Motion for Injunction 1

8/14/2019 Motion for Injunction 1

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UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

LIFEWATCH SERVICES, INC., and

CARD GUARD SCIENTIFIC SURVIVAL,

LTD.,

Plaintiffs,

-vs- Case No. 6:09-cv-1909-Orl-31DAB

MEDICOMP, INC., and UNITED

THERAPEUTICS CORPORATION,

Defendants.

______________________________________

ORDER

This matter came before the Court upon consideration of the Motion for Preliminary

Injunction (the Motion) (Docs. 4 and 5) filed by Plaintiffs LifeWatch Services, Inc.

(LifeWatch) and Card Guard Scientific Survival, Ltd. (Card Guard) (collectively, Plaintiffs);

the response in opposition thereto (the Response) (Doc. 47) filed by Defendants Medicomp, Inc.

(Medicomp) and United Therapeutics Corporation (UTC) (collectively Defendants); and the

reply to the Response filed by Plaintiffs (Doc. 53). The Court held an evidentiary hearing and

heard oral argument on Thursday, January 28, 2010 (Doc. 62). Upon careful review of the parties

memoranda, the declarations and exhibits filed in support thereof (see Docs. 6, 38, 39, 40, 44-1

and 54) and the evidence presented at the hearing, Plaintiffs Motion will be denied.


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In addition to the 878 Patent, Card Guard owns U.S. Patent No. 5,730,143, which is also at1

issue in this case (see Doc. 1, 10). Plaintiffs Motion for Preliminary Injunction, however, pertainsonly to Defendants alleged infringement of the 878 Patent (Doc. 5 at 3 n.1).

Plaintiffs market their device as the LifeStar Ambulatory Cardiac Telemetry (ACT). See,2

e.g., LifeStar ACT Ambulatory Cardiac Telemetry, http://www.lifewatch.com/siteFiles/1/282

/5005.asp. For sake of clarity, the Court refers to Plaintiffs device as the LifeStar MCT and refersto Defendants allegedly infringing product as the SAVI MCT.

When Plaintiffs filed their Motion, the SAVI MCT was still pending approval by the Food3

and Drug Administration. At the hearing, however, Defendants counsel represented to the Court thatthe SAVI MCT had since been approved. Defendants nevertheless agreed not to release their device

until the Court ruled on Plaintiffs Motion.

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I. Statement of the Case

Card Guard is the owner of U.S. Patent No. 7,542,878 (the 878 Patent), which1

describes a method and mobile cardiovascular telemetry (MCT) device for monitoring a

patients heart (Doc. 5 at 3-4). Unlike Holter or event monitors, Plaintiffs LifeStar MCT monitor2

is attached to a cell phone containing software that processes cardiac data from the patient in real-

time. If certain disturbances, such as an arrhythmia, are detected, then the software wirelessly

transmits an electrocardiogram to one of LifeWatchs monitoring centers. The monitoring center

then analyzes the electrocardiogram and, if a serious problem is detected, contacts the patients

doctor (Doc. 5 at 3-4).

Plaintiffs brought suit on November 6, 2009, alleging, inter alia, that Defendants

CardioPAL SAVI Wireless Cardiac Event Monitor (the SAVI MCT) infringes on the 878

Patent (see generally Doc. 1). On November 10, 2009, Plaintiffs filed their instant Motion to

enjoin Defendants from putting the SAVI MCT on the market prior to trial (Doc. 5 at 1-2).3

The Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331.


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II. The Preliminary Injunction Standard in Patent Cases

A preliminary injunction is an extraordinary remedy that should only issue where the

intervention of a court of equity is essential to protect property rights against irremediable injuries.

Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-312 (1982) (citations and quotations omitted).

To obtain a preliminary injunction, the movant must establish that: (1) it is likely to succeed on the

merits; (2) it will likely suffer irreparable harm in the absence of the injunction; (3) the threatened

injury to the movant outweighs the harm an injunction may cause the nonmovant (i.e., the balance

of the equities tips in the movants favor); and (4) granting the injunction is not adverse to the

public interest. See, e.g., Winter v. Natural Res. Def. Council, Inc., 129 S.Ct. 365, 374 (2008)

(citations omitted); Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375-76 (Fed. Cir.

