SUE ROBINSON, District Judge.
Plaintiff McKesson Automation, Inc. ("McKesson") is the owner of U.S. Patent Nos. 5,468,110 ("the '110 patent") and 5,593,267 ("the '267 patent") (collectively, "the patents-in-suit"). The patents-in-suit claim automated systems for selecting and delivering packages to fill orders, such as patient prescriptions. ('267 patent, col. 3:7-10; '110 patent, col. 3:7-10) In its complaint for patent infringement,
The court referred this action to Magistrate Judge Leonard P. Stark for a Report and Recommendation ("R&R") on claim construction and the parties' motions for summary judgment, as well as the disposition of certain evidentiary disputes. (D.l. 238; D.l. 250) On October 30, 2009, Judge Stark issued the R&R, recommending that the court: (1) deny Swisslog's motion to dismiss for lack of standing (D.l. 526); (2) adopt the parties' agreed-upon constructions for the undisputed claim terms of the patents-in-suit; (3) adopt certain constructions for the disputed claim terms of the patents-in-suit; (4) grant McKesson's motion for summary judgment on Swisslog's lack of standing defense (D.l. 379); (5) deny Swisslog's motion for summary judgment of noninfringement (D.l. 383); (6) grant McKesson's motion for summary judgment of no inequitable conduct (D.l. 373); (7) grant McKesson's motion for summary judgment of validity under 35 U.S.C. § 112 (D.l. 404); (8) deny Swisslog's motion for summary judgment of invalidity (D.l. 408); (9) deny, without prejudice to renew, Swisslog's motion for summary judgment of no willfulness (D.l. 385); (10) deny, without prejudice to renew, McKesson's motion for summary judgment of no patent misuse (D.l. 376); (11) grant McKesson's motion for summary judgment of no unclean hands, waiver, laches and equitable estoppel (id.; (12) deny Swisslog's motion for summary judgment of laches and estoppel (D.l. 381); and (13) grant in part Swisslog's motion for summary judgment of failure to mark (id.). (D.l. 551 at 79-83) Judge Stark further denied the parties' respective motions to exclude certain expert testimony (D.l. 428; D.l. 435). (D.l. 551 at 83)
The parties have filed multiple objections, and responses thereto, in connection with the R&R. (D.l. 553; D.l. 554; D.l. 559; D.l. 561) Swiss log also seeks reconsideration of Judge Stark's decision not to exclude the expert testimony of Dr. Wayne J. Book ("Dr. Book"). The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1338(a). For the reasons that follow, the court will adopt in part and overrule in part the recommendations made by Judge Stark and deny Swisslog's motion for reconsideration.
McKesson is a Pennsylvania corporation with its principal place of business in Cranberry Township, Pennsylvania. (D.l. 1 at, ¶ 1) McKesson designs, manufactures, markets and sells, inter alia, automated inpatient medication and supply management systems. (Id.)
Swisslog Italia is an entity formed under the laws of the nation of Italy, having its principal place of business in Maranello, Italy. (D.l. 47 at ¶ [2) Translogic, a Swisslog Italia subsidiary, is a Delaware corporation with its principal place of business in Denver, Colorado. (D.l. 48 at ¶ 32) Swisslog engages in, inter alia, the manufacture, sale, distribution and installation of automated storage systems for medications.
The patents-in-suit claim an automated system for retrieving packages containing medication to fill prescription orders in a pharmacy. ('110 patent, col. 1:13-16; '267 patent, col. 1: 15-18) The patents-in-suit share identical specifications, differing only by the claimed subject matter. Independent claim 1 of the '110 patent, and independent claims 1 and 7 of the '267 patent, are representative of the invention.
The '110 patent, entitled "Automated System for Selecting Packages from a Storage Area," issued from a chain of continuation applications
The '267 patent, entitled "Automated System for Selecting and Delivering Packages from a Storage Area," issued to AHI on January 14, 1997.
