NIAZI LICENSING CORPORATION, Plaintiff-Appellant v. ST. JUDE MEDICAL S.C., INC., Defendant-Appellee
Case: 21-1864
United States Court of Appeals for the Federal Circuit
Decided: April 11, 2022
United States Court of Appeals for the Federal Circuit
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NIAZI LICENSING CORPORATION, Plaintiff-Appellant
v.
ST. JUDE MEDICAL S.C., INC., Defendant-Appellee
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2021-1864
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Appeal from the United States District Court for the District of Minnesota in No. 0:17-cv-05096-WMW-BRT, Judge Wilhelmina M. Wright.
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Decided: April 11, 2022
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MICHAEL T. GRIGGS, Boyle Fredrickson, S.C., Milwaukee, WI, argued for plaintiff-appellant. Also represented by ADAM BROOKMAN, MARRIAM LIN, TIMOTHY NEWHOLM.
KALPESH SHAH, Benesch Friedlander Coplan & Aronoff, Chicago, IL, argued for defendant-appellee. Also represented by SAMUEL RUGGIO.
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Before TARANTO, BRYSON, and STOLL, Circuit Judges.
NIAZI LICENSING CORPORATION v. ST. JUDE MEDICAL S.C., INC.
This appeal asks us to resolve numerous issues: validity and infringement of various claims of U.S. Patent No. 6,638,268; several evidentiary rulings; and the appropriateness of the U.S. District Court for the District of Minnesota’s entry of sanctions against Appellant Niazi Licensing Corporation. First, Niazi appeals the district court’s determination that all but one of the asserted claims of the ’268 patent are invalid as indefinite. We conclude that, when read in light of the intrinsic evidence, a person of ordinary skill in the art would understand the scope of the claims with reasonable certainty. Accordingly, we reverse that determination and remand for the district court to resolve whether Appellee St. Jude Medical S.C., Inc. (St. Jude) has infringed those claims and whether its remaining invalidity defenses are applicable. Second, Niazi appeals the district court’s summary judgment of no induced infringement of the only asserted claim it did not hold indefinite. We agree with the district court that Niazi failed to prove direct infringement—a necessary element of Niazi’s inducement claim—and therefore affirm that judgment. Third, Niazi appeals the district court’s sanction excluding portions of Niazi’s technical expert
BACKGROUND
I
Congestive heart failure is a common medical condition leading to hospital admission in the United States. Heart failure is frequently a result of the left and right sides of the heart contracting out of sync. There are different
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methods available for treating heart failure, such as medication or a heart transplant. Another method is resynchronization therapy, which uses electrical leads (called pacing leads) to help keep the two sides of the heart contracting with regularity and in sync.
According to the ’268 patent, at the time of the invention, physicians accomplished resynchronization therapy by inserting a catheter into the coronary sinus1 and its branch veins (i.e., cannulating) to place pacing leads on the hearts of patients with heart failure. ’268 patent col. 1 ll. 29–35. Because the target coronary branch veins arise at acute angles to the coronary sinus and because heart failure can cause changes in the heart’s anatomy (including, for instance, the location, shape, and size of the coronary sinus and the branch veins), the specification explains that it can be “difficult to pass a lead” into the coronary sinus and its branch veins using a catheter. Id. at col. 1 l. 61–col. 2 l. 11. Recognizing this, the inventor of the ’268 patent developed a double catheter—i.e., a catheter comprising an outer and inner catheter—for cannulating the coronary sinus “without significant manipulation,” id. Abstract, which he claimed in the ’268 patent.
Claim 1 (an apparatus claim) and claim 11 (a method claim) are representative of the claims on appeal and recite:
1. A double catheter, comprising:
an outer, resilient catheter having shape memory and a hook shaped distal end configured for cannulation of the coronary sinus with at least one curved bend;
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an inner, pliable catheter slidably disposed in the outer catheter and of greater length than the outer catheter so that a distal end portion of the inner catheter can be extended or retracted from a distal end opening of the outer catheter to vary the overall length of the double catheter, the inner catheter having an internal lumen configured for the introduction of contrast media and a pacing lead into the coronary sinus; and
a mechanism operable from the proximal end of the outer catheter for changing the curvature of the distal end of the outer catheter.
. . .
11. A method for placing an electrical lead in a lateral branch of a coronary sinus vein using a double catheter including an outer catheter and an inner catheter slidably disposed inside the outer catheter, comprising:
[1] inserting the catheter into the coronary sinus;
[3] advancing the inner catheter out of a front end opening of the outer catheter along the guide wire into the branch vein;
[4] inserting the lead through the outer and inner catheters to a target location in the branch vein; and
[5] withdrawing the catheter leaving the lead in the branch vein.
