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University of Pittsburgh of the Commonwealth System of Higher Education v. Varian Medical Systems

February 10, 2012

UNIVERSITY OF PITTSBURGH OF THE COMMONWEALTH SYSTEM OF HIGHER EDUCATION,
PLAINTIFF,
v.
VARIAN MEDICAL SYSTEMS, INC.,
DEFENDANT.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM OPINION ON PRETRIAL MOTIONS IN LIMINE

I. Introduction/Procedural History

This is an action in patent infringement. Plaintiff, University of Pittsburgh of the Commonwealth System of Higher Education (hereinafter "Pitt" or "plaintiff"), alleges that defendant, Varian Medical Systems, Inc. (hereinafter "Varian" or "defendant") has infringed its patent (U.S. Patent No. 5,727,554) (hereinafter "the patent," or "the '554 Patent"), by making and selling the RPM Respiratory Gating System (hereinafter "the RPM System"). Defendant filed an Answer and Counterclaim, seeking a declaration that the claims of the '554 Patent are invalid, and that the products of Varian do not infringe any of the asserted claims of the '554 Patent, and asserted numerous defenses including failure to state a claim, patent invalidity, estoppel, laches, and authorization and consent of the United States Government (doc. no. 355).

This lawsuit has a long and storied procedural history dating back to June 16, 2008,*fn1 when Pitt filed the instant action against Varian alleging that Varian's product, the RPM Gating System, which is radiotherapy equipment for the treatment of cancer, infringes Pitt's '554 Patent, which also concerns an application for radiation therapy. This lawsuit ("Varian II") is the second action which Pitt has commenced against Varian claiming an alleged infringement of the '554 patent. This Court dismissed the first action ("Varian I") for lack of standing. Univ. of Pittsburgh v. Varian Med. Sys. Inc., 2008 U.S. Dist. LEXIS 36098 (W.D. Pa. April 30, 2008). During the pendency of the appeal to the United States Court of Appeals for the Federal Circuit in Varian I, Pitt filed the instant action (Varian II). This Court dismissed Varian II on res judicata grounds. Univ. of Pittsburgh v. Varian Med. Sys. Inc., 630 F.Supp.2d 576 (W.D. Pa. 2008). Pitt then appealed this decision (doc. no. 120). While Varian II was on appeal, the Court of Appeals reversed this Court's judgment and remanded Varian I. Univ. of Pittsburgh v. Varian Med. Sys. Inc., 569 F.3d 1328 (Fed. Cir. 2009). The parties then reached an agreement pursuant to which the dismissal of Varian II would be vacated, the appeal in Varian II would be dismissed, and this case would proceeds on the merits (doc. no. 152). See also Univ. of Pittsburgh v. Varian Med. Sys. Inc., 2010 U.S. App. LEXIS 9542 (Fed. Cir. Apr. 27, 2010).

During the pendency of the appeals in Varian I and II, Varian filed an ex parte request with the United States Patent and Trademark Office ("PTO") requesting a reexamination of all of the "disputed" claims. The PTO reexamined the '554 Patent in light of the prior art, which Varian claimed rendered the disputed patent claims invalid. The PTO issued a reexamination certificate confirming the claims that were under reexamination, and added additional patent claims (Claims 23-28) that Pitt had submitted during the reexamination proceedings. At the conclusion of the reexamination proceedings, Claims 20-22 of the '554 Patent were deemed valid.

By Order of this Court of June 18, 2010 (doc. no. 182), pursuant to Fed. R. Civ. P. 53, this Court appointed the Honorable Donald E. Ziegler as Special Master in this action to conduct a claim construction hearing, and to set forth his findings in a Report and Recommendation, which the Court received on April 6, 2011. Univ. of Pittsburgh v. Varian Med. Sys. Inc., 2011 U.S. Dist. LEXIS 52078 (W.D. Pa. Apr. 6, 2011). After hearing the objections of the parties, and the motions to adopt/modify the Report and Recommendation, this Court issued a Memorandum Opinion and Order thereon. Univ. of Pittsburgh v. Varian Med. Sys. Inc., 2011 U.S. Dist. LEXIS 52059 (W.D. Pa. May 16, 2011); doc. no. 303. This Court affirmed and adopted the Report and Recommendation of the Special Master as the Opinion of the Court with only three (3) modifications (doc. no. 303).

After a status conference, the parties then filed cross-motions for summary judgment which were fully briefed on December 20, 2011. Pitt moved for partial summary judgment (as to liability) on the basis that: (1) Varian's RPM System infringes Claim 20 of the '554 Patent as a matter of law; (2) the RPM System infringes Claims 21, 25, 26 and 36 of the '554 Patent as a matter of law; and (3) the combination of the RPM System and Clinac and Trilogy Linear Accelerators infringes Claims 38 and 22 of the '554 Patent. Doc. No. 363.

