NATHANIEL M. GORTON, District Judge.
In this patent action, plaintiffs/counter-defendants Philips Electronics North America Corporation and Koninklijke Philips, N.V. (collectively, "Philips") and defendant/counter-claimant ZOLL Medical Corporation ("ZOLL") present cross claims of patent infringement and patent invalidity. ZOLL also contends that 1) the equitable defense of laches bars Philips from recovering any pre-filing damages and 2) Philips is equitably estopped from obtaining any relief on its infringement claims with respect to its "waveform" patents.
In December, 2013, the Court considered evidence on laches and equitable estoppel in conjunction with the 12-day jury trial on infringement and invalidity. The Court now publishes its findings of fact and conclusions of law as to those issues pursuant to Fed. R. Civ. P. 52(a).
1. Four of the seven patents asserted by Philips in the December 2013 trial are directed to biphasic waveforms in defibrillators and their associated circuitry. Those patents (collectively the "waveform patents") are:
2. Philips asserted claims of the '454, '905 and '978 patents against six ZOLL products: the AED Plus, the AED Pro, the M Series, the E Series, the R Series and the X Series defibrillators. Philips also asserted claims of the '212 patent against four ZOLL products: the AED Plus, the AED Pro, the R Series and the X Series.
3. Claim 15 of the '454 patent, which was asserted against ZOLL at trial, claims a method for applying electrotherapy comprised of several steps including "monitoring an electrical parameter during the discharging step" and "removing the additional impedance from the electrical circuit if the electrical parameter is within a defined range prior to the end of the discharging step."
4. Claim 4 of the '905 patent, which was asserted against ZOLL at trial, claims a method for delivering electrotherapy that includes "monitoring a patient-dependent electrical parameter during the discharging step".
5. Claims 4 and 5 of the '978 patent, which were asserted against ZOLL at trial, claim a method for applying electrotherapy that includes "simultaneously monitoring a patient-dependent electrical parameter and time during the discharging step".
6. Two of the patents asserted by Philips at trial are directed to certain self-testing methods and apparatus. Those patents (collectively the "self-test patents") are:
7. Philips asserted claims of the '374 patent against six ZOLL products: the AED Plus, the AED Pro, the M Series, the E Series, the R Series and the X Series defibrillators. Philips also asserted claims of the '460 patent against two ZOLL products: the AED Plus and AED Pro.
8. U.S. Patent No. 6,356,785 ("the '785 patent") issued on March 12, 2002 and is directed to prompts for using and operating automated external defibrillators ("AEDs").
9. Philips asserted claims of the '785 patent against four ZOLL products: the AED Plus, the AED Pro, the E Series and the X Series.
10. ZOLL entered the public-access AED market in 2000 but began to market professional defibrillators that included an AED mode as early as 1994.
11. ZOLL began selling the M Series in 1999, the AED Plus in February, 2002, the AED Pro in December, 2004, the E Series in June, 2005, the R Series in December, 2006 and the X Series in September, 2011.
12. Heartstream Inc., a predecessor to Philips, was founded in 1992 and was acquired by Hewlett Packard Inc. in 1998. In 1999, Hewlett Packard created a new subsidiary called Agilent Technologies ("Agilent") which included the former Heartstream unit. Koninklijke Philips Electronics, N.V. acquired Agilent in 2001.
13. Deborah DiSanzo became the General Manager of Heartstream Inc. in May, 1998, directed the defibrillator business at Agilent from 1999 to 2001 and was the General Manager of Philips' cardiac resuscitation business from about the time Philips acquired Agilent in 2001 until 2006.
14. Richard Packer, the President and CEO of ZOLL, testified at trial that he and Ms. DiSanzo met in the late 1990s, saw each other at industry events over the years and sat on an industry group board together. Mr. Packer and Ms. DiSanzo discussed patents and intellectual property in general but, prior to 2008, never talked about whether ZOLL was infringing Philips' patents.
15. Shervin Ayati, a former ZOLL product manager, supervised the technical development of ZOLL's rectilinear biphasic waveform in the 1990s. While at ZOLL, Mr. Ayati co-authored two peer-reviewed journal articles about ZOLL's biphasic waveform that were published in 1999 and 2000 and was named as co-inventor on six patents directed to biphasic waveform technology. Mr. Ayati was hired by Ms. DiSanzo in 2001 to help develop the hospital defibrillator business of Philips.