2009) (citations omitted); Oakley, Inc. v. Sunglass Hut Intl, 316 F.3d 1331, 1338-39 (Fed. Cir.

2003) (citations omitted).

These four factors, taken individually, are not dispositive in a patent case. Amazon.com,

Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001). Instead, the Court must

carefully weigh and measure each factor against the others and against the form and magnitude of

the relief requested. Id. However, the patentee must establish both of the first two factors, i.e.,

likelihood of success on the merits and irreparable harm. Amazon.com, Inc., 239 F.3d at 1350

(case law and logic both require that a [patentee] cannot be granted a preliminary injunction

unless it establishes both of the first two factors . . .) (emphasis added); Vehicular Techs. Corp. v.

Titan Wheel Intl, Inc., 141 F.3d 1084, 1088 (Fed. Cir. 1998);Reebok Intl Ltd. v. J. Baker, Inc.,

32 F.3d 1552, 1556 (Fed. Cir. 1994).


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Plaintiffs Motion does not explicitly contend that the SAVI MCT infringes on any particular4

claim in the 878 Patent (Doc. 5 at 9, noting that LifeWatch need only show that one of the claims

asserted in the underlying litigation is likely to be infringed). However, the Motion contains a chartthat includes a column heading labeled Claim 1 of U.S. Patent No. 7,542,878, which putativelyillustrates that Medicomps SAVI [MCT] is covered by the 878 Patent (Doc. 5 at 9). Other than

this chart, however, Plaintiffs make no reference in their Motion to any particular claim in the 878Patent. Accordingly, the Court has simply assumed as Defendants counsel also assumed at thehearing that Plaintiffs have sought preliminary injunctive relief only on Claim 1of the 878 Patent.

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At the preliminary injunction stage, the Court may rely on affidavits and hearsay materials

which would not be admissible evidence for a permanent injunction, if the evidence is appropriate

given the character and objectives of the injunctive proceeding. Levi Strauss & Co. v. Sunrise

Intl Trading, Inc., 51 F.3d 982, 985 (11th Cir. 1995) (citation and quotation omitted).

III. Analysis

A. Likelihood of Success Validity

The only claim of the 878 Patent at issue in Plaintiffs Motion is Claim 1, which4

discloses:

A personal health monitor comprising:

a physiological data input device operative to gather physiological data; and

a multi-purpose personal data accessory, whereas the multi-purpose data accessory is

adapted to execute health monitoring software such as to enable the multi-purposepersonal data accessory to receive the physiological data, process the physiological datato provide processed physiological data and control a long range transmission of the

processed physiological data to a remote entity.

(Doc. 1-2 at 19).

Ordinarily, a patentees likelihood of success at the preliminary injunction stage turns on

two assessments: the likelihood that the defendant has infringed (or will infringe) the patent; and


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Defendants note in their Response that the 878 Patent incorrectly identifies the filing date of5

the 136 Application as occurring in 1999 and that the correct filing date for the 136 Application was

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the likelihood that the patentee will prevail at trial as to any validity issues that are raised by the

defendant. Oakley, Inc., 316 F.3d at 1338-39; Titan Tire Corp., 566 F.3d at 1377. Here, however,

Defendants have conceded infringement for purposes of opposing Plaintiffs Motion (Doc. 37 at 2

n. 1). Accordingly, the Court need only assess Plaintiffs likelihood of success in light of the

validity issues raised by Defendants.

A patent is presumptively valid. 35 U.S.C. 282. However, if an alleged infringer assails

the patents validity at the preliminary injunction stage, then the patentee must respond with

countervailing evidence and argument demonstrating that the invalidity defense lacks substantial

merit. Titan Tire Corp., 566 F.3d at 1378-79. The Court must then determine, in light of the

existing record and after considering the evidence for and against validity, whether it is more likely

than not that the alleged infringer will be able to prove at trial that the patent is invalid. Id. at

1378-80. In sum, it is the movant who must persuade the Court that, despite the challenge to

validity, it is likely to succeed on the merits at trial on the validity issue. Id. at 1377.

