Gambro Lundia Ab v. Baxter Healthcare Corporation Defendant/cross-Appellant
Docket: 96-1004
Court: Court of Appeals for the Federal Circuit; April 8, 1997; Federal Appellate Court
Gambro Lundia AB appeals a final judgment from the United States District Court for the District of Colorado in a patent infringement case against Baxter Healthcare Corporation. The patent in question, U.S. Patent No. 4,585,552, describes a system for measuring the difference between two fluid flows in separate ducts, specifically designed to recalibrate sensors during hemodialysis to ensure accurate measurement of impurities removed from a patient's blood.
Hemodialysis is a medical procedure that removes contaminants and excess fluid from the blood when kidneys fail, using a dialyzer that separates dialysate solution and blood across a porous membrane. Accurate calculation of the ultrafiltrate, the impurities removed from blood, is vital, as improper removal can lead to serious health risks.
Repgreen Limited, a British bioengineering firm, initially developed an improved method for ultrafiltrate calculation with the UFM 1000 monitoring system, which used electromagnetic flow sensors to measure dialysate flow rates. However, the calibration method employed could not address inaccuracies caused by clogging in the outflow sensor, leading to measurement drift.
In the late 1970s, Gambro sought enhancements in ultrafiltrate monitoring techniques and acquired Repgreen's technology, including the UFM 1000, after Repgreen's bankruptcy. Gambro's team then refined this technology over three years, culminating in the issuance of the '552 patent in June 1982. The appellate court reverses the district court's findings regarding the patent's invalidity, unenforceability, and infringement, indicating errors in the lower court's analysis.
Gambro initially filed a patent application in Sweden on September 28, 1982, followed by a U.S. application in September 1983, which was prosecuted by in-house patent counsel Gunnar Boberg and U.S. counsel Arnold Krumholz. The U.S. examiner rejected claim 1 due to anticipation by a German patent (German '756), but after Gambro submitted a German-language copy and arguments from Boberg, the rejection was withdrawn. The '552 patent was issued on April 29, 1986. The invention involves a valve system that directs clean dialysate to recalibrate sensors during dialysis by temporarily blocking contaminated dialysate, allowing clean dialysate to flow through both the intake and outflow sensors.
Claim 1 details a system for measuring the flow rate difference between clean and spent dialysis solutions, describing the mechanics of fluid flow through ducts and the conditions for measurement. In 1984, Baxter acquired the dialysis division of Extracorporeal, Inc. and developed the Baxter SPS 550, which Gambro alleged infringed the '552 patent in a March 1992 lawsuit in Colorado. Baxter defended by claiming the '552 patent was invalid and unenforceable. After a ten-day bench trial, the district court found claim 1 invalid due to obviousness and derivation, as well as unenforceable for inequitable conduct. The court ruled in favor of Baxter on all infringement claims and declined to award attorney fees or costs to either party.
The trial judge concluded that Gambro derived the '552 invention from a Wittingham proposal found in the Repgreen files after acquiring its dialysis technology. Derivation is reviewed as a factual question, requiring acceptance of the district court’s findings unless they are clearly erroneous or legally flawed. The party claiming derivation must prove prior conception of the invention by another and that this conception was communicated to the patentee.
The district court determined that Wittingham conceived the invention by July 1979, relying on Wittingham's testimony and the proposal document. However, inventor testimony alone is insufficient to establish conception; it must be corroborated. The court needed to evaluate whether the Wittingham proposal supports Wittingham's conception claims. The proposal, a four-page document, discusses an ultrafiltration monitor with an automatic zeroing feature, but Baxter's argument that it discloses recalibration during dialysis is based on an ambiguous passage.
This passage, which Wittingham himself found unclear, does not explicitly describe recalibration during dialysis and suggests a pre-dialysis warm-up period instead. Expert testimony indicated that a person skilled in dialysis in 1982 would not interpret the passage as indicating recalibration during dialysis. Thus, the proposal fails to corroborate Wittingham's conception, leading the court to conclude that it does not support the claim of derivation.
