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Best Medical International, Inc v. Accuray

August 19, 2011

BEST MEDICAL INTERNATIONAL, INC., PLAINTIFF,
v.
ACCURAY, INC., A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: McVerry, J.

MEMORANDUM OPINION AND ORDER OF COURT

Pending before the Court are two more motions to compel filed by Defendant Accuray, Inc. ("Accuray") to seek compliance by Plaintiff Best Medical International, Inc. ("BMI") with its disclosure obligations under the Local Patent Rules: DEFENDANTS' MOTION TO ENFORCE THE COURT'S JUNE 30, 2011 ORDER COMPELLING THE PRODUCTION OF INITIAL PATENT DISCLOSURES PURSUANT TO LOCAL PATENT RULE 3.1 (Document No. 70) with exhibits and brief in support; and DEFENDANTS' MOTION TO COMPEL INFRINGEMENT CONTENTIONS PURSUANT TO LOCAL PATENT RULE 3.2 (Document No. 77), with exhibits and brief in support. BMI has filed responses in opposition to each motion and a Declaration from attorney Brit Groom (Document Nos. 74, 76, 80), Accuray has filed a reply brief (Document No. 79), and BMI has filed a sur-reply brief (Document No. 83). Thus, the motions have been fully briefed and are ripe for disposition.

Factual and Procedural Background

This is a patent infringement case which BMI initiated on August 6, 2010 -- over one year ago.*fn1 BMI's 13-count Amended Complaint contended that Accuray had developed a new cancer treatment system, the CyberKnife VSI System, which allegedly infringes three of BMI's patents. By Memorandum Opinion dated March 9, 2011, the Court dismissed all but Counts 1 and 9 with prejudice and dismissed the former BMI employees named as Defendants by BMI. Subsequently, BMI moved to dismiss Count 1 with prejudice. Thus, only Count 9 (alleging direct infringement of the '283 Patent) remains.*fn2

By initiating a patent case in this Court, BMI has necessarily been on notice for over a year that the Local Rules of Practice for Patent Cases before the United States District Court for the Western District of Pennsylvania ("LPR") are applicable, including the disclosure requirements set forth in LPR 3.1 and 3.2. In particular, LPR 3.1 requires the parties to exchange initial disclosures "not later than fourteen (14) days before the Initial Scheduling Conference." LPR 3.1 specifically details the information that must be produced or made available for inspection by a party claiming patent infringement such as BMI. Similarly, LPR 3.2 requires BMI to serve on all parties a "Disclosure of Asserted Claims and Infringement Contentions" within thirty (30) days after the Initial Scheduling Conference.

In June 2011, after having obtaining an extension of time from the Court, BMI made a very limited (61 page)*fn3 Initial Disclosure to Accuray. Accuray's counsel twice sent correspondence to BMI to point out and attempt to remedy the alleged deficiencies in BMI's Initial Disclosures, to no avail. On June 15, 2011 Accuray filed its first motion to compel in this Court.

In the motion to compel, Accuray contended that BMI's Initial Disclosures omitted key documents, including the file history, invention disclosures, inventor notebooks, design and conception drawings and sales agreements. In response, BMI acknowledged its disclosure obligations and explained that it was continuing to search for the requested documents. In particular, BMI represented that it had ordered the PTO file for the '283 Patent on June 17, 2011 (after the LPR deadline had expired); that it sent the BMI file for the '283 Patent to Accuray on June 20, 2011 (after Accuray's first motion to compel had been filed); that it had been unable to locate the inventors' notebooks and other historical documents; and that it was aware of its continuing disclosure obligations. BMI did not dispute the substance of the motion to compel or the propriety of Accuray's position. Nor did BMI indicate when such information would be provided (other than that the PTO file would be available within 25 days of the request.) At no time did BMI notify the Court of any difficulties in securing documents, nor did it seek leave of court for an additional extension of time for good cause shown. In its reply brief, Accuray correctly pointed out that BMI's response confirmed that BMI had failed to comply with LPR 3.1. For example, BMI did not order the PTO file and did not produce its internal patent file until after the deadline established by the Local Patent Rules had expired and Accuray's motion to compel had been filed.