Id. at col. 6 l. 62–col. 7 l. 9, col. 7 l. 63–col. 8 l. 9 (emphases added to disputed limitations).
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II
Niazi sued St. Jude for patent infringement. Niazi accused combinations of St. Jude’s products, including the CPS Aim™ SL Slittable Inner Catheter (Subselector/Cannulator), of directly infringing the ’268 patent claims, and it further accused St. Jude of inducing infringement of the ’268 patent claims.
The district court construed numerous terms in claims 1, 10–11, 13–15, 18–19, and 23–27 (the “asserted claims”) that are relevant to this appeal. First, the district court determined that the terms “resilient” and “pliable” in independent claims 1, 13, 18, and 24 of the ’268 patent rendered those claims and their dependents (claims 10, 14–15, 19, 23, and 25–27) indefinite. See Niazi Licensing Corp. v. Bos. Sci. Corp., Case Nos. 17-cv-5094 (WMW/BRT), 17-cv-5096 (WMW/BRT), 2019 WL 5304922, at *5–7 (D. Minn. Oct. 21, 2019) (Claim Construction Op.). The parties dispute this determination on appeal.
The court then considered independent claim 11, the only asserted claim that does not recite the terms “resilient” or “pliable.” The parties first disputed whether the term “the catheter” in claim 11 rendered that claim indefinite based on a lack of antecedent basis in the claim. The court determined that the claim was not indefinite, construing “the catheter” to mean “the double catheter.” Id. at *8. This construction, while relevant, is not disputed on appeal.
The parties’ second dispute as to claim 11 concerned whether the steps recited in claim 11 must be performed in the order recited in the claim, or whether mere performance of all steps (in any order) was sufficient to meet the claim. The district court determined that “logic requires the steps of [c]laim 11 to be performed in the order listed” and accordingly concluded that claim 11 “is infringed only when the steps are performed in the order listed.” Id. This
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second construction is not meaningfully disputed on appeal.
Following fact discovery, the parties exchanged expert reports concerning infringement and validity of claim 11, as well as the amount of damages for any alleged infringement of that claim. St. Jude moved to strike portions of Niazi’s technical expert (Dr. Martin Burke) report and its damages expert (Brad Carlson) report for improperly relying on facts that were not disclosed during fact discovery. Regarding Dr. Burke’s report, St. Jude argued that Niazi did not disclose facts relating to alleged direct infringement—specifically, that Dr. Burke himself had directly infringed claim 11 using St. Jude’s CPS catheter—which was relevant to Niazi’s theory of induced infringement for this claim. As to Mr. Carlson’s report, St. Jude argued that his reliance on several third-party license agreements to support his damages calculation was improper because those agreements had not been produced during fact discovery.
The magistrate judge agreed with St. Jude and, as a sanction under Federal Rule of Civil Procedure 37, excluded portions of both reports and further precluded Dr. Burke from testifying as a fact witness. See J.A. 140–54. Niazi objected to
Not long thereafter, the district court considered the parties’ cross-motions to exclude certain expert testimony as unreliable under Federal Rule of Evidence 702 and Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Relevant to this appeal, St. Jude moved to exclude Mr. Carlson’s damages opinion, arguing that he failed to properly apportion damages to the value attributable to
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claim 11’s method. The district court agreed, reasoning that Mr. Carlson’s opinion failed to “apportion” between infringing and noninfringing uses and improperly included leads in the royalty base. Niazi Licensing Corp. v. St. Jude Med. S.C., Inc., Case No. 17-cv-5096 (WMW/BRT), 2020 WL 5512507, at *9–11 (Sept. 14, 2020) (Daubert Op.). The district court accordingly held Mr. Carlson’s opinion inadmissible. Id.
The parties thereafter cross-moved for summary judgment on numerous issues, but only one of those—the issue of induced infringement of claim 11—is relevant here. Niazi submitted a declaration from Dr. Burke in support of its summary judgment motion. In St. Jude’s view, Dr. Burke’s declaration recounted various factual assertions that the magistrate judge previously ordered excluded. After the parties were unable to resolve the dispute regarding the scope of Dr. Burke’s declaration, St. Jude moved to enforce the magistrate judge’s exclusion order and sought monetary sanctions. The magistrate judge agreed with St. Jude, ordering all “facts disclosed by Dr. Burke that were not disclosed by the fact discovery deadline be stricken” from his declaration. J.A. 220 (Hr’g Tr. 63:15–19). The magistrate judge also awarded St. Jude attorney fees and costs associated with its motion to enforce the exclusion order. J.A. 220–21 (Hr’g Tr. 63:20–64:3). Niazi objected to this decision, but the district court judge affirmed the magistrate judge’s exclusion order and award of sanctions. Niazi Licensing Corp. v. St. Jude Med. S.C., Inc., Case No. 17-cv-5096 (WMW/BRT), 2020 WL 3638771, at *4 (D. Minn. July 6, 2020) (Sanctions Op. II).