Claim 7 discloses an embodiment employing a suction rod as the picking means:
Swisslog's Pill Pick System is an automated system that, in response to the manual entry of prescription information via computer interface, automatically retrieves and dispenses unit-dose medications from a hospital pharmacy to fill patient prescriptions. (D.l. 387, ex. 30 at 10673) At its most basic level, the PiIIPick System includes three pieces of equipment: (1) a device that automatically creates unit-dose packages of medications from bulk medication canisters ("the PiIIPicker"); (2) an area for storing, retrieving and restocking the unit-dose packages ("the DrugNest"); and (3) optional dispensing machines for organizing unit-dose packages retrieved from the DrugNest into parcels for distribution to patients (either "the PickRing assembly" or "the FillBox assembly"). (D.l. 443, ex. 3 at 57755-58)
Once the PillPicker creates a unit-dose package pursuant to the desired specifications, a robot positioned at the loading ends of the DrugNest (lithe SinglePiII Robot") retrieves packages from the Pill Picker and places the packages in the DrugNest for storage.
The SinglePill Robot subsequently travels horizontally and/or vertically within the plane of the loading ends to the designated rod and loads the package onto the rod. (Id.) The SinglePill Robot also acts to retrieve unit-dose packages from the DrugNest to fill a patient's prescription. A command prompt entered via computer interface causes the rotatable conveyor to move the rod carrying the desired medication to the loading ends of the DrugNest. (Id., ex. 33 at 12468) The SinglePiII Robot travels within the plane of the loading ends to the designated rod and retrieves the specified unit-dose package. (Id.) This process repeats until each medication that comprises the patient's prescription is retrieved. (Id., ex. 34 at 22933) Once the SinglePill Robot has retrieved all of the requested medications, it rotates 180 degrees, orienting so that the collected unit-dose packages face away from the DrugNest. (D.l. 443, ex. 6 at 46265) The unit-dose packages are then either dispensed directly by the SinglePiII Robot, or packaged into parcels by the PickRing and/or the FiIIBox.
If the PHI Pick System employs the PickRing assembly, the SinglePiII Robot releases the unit-dose packages onto the rod of a robot manipulator ("the RingRobot") positioned adjacent to the DrugNest. (D.l. 387, ex. 34 at 22934) The RingRobot subsequently rotates 180 degrees, and the unit-dose packages are individually removed and scanned by a barcode scanner located within the PickRing assembly and separate from the DrugNest. (Id.) The scanner verifies that the medications selected by the Single Pill Robot match the prescription information. After verification, a binding machine in the PickRing assembly threads a plastic cord through a perforation in the unit-dose packages and welds the ends together to form a ring of medications that can be delivered to the patient.
Alternatively, the SinglePill Robot transfers the unit-dose packages to the FiIIBox assembly. (Id., ex. 37 at 85697) After the FillBox assembly receives the unit-dose packages from the SinglePill Robot, a barcode scanner
An automated feature facilitates the sorting and subsequent return of unused medications to the DrugNest. These medications are manually loaded onto a conveyor configured to transfer the medications back to the DrugNest ("the Return Conveyor"). The medications, generally arranged randomly on the Return Conveyor, rotate towards the SinglePill Robot. (Id., ex. 35 at 29473) Prior to reaching the SinglePill Robot, each unit-dose package is scanned by a stationary barcode reade
The court engages in de novo review for each objection to the decision of a magistrate judge on a dispositive matter. 28 U.S.C. § 636(b)(1)(8); Fed. R. Civ. P. 72(b)(3). A motion for summary judgment is considered a dispositive matter and, therefore, objections to the findings or conclusions of the magistrate judge in connection with such a motion necessitate de novo review. Id. Irrespective of whether the parties have lodged an objection, the court may accept, reject, or modify the recommendations of the magistrate judge. See Henderson v. Carlson, 812 F.2d 874, 878-79 (3d Cir. 1987).
By contrast, evidentiary decisions made by the magistrate judge go to non-dispositive matters. See Fuller v. Summit Treestands, LLC, 2009 WL 483188, at *1 n.1 (W.D.N.Y. Feb. 25, 2009) ("Although defendant's motion for summary judgment is dispositive, its motion to preclude expert evidence is non-dispositive."). These decisions become orders of the court. See U.S. W. v. New Jersey Zinc Co., 828 F.2d 1001, 1005 (3d Cir. 1987) (holding that, pursuant to 28 U.S.C. § 636(b)(1)(A), the order of a magistrate judge is dispositive unless district court takes action to overrule it). The court must reconsider such decisions to the extent that "it has been shown that the magistrate's order is clearly erroneous or contrary to the law." 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a).
