Advanced Cardiovascular Systems, Inc. v. Medtronic Vascular, Inc. (485 F. Supp. 2d 538, 2007)

OPINION

SUE L. ROBINSON, Chief Judge.

I. INTRODUCTION

A bench trial was held on defendants’ defense and counterclaim that U.S. Patent Nos. 5,514,154 (“the '154 patent”), 6,066,-167 (“the '167 patent”), 6,066,168 (“the '168 patent”), and 6,432,133 (“the '133 patent”) (collectively, the “Lau patents”) are unenforceable as a result of inequitable conduct. The issue was fully briefed post-trial. (D.1.683, 686, 687) The court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1338(a) and 2201(a). Having considered the documentary evidence and testimony, the court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(1).

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. Procedural History

1. The lawsuit originally was filed on February 18, 1998 by the predecessor in interest to Medtronic Vascular Inc. and Medtronic USA, Inc. (collectively, “Med-tronic”), claiming infringement by Advanced Cardiovascular Systems, Inc. and Guidant Sales Corporation (collectively, “ACS”) of certain of its patents (“the Bo-neau patents”). (D.I.l) ACS countersued for infringement of the Lau patents. Because judgment was entered in favor of ACS in connection with the Boneau patents (D.I.546), the parties were “realigned” in order to proceed with the jury trial on the Lau patents. (D.I.585)

2. A jury trial was held between February 7 and 18, 2005. (D.1.631-39) At the conclusion of trial, the jury returned a verdict that the Lau patents were valid and infringed by Medtronic. The jury found that each of Medtronic’s accused stents infringe each asserted claim of the Lau patents. Specifically, the jury found Medtronic’s MicroStent II, GFX, GFX2, GFX2.5, S540, S660, S670 and BeStent2 stents infringe claims 1 and 4 of the '154 patent, Medtronic’s BeStent2 stent infringes claim 12 of the '154 patent, and that Medtronic’s MicroStent II, GFX, GFX2, GFX2.5, S540, S660, S670, S7, Driver, MicroDriver, and Racer stents infringe claims 5 and 8 of the '167 patent. (D.I. 629) Additionally, the jury found that all of the aforementioned stents infringe claims 1, 3, and 11 of the '168 patent (with the exception of the MicroStent II, which infringes only claims 1 and 3), and infringe claims 1, 2, and 3 of the '133 patent. (Id.) The jury found that the BeStent2 stent also infringes claim 9 of the '133 patent. (Id.)

3. The court held a bench trial regarding Medtronic’s inequitable conduct defense and counterclaim on June 7 and 8, 2005. (D.I.670, 671)

B. The Patents In Suit and the Technology at Issue

4. The Lau patents generally relate to endovascular support devices, or stents, that are used in the treatment of cardiovascular disease. The '154 patent was originally filed on July 28, 1994 as U.S. Application No. 08/281,790 (“the 790 application”). The 790 application was a eontin-uation-in-part application, and claimed priority to subject matter filed in an earlier, abandoned application filed on October 28, 1991. Nine divisional applications were subsequently filed, including the applications which issued as the '133, '167, and '168 patents. Each divisional application claimed priority through the chain of applications preceding it to the '790 application and, in turn, the October 28, 1991 filing date. The Lau patents share a common specification.

5. Each of the Lau patents generally claim a longitudinally flexible stent comprising a plurality of independently expandable cylindrical elements aligned on a common axis. The '154 patent requires that adjacent cylindrical elements are interconnected with connecting elements. Independent claim 1 (and dependant claims 2-11) also requires that the stent has a smooth outer surface prior to expansion but forms a plurality of outwardly projecting edges upon expansion. Independent claims 12 and 23 (and dependant claims 13-22) generally require that the stent retains its length without shortening when the stent is expanded.

6. Independent claims 1 and 12 of the '133 patent require that the cylindrical elements have a length less than their diameter upon expansion. Claim 1 requires a length of less than 2.55 mm for the cylindrical element upon expansion, and claim 12 generally requires that the stent pattern has a plurality of undulating portions extending circumferentially about the longitudinal axis. Independent claim 15 also incorporates this plurality of undulating portions, and further requires that these undulating portions have open and closed ends, where at least one closed end is wider than an open end.

7. Claim 1 of the '167 patent requires that each cylindrically shaped element is independently expandable, and has an undulating pattern whereby the cylindrical elements are out of phase with adjacent cylindrical elements. Independent claim 5 additionally requires that the cylindrically shaped elements form a longitudinally flexible stent.

