Masimo Corp. v. Philips Elecs. N. Am. Corp.

MASIMO CORPORATION, Plaintiff,

v. PHILIPS ELECTRONICS NORTH AMERICA CORPORATIONand PHILIPS MEDIZIN SYSTEME BÖBLINGEN GMBH, Defendants.

C. A. No. 09-080-LPS-MPT

C. A. No. 11-742-LPS-MPT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

April 2, 2013

Consolidated Cases

REPORT AND RECOMMENDATION

I. INTRODUCTION

This is a patent infringement case. Plaintiff Masimo Corporation ("Masimo") and defendants Philips Electronics North American Corporation and Philips Medizin Systeme Böblingen GMBH ("Philips Medizin") (collectively, "Philips" or "defendants") manufacture competing products in the field of pulse oximetry. Pulse oximetry allows for non-invasive measurement of the oxygen levels in a medical patient's hemoglobin.

Generally, pulse oximetry operates via a sensor placed over a thin section of a patient's body, such as the fingertip or earlobe of an adult, or the foot of an infant. The sensor emits red and infrared light through a cross-section of the patient's tissue and measures the amount of light absorbed. Using various algorithms, a monitor then processes the signal and calculates the patient's oxygenation level. Pulse oximetry systems are standard equipment in many clinical settings, either as stand-alone devices, or more commonly, as components of integrated multi-parameter patient monitors which track pulse, temperature, and other physiological vital signs.

II. BACKGROUND

On February 3, 2009, Masimo sued Philips alleging infringement of a number of Masimo's pulse oximetry-related patents.¹ Masimo filed an amended complaint on May 12, 2009.² In the amended complaint, Masimo alleges that Philips' production, use, and sale of pulse oximeters incorporating Philips' "Fourier Artifact Suppression Technology" ("FAST") as well as Philips' IntelliVue line of patient monitors infringe fourteen of Masimo's patents. Philips' infringement of eight of those patents is alleged to be willful, deliberate, and intentional because Philips had notice of the patents and the alleged infringement. Masimo requests monetary damages and seeks to enjoin Philips from further production, use, or sale of infringing products.

Philips answered the complaint on June 15, 2009.³ In the answer, both Philips North America and Philips Medizin deny all allegations of infringement citing twelve defenses including, among others, invalidity of Masimo's patents, prosecution history estoppel, laches, unclean hands, patent misuse, and implied license. Philips North America concurrently filed counterclaims against Masimo. According to Philips North America, Masimo has infringed ten of Philips' patents through the production, use, and sale of various Masimo monitors, boards, sensors, and oximeters using patented Philips technology. Regarding six of these patents, since Masimo has had notice of the patents and the infringement, Philips North America alleges that Masimo's infringement is willful, deliberate, and intentional. Philips North America requests monetary damages and, foreight patents, seeks injunctive relief to prevent Masimo from further production, use, or sale of infringing products.

Philips North America's counterclaims also include seven antitrust claims focusing on Masimo's purported anticompetitive restrictions in its licensing agreements; its allegedly improper exclusion of competition in the sensor and patient cable markets; an anticompetitive settlement agreement stemming from a 2006 infringement suit with licensee Nellcor; and claims of exclusionary pricing and bundling practices designed to lock hospitals into Masimo pulse oximetry products. Masimo filed its answer to Philips North America's counterclaims on July 9, 2009, asserting its own counterclaims and defenses.⁴ On August 3, 2009, Philips filed its answer to Masimo's counterclaims.⁵

On August 7, 2009, Masimo filed a motion to bifurcate and stay discovery on Philips North America's antitrust counterclaims,⁶ which this court granted on March 11, 2010.⁷ In its decision, this court found that bifurcation would assist in juror comprehension and increase efficiency without substantial prejudice to either party. This court also stayed discovery concerning Philips North America's antitrust counterclaims, finding that a stay would conserve economy because a trial on Masimo's patent claims could potentially eliminate or simplify Philips North America's antitrust counterclaims. A motion for reconsideration filed by Philips⁸ was denied on April 19, 2010,⁹ and JudgeJoseph J. Farnan, Jr. denied Philips' objections¹⁰ to this court's order on July 15, 2010.¹¹

On July 30, 2010, Philips filed a motion to bifurcate and stay discovery on patent damages.¹² In its motion, Philips sought bifurcation of the parties' patent damages claims, trial to be scheduled on patent damages to follow trial on the antitrust and patent misuse claims, and a stay of the remaining damages-related discovery until antitrust discovery proceeds. On October 6, 2010, this court denied Philips' motion.¹³

As noted above, Masimo brought suit against Philips, asserting infringement of fourteen patents. Philips answered asserting ten patents and seven antitrust counterclaims. For litigation and trial management purposes, the parties were ordered to reduce the number of patents involved to a more manageable level. The parties were initially able to reduce the original twenty-four patents to fourteen. Thereafter, the court reduced the number of patents to seven, with the remaining seven patents to be held in abeyance. Masimo had to select four of its remaining patents, while Philips had to select three of its remaining patents. Masimo chose U.S. Patent No. 6,263,222 ("the '222 patent"), U.S. Patent No. 5,632,272 ("the '272 patent"), U.S. Patent No. 7,215,984 ("the '984 patent"), and U.S. Patent No. 6,699,194 ("the '194 patent"). Philips selected U.S. Patent No. 5,448,991 ("the '991 patent"), U.S. Patent No. 6,122,535 ("the '535 patent"), and U.S. Patent No. 6,725,074 ("the '074 patent").

