagnose an arrhythmia remotely by monitoring a patient's heart rhythm. See Pls.' Opp'n To Defs.' Mot. J. Pleadings 4–5, Doc. 224. If done remotely, an ambulatory cardiac monitoring device will record the patient's heart rate either intermittently or continuously. See Pls.' Opp'n To Defs.' Mot. J. Pleadings 4–5, Doc. 224.

The MCOT™ device enables heartbeat-by-heartbeat ECG monitoring, analysis, and response, at home or away, 24 hours a day, 7 days a week, 365 days a year. Pls.' Opp'n To Defs.' Mot. J. Pleadings 5, Doc. 224. The MCOT™ device includes a patient-worn sensor attached to electrodes that capture two-channel ECG data, measuring electrical activity of the heart and communicating wirelessly with a company-handheld-monitor. Pls.' Second Am. Compl., Ex. J, Doc. 58. The monitor analyzes incoming heartbeat-by-heartbeat information from the sensor on a real-time basis by applying algorithms designed to detect abnormal heart "events"—i.e. arrhythmias. See Pls.' Opp'n To Defs.' Mot. J. Pleadings 4–5, Doc. 224. When the monitor detects an arrhythmia, "it automatically transmits [ECG] information to [ ] CardioNet['s] monitoring center for analysis and response." Pls.' Opp'n To Defs.' Mot. J. Pleadings 5, Doc. 224.

B. Overview of the '237 Patent ( Patent No. 7,587,237 )

The '237 Patent —entitled "Biological Signal Management"—relates to systems and techniques for analyzing and handling a patient's biological signal for medical purposes, including notifying cardiac monitoring technicians when an arrhythmia has been detected by the device. '237 Patent, Abstract, Ex. A⁵ . Biological signals are electrical or optical streams that, in the medical context, include information relating to the physiological state of an organism which can be used to diagnose and treat disease. '237 Patent, 1:7–11, Ex. A. The handling of biological signals includes notifying medical personnel at a remote location when an "event," such as atrial fibrillation or atrial flutter (collectively "AF"), is identified. An event is a period in time when the information content of the cardiac electrical activity is of increased relevance. '237 Patent, 4:19–23, Ex. A.

The claimed method of the '237 Patent involves receipt of cardiac biological signals involving events; determining a measure of merit for each identified event; comparing the measure of merit to a merit criterion; transmitting information of the events meeting the merit criterion to a remote medical receiver; and discarding information of the events that do not meet the merit criterion. '237 Patent, Abstract, Ex. A. The '237 Patent describes a method of analyzing biological signals before handling to reduce data clutter and handling costs. '237 Patent, 2:43–50, Ex. A. By analyzing the biological signal before handling and only transmitting meritorious events to the monitoring center for review, the volume of data that is handled by the system is reduced, including the volume of data that is reviewed by medical technicians. '237 Patent at 2:46–50, Ex. A. "Such reductions in data clutter can be used to quickly provide physicians with relevant information, decreasing the cost of data review and increasing the likelihood that diagnosis and/or treatment is appropriately delivered." '237 Patent, 2:46–50, Ex. A.

C. Overview of the '207 Patent ( Patent No. 7,941,207 )

The '207 Patent —entitled "Cardiac Monitoring"—relates to "[s]ystems and techniques for monitoring cardiac activity." '207 Patent, Abstract, Ex. B.⁶ The systems and techniques collect information describing variability in heart beats and determine whether that variability is indicative of AF. Pls.' Second Am. Compl. Ex. K, Doc. 58. The patented method accomplishes this by: (1) "determining a beat-to-beat variability in cardiac electrical activity," (2) "determining a relevance of the variability to one of atrial fibrillation and atrial flutter," and (3) "identifying ... an atrial fibrillation [ ] and atrial flutter event based on the determined relevance." '207 Patent, 1:49-56, Ex. B.

D. Overview of the Pending Motion

On September 11, 2018, Defendants filed the instant Motion arguing that the '237 and '207 Patents are directed to abstract ideas and that the asserted claims do not contain inventive concepts, thereby rendering the Patents ineligible under 35 U.S.C. § 101 (" § 101"). Defs.' Mot. for J. On The Pleadings, Or In The Alternative Summ. J. 1, Doc. 211. Defendants further allege that Plaintiffs are collaterally estopped from asserting infringement of claims 1, 2, 8, 9, 10, 21, 22, and 23 of the '207 Patent because Judge Talwani of the District Court for the District of Massachusetts ("Massachusetts District Court") found the '207 Patent ineligible under § 101. CardioNet, LLC v. InfoBionic, Inc. , 348 F. Supp. 3d 87 (D. Mass. 2018) ; Defs.' Reply in Supp. of Mot. for J. On The Pleadings, Or In The Alternative Summ. J. 2, Doc. 228.

Plaintiffs respond that the '237 Patent focuses on a specific method, not an abstract idea and the asserted claims recite an inventive concept for analyzing ECG data. Pls.' Opp'n To Defs.' Mot. J. Pleadings 11–16, Doc. 224. Regarding the '207 Patent, Plaintiffs claim that collateral estoppel does not apply because the Massachusetts District Court did not adjudicate identical issues. Pls.' Opp'n To Defs.' Mot. J. Pleadings 17, Doc. 224. Plaintiffs further argue that the '207 Patent is a specific device rather than an abstract idea and the claims recite inventive concepts that improve AF diagnosis. Pls.' Opp'n To Defs.' Mot. J. Pleadings 21–24, Doc. 224.

II. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 12(c), a party may move for judgment on the pleadings after the pleadings are closed, as long as the party does so early enough not to delay the trial. Fed. R. Civ. P. 12(c). Courts in this Circuit construe motions for judgment on the pleadings that assert failure to state a claim under the same standard as motions to dismiss made pursuant to Rule 12(b)(6). Katzenmoyer v. City of Reading , 158 F. Supp. 2d 491, 496 (E.D. Pa. 2001). "The only notable difference between these two standards is that the court in a motion on the pleadings reviews not only the complaint but also the answer and written instruments attached to the pleadings." Sprague v. Neil , No. 1:05-CV-1605, 2007 WL 3085604, at *2 (M.D. Pa. Oct. 19, 2007).

To survive a motion to dismiss under Rule 12(b...