The district court then addressed the merits of the induced infringement issue. As a result of the various exclusion orders (and a ruling on inadmissibility of certain evidence that is not challenged on appeal), Niazi’s induced infringement case rested on St. Jude’s instructions for use (IFUs) for its CPS catheter. The district court determined
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that Niazi “failed to present evidence to support either” direct infringement or that St. Jude possessed specific intent to encourage another’s infringement, both of which are necessary to impose liability for induced infringement. Niazi Licensing Corp. v. St. Jude Med. S.C., Inc., Case No. 17-cv-5096 (WMW/BRT), 2021 WL 1111074, at *8 (D. Minn. Mar. 23, 2021) (Summary Judgment Op.).
As to direct infringement, the district court determined that the IFUs required the performance of the claim steps in an order different than that required by the claims and, therefore, that doctors performing the steps in the IFUs did not directly infringe claim 11 as a matter of law. Id. at *4–7. The district court also determined that there was no material dispute of fact as to the intent element. The court explained that, not only did St. Jude’s IFUs “substantively differ” from the claimed method, but many of the steps
Niazi appeals. We have jurisdiction under
DISCUSSION
On appeal, Niazi challenges: (1) the district court’s determination that claims 1, 10, 13–15, 18–19, and 23–27 are invalid as indefinite; (2) the
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I
We begin with Niazi’s assertion that the district court erred in holding that the terms “resilient” and “pliable” render claims 1, 10, 13–15, 18–19, and 23–27 invalid as indefinite. For the reasons below, we agree with Niazi, and accordingly, we reverse.
A
Definiteness is a statutory requirement for patentability. Under
As the Supreme Court explained in Nautilus, language has “inherent limitations.” 572 U.S. at 909. The reasonable certainty standard exists to strike a “delicate balance,” “afford[ing] clear notice of what is claimed” while recognizing such inherent
’268 patent col. 8 ll. 1–2. Step 3 follows step 2 and recites “advancing the inner catheter out of a front end opening of the outer catheter along the guide wire into the branch vein.” Id. at
Turning to St. Jude’s IFUs—the key evidence Niazi relies on for direct infringement—we agree with the district court that St. Jude’s IFUs recite the steps required by claim 11 in an order opposite to that required by claim 11 (as construed). No reasonable juror could find otherwise.
judgment conclusion of no triable issue of the required direct infringement of steps 2 and 3 of claim 11.
Niazi nonetheless argues that the district court erred in construing claim 11 to exclude a method of (1) advancing the inner catheter into the branch vein; (2) advancing the guide wire into the branch vein; and then (3) advancing the inner catheter further into the branch vein along the guidewire. We disagree.
This argument is contrary to the claim language defining the act covered by step 3. In that step, claim 11 requires “advancing the inner catheter along the guide wire into the branch vein.” ’268 patent col. 8 ll. 3–5 (emphasis added). The district court logically concluded, and we agree, that “the inner catheter can be advanced ‘along the guide wire into the branch vein’ only if the guide wire has itself already been advanced through the outer catheter.” Claim Construction Op., 2019 WL 5304922, at *8. Under Niazi’s proposed construction, the inner catheter would already be in the branch vein prior to inserting the guidewire. If the inner catheter is already in the branch vein (as Niazi proposes), it cannot be advanced “into” the branch vein as required by the claims. Like the district court, we think it is clear from the claim language that initial entry into the branch vein, not just further movement once inside the branch vein, must take place in the sequence specified. But there is no evidence of such a sequence here. Accordingly, we adopt the district court’s construction with respect to steps 2 and 3 and affirm the summary judgment of no induced infringement.
III
We now consider Niazi’s challenges to the district court’s order excluding portions of Dr. Burke’s and Mr. Carlson’s expert reports under
order. We review a district court’s decision to sanction a litigant under
We start by addressing Niazi’s challenges to the exclusion of portions of its experts’ reports as a sanction under
Mr. Carlson, for his part, relied on several license agreements he had identified in third-party databases in support of his opinion on a reasonable royalty. St. Jude specifically requested “[d]ocuments that [Niazi] may rely on in any way to support its claim for damages” during fact discovery. J.A. 147–48 (Hr’g Tr. 102:21–103:2). But again, these license agreements were not produced during fact discovery, depriving St. Jude of the opportunity to conduct meaningful discovery with respect to these agreements.