Varian, on the other hand, moved for summary judgment on the grounds of invalidity for lack of enablement, lack of damages (Entire Market Value Rule allegedly precludes Pitt from obtaining royalties on sales of linear accelerators), non-infringement due to "incapacity" (which was subject of Pitt's previously granted Motion to Strike), non-infringement of the redesigned (or modified) RPM System, and willfulness. Doc. No. 364.

The Court granted Pitt's Motion for Partial Summary Judgment, finding infringement as a matter of law. The Court also denied Varian's Motion for Summary Judgment regarding invalidity, denied Varian's Motion for Summary Judgment regarding damages, found the redesigned RPM System infringes as a matter of law (literally and under the doctrine of equivalents), and struck Varian's belated defense of non-infringement due to "incapacity." Univ. of Pittsburgh v. Varian Med. Sys. Inc., 2011 U.S. Dist. LEXIS 149685 (W.D. Pa. Dec. 30, 2011).

The Court also found that the issue of willfulness should proceed before a jury, and thus the Court denied Varian's Motion for Summary Judgment as to the issue of willfulness. Id. On December 21, 2011, the same day this Court entered an Order granting Pitt's Motion for (Partial) Summary Judgment and denying Varian's Motion for Summary Judgment, this Court also issued a Pretrial Order setting a trial on the issue of willfulness (see Section II below) to commence on January 23, 2012.

The trial on willfulness concluded on January 26, 2011, with a verdict in favor of Pitt and against Varian on all issues before the jury. The second part of the trial (damages) is scheduled to commence on February 21, 2012 (doc. no. 452), and part three of the trial (invalidity) is scheduled to commence on April 16, 2012 (doc. no. 543). Currently pending before this Court are several motions in limine/pretrial motions (doc. nos. 560, 567, 554, 559, 563 and 565), all of which will be addressed in this Opinion.

II. One Trial in Three Parts

In accordance with Fed. R. Civ. P. 42(b), at the conclusion of the summary judgment proceedings, instead of scheduling one lengthy and cumbersome jury trial on all remaining issues before this Court (willfulness, damages, invalidity, etc.), the Court instead exercised its discretion to break the trial of this matter into three (3) discreet subparts, and ultimately decided the entire trial should be tried before the same jury. See Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1213 (Fed. Cir. 1987) (holding that "[A] separation [of issues in patent litigation] is precisely the type contemplated by Rule 42(b) and does not run afoul of the Seventh Amendment.") Consistent therewith, the Court set forth three separate Pretrial Orders (doc. nos. 426, 452 and 543), after consulting with the parties on the order or secession of the issues to be presented to the jury on several occasions. The Court selected the issue of willfulness as the first trial issue, primarily because defendant had taken the position in its summary judgment filings that the issue of willfulness was so clear and uncomplicated, and that defendant was entitled to summary judgment on this basis.

Although the Court did not ultimately agree with defendant's position on summary judgment, and ruled instead that numerous issues of fact were present such that a summary judgment finding in defendant's was not appropriate, the Court also believed, and continues to believe, that the issue of willfulness was an appropriate topic upon which to begin the jury trial in this case (and as previously discussed by this Court during conference, if anything, would have been an issue that would be favorable to Varian, given the heightened burden of proof) (see doc. no. 442 at 5-8, Transcript of January 4, 2012 Status Conference).

Much to the surprise of this Court, defendant appeared to change course from its prior position on summary judgment (that willfulness was an issue on which defendant had a strong argument on the merits), and on December 23, 2011, filed a motion for reconsideration and to stay the trial of this matter (doc. no. 428). Within that motion, defendant seemed to be taking the position that a trial on willfulness should come after any determination on invalidity. In an attempt to heed the advice of, and give deference to, the parties, at the January 13, 2012 Preliminary Pretrial Conference, the Court offered Varian the option to combine the portion of the trial dealing with invalidity defenses with the willfulness trial, but Varian responded "there would be no way to do it." In re Varian Med. Sys. Inc., 2012 U.S. App. LEXIS 1196, at *3 (Fed. Cir. Jan. 20, 2012).