1. Priority Date

As a threshold matter, the Court concludes, solely for purposes of this Order, that Claim 1

of the 878 Patent has a priority date of March 3, 1998. On its face, however, the 878 Patent

reflects only that it is a standard continuation of application No. 10/876,139, filed on Jun. 23,

2004, now abandoned, which is a continuation-in-part of application No. 10/086,633, filed on Mar.

4, 2002, now Pat. No. 7,222,054, which is a continuation-in-part of application No. 09/261,136,

filed on Mar. 3, 1999, now Pat. No. 6,366,871" (Doc. 1-2 at 2). Whether Claim 1 is entitled to a5


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March 3, 1998 (Doc. 37 at 7).

Notably, Reuven Nanikashvilli, the inventor of the 878 Patent, is not listed as an inventor on6

the 054 Patent. Plaintiffs contend that this is a scriveners error and represented at the hearing thatthey have filed a Certificate of Correction with the United States Patent and Trademark Office

(USPTO) to properly list Mr. Nanikashvilli as an inventor of the 054 Patent. As Defendantsobserved in their Response, however, before an application can enjoy an earlier priority date relatedto a prior application, the prior application must have, inter alia, been filed by the inventor or

inventors named in the previously filed application. 35 U.S.C. 120. Were the Court to strictlyconstrue 120 based on the current record, the priority date would be June 23, 2004, which wouldsubject the 878 Patent to at least another three highly relevant prior art references. Seeinfra note 7.

Assuming the 878 Patent has a priority date of June 23, 2004, Defendants contend that Claim7

1 is obvious or anticipated in light of J. Rodriguez et al., Capturing, Analysing, and Managing ECGSensor Data in Handheld Devices, in On the Move to Meaningful Internet Systems 2003: CoopIS,DOA, and ODBASE1133 (Meersman et al. eds., 2003) (ECG Article), PCT Patent Pub. WO

02/080762 (filed April 6, 2001) (Korman), or U.S. Patent No. 7,009,511 (filed Dec. 17, 2002)

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March 3, 1998 priority date, in light of the continuations-in-part of the other prior applications and

patents (including, in particular, the 633 Application and 054 Patent, for which the inventor of

the 878 Patent is not currently listed as an inventor ), is unclear on the present record. However,6

as discussed, infra, because the Court concludes that the prior art references extant on March 3,

1998 raise a substantial question as to the anticipation and obviousness of Claim 1, the Court need

not resolve the priority date at this time.

2. Prior Art and Inequitable Conduct

Defendants make three arguments regarding the validity of Claim 1. First, even assuming

that the 878 Patent has a priority date of March 3, 1998, Defendants contend that Claim 1 is

anticipated or obvious in light of U.S. Patent No. 5,876, 351 (filed April 10, 1997) (Rohde), U.S.

Patent No. 5,090,418 (filed Nov. 9, 1990) (Squires) or U.S. Patent No. 5,735,285 (filed June 4,

1996) (Albert). Defendants further contend that Claim 1 is obvious over Rohde in view of7


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(Mazar). Plaintiffs have not rebutted any of these references.

More specifically, Defendants argue that the attorney who prosecuted the 878 patent before8

the USPTO failed to disclose to the USPTO that a patent examiner considering Plaintiffs

International Patent Application under the Patent Cooperation Treaty (PCT) had rejected, as beinganticipated, substantially the same claims that were also currently pending before the USPTO,notwithstanding the fact that the same attorney prosecuted both applications and the application before

the USPTO remained pending after the PCT sent the rejection to the attorney (Doc. 37 at 11).

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Squires. Second, because the USPTO recently found that Rohde, Squires, and Albert raised

substantial new questions concerning the patentability of Claim 1 and entered its Order Granting

Request forEx Parte Reexamination (Doc. 55 at 6-14), Defendants argued at the hearing that,

while not dispositive, the USPTOs re-examination order casts significant doubt on the validity of

Claim 1. Third, Defendants contend that the 878 Patent has been rendered unenforceable due to

inequitable conduct.8

In their Reply, Plaintiffs respond that Rohde and Albert fail to disclose each and every

element of Claim 1 (including processing the physiological data and controlling a long range

transmission of the processed physiological data to a remote entity) (Doc. 53 at 2-3). Plaintiffs

also argue that the combination of Rohde and Squires would not have been obvious and that

Defendants have failed to proffer any expert testimony as to why a person skilled in the art would

find Claim 1 obvious (Doc. 53 at 3). Finally, with respect to inequitable conduct, Plaintiffs

contend that Defendants have, inter alia, failed to demonstrate a deliberate intent to deceive the

USPTO (Doc. 53 at 5).