Thus, when St. Jude moved to strike these facts from Dr. Burke’s and Mr. Carlson’s reports under
On appeal, Niazi argues that the district court abused its discretion in its application of the four-factor test for exclusion of previously undisclosed evidence set forth in Citizens Bank of Batesville, Arkansas v. Ford Motor Co., 16 F.3d 965, 966–67 (8th Cir. 1994). Appellant’s Br. 41–42. But the district court did not rest its analysis on these four factors. Instead, the district court considered whether Niazi’s failure to disclose these facts or identify Dr. Burke as a fact witness was “substantially justified or harmless” under
This takes us to the district court’s entry of monetary sanctions against Niazi for violating the exclusion order. For the reasons below, we conclude that the district court did not abuse its discretion in awarding St. Jude costs and attorney fees in connection with its motion to strike, and we therefore affirm.
Niazi submitted a declaration from Dr. Burke in support of its motion for summary judgment of induced infringement. That declaration included numerous factual assertions related to Dr. Burke’s personal experience using St. Jude’s CPS catheter, as well as his recounting of conversations he had with electrophysiologists. St. Jude moved to strike these factual assertions from Dr. Burke’s declaration because he had not been disclosed as a fact witness. Nor were these facts disclosed during fact discovery, and their inclusion in his declaration directly contravened the court’s prior exclusion order. The magistrate judge agreed, explaining that the exclusion order was clear: “Dr. Burke was precluded from offering testimony of fact in this case because he was not timely disclosed as a fact witness.” J.A. 219 (Hr’g Tr. 62:7–11). As a sanction for violating the order, the magistrate judge awarded St. Jude attorney fees and costs associated with bringing
(explaining that it was not error for district court to consider the “balancing test we previously found helpful to evaluate the admissibility of evidence a party did not properly disclose”))—Niazi has not mounted a meaningful challenge on appeal. Application of these factors is within the sound discretion of the district court. Because Niazi has not identified any legal error or clear factual error, we will not reweigh these factors on appeal. See Citizens Bank, 16 F.3d at 967 (declining “to second-guess the [d]istrict [c]ourt’s exercise of discretion” in applying these four factors).
the motion to strike. On review of Niazi’s objections to this decision, the district court determined that the imposition of sanctions against Niazi for “willful violation” of the magistrate judge’s “clear[] and unambiguous[]” order was neither clearly erroneous nor contrary to law, and it accordingly agreed with the magistrate judge’s award. Sanctions Op. II, 2020 WL 3638771, at *4.
Here, the sanctions the court imposed were specifically keyed to St. Jude’s expenses in moving to strike the already-excluded evidence from consideration at summary judgment. We see no abuse of discretion in the district court’s decision to award monetary sanctions.
We are not persuaded by Niazi’s arguments to the contrary. First, Niazi argues that the magistrate judge’s initial exclusion order only precluded Dr. Burke from testifying that he had directly infringed claim 11. Appellant’s Br. 49–51. Niazi contends that it cannot be
sanctioned for Dr. Burke’s inclusion of other factual assertions in his declaration because the magistrate judge’s order was not clear and unambiguous. The magistrate judge, in
Second, Niazi argues that monetary sanctions are not justified in light of the magistrate judge’s finding that Niazi did not act in bad faith. According to Niazi, under Eighth Circuit precedent, “[a] bad faith finding is specifically required in order to assess attorney[] fees.” Appellant’s Br. 48 (second alteration added) (citing Stevenson v. Union Pac. R.R. Co., 354 F.3d 739, 751 (8th Cir. 2004)). But Stevenson involved attorney fees awarded under the court’s inherent power to impose sanctions, not
violation of the exclusion order willful, see J.A. 219–20 (Hr’g Tr. 62:17–63:3), and the district court agreed, see Sanctions Op. II, 2020 WL 3638771, at *3. We see no abuse of discretion in the court’s decision to award sanctions in the form of costs and attorney fees under
IV
Niazi’s final argument on appeal challenges the district court’s order excluding as unreliable Mr. Carlson’s expert report on damages for infringement of claim 11. We review a district court’s decision to exclude expert testimony for an abuse of discretion. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 142, 152–53 (1999).
Mr. Carlson concluded that a royalty rate of 14.6% “is the minimum reasonable royalty” rate for infringement of claim 11, directed to a procedure for implanting an electrical lead into a lateral branch of a coronary sinus vein using a double catheter. J.A. 728. He further opined that certain qualitative factors “would support a higher royalty rate.” Id. As for the royalty base, he opined that the royalty base for infringement of claim 11 includes an outer catheter, an inner catheter, a guide wire, and a lead, because: (1) the method claims recite these elements; and (2) this court “has recognized that in some instances, a royalty based upon actual use of a method – as opposed to a royalty applied to the sale of a device that practices the method – is impractical in view of real-world considerations.” J.A. 727 (citing Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1334 (Fed. Cir. 2009)).