8. Claim 1 of the '168 patent requires that each cylindrical element is connected by at least one weld connection to an adjacent cylindrical element. Independent claim 12 additionally requires that the cylindrical elements are arranged out of phase, and that adjacent peaks of the cylindrical elements are connected by weld connections.

9. ACS’s stents are balloon expandable devices that are formed from a metal tube. (D.I. 427 at 4) These stents are comprised of multiple circular elements that are connected together by connecting elements, (Id.) ACS sells its stents under the Multil-ink tradename.

C. Prior Art References

10. Defendants assert that the following constitutes material information withheld from the United States Patent and Trademark Office (“USPTO”): (1) U.S. Patent Application No. 07/398,180 (“the Boneau application”), which later issued as U.S. Patent No. 5,292,331 to Boneau (“Bo-neau '331”); and (2) “the Boneau prior art,” a term which defendants use to describe, inter alia, “clinical data showing implantation of Boneau rings in a crown to crown configuration, and the connection of such rings at their crowns.” (D.I. 683 at 5-6, 24, 27-28)

11. Michael Boneau (“Boneau”) invented and bench tested the Boneau stent in 1988. (D.I. 683 at 5; D.I. 636 at 1213:12-1214:3) Also in 1988, Boneau began working with Dr. Simon Stertzer (“Stertzer”), a pioneer interventional cardiologist who was the first doctor to implant a stent in a human patient in the United States. (D.I. 670 at 35:7-36:22) Stertzer implanted multiple Boneau stents in a single artery (id. at 41:16-18), in a manner which left only a small gap between the crowns of the stents (a “crown to crown” configuration) (id. at 41:19-43:7). According to Medtronic, “[b]y August 1988, based upon the disclosure of the Boneau application and the work done by [Boneau and Stertzer], the scope of the Boneau prior art included the use of multiple Boneau stents, each with a length less than its diameter, and the crown to crown alignment of stents.” (D.I. 683 at 6) “The Boneau prior art” also encompasses Bo-neau’s idea of connecting multiple Boneau stents with sutures. (Id. at 6-7) Boneau testified that he first conceived of connecting Boneau stents with sutures in March 1990, though he never tested this idea clinically, and did not file a patent application at that time. (D.I. 670 at 136:22-138:18)

12. The Boneau application was filed on August 24,1989, and issued on March 8, 1994. Prior to publication, Boneau provided at least one copy of the Boneau application to ACS in an attempt to obtain a license for his stent technology. (D.I. 686 at 5) In January 1990 (and again in March 1990), ACS asked its outside patent counsel, Edward Lynch (“Lynch”), to review the Boneau application. (Id.; D.I. 671 at 532:7-12, 534:1-8) Boneau and Stertzer gave a formal presentation on the Boneau technology to ACS in late August or early September 1990. (D.I. 686 at 5)

13. The Boneau application generally discloses an expandable stent which has a zig-zag structure with a number of peaks (or turns) at each end. The specification states that

[t]he minimum length of the stent, or the distance between the upper turns 12 and lower turns 14, is determined in large measure by the size of the vessel into which the stent will be implanted. The stent 10 will preferably be of sufficient length as to maintain its axial orientation within the vessel without shifting under the hydraulics of blood flow (or other fluid flow in different types of vessels), while also being long enough to extend across at least a significant portion of the affected area. At the same time, the stent should be short enough as to not introduce unnecessarily large amounts of material as might cause undue thrombosis. Typical cardiovascular vessels into which the stent 10 might be implanted range from 1.5 millimeters to five millimeters in diameter, and corresponding stents may range from one millimeter to two centimeters in length. However, in most instances the stent will range in length between 3.5 millimeters and 6 millimeters. Preliminary testing of stents having a length between 3.5 millimeters and 4.5 millimeters has been performed with good success outside the United States, and testing on animals is also ongoing.

(Boneau '331, col. 5 II. 14-36) The specification further states that

[o]ne of the advantages of the stent 10 is that multiple stents may be used in the treatment of a single lesion. Thus, for example, in the event the affected area shown in FIGS. 3 and 4 was longer than the stent 10, additional stents 10 could be positioned elsewhere along the lesion to prevent restenosis ... Due to the conformability of the stent 10, not only can varying lesion lengths be treated, but curved vessels and “S” shaped vessels may also be treated by the present invention. In instances where it is known in advance that multiple stents will be the preferred method of treatment, a plurality of such stents may be positioned along a single balloon catheter for simultaneous delivery to the affected area.