Rohde discloses a portable and modular electrocardiogram (ECG) medical device that

uses a multipurpose computerized base unit (Doc. 40-18 at 22-23), e.g., a Nintendo Gameboy, to

monitor a patients ECG data (Doc. 40-18 at 16). Specifically, a patients ECG data are gathered


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Nintendo Gameboy cartridges, of course, contain software.9

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by four attached electrodes, digitized and then sent through a removal-cartridge that plugs into the

Gameboy (Doc. 40-18 at 4, 16 and 22-23). The digitized ECG data are then displayed on the

Gameboys screen as a waveform for real-time diagnosis (Doc. 40-18 at 15). Rohde teaches that

any portable handheld multipurpose computerized platform conforming to the claimed invention

is amenable, such as a personal digital assistant (PDA) (Doc. 40-18 at 22). Furthermore, Rohde

emphasizes the need for quick and effective medial diagnoses:

[P]ortable equipment found within the prior art such as holter [monitors] . . .

require additional hardware to permit viewing of the stored signal. On-line, real-time diagnosis cannot be made at a remote location with such prior art . . . without

telemetry to a base unit or transmission over a telephone line. The patient dataneeded to make diagnoses quickly and effectively cannot be accessed readily;therefore, the instrumentation fails to meet user needs in a real-time manner . . . .

The resulting diagnostic medical device addresses all of the shortcomings described above.It is a low-cost, mass-produced, portable hand-held device having features including an

integrated screen, user-friendly controls, and a serial port. . . .

Different diagnostic medical functionality is achieved by inserting different cartridges9

into the device. A particular diagnostic medical functionality is preferably self-containedwithin a given cartridge.

(Doc. 40-18 at 15-16) (emphasis added).

In addition to contemplating the use of various software for achieving different diagnostic

medical functionality, including diagnosis of arrhythmia (Doc. 40-18 at 16), and the use of

multipurpose PDAs other than a Gameboy, Rhode clearly discloses what may be fairly described


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QRS, QRS-complex, or Q-R-S describes a particular cardiac electrical position as10

recognized in an electrocardiogram. STEDMANS MEDICAL DICTIONARY 173820 (27th ed. 2000); see

also 1 ATTORNEYS MEDICAL DESKBOOK 5:19 (4th ed. 2008).

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as processing of physiological data, including: the use of software that runs QRS detection10

routines (Doc. 40-18 at 21).

Finally, with respect to controlling a long range transmission of processed physiological

data to a remote entity, Rohde discloses that:

Outputting of the signal via the serial port permits the acquired data to be sent viacable to a local laptop computer or smart modem. Outputting of the signal on the

speaker or through the headphones may enhance data visualization for the clinician;the speaker can also be used as an acoustic modem to transmit the signal from aremote location to a hospital via a normal phone connection.

(Doc. 40-18 at 17).

Squires discloses software (Doc. 40-20 at 17) containing complex algorithms (Doc. 53 at

5) that automatically screen digital ECG data to detect, inter alia, arrhythmia (Doc. 40-20 at 22).

Although Squires does not appear to disclose a device that simultaneously records and processes

ECG data from a patient, Squires clearly discloses a high-speed (if not real-time) means of

processing ECG data (Doc. 40-20 at 16).

Albert discloses a Heart Card-type of device that modulates a patients ECG data into

audio signals (Doc. 40-22 at 14) that can then be transferred by wireline or wireless transmission

(Doc. 40-22 at 2 and 14) to a remote hand-held computer device for patient monitoring (Doc.