Mr. Carlson did not explain why a royalty based on the alleged use of the method would be impractical in this case. Instead, Mr. Carlson stated merely that because claim 11 requires an outer catheter, an
that the royalty base should include all sales of these components. The district court excluded Mr. Carlson’s expert opinion as legally insufficient because Mr. Carlson failed to “apportion” between infringing and noninfringing uses and because he could not properly include leads in the royalty base. Daubert Op., 2020 WL 5512507, at *10–11. We affirm the district court’s exclusion.5
Mr. Carlson did not even attempt to explain why a royalty based on use of the method would be impractical in this case. He did not attempt to value any efficiencies or patient health advantages gained by practicing the patented method compared to non-patented methods or explain why this could not be done. Nor did he identify any other evidence relating to the value of the claimed method relative to other methods or explain why such a valuation would not be possible.
In addition, Mr. Carlson included in his damages calculations sales of all of St. Jude’s outer catheters, inner catheters, guide wires, and leads, even though it was undisputed that not all of those sold devices had been used to practice the claimed method. Appellant’s Br. 56 (noting that claim 11 is the “predominant” method). Whether one refers to this as failure to “apportion” as the parties and district court did or as failing to limit damages to a reasonable approximation of actual infringing uses of the claimed method, Mr. Carlson’s failure to account for noninfringing uses of the sold devices was legally improper. In this regard, we disagree with Niazi’s carefully worded assertion on appeal that apportionment does not apply to method claims. Damages should be apportioned to separate out noninfringing uses, and patentees cannot recover damages
based on sales of products with the mere capability to practice the claimed method. Rather, where the only asserted claim is a method claim, the damages base should be limited to products that were actually used to perform the claimed method. Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d 1348, 1358–59 (Fed. Cir. 2009).
It is true that “we have never laid down any rigid requirement that damages in all circumstances be limited to specific instances of infringement proven with direct evidence.” Lucent, 580 F.3d at 1334. But Mr. Carlson did not address or rely on any evidence—such as testimony of electrophysiologists, other anecdotal testimony, or survey evidence—that estimated the amount or percentage of sold devices that were actually used to infringe the claimed method. Niazi asserts in its appeal brief that the claimed method was the “predominant method” and that, therefore, because damages do not have to be more than a reasonable approximation, it was reasonable to include all sales. First, the appendix page that Niazi cites for this “predominant method” assertion, J.A. 716, says nothing about frequency of use and does not support its assertion. Second, even assuming that the record supported the notion that the claimed method was the “predominant” method, predominant is a broad word that merely means “most frequent” or “common.” Such a broad, unsupported, and conclusory assertion does not reliably establish how often the patented method was used by doctors to allow a reasonable approximation of the damages base.
We are also not persuaded by Niazi’s argument that Mr. Carlson properly included leads in his calculation of the royalty
when selecting the minimum royalty rate of 14.6%. And the explanation provided in Niazi’s brief—that Mr. Carlson selected a range of rates from 6.0% to 16.63%, Appellant’s Reply Br. 30—is contradicted by the report itself. Mr. Carlson did not provide a range of reasonable royalty rates; rather, he concluded that a royalty rate of 14.6% “is the minimum reasonable royalty [rate] under [his] quantitative analysis.” J.A. 728 (emphasis added); see also J.A. 726 (opining that a “reasonable royalty rate is 14.60%, and that [Niazi] and St. Jude would have reasonably entered into a license at that rate”); J.A. 729 (indicating 14.6% is the reasonable royalty rate).
For at least these reasons, we see no abuse of discretion by the district court in excluding Mr. Carlson’s conclusory and legally insufficient analysis.
CONCLUSION
We have considered the parties’ remaining arguments and find them unpersuasive. For the foregoing reasons, we reverse the district court’s determination that claims 1, 10, 13–15, 18–19, and 23–27 are invalid as indefinite and remand for further proceedings. As to claim 11, we affirm the district court’s summary judgment of no induced infringement. Finally, we affirm the district court’s exclusion of portions of Dr. Burke’s and Mr. Carlson’s expert reports for failure to disclose predicate facts during fact discovery; its award of monetary sanctions for violating that exclusion order; and its exclusion of Mr. Carlson’s damages expert report as unreliable.
AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED
COSTS
No costs.