(Boneau '331, col. 6 II. 27-41)

14. Six figures are provided, which show a stent according to the invention, both in an expanded and unexpanded state, compressed into a balloon catheter for delivery, and expanded within a sectioned portion of a lesion after removal of the catheter. The use of multiple stents is not pictured.

D.Parties Charged with Inequitable Conduct

15. Defendants assert that the following individuals were aware of Boneau '331 but intentionally failed to disclose it to the USPTO: (1) Lilip Lau (“Lau”), coinventor of the Lau patents; (2) Elizabeth McDer-mott, Director of Research and Development for ACS, and to whom Lau reported during his stent development work; (3) Michael Orth (“Orth”), Business Manager of ACS’s stent business unit; (4) Bruce Barclay, ACS’s in-house patent counsel; (4) Lynch, who prosecuted the Lau patents until October 1992; and (5) Tony Nagy, ACS’s outside patent counsel, who prosecuted the Lau patents from October 1992 onward. (D.I. 683 at 17-20)

E.Inequitable Conduct Standard

16. Applicants for patents and their legal representatives have a duty of candor, good faith, and honesty in their dealings with the USPTO. See Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed.Cir.1995); 37 C.F.R. § 1.56(a). This duty is predicated on the fact that “a patent is an exception to the general rule against monopolies and to the right of access to a free and open market.” Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 816, 65 S.Ct. 993, 89 L.Ed. 1381 (1945). The duty of candor, good faith, and honesty includes the duty to submit truthful information and the duty to disclose to the USPTO information known to patent applicants or their attorneys which is material to the examination of a patent application. See Elk Corp. of Dallas v. GAF Bldg. Materials Corp., 168 F.3d 28, 30 (Fed.Cir.1999). A breach of this duty constitutes inequitable conduct. Molins, 48 F.3d at 1178.

17. If it is established that a patent applicant engaged in inequitable conduct with respect to one claim, then the entire patent application is rendered unenforceable. See Kingsdown Med. Consultants v. Hollister Inc., 863 F.2d 867, 877 (Fed.Cir.1988). Additionally, “[a] breach of the duty of candor early in the prosecution may render unenforceable all claims which eventually issue from the same or a related application.” Fox Indus., Inc. v. Structural Pres. Sys., Inc., 922 F.2d 801, 803-04 (Fed.Cir.1990).

18. A finding of inequitable conduct is “an equitable determination” and, therefore, “is committed to the discretion of the trial court.” Monon Corp. v. Stoughton Trailers, Inc., 239 F.3d 1253, 1261 (Fed.Cir.2001).

19. 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 the pat-entability of the invention; (2) the applicant had knowledge of the existence and materiality of the information; and (3) the applicant intended to deceive the USPTO. See Molins, 48 F.3d at 1178.

20. The Federal Circuit has recently stated that, prior to 1992, two standards for materiality were in effect: (1) the materiality standard set forth in the present version of USPTO Rule 56, 37 C.F.R. § 1.56(b) (2004); and (2) the previous version of that rule. See Digital Control Inc. v. Charles Machine Works, 437 F.3d 1309, 1314 (Fed.Cir.2006). The Court in Digital Control held that the new 1992 iteration of Rule 56 was not intended to replace the broader old Rule 56, and “merely provides an additional test of materiality.” Id. at 1316. Therefore, “if a misstatement or omission is material under the new Rule 56 standard, it is material. Similarly, if a misstatement or omission is material under the ‘reasonable examiner’ standard or under the older three tests, it is also material.” Impax Labs., Inc. v. Aventis Pharm. Inc., 468 F.3d 1366, 1374 (Fed.Cir.2006) (quoting Digital Control, 437 F.3d at 1316).

21. Rule 56 currently states:

Information is material to patentability when it is not cumulative to information already of record or being made of record in the application, and

(1) It establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim; or

(2) It refutes, or is inconsistent with, a position the applicant takes in:

(i) Opposing an argument of unpatenta-bility relied on by the Office, or

(ii) Asserting an argument of patentability.

37 C.F.R. § 1.56(b) (2006). Further,

[a] prima facie case of unpatentability is established when the information compels a conclusion that a claim is unpat-entable under the preponderance of evidence, burden-of-proof standard, giving each term in the claim its broadest reasonable construction consistent with the specification, and before any consideration is given to evidence which may be submitted in an attempt to establish a contrary conclusion of patentability.

Id.

