Ormco Corp. v. Align Technology, Inc.

Page 1200

647 F.Supp.2d 1200

ORMCO CORPORATION, Plaintiff, v. ALIGN TECHNOLOGY, INC., Defendant.

Case No. CV 03-16 CAS (ANx).

United States District Court, C.D. California, Western Division.

July 27, 2009.

Charles J. Crueger, David L. Debruin, John E. Flanagan, Joseph T. Miotke, Michael Best & Friedrich, Richard H. Marschall, Michael Best And Friedrich LLP, Milwaukee, WI, Christopher B. Mead, London & Mead, Washington, DC, Karin G. Pagnanelli, Thomas P. Lambert, Mitchell Silberberg and Knupp LLP, Los Angeles, CA, for Plaintiff.

Anne M. Rogaski, Daniel J. Furniss, John E. Lord, Susan C. Moon, Susan M. Spaeth, Heidi J. Kim, Jon V. Swenson, Gary H. Ritchey, Townsend Townsend & Crew, Palo Alto, CA, for Defendant.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

CHRISTINA A. SNYDER, District Judge.

I. INTRODUCTION

This is an action brought by plaintiff Ormco Corp. ("Ormco") against defendant Align Technology, Inc. ("Align") regarding the alleged infringement of four related Ormco patents: (1) U.S. Patent No. 5,447,432 ("the '432 patent"); (2) U.S. Patent No. 5,683,243 ("the '243 patent"); and (3) U.S. Patent No. 6,244,861 ("the '861 patent"); and (4) U.S. Patent No. 6,616,444 ("the '444 patent"). On May 13, 2004, the Court granted Align's motion for summary judgment of noninfringement of Ormco's patents. See Ormco Corp. v. Align Tech., Inc., 498 F.3d 1307, 1311 (Fed.Cir.2007), citing Ormco Corp. v. Align Tech., Inc., No. 03-cv-00016 slip. op. (C.D.Cal. May 13, 2004). On August 20, 2004, the Court granted Align's motion for summary judgment of nonenablement of Ormco's patents. See id., citing Ormco Corp. v. Align Tech., Inc., No. 03-cv-00016, 2004 WL 5453218, slip. op. (C.D.Cal. Aug. 20, 2004).

Ormco appealed to the Federal Circuit. On August 24, 2007, the Federal Circuit affirmed the Court's grant of summary judgment of noninfringement and nonenablement as to claims 1, 9, and 10 of the '432 patent, claims 1 and 2 of the '243 patent, claims 1, 3, 4, 9-12 and 16-18 of the '861 patent, and claims 1-5, 8-36, 41-44, 46-68, and 70-79 of the '444 patent. Ormco, 498 F.3d at 1320. However, the court reversed the grant of summary judgment of noninfringement and nonenablement of claims 37-40, 45, and 69 of the '444 patent, and remanded. Id.

This action was tried to a jury on June 9, 10, 11, 12, 16, 17, 18, 19, and 25, 2009. Richard Marschall and David DeBruin of Michael Best & Friedrich LLP and Christopher Mead of London & Mead appeared for Ormco. Anne Rogaski, Heidi Kim, Daniel Furniss, and Jon Swenson of Townsend and Townsend and Crew LLP appeared for Align. On June 25, 2009, the jury returned a verdict for plaintiff, finding that Align had infringed the '444 patent and that claims 37, 38, 40, 45, and 69 were not anticipated or obvious. The jury also issued an advisory verdict, finding that Align had failed to prove that the '444 patent is unenforceable due to prosecution laches or unclean hands.

I. FINDINGS OF FACT

The application for what became the U.S. Patent No. 6,616,444 ("the '444 patent") was filed on June 11, 2001. The claims asserted in this suit were added to the '444 patent application on December 12, 2002. The '444 patent issued on September 9, 2003.

The '444 patent claims priority to seven patent applications

The first of which applications was filed on November 9, 1992. This patent—U.S. Patent No. 5,368,478—was allowed on May 12, 1994 and issued on November 29, 1994.

U.S. Patent No. 5,447,432 was filed on November 9, 1992, allowed on December 21, 1994 and issued on September 5, 1995.

U.S. Patent No. 5,431,562 was filed on November 9, 1992, allowed on January 4, 1995 and issued on July 11, 1995.

U.S. Patent No. 5,454,717 was filed on November 9, 1992, allowed on April 6, 1995 and issued on October 3, 1995.

U.S. Patent No. 5,683,243 was filed on June 2, 1995, allowed on March 19, 1997 and issued on November 4, 1997.

U.S. Patent No. 6,015,289 was filed on October 30, 1997, allowed on August 16, 1999 and issued on January 18, 2000.

U.S. Patent No. 6,244,861 was filed on November 1, 1999, allowed on December 18, 2000 and issued on June 12, 2001.

The '444 patent was filed on June 11, 2001. The asserted claims were added on December 12, 2002. The patent was allowed on March 24, 2003 and issued on September 9, 2003.

Align was founded in March 1997. Align raised approximately $125 million dollars in venture capital while it was a privately held company. 6/16/09 Trial. Trans. at 56:2-3. Align's Invisalign product was commercially launched in May 1999. 6/16/09 Trial. Trans. at 57:17-18. Align raised approximately $125 million dollars in its initial public offering in March 2001.