A court shall grant summary judgment only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Giv. P. 56(c). The moving party bears the burden of proving that no genuine issue of material fact exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.10 (1986). "Facts that could alter the outcome are `material,' and disputes are `genuine' if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct." Horowitz v. Fed. Kemper Life Assurance Co., 57 F.3d 300, 302 n.1 (3d Gir. 1995) (internal citations omitted). If the moving party has demonstrated an absence of material fact, the nonmoving party then "must come forward with `specific facts showing that there is a genuine issue for triaL'" Matsushita, 475 U.S. at 587 (quoting Fed. R. Giv. P. 56(e)). The court will "view the underlying facts and all reasonable inferences therefrom in the light most favorable to the party opposing the motion." Pa. Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Gir. 1995). The mere existence of some evidence in support of the nonmoving party, however, will not be sufficient for denial of a motion for summary judgment; there must be enough evidence to enable a jury reasonably to find for the nonmoving party on that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The 83-page R&R reflects Judge Stark's careful and exhaustive consideration of each of the referred issues. In general, the recommendations are well supported by the record in view of the relevant authority.
Swisslog objects to Judge Stark's recommendation to deny its motion to dismiss based on its contentions that McKesson has failed to establish that it holds all rights, title, and interest in the patents-in-suit.
To substantiate a claim of patent ownership, a putative patentee "must produce a written instrument documenting the transfer of [ownership]." Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1259 (Fed. Gir. 2000). Where more than one party owns rights in a patent, "a co-owner acting alone will lack standing." Israel Bio-Engineering Project v. Amgen, Inc., 475 F.3d 1256, 1265 (Fed. Gir. 2007). This requirement aims to ensure that accused infringers are not "subjected to multiple suits and duplicate liability" from other parties who might also assert rights in the same patent. IpVenture, Inc. v. ProStar Computer, Inc., 503 F.3d 1324, 1325 (Fed. Gir. 2007).
In the R&R, Judge Stark reaffirms his prior opinion that a 1990 loan between AHI and several investors did not involve an assignment of patent rights to inventors, but instead gave the investors a mere security interest in AHl's patent rights which expired upon repayment of the loan. (D.l.551 at 5) This reaffirmation was made in view of a ruling in which the court declined to adopt the Magistrate Judge's previous recommendation to outright deny the motion and, instead, denied the motion without prejudice to renew. Specifically, the court evinced skepticism that, in view of the competing evidence, McKesson had met its burden to substantiate its claim of patent ownership. (D.l. 503 at 2-3) Accordingly, the court stayed this action and directed McKesson to resolve the question of ownership "either through agreement or in a court having proper jurisdiction over the non-party investors." (Id.)
During the six month interim in which this case was stayed, McKesson obtained a disavowal from each investor. The disavowal states, in relevant part:
(D.l. 535, exs. 1,41) Moreover, while lacking an explicit assignment from the investors, the disavowals obligate the investors to "execute any additional documents required to provide AHI, now McKesson, with full legal and equitable title to [the patents-in-suit], including a reassignment with an effective date of December 27, 1990 should a Court deem one necessary in the patent litigation pending in the U.S. District Court for the District of Delaware." (D.l. 528, ex. Bat ¶ 7) The disavowals were obtained in view of the investors' expressed opinion that they possessed rights to the patents-in-suit. (Id., ex. A) The investors received a total of $337,500 in consideration of their execution of the disavowals. (Id., ex. B at ¶ 13)
Swisslog argues that these facts expose a defect in ownership, emphasized by McKesson's failure to obtain an assignment, that precludes McKesson alone from asserting the patents-in-suit. According to Swisslog, the absence of an express assignment in the disavowals is, in reality, a gamble on McKesson's part in "choosing to keep the ownership question alive ...." (D.l. 553 at 5) The court disagrees. While re-assignment by the investors of any remaining rights would have provided greater clarity with respect to the question of ownership, another equally sufficient method of resolving the issue in a manner that would allow the litigation to progress, as explained by the court's previous order, was to demonstrate that the investors have "either disavowed rights in the patents-in-suit or indicated a willingness not to enforce those rights." (D.l. 503 at 3 n.3) The disavowals contain representations that satisfy both criteria. Accordingly, the court concludes that McKesson "resolv[ed] the issue of ownership ... through agreement [with] ... the non-party investors" and has standing to bring this suit. (Id. at 3)
Generally, a patentee is "entitled to damages from the time when it either began marking its products in compliance with 35 U.S.C. § 287(a) or when it actually notified [the infringer] of its infringement, whichever was earlier." American Medical Systems, Inc. v. Medical Engineering Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993). Section 287(a) of Title 35 of the United States Code provides, in relevant part, that
The Federal Circuit has interpreted this provision to require the marking of each tangible product capable of being so marked with the patent number prior to allowing the patentee to claim constructive notice of infringement. See American Medical Systems, 6 F.3d at 1538-39.