Then, on January 15, 2012, Varian filed a motion for the Court to certify the issue for interlocutory appeal, and contended that "allowing a trial on willful infringement in a circumstance where a defendant is not allowed to meaningfully present invalidity evidence violates defendant's due process and Seventh Amendment rights." Doc. No. 468 at 6. Varian went on to state that an invalidity trial was necessary prior to a willfulness trial because it would help to avoid inconsistent verdicts, would clarify defendant's rights, and it would materially advance the ultimate termination of the litigation. On January 18, 2012, this Court entered an Order denying Varian's motion to certify an interlocutory appeal. Univ. of Pittsburgh v. Varian Med. Sys. Inc., 2012 U.S. Dist. LEXIS 5720 (W.D. Pa. Jan. 18, 2012).

Then, on the eve of trial, Varian filed a Petition for Writ of Mandamus before the United States Court of Appeals for the Federal Circuit, seeking a last minute stay of the first part of the trial (the willfulness subpart), and a ruling that defendant's invalidity defenses be tried to the jury prior to any determination on willfulness. However, as the Federal Circuit Court of Appeals aptly pointed out in its Order denying Mandamus, "the district court offered a trial on invalidity and Varian refused. . . ." In re Varian, 2012 U.S. App. LEXIS 1196, at *5. Despite the prior offers of this Court to combine the willfulness trial with the invalidity trial, perplexingly Varian declined this Court's attempt to accommodate Varian.

The jury trial on willfulness commenced on January 23, 2012, and the jury began (and concluded) deliberations on January 26, 2012. Upon the conclusion of the willfulness trial, and while the jury was still deliberating, during a status conference on January 26, 2012, the Court again sought the positions of the parties (while stating on the record that it would give the position of Varian due weight) about whether the parties (especially Varian) would prefer to try the invalidity defenses prior to the damages trial, currently scheduled for February 21, 2012.

While Pitt took the position that it would be amenable to trying the invalidity portion of the trial prior to damages, again to the surprise of this Court, Varian orally responded that it did not wish to conduct the invalidity portion of the trial prior to the damages portion of the trial (a position which would seem inconsistent with Varian's prior positions before this Court and the Court of Appeals for the Federal Circuit that invalidity determinations should have been put before the jury prior to willfulness/damages) (see doc. no. 573 at 3, Transcript of January 26, 2012 Status Conference).

Most recently, by Text Order of Court of February 3, 2012, the Court stated as follows:

Since the remaining portions of the jury trial (i.e. damages, set to begin 2/21/2012, and invalidity defenses, set to begin 4/16/2012) are the continuation of the prior willfulness portion of the trial, and are before the same jury, the evidence previously offered in the willfulness trial is part of the remaining portions of this trial. Therefore, evidence previously offered to the jury need not be re-addressed in the forthcoming damage and invalidity trials. See Fed. R. Civ. Pro. 1 (The rules "should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding.")

In sum, the Court believes that this case was better suited to be tried in three distinct subparts, and exercised its discretion under Fed. R. Civ. P. 42(b) to do so. In essence though, since the Court is employing the same jury for all three subparts, these subparts actually constitute one trial. By ordering the trial in this manner, the Court has built in lapses of time, whereby the attorneys, and the Court, are given more time to prepare each subpart, and the jury has been relieved of the responsibility of determining all of the issues in one trial, after having been presented with a rather unwieldy amount of evidence, and an extraordinarily long set of jury instructions, and verdict slip.

III. Defendant's Motion to Seat New Jury For Damages Trial (doc. no. 563)

Defendant now seeks to seat an entirely new jury and alleges that there is a danger of unfair prejudice because the jury will be unable to dispassionately decide the issue of compensatory damages without taking into consideration their prior findings of willful infringement.

As explained immediately hereinabove (Section II), although the trial of this matter has been split into three distinct subsections or subparts, the trial of this matter still only really constitutes one trial, with the same jury. The Court, within its discretion and after consulting with the parties on numerous occasions (as discussed above), split the trial of this case into three

(3) subparts in order to give the attorney's more time to prepare each segment of the trial, and to hopefully reduce the overall length of the trial time by narrowly tailoring the issues to be tried in each subpart. See Fed. R. Civ. P. 1; Weiss v. Regal Collections, 385 F.3d 337, 342 (3d Cir. 2004) (citing Canister Co. v. Leahy, 182 F.2d 510, 514 (3d Cir. 1950)) (holding that the Federal Rules of Civil Procedure are interdependent).

The Court has also chosen to keep the same jury so as to avoid the inefficiency of having to select three (3) separate juries, who would each be required to learn anew the technology at issue, not to mention the intricate details of patent law. Thus, to select two new juries (one for damages, and one for invalidity) for the remaining subparts of the trial, would result in great duplication and inefficiency.

Simply put, the Court ordered the trial in this manner as an exercise of its discretion. Fed. R. Civ. P. 42(b). Another equally permissible exercise of this Court's discretion could have been to try the entire case in one lengthy and exhausting trial, and ...


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