At the time Align was formed, four of Ormco's eight patents in the family had issued.

Align contends that the doctrine of prosecution laches and unclean hands should bar enforcement of the claims at issue in Ormco's '444 patent. In particular, Align argues that Ormco's delay in securing the claims was unreasonable, and that Align was prejudiced by this delay. Ormco, however, argues that its delay was not unreasonable, that it was excused, and that Align suffered no prejudice.

With regard to the reasonableness of the delay, Align contends that the ten-year delay between the filing of the original patent application on November 9, 1992, and Ormco's addition of the claims asserted in this case on December 12, 2002, was unreasonable because Ormco was in possession of the alleged inventions contained in the asserted claims at the time the priority application was filed in 1992. Align's Proposed Findings of Fact and Conclusions of Law ("Align Br.") ¶ 55. Align argues that there is no legitimate excuse for Ormco's delay, and that, in fact, Ormco delayed because it did not view the basic steps of scanning and separating as patentable until it later saw Align's processes and sought to seek broader claims to cover Align's process. Id. ¶ 22; 56.¹² Align further argues that Ormco's product, Insignia, was a commercial failure, and that rather than working on investing Ormco "sat back, watched Align invest hard work and money into a novel product, and then wrote claims after ten years of possessing its invention with the intent to cover Align's process." Align Br. ¶ 43. Ormco, however, contends that it was prompted to review its claims in the '444 patent when Ormco's general counsel, Stephen Tomassi, noted that one of Ormco's competitors, 3M Company, had been obtaining patent claims that were well crafted and less burdened by unnecessary limitations, and in response, he sought to emulate 3M Corporation's practice. Ormco's Proposed Findings of Fact and Conclusions of Law ("Ormco Br.") ¶ 29; see 6/19/09 Trial Tr. 140:17-24.

With regard to prejudice, Align contends that it was prejudiced by Ormco's delay because it spent vast amounts of time, money and effort from 1997 to 2003 on researching, developing, manufacturing, and selling its Invisalign product. Align Br. ¶ 19. Ormco, however, contends that Align was not prejudiced by the delay, because there is no evidence that Align would have done anything differently between 1997 and 2003 if it had been faced with the '444 patent sooner. Ormco Br. ¶ 27.

II. CONCLUSIONS OF LAW

A. Prosecution Laches

Prosecution laches is "a defense to an infringement action involving new claims issuing from divisional and continuing applications that prejudice intervening adverse public rights." Symbol Technologies, Inc. v. Lemelson Med., Educ. & Research Foundation, LP ("Symbol I") 277 F.3d 1361, 1364 (Fed.Cir.2002). The doctrine "may be applied to bar enforcement of patent claims that issue[] after an unreasonable and unexplained delay in prosecution." Id. To succeed on a prosecution laches defense, defendant must prove that "plaintiff unreasonably delayed the prosecution of his patent(s) in a manner that cannot be reasonably explained." Reiffin v. Microsoft Corp., 281 F.Supp.2d 1149, 1151 (N.D.Cal.2003). Defendant must prove this element by a preponderance of the evidence. Id.

The doctrine of prosecution laches was first announced by the Supreme Court in a series of cases in the early- to mid-twentieth century. See Woodbridge v. United States, 263 U.S. 50, 44 S.Ct. 45, 68 L.Ed. 159 (1923); Webster Electric Co. v. Splitdorf Electrical Co., 264 U.S. 463, 44 S.Ct. 342, 68 L.Ed. 792 (1924); Crown Cork & Seal Co. v. Ferdinand Gutmann Co., 304 U.S. 159, 58 S.Ct. 842, 82 L.Ed. 1265 (1938); General Talking Pictures Corp. v. Western Electric Company, 304 U.S. 175, 58 S.Ct. 849, 82 L.Ed. 1273 (1938). More recently, in Symbol I, 277 F.3d 1361, the Federal Circuit affirmed that prosecution laches remains a viable defense to the enforcement of a patent.

Courts have employed the doctrine of prosecution laches to invalidate a patent very infrequently. In fact, two district courts have observed that Symbol Technologies, Inc. v. Lemelson Med., Educ. & Research Foundation, LP, ("Symbol II") 301 F.Supp.2d 1147, 1155 (D.Nev.2004), aff'd 422 F.3d 1378 (Fed.Cir.2005) is the only instance where a district court found that prosecution laches operated as a defense. See Ariad Pharms., Inc. v. Eli Lilly & Co., 529 F.Supp.2d 106, 140 (D.Mass.2007), aff'd in part, rev'd in part on other grounds, 560 F.3d 1366 (Fed.Cir. 2009) ("It appears that [the patentee's] conduct in the Symbol Cases represents the only time a district court found a prosecution delay unreasonable and unexplained enough to trigger prosecution laches."); Kothmann Enters., Inc. v. Trinity Indus., Inc., 455 F.Supp.2d 608, 646 (S.D.Tex.2006) ("At present, only one district court (now affirmed by the Federal Circuit) has found prosecution laches, and in that case the delays were as long as 39 years.").

In Symbol II, 301 F.Supp.2d 1147, Lemelson, the patentee, filed his two original patent applications in 1954 and 1956, and then delayed from 18 to 39 years in filing the related applications that ultimately issued as the fourteen patents in suit. The district court held...