Judge Stark recommends that, insofar as McKesson failed to properly mark its Robot-Rx system, the court circumscribe McKesson's potential damages to those accruing after December 16, 2005, when Swisslog received a cease and desist letter. Consistent with this recommendation, the record demonstrates both that the Robot-Rx system is an embodiment of the patents-in-suit and that McKesson never marked the physical system or any of its packaging with the numbers of the patents-in-suit. (D.l. 387, ex. 46 at 18) McKesson's objection, notwithstanding these facts, argues primarily that the Connect-Rx software associated with the Robot-Rx system displays the patents-in-su it on the log-in screen of the user interface each time a user accesses the Robot-Rx system. (D.l. 554 at 6)
The Connect-Rx software is neither an embodiment of the patents-in-suit, nor exclusive to the Robot-Rx system.
Judge Stark denied the motions of both parties to exclude expert testimony. Swisslog argues that the denial of its motion to exclude the testimony of Dr. Book insofar as it pertains to an equivalency analysis of the Pill Pick System has resulted in a clear error of law under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). The court disagrees. A review of the record demonstrates that Dr. Book compared the function, way and result of the Pill Pick System with the relevant claim limitations for each element where such an equivalency analysis was applicable. (D.l. 443, ex. 13) Nothing in the expert report of Dr. Book leads the court to question the Magistrate Judge's determination that McKesson has met its burden of demonstrating qualifications, reliability and fit. To the extent that Swisslog's concerns go to the substance of Dr. Book's opinions, these may be addressed through cross-examination at triaL.
The court construes the words of a claim according to "their ordinary and customary meaning." Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005). A claim term's "ordinary and customary meaning" "is the meaning that the term would have to a person of ordinary skill in the art in the question at the time of the invention, i.e., as of the effective filing date of the patent application." Id. "[T]he person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification." Id. Where "the meaning of a claim term as understood by persons of skill in the art is ... not immediately apparent," the court turns to publicly-available sources to ascertain the meaning, including "the words of the claims themselves, the remainder of the specification, the prosecution history, and extrinsic evidence concerning relevant scientific principles, the meaning of technical terms, and the state of the art." Id. at 1314 (quotation marks omitted).
In the R&R, Judge Stark recommends: (1) adoption of the parties' agreed-to constructions of undisputed claim limitations; and (2) constructions for the disputed claim limitations. The court adopts these recommendations in part, overruling two proposed constructions of the disputed limitations.
Judge Stark construed "x,y coordinate," to mean "one or more points that designates the position of a package where the picking means selects, grabs and replaces packages." In recommending this construction of "x,y coordinate," Judge Stark agreed with McKesson's position that the x,y plane referred to in the claims must exist only where the picking means can access packages. Swiss log objects to this construction and argues that the court should construe "x,y coordinate" in accordance with its ubiquitous mathematical meaning, to wit, "a location identifier `X,Y,' in which X designates a position of the location along an X-Axis and Y designates a position of the location along a Y-Axis."
While construing "x,y coordinate" in terms of where the picking means can access packages has intuitive appeal based on the claim language and the specification (which demonstrate a relationship between x,y coordinates and the automated picking means), Judge Stark's proposed construction goes one step further and associates the "x,y coordinate" with the location of the packages themselves. The court declines to adopt this construction for several reasons. First, the claims themselves are replete with language requiring the accessibility of packages to the picking means. ('267 patent at coI.13:10-14, col. 13:26-32, col. 14:23-29; '110 patent at col. 13:5-11, col. 13:12-23) Therefore, the construction of the "x,y coordinate" limitation need not contain a duplicate requirement. Second, and most importantly, designating a nonpermanent, movable object (Le., package) as a location identifier runs the inherent risk of defining a transient coordinate system which varies according to the position of a given package. Neither does Swisslog's proposed construction comport with the claims or specifications of either of the patents-in-suit. Construing "x,y coordinate" according to its ubiquitous meaning fully divorces this claim limitation from the context of the patents-in-suit, which makes clear that the x, y plane exists in certain locations and not others.