16. Gary Freeman, the Vice President of Technology at ZOLL, was a member of a committee assembled to promote biphasic waveform technology in the 1990s. Carl Morgan, who is a named inventor on several of the Philips waveform and self-test patents, was also a member of the same committee. Mr. Freeman and Mr. Morgan saw each other at conferences regularly.
17. ZOLL owns seven patents related to biphasic waveform technology. All seven issued between March, 1998 and August, 2000 and were publicly available in August, 2000. Shervin Ayati and Michael Lopin are named as co-inventors on all seven patents. Figure 1 of each of the patents discloses ZOLL's rectilinear biphasic waveform. Each of the patents also discloses that
14. ZOLL's biphasic waveform was described in two published peer-reviewed articles which presented the results of clinical studies demonstrating the superior efficacy of ZOLL's waveform over the then-standard monophasic waveform. The first article, which was published in 1999 in the
The second article, published in 2000 in
18. In 1999, Philips, ZOLL and two other companies formed an industry consortium to promote the use of biphasic waveform technology. During the course of that collaboration, representatives of Philips and ZOLL discussed how their respective waveforms worked in order to make sure that they could come up with a consensus statement that worked for all four companies. The consortium released an unsigned "Industry Consensus Statement" on low energy biphasic defibrillation in September, 2000 that cited the two articles co-authored by Mr. Ayati.
19. On January 25, 1999, ZOLL announced in a press release that it continued to make progress with its "clinically advanced, patented biphasic waveform" and that it expected to launch biphasic technology in 1999. On that same date, individuals at Philips, including Ms. DiSanzo, received a copy of the press release in an email sent by a Philips colleague titled "Zoll Medical — First Quarter results" noting that ZOLL expected to launch biphasic technology in 1999.
20. On March 8, 1999, ZOLL announced in a press release that it had successfully completed clinical studies of its rectilinear biphasic waveform. The press release was included as an attachment in an email sent to individuals at Philips, including Ms. DiSanzo. The email was titled "Zoll biphasic study news" and stated
21. On September 9, 1999, ZOLL announced in a press release that it had received FDA approval for its patented biphasic waveform technology. The press release explained that the waveform's
The text of the press release was included in the body of an email titled "Sept 9, Zoll gets FDA Clearance of Biphasic for M-Series" sent by a Philips employee to individuals at Philips, including Ms. DiSanzo. There was no text in the email other than the press release.
22. On November 2, 2000, ZOLL announced in a press release that it had licensed its biphasic waveform to GE Medical Systems and that
It was forwarded by a Philips employee to Ms. DiSanzo in an email titled "FW: News re: Medtronic/Siemens & Zoll/GE".
23. Mr. Packer testified that ZOLL's sales force "widely distributed" a marketing brochure to customers that described ZOLL's rectilinear biphasic waveform in detail and cited ZOLL's patents and the two articles described in Finding 14 above.
24. Since at least 2001, Philips has gathered competitive intelligence about ZOLL's technology from its displays at trade shows. In March, 2001, employees of Philips visited ZOLL's booth at the American College of Cardiology trade show and one reported in an email to Philips employees, including Ms. DiSanzo, that ZOLL's "marketing message was all around their biphasic technology." In November, 2001, Philips employees inspected ZOLL's recently-developed AED Plus at an American Heart Association trade show and several reported their findings on ZOLL's AED Plus and two products produced by a competitor, Access Cardio, in emails on which Ms. DiSanzo and Mr. Ayati were carbon-copied.
25. In March, 2002, ZOLL announced in a press release that the Food and Drug Administration ("FDA") had approved its AED Plus defibrillator which
The press release was attached to an email titled "ZOLL NEWS" that was sent to Ms. DiSanzo and other Philips employees.
26. At some point in or before July, 2009, Philips discovered that ZOLL's website stated that ZOLL's waveform patents employed an impedance compensation technique during a "shock delivery". There was no evidence presented at trial as to the precise date on which that information appeared on ZOLL's website or when Philips discovered it. ZOLL later removed that statement from its website and replaced it with a statement declaring that the impedance compensation technique is employed during a "test pulse".
27. The March, 2002 ZOLL press release also indicated that the AED Plus featured a "combination of simple, step-by-step illustrations and audio coaching". The press release was attached to an email titled "ZOLL NEWS" that was sent to Ms. DiSanzo and other Philips employees.