40-22 at 13). As the data are received at the doctors office, the device demodulates the audio

signal and displays the patients ECG data in real-time. As an object for his invention, Albert


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The Court does not address Defendants inequitable conduct defense at this time but in11

passing would simply note that prosecuting counsels alleged failure to disclose the PCT rejection, in

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provides a hand-held computer with proprietary software that combines with a telephone system

to provide remote monitoring of a patients electrocardiogram (ECG) (Doc. 40-22 at 8).

Upon review, the Court finds that Defendants have raised a substantial question of

invalidity. Rohde clearly discloses a PDA (or, multi-purpose personal data accessory) that

gathers and processes physiological data (with specific reference to, inter alia, software containing

QRS detection algorithms), and is capable of controlling a long range transmission of

processed physiological data to a remote entity. Furthermore, even assuming that Rohde fails to

disclose the transmission ofprocessedphysiological data, Squires clearly discloses software that

processes and detects arrhythmia which, notwithstanding the processing power of a Nintendo

Gameboy (Doc. 53 at 5), could have readily been employed on another PDA as contemplated in

Rohde. Rohde therefore discloses and anticipates, on the current record, each and every element

of Claim 1 and Claim 1 is obvious in light of Rohde over Squires. Moreover, the USPTOs recent

nine-page order granting ex parte reexamination based on its finding that Rohde, Squires and

Albert raised substantial new questions of patentability (Doc. 55-1 at 9-11), provides additional

support for findings of anticipation and obviousness. While by no means dispositive, the Court

finds that the USPTOs order should at least relieve Defendants of the need to produce expert

testimony as to the foregoing prior art and shifts the burden back to Plaintiffs. On the present

record, however, Plaintiffs have failed to demonstrate that Defendants anticipation or obviousness

defenses substantially lack merit. Accordingly, the Court finds that Plaintiffs have failed to carry

their burden of establishing their likelihood of success on the merits.11


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conjunction with counsels failure to ensure that the correct inventors name was included on the 633Application (even after, as the Court learned at hearing, the USPTO timely notified him of the issueand the USPTOs correspondence sat in a file collecting dust for apparently years), have not gone

without notice.

Testimony and argument at the hearing revealed that participants in the MCT market generate

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very little, if any, revenue from the sale of their MCT devices. It is the sale of the monitoring service not the device that accounts for participants revenue. In fact, rather than sell its MCT device,

LifeWatch now leases (or simply gives away) its LifeStar MCT to doctors and hospitals.

The MCT market in the United States could see total revenues in the range of $240-$30013

million dollars in 2010.

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B. Irreparable Harm

Even assuming, arguendo, that Plaintiffs could establish their likelihood of success on the

merits, they have clearly failed to demonstrate irreparable harm. If Defendants enter the market

now and Plaintiffs prevail at trial, the damages attributable to Defendants infringement can be

assessed with reasonable precision and adequately compensated with monetary relief.

Based on the testimony of Defendants economic expert, John Jarosz, which went largely

unrebutted at the hearing, the relevant market for Plaintiffs LifeStar MCT is not the MCT market,

but the general market for cardiac arrhythmia monitoring. Indeed, Plaintiffs device and

monitoring service competes in an already crowded market that is still dominated, in significant12

part, by Holter and event monitors (and, to a lesser extent, loop monitors). According to Plaintiffs

own market research, MCT monitoring comprised only 10% of the total cardiac arrhythmia market

as of June 30, 2009 (Doc. 38-9 at 3). While the MCT sub-market has shown signs of growth,13


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Medicomp, for instance, estimates that about 85% of its sales of the SAVI MCT and14

monitoring services will be to existing Medicomp customers.

CardioNet is the largest provider of MCT monitoring services and reported third quarter

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revenues of $33.3 million in 2009. CardioNet, Inc., Quarterly Report (Form 10-Q), at 5 (Nov. 6.2009), available at http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6590344&

format=PDF. Plaintiffs have yet to sue CardioNet, but on September 25, 2009, Plaintiffs suedBraemar, Inc., eCardio Diagnostics, LLC and Mednet Healthcare Technologies, Inc. on substantiallythe same patent infringement claims asserted here. See LifeWatch Servs. Inc. et al. v. Braemar, Inc.

et al., Case No. 1:09-cv-6001 (E.D. Ill. 2009) (Doc. 1). Plaintiffs have not, however, soughtpreliminary injunctive relief in the Illinois litigation.