Baxter's evidence for corroborating conception of the '552 patent relies heavily on Mr. Smith's testimony, which the trial judge deemed self-serving and insufficient. Smith claimed that the Wittingham proposal mentioned calibration during dialysis, but the proposal's language contradicts this assertion. Consequently, the court determined Baxter did not meet the burden of clear and convincing evidence for prior conception.
Regarding the communication of prior conception to the named inventor, the district court misapplied the legal standard, requiring only that Baxter prove the communication made the invention obvious to a skilled artisan, referencing New England Braiding Co. v. A.W. Chesterton Co. This interpretation mistakenly introduced an obviousness analysis into the derivation test, which traditionally requires the communication to enable a skilled individual to construct the invention without special skill, as established in Agawam Woolen v. Jordan.
The New England Braiding case clarified that to invalidate a patent for derivation, it must be shown that the named inventor obtained knowledge of the invention from another, but did not incorporate an obviousness standard into the Section 102(f) analysis. In that case, the court upheld the denial of a preliminary injunction based on credibility issues rather than the sufficiency of communication regarding the invention's obviousness.
Insufficient evidence of communication regarding the patented invention was identified, as Wittingham was uncertain about discussing calibration during dialysis or sensor contamination with anyone at Gambro. The trial judge's finding was based solely on Wittingham's written proposal, which Gambro obtained through its acquisition of Repgreen's technology. However, the proposal failed to disclose recalibration during dialysis to someone skilled in the art at the relevant time, meaning it could not substantiate a communication of that idea. Consequently, the district court erred in finding communication and conception, rendering the derivation finding clearly erroneous.
As for obviousness, the court reviews the ultimate determination de novo but examines factual findings for clear error. The district court concluded that prior art contained all claim elements except for the "transferring means," specifically noting that the prior art lacked computer-controlled valves for recalibrating flow sensors during dialysis. The key question was whether the prior art would have taught one skilled in the art to use valves for recalibration. The district court found that those skilled in the art were aware of recalibration possibilities and that substituting computer-controlled valves for hoses was obvious. However, a specific teaching, suggestion, or reason to make such a substitution is crucial for an obviousness determination.
The trial judge cited the Gray and Sanderson article as suggesting a valve system for bypassing clean dialysate around the dialyzer. However, this assertion was unsupported by the evidence. Sanderson clarified that his article did not advocate using valves for bypassing the dialyzer and instead suggested rerouting spent dialysate through sensors, emphasizing that maintaining fluid flow through the dialyzer was a medical requirement. Thus, the article taught against the concept of recalibration during dialysis by bypassing the dialyzer.
The Gray and Sanderson article indicates that recalibrating the dialyzer during dialysis is unfeasible due to the inability to stop fluid flow. It details that valves were utilized to maintain dialysis while allowing for a zero differential flow configuration. The article asserts that the absence of a bypass option during dialysis necessitated a differential measurement technique to isolate true differential flow from a larger common mode signal. This contradicts the district court's findings, as the article teaches against using valves for recalibration by bypassing the dialyzer, undermining Baxter's argument for obviousness.
The district court also failed to adequately assess the fourth prong of the obviousness determination related to objective indicia of nonobviousness, which are critical under Section 103. The evidence of a long-felt need was dismissed, despite Baxter acknowledging the significance of calibration during dialysis prior to litigation, promoting it as an advancement in their advertising for the SPS 550 machines.
Furthermore, there is substantial evidence of commercial success linked to Gambro's invention, with Baxter selling over 14,800 machines since 1987 and admitting their success. The connection between this success and the patented invention is inferred from its prominence in Baxter's marketing.
Lastly, evidence shows that others in the market had attempted various solutions to enhance the accuracy of ultrafiltration monitors but were unsuccessful, reinforcing the conclusion of nonobviousness.