28. At some point, an employee of Philips downloaded a copy of the AED Plus Administrators Guide from ZOLL's website and attached it to an email to several Philips employees, including Ms. DiSanzo, in June, 2002. The Administrators Guide included specifications and instructions for operating the AED Plus.
29. The AED Plus issues voice prompts as soon as it is turned on which would have been self-evident to anyone who examined the device.
30. The Administrators Guide for the AED Plus describes its self-test features. A Philips employee downloaded that Guide from ZOLL's website and emailed it to Philips employees, including Ms. DiSanzo, in June, 2002.
31. The self-test display is located on the front of the AED Plus device.
32. Philips sued Defibtech LLC for patent infringement in the early 2000s. A user manual for one of Defibtech's products admitted that it utilized Hewlett Packard's (i.e. Philips') technology.
33. Philips also brought a patent infringement action against Access CardioSystems, Inc. in the 2000s. That company explicitly marketed its products as providing a cheaper version of Philips' waveform technology.
34. Access Cardio and Defibtech were major, established competitors of Philips before ZOLL began to compete for market share.
35. Philips was also involved in litigation with Cardiac Science Inc. during the same time period. Cardiac Science sued Philips for patent infringement and Philips counterclaimed for infringement of its self-test patents. Cardiac Science was one of Philips main competitors with respect to self-testing technology.
36. Mr. Packer was aware of Philips' three lawsuits and believed that Philips had a business strategy of enforcing its intellectual property rights against other companies.
37. In November, 2008, counsel for Philips sent a cease and desist letter to ZOLL claiming that ZOLL infringed Philips' asserted patents. That was the first time that Philips contacted ZOLL with respect to the patents at issue.
38. The parties made a good faith effort to negotiate the settlement of the alleged infringement between 2008 and 2010.
39. Philips filed the instant action on June 18, 2010.
40. In 1992, sales of ZOLL's products accounted for approximately 15% of the market for defibrillators used in hospitals. By the time this action went to trial, ZOLL's market share had grown to 50%.
41. ZOLL did not alter the design of any of the accused products for more than five years after receiving the cease and desist letter from Philips in 2008. In 2013, ZOLL implemented a technique in its X-Series defibrillator for using a high-frequency, low-current signal that measures impedance without using any energy discharge from the capacitor. ZOLL had been aware of that technology as early as 1999 and could have implemented it earlier.
42. Philips did not assert the '212 waveform patent against ZOLL's M-Series and E-Series defibrillators. The M-Series and E-Series defibrillators both use a four-switch circuit configuration rather than the five-switch configuration required by Philips' asserted claims.
43. Although a Nihon Koden employee testified that a pre-1993 Nihon Koden manual contained the same description of the self-test features that was included in the 1994 manual introduced at trial, there is no evidence that ZOLL could have obtained the pre-1993 version of the manual had it been sued earlier.
Laches is an equitable defense that may bar a party from relief if its delay in bringing the claim was 1) unreasonable and inexcusable from the time when the plaintiff had actual or constructive notice of its potential claim and 2) resulted in injury or prejudice to the opposing party.
The standard for actual knowledge is whether the patentee had knowledge of the activity alleged to infringe, i.e. the salient features of the accused product or method.
Constructive knowledge, on the other hand, exists if the patentee should have known about the infringement because "the facts already known by him were such as to put upon a man of ordinary intelligence the duty of inquiry."
The presumption of laches is a "bursting bubble" presumption that disappears if the patentee is able to establish a genuine issue as to whether 1) it delayed for more than six years after acquiring actual or constructive knowledge, 2) its delay was justified or 3) the infringer did not suffer any additional prejudice during the six year time period.
Even if the presumption is rebutted, unreasonable delay and prejudice may still bar a plaintiff's claim.
Prejudice may be evidentiary or economic. The Federal Circuit has acknowledged that economic prejudice is a "slippery issue to resolve" because it is difficult to draw a line between losses due to the finding of infringement and losses that could have been prevented had the patentee not delayed in filing suit.
Economic prejudice does not include monetary losses due to liability for infringement because, were that the case, economic prejudice would be a factor in every suit.
In evaluating where to draw the line between economic prejudice and normal business expenditures, courts, including the Federal Circuit, generally find evidence of the accused infringer's conduct upon being sued or notified of possible infringement persuasive. The fact that an accused infringer continues to engage in the allegedly infringing activity may indicate that it would not have changed its behavior if it had been sued earlier.