In light of the above, the court concludes that the patents-in-suit contemplate a coordinate system anchored by the various means for holding the packages. With respect to the '110 patent, designating the "package holding means"
In sum, the package holding means of the '110 patent, as well as the holding means and supply structure of the '267 patent, relate to discrete and permanent locations that render the packages accessible to the picking means. Accordingly, with respect to the '110 patent, the court construes "x,y coordinate" to mean "one or more points that designates a position in the package holding means." With respect to the '267 patent, the court construes "x,y coordinate" to mean "one or more points that designates a position in the holding means or supply structure."
The Magistrate Judge has recommended that the court construe "package reader associated with the picking means" as used in claim 1 of the '110 patent to mean "a device that provides the identity of a package to the computer directing the picking means." Swisslog objects
In support of its proposed construction, Swiss log alleges that the applicants made statements during prosecution of the '110 patent that resulted in a disavowal of claim scope,
(D.l. 350, ex. Cat 56471-72) (emphasis added) Looking at these two sentences in isolation lends credence to Swisslog's position regarding the physical relationship between the picking means and the package reader. However, the clarity of any specific disavowal is belied by the bulk of the applicants' remarks, contained in a sizeable two-page paragraph terminating in the aforementioned sentences, which distinguish the invention of the '110 patent from the Morello patent on various grounds. (Id. at 56470-72) The emphasized sentence characterizes the combination of elements taught by the Morello patent, and not solely the manner in which the picking means identifies an article. The court agrees with Judge Stark's conclusion that these remarks do not amount to a clear, unambiguous and unmistakable disavowal. See Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1325-1326 (Fed. Cir. 2003) (holding that "for prosecution disclaimer to attach, [Federal Circuit] precedent requires that the alleged disavowing actions or statements made during prosecution be both clear and unmistakable."). Accordingly, the court declines to limit this claim limitation in the manner proposed by Swisslog, and adopts the Magistrate Judge's recommended construction.
The parties have no objection to Judge Stark's construction of "storage area location" as used in claim 1 of the '110 patent to mean "a place in the storage area accessible to the picking means where packages are held." However, the explicit detail provided by claim 1 defines the precise nature of a "storage area location," and belies any need for further construction. Accordingly, the court concludes that no construction is required and overrules this recommendation.
Judge Stark recommends that the court construe these means-plus-function limitations to have the following function: "to hold packages, to select packages from the storage area locations and place packages in the storage area locations in accordance with computer controlled instructions." The recommended structure corresponding to this function is "picking means 38." McKesson objects only to the recommended structure and argues that the Magistrate Judge, through this allegedly narrow and "circular" definition. has essentially failed to identify a corresponding structure. (D.l. 554 at 2) In an attempt to alleviate this perceived structural deficiency. McKesson proposes that the court find the corresponding structure for these limitations to be "a device that includes a housing. a gripper, an extension rod, and a storing rod as disclosed in col. 7, lines 57-64 and Fig. 7."
Consistent with the findings of Judge Stark, the specification repeatedly describes and refers to "picking means 38" in connection with the identified function. ('110 patent, col. 5:63-6:9, col. 7:45-col. 8:13, col. 5:63-64, col. 7:51-53) Accordingly, the court concludes that one of ordinary skill would understand the corresponding structure of the aforementioned means limitations to be "picking means 38."
The recommended disclosed function for these means-plus-function limitations is "obtaining a medicine package." The structure corresponding to this function is "obtaining means 5D." McKesson objects again to the recommended corresponding structure, reiterating the same structural deficiency arguments it proffered regarding the picking means limitations. For the reasons given supra, the court disagrees that the recommended corresponding structure is "circular" and fails to evoke a readily identifiable structure. Consequently, the court adopts the recommended disclosed function and corresponding structure.
A patent is infringed when a person "without authority makes, uses or sells any patented invention, within the United States ... during the term of the patent." 35 U.S.C. § 271 (a). A two-step analysis is employed in making an infringement determination. Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995). First, the court must construe the asserted claims to ascertain their meaning and scope. Id. Construction of the claims is a question of law subject to de novo review. See Cybor Corp. v. FAS Techs., 138 F.3d 1448, 1454 (Fed. Cir. 1998). The trier of fact must then compare the properly construed claims with the accused infringing product. Markman, 52 F.3d at 976. This second step is a question of fact. See Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998).