On June 30, 2011, the Court entered an Order (the "June 30 Order") which granted Accuray's motion to compel and commented that BMI's belated and apparently lackadaisical approach to its disclosure obligations under the Local Patent Rules was unacceptable. The Court ordered BMI to "fully comply with its initial disclosure obligations on or before July 7, 2011" and to "strictly comply with all of its obligations under the Local Patent Rules throughout the remainder of this case." Unfortunately, problems have persisted.

Motion to Enforce the June 30 Order

On July 6, 2011, apparently in response to the June 30 Order, BMI produced two CDs containing "CORVUS Manuals" and various iterations of source code for the CORVUS system (a precursor system). BMI did not specify which documents corresponded to each category of information as required by LPR 3.1, nor did BMI certify that this production fulfilled its obligation to make Initial Disclosures. On July 12, 2011, Accuray's counsel wrote a letter which identified numerous shortcomings of the July 6 production and requested a supplemental response or a certification that no other responsive documents exist. On July 14, 2011, BMI attorney Groom agreed that additional documents should exist regarding "earlier Peacock research and development" (another precursor system) and documents evidencing sales or offers to sell the claimed invention prior to the date of the patent application (i.e., October 24, 1996). Groom also disclosed that "earlier this week" a number of file cabinets had been discovered which contained documents dating back to the inception of NOMOS.*fn4 Groom promised that examination of these documents would be completed by July 15, 2011, at which time he would be able to "state unequivocally" whether responsive documents existed. Groom further represented that relevant documents would be scanned over the weekend and sent to Accuray electronically beginning on Monday afternoon, July 18, 2011. BMI did not explain why these documents had not been found previously, did not inform the Court of these developments or seek an extension of time.

By the close of business on July 18, 2011, BMI had neither stated unequivocally whether responsive documents existed; produced any of these documents; nor otherwise contacted Accuray. On July 19, 2011, after attempting to contact BMI, Accuray filed the pending motion to enforce the Court's June 30 Order. BMI, in its response, accuses Accuray of pronouncing July 18 as a "magical due date." However, it was BMI who promised to make its production by that date. The actual due date(s) for BMI's production*fn5 had long since expired.

On July 21, 2011 -- after Accuray's second motion to compel was filed -- BMI made a supplemental disclosure. BMI represents that all information requested by Accuray has now been provided. Accuray contends that this representation is "categorically untrue" and continues to believe that BMI has failed to comply with its disclosure obligations, as it has still not produced "contracts, purchase orders, invoices, advertisements, marketing materials, offer letters, beta site testing agreements and third party or joint development agreements" evidencing sales or offers to sell the claimed invention prior to the patent filing date. BMI attorney Groom agreed that such documents should exist. Nor has the PTO file been provided -- although that may be beyond BMI's control. Accuray contends that BMI should be precluded from using information and/or documents subject to disclosure under LPR 3.1 but not yet produced by BMI and that BMI be held in contempt of court.

Motion to Compel Infringement Contentions

Another dispute involving BMI's duty to make Infringement Contentions pursuant to LPR 3.2 has also been brewing. BMI served its initial Infringement Contentions on June 13, 2011, the date set forth in the Case Management Order. Accuray promptly notified BMI that, in its view, the Infringement Contentions were deficient in numerous respects and requested supplementation. On July 7, 2011, counsel for BMI acknowledged that Accuray "may be at a disadvantage in providing its Disclosure of Non-Infringement and/or Invalidity Contentions without more specificity from BMI as to where the alleged infringement lies," and offered to extend all of the case management deadlines by at least sixty (60) days. Accuray opposes this delay. On July 14, 2011, BMI served an amended infringement chart. On July 18, 2011, Accuray notified BMI that the amendment failed to cure the alleged deficiencies it had identified in the original chart -- for example, by failing to identify the accused device by specific parts or model numbers; by failing to identify where each element of the claims is found in the accused device; by failing to disclose whether or not it is asserting infringement under the doctrine of equivalents; and as to the "means plus function" elements governed by 35 U.S.C. ยง 112(6), by failing to describe the claimed function or to identify the structure, act or material in the accused instrumentality that performs the ...


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