Federal Circuit Penalizes ICU Medical, Inc. and Counsel Paul Hastings for Frivolous Patent Infringement Suit
By Jamie Wicks – Edited by Joshua Gruenspecht
ICU Medical, Inc. v. Alaris Medical Systems, Inc.
Federal Circuit, March 13, 2009, No. 2008-1077
On March 13th, the Federal Circuit unanimously affirmed the United States District Court for the Central District of California, which had granted summary judgment in favor of Alaris in a suit in which ICU claimed infringement of its patents for spiked medical valves used in intravenous (IV) fluid transmission. Judge Kimberly A. Moore, writing for the Federal Circuit, granted summary judgment of non-infringement against claims by ICU that the Alaris devices were “spiked” according to the terms of the patents, granted summary judgment of invalidity against claims by ICU that its patents covered spikeless and tubed devices, and awarded $4.6 million in attorney fees to Alaris and Rule 11 sanctions against ICU.
The Patent Prospector summarizes the Federal Circuit’s opinion. Dewipat details the section of the opinion regarding the spiked medical valve claims. Law.com highlights the Rule 11 sanctions, quoting patent attorney Neil Smith, who says that sanctions are “really unusual” in patent cases.
With regards to the spiked valve claims, the Federal Circuit held that the district court properly interpreted the word “spike” to mean “an elongated structure having a pointed tip for piercing the seal, which may be sharp or slightly rounded” as Alaris argued, and not to mean “an upward projection” as ICU argued. Rejecting ICU’s broader definition, the Federal Circuit held that the district court properly granted summary judgment of non-infringement. The Federal Circuit reasoned that a person having ordinary skill in the art would interpret “spike” in the narrower respect after reading the complete patent. Importantly, it reasoned that the patent’s specification strongly supported this definition, and held that patent specifications should generally carry significant weight in claim construction.
With regards to the spikeless and tube valve claims, the Federal Circuit held that the claims are invalid because they lack written descriptions in the specification, which is required by U.S.C. § 112, ¶ 1. The court reasoned that a person having ordinary skill in the art would not know ICU invented spikeless or tube valves after reading the specification, since the specification only detailed spiked valves.
The case is particularly notable for the Federal Circuit’s agreement with the district court that the claims as constructed were frivolous enough to merit sanctions and payment of court costs. Judge Moore held that the district court appropriately awarded attorney fees in favor of Alaris under the Federal Circuit’s legal standard for awarding such fees, articulated in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005): Attorney fee awards are justified “if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” The district court reasoned that ICU’s broad construction of the term “spike” was “objectively baseless and brought in bad faith.” ICU’s inventor and internal personnel each indicated that they believed Alaris’s valve technology did not include spikes. In addition, the district court detailed numerous misrepresentations made by ICU. Overall, the Federal Circuit determined that the district court made no clear error, utilized the correct legal standard and adequately explained its basis for awarding attorney fees.
For similar reasons, the Federal Circuit held that the district court appropriately sanctioned ICU and its counsel Paul Hastings under Rule 11 of the Federal Rules of Civil Procedure. The district court found that ICU and counsel were well aware of the dubiousness of their definition of the term “spike” and frivolously amended the complaint to include the spiked claims, an action which merited sanctions. ICU argued that the district court utilized the same justification for imposing attorney fees and sanctions, and thus stated that its arguments for both issues “applie[d] equally.” The Federal Circuit reasoned that since it did not accept ICU’s arguments regarding the attorney fees issue, it would not accept its argument regarding the sanctions issue. The court also accepted the lower court’s choice to award no Rule 11 monetary sanctions given the sizeable penalty paid in attorney’s fees.