"Direct infringement requires a party to perform each and every step or element of a claimed method or product." BMC Res., Inc. v. Paymentech, LP., 498 F.3d 1373, 1378 (Fed. Cir. 2007). "If any claim limitation is absent from the accused device, there is no literal infringement as a matter of law." Bayer AG V. Elan Pharm. Research Corp., 212 F.3d 1241, 1247 (Fed. Cir. 2000). If an accused product does not infringe an independent claim, it also does not infringe any claim depending thereon. See Wahpeton Canvas Co. v. Frontier, Inc., 870 F.2d 1546, 1553 (Fed. Cir. 1989). A product that does not literally infringe a patent claim may still infringe under the doctrine of equivalents if the differences between an individual element of the claimed invention and an element of the accused product are insubstantial. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17,24 (U.S. 1997).
Prosecution history estoppel may preclude the patentee from relying upon a theory of equivalence during an infringement proceeding. "[E]stoppel arises when an amendment is made to secure the patent and the amendment narrows the patent's scope." Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 736 (U.S. 2002). However, the Supreme Court has rejected a per se approach in which a finding of estoppel would bar a patentee from later asserting a claim under the doctrine of equivalents regarding the narrowed element. Indeed, such a practice is "inconsistent with the purpose of applying the estoppel in the first place — to hold the inventor to the representations made during the application process and to the inferences that may reasonably be drawn from the amendment." Id. at 737. In Festo, the Supreme Court provided guidance as to when narrowing amendments should not eliminate access to the doctrine of equivalents:
Id. at 738. Accordingly, the flexible rule announced in Festa requires the court to "consider[] what equivalents were surrendered during the prosecution of the patent." Id.
The patent owner has the burden of proving infringement and must meet its burden by a preponderance of the evidence. SmithKline Diagnostics, Inc. v. Helena Lab. Corp., 859 F.2d 878, 889 (Fed. Cir. 1988) (citations omitted).
Swisslog alleges that the Magistrate Judge, in recommending that the court deny its motion for summary judgment of noninfringement of the '110 patent, failed to consider several arguments that could, individually, result in a contrary conclusion. The court has disposed of one such argument, supra, in overruling Swisslog's objection to the recommended construction of a "package reader associated with the picking means." The court now turns to Swisslog's remaining arguments, most of which center upon limitations it alleges define the operation of the package reader.
Highlighting a series of amendments made during the prosecution of the '110 patent, Swiss log argues that the Festa presumption precludes McKesson from relying upon the doctrine of equivalence with respect to the Package Reader Limitations. Festa, 535 U.S. at 736. Despite the multiple prior art rejections of claim 1, the record sufficiently demonstrates that it was not the addition of the Package Reader Limitations that ultimately swayed the examiner to allow the '110 patent. Indeed, the examiner twice explained that the prior art references taught a package reader that scanned an article prior to the article's removal from the storage area. (D.l. 443, ex. 15 at 217, 234) Instead, claim 1 of the '110 patent was allowed after the applicants made a subsequent amendment, proposed by the examiner at an interview, that "the picking means storage location [be] sized and configured to hold a plurality of packages in a face to face relationship." (Id. at 248) Consequently, the court cannot say that the Package Reader Limitations bear more than a tangential relationship to the patentability of the '110 patent. See Festa, 535 U.S. at 736,740-41. The court concludes that McKesson has rebutted the Festa presumption and may rely upon a theory of equivalence with respect to the Package Reader Limitations.
The conclusion that the Package Reader Limitations are entitled to a range of equivalents erodes much of the force of Swisslog's non infringement arguments directed to these Iimitations.
Swiss log also argues that the PillPick System does meet the Third Reader Limitation because it does not scan a package "without removing the package from the storage location." While this argument depends, at least partially, upon Swisslog's characterization of the Return Conveyor — determined, supra, to be one that a reasonable jury could disagree with — as excluded from the storage area, the court finds that this claim must fail for an independent reason. The full context of the Third Reader Limitation reveals that this limitation only concerns the orientation of packages held within the storage area. Limitation a) of claim 1 requires that
(emphasis added) By contrast, limitation e) provides a relational context between the package reader and the labels on the stored packages, stating that the package reader is "positioned for reading the machine readable labels on packages located within the storage area ...." A reasonable jury could conclude, in view of the foregoing, that the three bar code readers of the PiIIPick system scan packages within the storage area as required by limitation e).