Li feWatch Repor t s S t rong Resul t s for 3rd Quar ter 2009,1 6

http://www.lifewatch.com/siteFiles/1/545/6919.asp. Defendants counsel further represented at the

hearing that LifeWatchs 2009 annual revenues were on the order of $130 million.

Medicomp is a subsidiary of a $100 million-plus parent corporation. Plaintiffs did not17

adduce any evidence, however, tending to show that Medicomps parent has significant control overits subsidiary or that, more importantly, the parent could (or even would) attempt to aggressivelyexpand Medicomps MCT monitoring products beyond the projections provided to the Court by

Medicomps COO.

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that growth has come in large part from existing clients who have simply decided to trade in their

old monitors for newer MCT technology.14

In addition to the fact that the market for cardiac arrhythmia monitoring is already crowded

by comparable devices, there are currently seven or eight providers competing in the MCT sub-

market. Plaintiffs, with 107 sales representatives, are the second largest provider and captured15

about 35% of the MCT sub-market with third quarter revenues of $32.48 million in 2009. In16

contrast, Medicomps COO, Dr. Daniel Balda, testified that Defendants are projecting total first-

year revenues of about $4.57 million on their SAVI MCT device and monitoring services and will

have about nine sales representatives. Even assuming that Defendants projections are17

conservative and that Defendants will double their sales force and projected revenues, Defendants


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Some insurance companies, however, have developed objective criteria that must be met18

before a patient is eligible for reimbursement of MCT monitoring services. See, e.g., Aetna, Clinical

Policy Bulletin: Cardiac Event Monitors, at http://www.aetna.com/cpb/medical/data/1_99/0073.html.Others have found, however, that MCT monitoring is generally not medically necessary. Medicare,however, will reimburse for MCT monitoring and is presently the largest payor (it has recently

reduced its reimbursement rate, however).

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would have approximately 3% to 4% of the MCT sub-market towards the middle or end of 2010.

Accordingly, Plaintiffs likely loss of market share which must be apportioned among its seven or

eight competitors would likely be very small (i.e., less than 1% to 2%).

Finally, the price of MCT monitoring services is determined by third-party payors such

as Medicare and private insurance companies. These entities do not distinguish on the basis of

brand, quality or any other subjective theory of value. They simply pay LifeWatch or one its18

competitors a fixed reimbursement amount for whatever MCT device and monitoring service that

the participating provider prescribed to the patient. For example, if LifeWatch is paid $300 per

patient for MCT monitoring services, then Medicomp will also receive $300 per patient. In short,

no participant can gain a competitive advantage on price or quality, and participants (including

new entrants such as Medicomp) are forced to compete largely if not entirely on building close

relationships with the participating providers. Due to the pricing mechanism and adverse selection

present in this market, there will be no price erosion as a result of Medicomps entry into the MCT

monitoring market. It is therefore apparent that LifeWatchs damages between now and trial are

simply a matter of quantifying lost profits or a reasonable royalty.

Accordingly, Plaintiffs have failed to establish that they will likely suffer irreparable harm

in the absence of a preliminary injunction.


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C. The Remaining Factors

Inasmuch as Plaintiffs have failed to establish their likelihood of success on the merits and

irreparable harm, the balance of the equities and the public interest are of no moment.

Amazon.com, Inc., 239 F.3d at 1350; Vehicular Techs. Corp., 141 F.3d at 1088;Reebok Intl Ltd.,

32 F.3d at 1556. The Court does note, however, that these two factors also weigh against the entry

of a preliminary injunction.

IV. Conclusion

Based on the foregoing, it is ORDERED that Plaintiffs, LifeWatch Services, Inc. and

Card Guard Scientific Survival, Ltd., Motion for Preliminary Injunction (Doc. 4) is DENIED.

DONE and ORDERED in Chambers, Orlando, Florida on February 10, 2010.

Copies furnished to:

Counsel of RecordUnrepresented Party

Documents

Motion for Injunction 1