Masimo Corp. v. Philips Elecs. North America Corp.

MASIMO CORPORATION, Plaintiff,

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

Civil Action No. 11-742-LPS-MPT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

Date: April 16, 2012

MEMORANDUM ORDER

I. INTRODUCTION

Presently before the court is a motion to consolidate and stay filed by defendants, Philips Electronics North American Corporation and Philips Medizin Systeme Böblingen GmbH (collectively "Philips"), in a patent infringement suit brought by plaintiff, Masimo Corporation ("Masimo"). For the reasons discussed herein, Philips' motion will be granted in part and denied in part.

II. BACKGROUND

Masimo and Philips manufacture competing products in pulse oximetry. Pulse oximetry is a non-invasive procedure for measuring the level of oxygen saturation in a patient's arterial blood. 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. They are composed of a sensor; a monitor, also sometimesreferred to as a board, socket, or pulse oximeter, which contains the electronics that process the signal and produce a saturation reading; and may have a cable which connects the sensor and monitor.

Modern pulse oximeters permit users to monitor patients continuously and in real time. Where previous technology could not provide accurate data in the presence of motion induced "noise," the products manufactured by both Masimo and Philips remove, filter, or circumvent the "noise" to generate more accurate data points.

A. Masimo I¹

Masimo brought suit against Philips, asserting infringement of fourteen patents.² Philips answered asserting ten patents³ and seven antitrust counterclaims.⁴ After full briefing, the court bifurcated and stayed Philips' antitrust counterclaims.⁵

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. Masimo had to select four of its remaining patents, while Philips had to select three of its remaining patents.⁶ 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 "'194patent").⁷ 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").⁸

On December 1, 2010, a Markman hearing was conducted, and a Report and Recommendation on claim construction was issued on February 18, 2011.⁹ Both parties filed objections.¹⁰ 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.¹¹

B. Masimo II¹²

Subsequently, Masimo filed a second action against Philips, alleging infringement of two patents, U.S. Patent No. 7,530,955 (the "'955 patent") and U.S. Patent No. 8,019,400 (the "'400 patent").¹³ Philips answered, again raising seven antitrust counterclaims.¹⁴ On November 22, 2011, Philips filed a motion to consolidate and stay Masimo I and Masimo II.¹⁵ Masimo opposes this motion.¹⁶

III. DISCUSSION

A. Consolidation of the Masimo I "Limbo" Patents¹⁷ and the Masimo IIPatents¹⁸

Under FED. R. CIV. P. 42(a), "courts have the authority to consolidate actions involving a common question of law or fact."¹⁹ The court has broad discretionary power in deciding whether to consolidate cases and typically "balance considerations of efficiency, expenses, and fairness."²⁰ Although there may be common issues between actions, a prerequisite to consolidation, this does not mandate a joint trial.²¹

1. Similarity of Patents

Philips argues "Masimo II involves the same family of patents, the same technology and the same accused products as Masimo I."²² Similar technologies at issue and the same parties in each case may "lead the court to conclude that judicial resources likely will be conserved by consolidating [the] cases."²³ In determining whether the technologies at issue are similar, the court can look to which class, or subclass, the United States Patent and Trademark Office ("PTO") has classified each of the patents.²⁴

The four Masimo limbo patents²⁵ and their United States Patent Classification Class/Subclass include: U.S. Patent No. 7,509,154 (the "'154 patent") (600/323;600/324; 600/336),²⁶ U.S. Patent No. 6,157,850 (the "'850 patent") (600/323; 600/336; 600/509; 600/529),²⁷ U.S. Patent No. 7,530,949 (the "'949 patent") (600/300; 600/323),²⁸ and U.S. Patent No. 6,002,952 (the "'952 patent") (600/310; 600/481; 600/502)²⁹ . The three Philips limbo patents³⁰ and their United States Patent Classification Class/Subclass include: U.S. Patent No. 5,820,550 (the "'550 patent") (600/323; 600/336; 356/41),³¹ U.S. Patent No. 5,337,745 (the "'745 patent") (128/633; 128/664; 128/665; 356/39),³² and U.S. Patent No. 5,170,786 (the "'786 patent") (128/633; 128/665)³³ . The two Masimo II patents³⁴ and their United States Classification Class/Subclass include the '955 patent (600/502; 600/324)³⁵ and the '400 patent (600/323; 600/336)³⁶ .