Finally, Swiss log contends that the SinglePill Robot, which the parties seem to agree functions as the picking means, does not hold packages "after the ... packages have been retrieved from the storage area," as required by limitation b) of claim 1. In support of this position, Swisslog cites to the deposition testimony of McKesson's expert, Dr. Book, in which he explained that the SinglePill Robot remains within the storage area at all times. (D.l. 387, ex. 43 at 266-68) The probative value of this alleged admission is questionable in view of Dr. Book's opinion that the SinglePill Robot is separate and distinct from the OrugNest (which Dr. Book characterized as the storage area of the PillPick System). (D.l. 443, ex. 21 at 237-40,241-42) At a minimum, an issue of material fact exists with respect to whether this limitation, too, is met by the PillPick System.
The court next briefly pauses to consider how, if at all, the court's construction of "x,y coordinate" in a manner different from that proposed by either of the Magistrate Judge or the parties affects the noninfringement analysis. To the extent that the adopted construction has merely altered the point of reference from the package (the Magistrate Judge's proposed construction) to the package holding means, the court concludes that this change does not warrant the grant of Swisslog's motion for summary judgment of noninfringement of the '110 patent. Specifically, a question of fact persists as to whether the requirement of a "distinct" x,y coordinate for each storage area location is met by the rotating conveyor approach of the PillPick System, which Swisslog asserts is absent to the extent that each pin conveyor has multiple storage area locations with the same x,y coordinate. (D.l. 384 at 2) Neither party requested that the court construe "distinct," and Swiss log's position does not account for all reasonably possible interpretations of this limitation.
In conclusion, multiple issues of material fact warrant the denial of Swisslog's motion for summary judgment of noninfringement; the court adopts the Magistrate Judge's recommendation in this regard.
Applicants for patents and their legal representatives have a duty of candor, good faith, and honesty in their dealings with the United State Patent and Trademark Office ("PTO"). Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Gir. 1995); 37 G.F.R. § 1.56(a) (2003). The duty of candor, good faith, and honesty includes the duty to submit truthful information and the duty to disclose to the PTO information known to the patent applicants or their attorneys which is material to the examination of the patent application. Elk Corp. of Dallas v. GAF Bldg. Materials Corp., 168 F.3d 28,30 (Fed. Gir. 1999). A breach of this duty constititues inquitable conduct. Mollins, 48 F.3d at 1178. If it is established that a patent applicant engaged in inequitable conduct, then the patent application is rendered unenforceable. Kingsdown Med. Consultants v. Hollister Inc., 863 F.2d 867, 877 (Fed. Gir. 1988).
In order to establish unenforceability based on inequitable conduct, a defendant must establish, by clear and convincing evidence, that: (1) the omitted or false information was material to patentability of the invention; or (2) the applicant had knowledge of the existence and materiality of the information; and (3) the applicant intended to deceive the PTO. Mollins, 48 F.3d at 1178. A determination of inequitable conduct, therefore, entails a two step analysis. First, the court must determine whether the withheld information meets a threshold level of materiality. A reference is considered material if there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent. Allied Colloids, Inc. v. American Cyanamid Co., 64 F.3d 1570, 1578 (Fed. Gir. 1995) (citations omitted). A reference, however, does not have to render the claimed invention unpatentable or invalid to be material. See Merck v. Danbury Pharmacal, 873 F.2d 1418 (Fed. Cir. 1989).
After determining that the applicant withheld material information, the court must then decide whether the applicant acted with the requisite level of intent to mislead the PTO. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Gir. 2009); 8axterlnt'l, Inc. V. McGaw Inc., 149 F.3d 1321, 1327 (Fed. Gir. 1998). "Intentto deceive cannot be inferred solely from the fact that information was not disclosed; there must be a factual basis for finding a deceptive intent." Herbert v. Lisle Corp., 99 F.3d 1109, 1116 (Fed. Cir. 1996). That is, "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive." Kingsdown, 863 F.2d at 876 (Fed. Gir. 1988). Evidence of specific intent must "be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement." Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed. Gir. 2008). A "smoking gun," however, is not required in order to establish an intent to deceive. See Merck, 873 F.2d at 1422.