22. The inquiry presented under the prior “reasonable examiner” standard is whether “a reasonable examiner would have considered such [omitted] prior art important in deciding whether to allow the patent application.” Impax Labs., 468 F.3d at 1374 (quoting Digital Control, 437 F.3d at 1314).

23. The applicable “older three tests” referenced in Digital Control include: (1) the objective “but-for” standard, in other words, “where the misrepresentation was so material that the patent should not have issued;” (2) the subjective “but-for” test, or “where the misrepresentation actually caused the examiner to approve the patent application when he would not otherwise have done so”; and (3) the “but it may have” standard, “where the misrepresentation may have influenced the patent examiner in the course of prosecution.” See Impax Labs., 468 F.3d at 1374 n. 5 (quoting Digital Control, 437 F.3d at 1315).

24. After determining that the applicant withheld material information, the court must decide whether the applicant acted with the requisite level of intent to mislead the USPTO. See Baxter Int’l. Inc. v. McGaw Inc., 149 F.3d 1321, 1327 (Fed.Cir.1998). “Intent to deceive cannot be inferred solely from the fact that information was not disclosed; there must be a factual basis for finding a deceptive intent.” Hebert 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. A “smoking gun” is not required in order to establish an intent to deceive. See Merck, 873 F.2d at 1422. An inference of intent, nevertheless, is warranted where a patent applicant knew or should have known that the withheld information would be material to the USPTO’s consideration of the patent application. See Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed.Cir.1997).

25. Because a patent is presumed valid under 35 U.S.C. § 282, inequitable conduct requires proof by clear and convincing evidence. See Manville Sales Corp. v. Paramount Sys., Inc., 917 F.2d 544, 551 (Fed.Cir.1990). Both the distinct elements of materiality and an intent to deceive must each be shown by clear and convincing evidence. See Hoffmann-La Roche, Inc. v. Promega Corp., 323 F.3d 1354, 1359 (Fed.Cir.2003).

26. A determination of inequitable conduct follows a two-step analysis. The withholding of information must first meet threshold findings of materiality and intent. See Molins, 48 F.3d at 1178.

27. If the court finds that these thresholds have been met, the trial court must weigh its findings of materiality and intent to determine whether the balance tips in favor of a conclusion of inequitable conduct. See N.V. Akzo v. E.I. Du Pont de Nemours, 810 F.2d 1148, 1153 (Fed.Cir.1987). 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.

F. The Boneau Application-Materiality

28. The Boneau application, which issued as Boneau '331 in March 1994, was not disclosed prior to the issuance of the '154 patent in May 1996. The Boneau patent was first disclosed to the USPTO on September 2, 1997 in connection with a later divisional Lau patent application claiming priority to the '154 patent. (DTX-911, IDS at paper 9) Each of the divisional applications that issued as the '133, '167, and '168 patents claimed priority to the '097 application. ACS was not required to disclose Boneau '331 in those patent applications, since Boneau '331 was disclosed in the prosecution of the '097 application. The Manual of Patent Examination Procedure (“MPEP”) states that an applicant need not resubmit references cited in a parent application because the examiner is required to consider those references when examining a continuing application (such as a divisional application). MPEP § 609.02 (Revision 5, Aug. 2006). “In view of MPEP § 609, it can not be inequitable conduct for an applicant not to resubmit, in the divisional application, the information that was cited or submitted in the parent application.” ATD Corp. v. Lydall, Inc., 159 F.3d 534, 537 (Fed.Cir.1998). Indeed, Boneau '331 appears on the face of each of the '168, '133, and '167 patents. Therefore, for the aforementioned reasons, the '168, '133, and '167 patents are not unenforceable due to inequitable conduct based upon a failure to disclose the Boneau application/Boneau '331.

29. The 790 application was filed on July 28, 1994, and claimed priority to an application filed October 28, 1991. The court, therefore, applies the pre-1992 “reasonable examiner” standard for materiality, noting that the Federal Circuit has specifically stated that this standard was not superceded by Rule 56. See Digital Control, 437 F.3d at 1316 (applying “reasonable examiner” standard in reviewing inequitable conduct during prosecution of a patent filed in 1996 claiming priority to application filed in 1991): see also Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1380 (Fed.Cir.2001) (applying “reasonable examiner” standard in reviewing omission during prosecution of an application filed in 1993).

30. The court has previously construed the term “cylindrical element” as it appears in the Lau claims to mean “a radially expandable segment of a stent having a longitudinal length less than its diameter [“L