Similarly to the finding in Abbott,³⁷ the Masimo II patents and all but two of the Masimo I limbo patents are in Class 600. Although the other two Masimo I limbo patents are listed in Class 128, "Class 600 is an integral part of this Class."³⁸ Further, all of the Class 600 patents fall within Subclasses 502, 323, 324, or 336. Thus, "[b]asedon this evidence, . . . the PTO found the technologies in the . . . [p]atents related."³⁹

2. Delay

Masimo contends the court should deny any consolidation that causes delay. Further, Masimo argues consolidation would place the Masimo II patents into an indefinite "limbo" status.⁴⁰ Philips counters that proceeding on the newly asserted patents at the present stage of Masimo I would be duplicative, wasteful, and burdensome.⁴¹

At the time of the briefing on Philips' motion, the parties were awaiting a decision on their objections to claim construction.⁴² Those issues were resolved on January 17, 2012.⁴³ Thereafter, at the request of the parties, various stipulations and orders were issued extending certain deadlines in Masimo I.

On March 19, 2012, the parties as ordered submitted a joint status report which included a joint expert discovery and case dispositive motions schedule for the seven selected patents in Masimo I; their respective proposed schedules for the limbo patents in Masimo I and the two patents in Masimo II; and their estimates for the number of claim terms to be construed for the limbo patents in Masimo I and the patents in Masimo II.⁴⁴ Those proposals are presently under consideration by the court.

3. Injunctive Relief

Masimo contends it has been prejudiced by the delay to date in Masimo I, and any further delay may prevent injunctive relief in Masimo II.⁴⁵ It is not clear whether Masimo is referencing a preliminary or permanent injunction, or both.

a. Preliminary Injunction

A district court has discretion, under 35 U.S.C. § 283, to grant or deny a preliminary injunction in a patent infringement case. Under 35 U.S.C. § 283, a court can "grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." In order to obtain a preliminary injunction, a moving party must establish: "(1) a reasonable likelihood of success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction's favorable impact on the public interest."⁴⁶ No one factor is dispositive, as the district court must weigh each factor.⁴⁷ The moving party must "demonstrate both a reasonable likelihood of success on the merits and irreparable harm."⁴⁸

Although Masimo suggests prejudice by the delay to date, with future delay potentially preventing injunctive relief on the Masimo II patents, it never proceeded for a preliminary injunction in Masimo I. Further, neither party has presented sufficientevidence or information that either party is likely to prevail at trial over the other,⁴⁹ nor has Masimo demonstrated irreparable harm. It argues because of expiry, injunctive relief for certain patents may be unavailable.

b. Permanent Injunction

For a permanent injunction, a plaintiff must demonstrate: "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction."⁵⁰ A district court's decision to grant or deny permanent injunctive relief is an act of equitable discretion, "reviewable on appeal for abuse of discretion."⁵¹

Although Masimo and Philips are competitors in the market involving the technology of the limbo and Masimo II patents, the parties have raised cross-patent claims, with counterclaims of non-infringement and invalidity, against each other, making the probability of injunctive relief uncertain. Again, neither has presented sufficient evidence or information that either party is likely to prevail at trial over the other,⁵² nor has irreparable harm been demonstrated. As noted previously, Masimo's concern is the unavailability of injunctive relief due to expiration of certain patents resulting from the passage of time.

4. Analysis

The related technologies at issue in the Masimo I limbo patents and the Masimo II patents involve the same parties and same products,...