Evidentiary prejudice may arise if the defendant cannot present a "full and fair defense on the merits" due to factors such as lost records, the death of a witness or the "unreliability of memories of long past events" that undermine the ability of the court or jury to judge the facts.
The accused infringer has the burden of proving the facts related to laches, including delay and prejudice, by a preponderance of the evidence.
Finally, laches is not applied mechanically. Rather,
The Court hereby makes the following conclusions of law with respect to ZOLL's laches defense:
44. ZOLL has not proved that Philips had actual knowledge of infringement of the waveform patents prior to 2008 when someone at Philips allegedly noticed language on ZOLL's website.
45. ZOLL has also not proved, by a preponderance of the evidence, that Philips had constructive knowledge of its infringement. While ZOLL is correct that Philips employees, including its General Manager, received materials that mentioned ZOLL's biphasic waveform technology, and several of those materials mentioned impedance, none of the subject press releases described the relevant technology with sufficient specificity to put Philips on notice of an "act of infringement that gives rise to a legal claim."
46. Even if the articles, press releases and other materials were sufficient to put Philips on constructive notice and create a duty to investigate because they, at the very least, informed Philips that ZOLL was using "similar technology to accomplish a similar objective" as the asserted patents,
50. Philips had constructive knowledge of infringement of the '785 patent by ZOLL's AED Plus as of June, 2002. By that time, employees, including Ms. DiSanzo, had received 1) a copy of a ZOLL press release that described how ZOLL's AED Plus included a "combination of simple, step-by-step illustrations and audio coaching" and 2) a copy the Administrators Guide for ZOLL's AED Plus. That information was sufficient to create a reasonable suspicion of infringement and an accompanying duty to investigate. The existence of voice prompt features would have been self-evident to anyone who examined the device and therefore investigation would have revealed a likelihood of infringement.
48. Philips had constructive knowledge of infringement of the '460 and '374 patents as of June, 2002, for the reasons listed above with respect to the '785 patent.
49. A bursting bubble presumption of laches arises when a patentee delays filing suit for six or more years after it develops actual or constructive knowledge of the alleged infringement.
50. The Court will not penalize Philips for the time spent negotiating with ZOLL between November, 2008, when Philips informed ZOLL of possible infringement, and June, 2010, when Philips filed the instant lawsuit.
51. Philips had constructive knowledge of infringement of the '785, '374 and '460 patents as of June, 2002. As a result, a presumption of laches arises as to those patents because Philips delayed six years and five months before filing suit.
52. If the Court were to conclude that Philips had constructive notice of infringement of the '454, '905, '978 and '212 patents earlier than 2008, it would deem the date on which Philips developed constructive knowledge to be March, 2002, which is six years and eight months before Philips notified ZOLL of infringement of those patents.
53. Philips has, however, defeated any presumption of laches because it has reasonable excuses for its delay in filing suit after it had constructive knowledge of any of the subject devices.
54. While ZOLL is correct that Philips did not notify ZOLL that it was next in line to be sued, the Federal Circuit has not imposed a rigid notice requirement.
55. ZOLL has not demonstrated, by a preponderance of the evidence, that it suffered either economic or evidentiary prejudice as a result of the delay.
56. First, the Court is unconvinced that ZOLL would have ceased to infringe had Philips brought suit earlier. Throughout this litigation ZOLL has denied that it infringed the subject patents and maintained that they were invalid.
57. ZOLL produced evidence at trial that its market share increased from 15% in 1992 to around 50% in December, 2013. It did not, however, show that it made any capital investments or increased expenditures between 2002 and 2008 such that it can claim economic prejudice.
58. The Court is also unpersuaded that ZOLL suffered any evidentiary prejudice as a result of the delay. ZOLL failed conclusively to demonstrate that it would have been able to obtain a pre-1993 version of the Nihon Koden manual if it had been sued earlier.
Equitable estoppel is an equitable defense that entirely bars a claim to infringement.
59. The defense of equitable estoppel does not apply to the asserted claims of the waveform patents. There is no evidence that Philips had a duty to alert ZOLL to its intent to assert its patents against the accused products and yet remained silent and, in any event, ZOLL has not established economic or evidentiary prejudice for the reasons outlined above.
Looking to the totality of evidence presented, the Court concludes that it is inappropriate 1) to limit Philips' damages based upon the doctrine of laches or 2) to bar Philips' claims of infringement of its waveform patents based upon the doctrine of equitable estoppel.