Koninklijke Philips N.V. v. Zoll Med. Corp., Civil Action No. 10-11041-NMG.

257 F.Supp.3d 159

KONINKLIJKE PHILIPS N.V. and Philips Electronics North America Corporation, Plaintiffs,

v.ZOLL MEDICAL CORPORATION, Defendant.

Civil Action No. 10-11041-NMG.

United States District Court, D. Massachusetts.

Signed June 26, 2017

David K. Mroz, Luke McCammon, Susan Y. Tull, J. Michael Jakes, Clara N. Jimenez, Jason L. Romrell, Robert F. Shaffer, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC, Denise W. DeFranco, Belmont, MA, Christopher S. Schultz, Rachel L. Emsley, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Boston, MA, for Plaintiffs.

Alan J. Heinrich, C. Maclain Wells, Christine Woodin, Christopher Vanderlaan, David I. Gindler, Morgan Chu, Talin Gordnia, Casey Curran, Nima Hefazi, Irell & Manella LLP, Los Angeles, CA, Christopher C. Campbell, Cooley, LLP, Reston, VA, David Craig McPhie, Irell & Manella—Newport Beach, Rebecca L. Carson, Heather Benzmiller Sultanian, Irell & Manella LLP, Newport Beach, CA, James P. Brogan, Matthew J. Leary, Cooley LLP, Broomfield, CO, Sara Jane Shanahan, Thomas F. Maffei, Sherin and Lodgen LLP, Boston, MA, for Defendant.

MEMORANDUM & ORDER

Nathaniel M. Gorton, United States District Judge

This patent case involves automated external defibrillators ("AEDs") and components thereof. In June, 2010, plaintiffs Koninklijke Philips, N.V. and Philips Electronics North America Corporation (collectively, "plaintiffs" or "Philips") filed suit against defendant Zoll Medical Corporation ("defendant" or "Zoll") for infringement of the Philips waveform patents (the '454, '905, '212 and '978 patents), self-test patents (the '460 and '374 patents) and CPR instructions patent (the '785 patent). Zoll denied infringement and counterclaimed for infringement of its electrode patent (the '526 patent ) and defibrillator patent (the '187 patent). This Court bifurcated the liability and damages phases of the case.

Pending before the Court are Zoll's motion for summary judgment of no willful infringement and Philips's motions for summary judgment to preclude Zoll from collecting damages 1) on foreign sales of a certain electrode pad product and 2) for a particular five-month period in 2007. For the reasons that follow, Zoll's motion will be allowed, Philips's motions will be denied.

I. Background

In December, 2013, after a vigorously contested jury trial, the Court submitted the issues of patent validity and infringement to the jury. With respect to Philips's patents, the jury did not address the validity of the '212 patent, which was not contested, but otherwise found that all of the contested claims in the '212, '454, '905 and '460 patents were valid and directly infringed by Zoll's products and that all of the disputed claims in Philips's '374 patent were valid and some were directly infringed.

With respect to the Zoll patents, the jury found that the disputed claims of the '187 and '526 patent were valid, all of the claims of the '187 patent were directly infringed and most of the disputed claims of the '526 patent were directly infringed.

This Court denied both parties' motions for judgment as a matter of law and both parties appealed.

In January, 2015, the Court granted Zoll's motion to continue the damages trial pending the appeal even though the parties had already exchanged damages expert reports. In July, 2016, the Federal Circuit Court of Appeals affirmed, in part, reversed, in part, vacated, in part, and remanded the case for a new liability trial on the contested claims in Zoll's '526 electrode patent. This Court lifted the stay and scheduled the trial on the sole remaining liability issue (relative to Zoll's '526 patent ) and damages to commence on July 24, 2017.

Early in 2015, Zoll requested the PTO to reexamine the validity of the claims based on the Philips' waveform '454, '905 and '212 patents. The PTO did so and issued final rejections of the claims with respect to the '454 and '212 patents. Philips appealed those rejections to the Patent Trial and Appeal Board and, in September, 2016, Zoll again moved to stay the damages trial pending the completion of the reexamination. Zoll also moved to set deadlines for Philips to seek leave to file any amended or new damages expert reports. This Court declined to stay the case but allowed the parties to file new or amended damages expert reports.

Pursuant to a briefing schedule set by this Court in November, 2016, the parties filed three motions for summary judgment (one by Zoll and two by Philips) in March, 2017. This memorandum addresses those pending motions.