Objective evidence supports the nonobviousness of Baxter's invention, which includes recognition of its significance, commercial success, and others' failure to resolve the identified problem. The absence of guidance to combine existing elements further necessitates a conclusion of nonobviousness.
Inequitable conduct involves failing to disclose or submitting false material information during patent prosecution with intent to deceive. Materiality is defined by whether a reasonable examiner would find the omitted or misrepresented information important for patent issuance. However, duplicative references are not deemed material. Establishing inequitable conduct also requires evidence of intent to deceive, assessed alongside factors indicating good faith. The degree of evidence required correlates with the materiality of the information; significant omissions may require less evidence of intent.
The court reviews a district court's inequitable conduct findings for abuse of discretion, ensuring that such findings are not based on clearly erroneous facts or legal misunderstandings. The district court found Gambro made significant misrepresentations regarding the German '756 patent, but this court deems that finding an abuse of discretion.
The German '756 patent describes a dialysis system utilizing a temporary hose to connect sensors but does not offer a method for simultaneous connection of the hose and dialyzer. Therefore, it fails to disclose features necessary for the patented invention, including a "transferring means" for recalibrating during dialysis. Gambro amended its claim to specify this transferring means, clarifying that the German patent does not allow for clean dialysis solution to flow to the measuring cell while preventing contaminated solution flow.
The German patent lacks any indication of a dialyzer design that allows clean dialysis solution to flow through both ducts of the measuring cell. The district court determined that Gambro misrepresented the German patent's teachings to the patent examiner, specifically claiming it did not disclose a method to transfer clean dialysis solution to the second flow sensor while preventing contaminated solution flow. However, the German '756 patent does disclose a mechanism to use a hose in place of the dialyzer, allowing clean dialysate to flow through both sensors and prevent contaminated flow. Gambro's assertion regarding the German patent's disclosures was therefore misleading.
The court observed that Gambro's statements were exaggerated but not grossly false. While it is true that the downstream measuring cell is not influenced solely by contaminated solution at all times, this claim is only accurate within the context of an ongoing dialysis process using a dialyzer, not the hose system. Importantly, the German reference lacks any disclosure on bypassing the dialyzer during dialysis or preventing spent solution flow through the downstream sensor in that context.
Regarding intent to deceive, which is necessary for a finding of inequitable conduct, the evidence presented is weak. Gambro had disclosed a corresponding British Patent (Repgreen '274) using a similar pre-dialysis hose procedure, demonstrating good faith. Additionally, the examiner had access to the German '756 patent and could properly assess Gambro's comments, further supporting the notion that Gambro's misstatements were not made with deceptive intent.
The district court placed excessive emphasis on Gambro's in-house patent counsel, Boberg's, fluency in German, suggesting this proficiency was used to deceive the patent examiner. However, the mere act of translating does not inherently demonstrate deceptive intent, as the examiner can request translations during the patent examination process (referencing MPEP 901.05(d)). Additionally, the court cited Gambro's failure to name Wittingham as the inventor as evidence of intent to deceive; however, since Gambro did not derive the invention from Wittingham, this point does not support a claim of deceptive intent. The court concluded that the allegations of inequitable conduct were primarily based on exaggerations in Gambro's responses and the language skills of its counsel, which do not establish the requisite intent for inequitable conduct. Consequently, the court determined that the district court abused its discretion in finding intent to deceive.
Regarding infringement, the district court found that Baxter's SPS 550 literally infringed claim 1 of Gambro's patent but ruled the patent invalid and unenforceable, leading to a judgment for Baxter. With the reversal of the invalidity and unenforceability findings, the court also reversed the judgment of infringement, confirming that Baxter infringes claim 1 of the Gambro '552 patent. Furthermore, Baxter failed to demonstrate that the case was exceptional or that the refusal to award costs constituted an abuse of discretion, leading the court to decline addressing those matters. Each party is to bear its own costs, and the court reversed the prior decisions. The German '756 patent was deemed material, as it was cited in the Gambro patent application and led to its rejection prior to Gambro's statements in response.