On December 1, 2010, a Markman hearing was conducted and a Report and Recommendation on claim construction was issued on February 18, 2011.¹⁴ Both parties filed objections,¹⁵ and on January 17, 2012, Judge Leonard P. Stark adopted the Report and Recommendation, with the exception of the term "a signal processor," as used in claim 17 of the '222 patent.¹⁶

On August 19, 2011, Masimo filed an new action against defendants, C.A. No. 11-742-LPS-MPT, alleging infringement of Masimo's U.S. Pat. No. 7,530,955 ("the '955 patent").¹⁷ On October 6, 2011, Masimo filed an amended complaint adding an allegation of infringement of its U.S. Pat. No. 8,019,400 ("the '400 patent").¹⁸ Defendants answered the amended complaint on November 7, 2011.¹⁹ On November 22, 2011, defendants moved to consolidate the court's consideration of the issues concerning the seven patents held in abeyance from the 09-80-LPS-MPT action with the two patents asserted by Masimo in the 11-742-LPS-MPT action, and to stay proceedings with regard to those nine patents.²⁰ On April 16, 2012, the court granted the motion to consolidate and denied the motion to stay.²¹ Fact discovery closed on June 2, 2011 and expert discovery closed on July 16, 2012. No trial date has been set.

Currently before the court are the following motions:

1. Masimo's Motion for Summary Judgment of Infringement of U.S. Patent No. 6,263,222;²²

2. Philips' Motion for Summary Judgment of Invalidity of U.S. Patent No. 6,263,222;²³

3. Philips' Motion for Summary Judgment of Invalidity and Noninfringement of U.S. Patent No. 7,215,984;²⁴

4. Philips' Motion for Summary Judgment of Invalidity and Noninfringement of U.S. Patent No. 5,632,272;²⁵

5. Philips' Motion for Summary Judgment of Invalidity of U.S. Patent No. 6,669,194;²⁶

6. Masimo's Motion for Summary Judgment of Noninfringement and Invalidity of U.S. Patent No. 6,122,535;²⁷

7. Masimo's Motion for Summary Judgment of Noninfringement and Invalidity of U.S. Patent No. 6,725,074;²⁸

8. Masimo's Motion to Exclude the Testimony of John M. Turner Pursuant to Fed. R. Evid. 702;²⁹

9. Philips' Motion for Summary Judgment on Laches with Respect to U.S. Patent Nos. 5,632,272, 6,263,222, and 6,999,194;³⁰

10. Philips' Motion for Summary Judgment of No Willful Infringement;³¹

11. Philips' Motion for Summary Judgment Regarding Damages Issues;³² 12. Masimo's Motion to Exclude Portions of the Testimony of Michael C. Keeley, Ph.D. Pursuant to Fed. R. Evid. 702;³³

13. Philips' Motion to Exclude the Testimony of Michael J. Wagner;³⁴

14. Masimo's Motion to Exclude the Expert Testimony of Drs. John H. Eichhorn, Thomas L. Higgins, and Edward A. Ochrock Pursuant to Fed. R. Evid. 702;³⁵ and

15. Philip's Motion to Exclude the Testimony of Timothy J. Quill.³⁶

III. LEGAL STANDARDS

"Summary judgment is appropriate when, after opportunity for discovery and upon motion, there is no genuine dispute of material fact for trial and one party is entitled to judgment as a matter of law."³⁷

To determine infringement, the court performs a two stop analysis: first, the court must determine the scope of the claims; second, the court must determine whether properly interpreted claims cover the accused products.³⁸

Once the claims are construed, the court proceeds to determine whether properly interpreted claims cover the accused products. At trial, it is plaintiff's burden to establish infringement by a preponderance of the evidence.³⁹ To prove infringement, Masimo must show the accused products meet each claim limitation, either literally or under the doctrine of equivalents.⁴⁰ "Literal infringement of a claim exists when everylimitation recited in the claim is found in the accused device, i.e., when the properly construed claim reads on the accused device exactly."⁴¹ If the accused products do not literally infringe an asserted claim, they may still infringe under the doctrine of equivalents under which an element of the accused device is equivalent to a claim limitation if the...