II. The Parties' Motions for Summary Judgement

A. Legal Standard

The role of summary judgment is "to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991). The burden is on the moving party to show, through the pleadings, discovery and affidavits, "that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists where the evidence with respect to the material fact in dispute "is such that a reasonable jury could return a verdict for the nonmoving party." Id.

Once the moving party has satisfied its burden, the burden shifts to the non-moving party to set forth specific facts showing that there is a genuine, triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court must view the entire record in the light most favorable to the non-moving party and indulge all reasonable inferences in that party's favor. O'Connor v. Steeves, 994 F.2d 905, 907 (1st Cir. 1993). Summary judgment is appropriate if, after viewing the record in the non-moving party's favor, the Court determines that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law.

B. Application

1. Defendant's Motion for Summary Judgment of No Willful Infringement

Defendant Zoll moves for summary judgment that it did not willfully infringe claim 51 of United States Patent No. 5,607,454 ("the '454 patent") and claims 4 and 8 of United States Patent No. 5,749,905 ("the '905 patent").

a. Factual background

Philips is the owner of several patents-in-suit, including the '454 patent and the '905 patent. On or about November 17, 2008, Philips first contacted Zoll about potential infringement of at least some of those patents.¹ Litigation ensued and on December 19, 2013, a jury found, inter alia, Zoll not liable for contributory infringement or induced infringement of claim 51 of the '454 patent and claims 4 and 8 of the '905 patent.

Philips appealed the jury's verdict with respect to its finding of no contributory infringement. The Federal Circuit Court of Appeals affirmed that finding in an opinion dated July 28, 2016. See generally Koninkli j ke Philips N.V. v. Zoll Med. Corp., 656 Fed.Appx. 504 (Fed. Cir. 2016).

b. Legal analysis

The United States Supreme Court recently held that in order to be liable for willful infringement, pursuant to 35 U.S.C. § 284, the infringing conduct must be "willful, wanton, malicious, [in] bad-faith, deliberate, consciously wrongful [or] flagrant." Halo Elecs., Inc. v. Pulse Elecs., Inc., –––U.S. ––––, 136 S.Ct. 1923, 1932, 195 L.Ed.2d 278 (2016).

According to defendant, a favorable jury verdict with respect to plaintiffs' claims for induced and contributory infringement, combined with the affirmation of that verdict and determination by the Federal Circuit Court of Appeals ("Federal Circuit") that its conduct was "reasonable," see Koninkli j ke Philips, 656 Fed.Appx. at 523, precludes any possibility that their conduct is "willful, wanton [or] malicious".

Plaintiffs generally respond that the standards for willful infringement under 35 U.S.C. § 284 and those of contributory and induced infringement are different and, therefore, the issue should be decided by the jury.

Although the Court recognizes that in most instances, the question of willfulness is for the jury, Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., 682 F.3d 1003, 1006 (Fed. Cir. 2012), here it is bound by the finding of the Federal Circuit that defendant's belief that its conduct was non-infringing was reasonable. United States v. Rivera–Martinez, 931 F.2d 148, 150 (1st Cir. 1991) ("[T]he decision of the appellate court establishes the law of the case and it must be followed by the trial court on remand.").

Plaintiffs' attempt to distinguish the jury findings and the Federal Circuit holding from the willfulness standard is unpersuasive. They maintain that the standard for willfulness considers the subjective belief of the defendant, see Halo Elecs., 136 S.Ct. at 1933, whereas the Federal Circuit only made only an objective determination as to whether defendant's conduct was reasonable.

In affirming the jury's verdict, however, the Federal Circuit concluded

that [although] Zoll's claim construction argument against the jury's direct infringement verdict ... was incorrect, [its] argument was based on a reasonable interpretation of the claims in light of the specification and the prosecution history.... [T]his belief in non-infringement was reasonable....

Koninkli j ke Philips N.V., 656 Fed.Appx. at 523 (emphasis added) (citation omitted). Post– Halo, courts have dismissed willfulness infringement claims where, as here, the defendant has had "reasonable arguments as to why its conduct was non-infringing." Move, Inc. v. Real Estate All. Ltd., 221 F.Supp.3d 1149, 1173 (C.D. Cal. 2016) (appeal pending); see also Trs. of Bos. Univ. v. Everlight Elecs. Co., 212 F.Supp.3d 254, 256–57 (D. Mass. 2016) (appeal pending).

Finally, plaintiffs contend that defendant knew about its infringing activities long before 2009, the...