Once materiality and intent to deceive have been established, the trial court must weigh them to determine whether the balance tips in favor of a conclusion of inequitable conduct. N. V. Akzo v. E.I. DuPont de Nemours, 810 F.2d 1148, 1153 (Fed. Gir. 1988). The showing of intent can be proportionally less when balanced against high materiality. Id. In contrast, the showing of intent must be proportionally greater when balanced against low materiality. Id.
McKesson's motion for summary judgment of no inequitable conduct challenges the adequacy of Swisslog's proffered evidence regarding materiality and intent to deceive. To support its theory of inequitable conduct, Swisslog identifies several alleged material prior art references which it contends should have been disclosed to the PTO. The alleged material references include: 1) three business plans created by AHI prior to the critical date of January 24, 1989; 2) the demonstration of a prototype; and 3) multiple offers for sale (collectively, "the references"). (D.l. 322 at ¶¶ 65-67) Swisslog alleges that the prototype, described in the business plans, "exhibited `substantially all of the functionality' of the first commercial [automated pharmacy station ("APS")] offered by AHI, as well as many of the purportedly novel features described in the patents-in-suit." (D.l. 433 at 7-8) Additionally, AHI allegedly entered into agreements, prior to the critical date, to install the APS at certain hospitals, offering a reduced price in consideration for the hospitals' agreements to allow potential buyers to witness demonstrations of the functionality of the APS.
Judge Stark, accepting for the sake of argument the materiality
As a threshold matter, the court declines to characterize McDonald's deposition testimony in the manner suggested by Swisslog. McDonald's testimony merely establishes that, while he authored the business plans, he was not aware of whether the references were withheld from the PTO. (Id. at 227-28) A fortiori, if McDonald did not know whether the references were disclosed during the prosecution of the patents-in-suit, Swisslog cannot show on the basis of this testimony alone, by clear and convincing evidence, that McDonald made a deliberate decision to withhold them. Swiss log did not address this evidentiary gap by deposing any of the other inventors or attorneys involved in the prosecution of the patents-in-suit on this topic.
Perhaps recognizing the infirmity of using McDonald as a source of direct evidence for this theory, Swisslog argues that an intent to deceive can be inferred in view of the high level of materiality of the information withheld. (D.l. 553 at 20) However, the Federal Circuit has made clear that, to warrant such an inference, the record must demonstrate more than a simple failure to disclose a material reference. See Herbert, 99 F.3d at 1116. With respect to any inferences that could be drawn from this record. Swisslog bears the additional burden of demonstrating that an inference of intent to deceive is "the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard." Star Scientific, 537 F .3d at 1366 (internal citations omitted). This record demonstrates neither and, accordingly, Swisslog has failed to adduce an inference that the applicants intended to deceive the PTO. The court adopts the recommendation of the Magistrate Judge to grant McKesson's motion for summary judgment of no inequitable conduct, concluding that Swisslog has failed to demonstrate either that the patentees knew or should have known of the materiality of the references, or that they intended to deceive the PTO.
For the foregoing reasons, the court adopts Judge Stark's recommendation: (1) to deny Swisslog's motion to dismiss for lack of standing (D.l. 526); (2) to adopt the parties' agreed-upon constructions for the undisputed claim terms of the patents-in-suit; (3) to grant McKesson's motion for summary judgment on Swisslog's lack of standing defense (D.l. 379); (4) to deny Swisslog's motion for summary judgment of noninfringement (D.l. 383); (5) to grant McKesson's motion for summary judgment of no inequitable conduct (D.l. 373); (6) to grant McKesson's motion for summary judgment of validity under 35 U.S.C. § 112 (D.l. 404); (7) to deny Swiss log's motion for summary judgment of invalidity (D.l. 408); (8) to deny, without prejudice to renew, Swisslog's motion for summary judgment of no willfulness (D.l. 385); (9) to deny, without prejudice to renew, McKesson's motion for summary judgment of no patent misuse (D.l. 376); (10) to grant McKesson's motion for summary judgment of no unclean hands, waiver, laches and equitable estoppel (id.); (11) to deny Swisslog's motion for summary judgment of laches and estoppel (D.l. 381); (12) to grant in part Swisslog's motion for summary judgment of failure to mark (id.) The court also adopts in part and overrules in part the recommended constructions for the disputed claim terms of the patents-in-suit, and denies Swisslog's motion to reconsider the Magistrate Judge's denial of its motion to exclude the expert testimony of Dr. Book (D.l. 428). An appropriate order shall issue.
