No. 2009-1557

United States Court of Appeals for the Federal Circuit

________________

HAEMONETICS CORP.,

Plaintiff-Appellee,

v.

BAXTER HEALTHCARE CORP. and FENWAL INC.,

Defendants-Appellants.

Appeal From The United States District Court For The District of Massachusetts

In Case No. 05-CV-12572, Judge Nathaniel M. Gorton

BRIEF OF DEFENDANTS-APPELLANTS

JOHN J. NORMILE JONES DAY 222 East 41st Street New York, NY 10017 (212) 326-3939

GREGORY A. CASTANIAS LUKE A. SOBOTA PAUL R. GUGLIUZZA JONES DAY 51 Louisiana Avenue, N.W. Washington, D.C. 20001 (202) 879-3939

Attorneys for Defendants-Appellants

i

CERTIFICATE OF INTEREST

Counsel for defendants-appellants hereby certifies the following:

1. The full name of every party represented by me is:

Baxter Healthcare Corp.; Fenwal, Inc.

2. The name of the real party in interest (if the party named in the caption is not the real party in interest) represented by me is:

The real parties in interest are named in the caption. 3. All parent corporations and any publicly held companies that own 10 percent of more of the stock of the party or amicus curiae represented by me are:

Baxter Healthcare Corp. is a wholly owned subsidiary of Baxter International Inc.

Fenwal, Inc. is a wholly owned subsidiary of Fenwal Holdings, Inc. 4. The name of all law firms and the partners or associates that appeared for the party or amicus now represented by me in the trial court or agency or are appearing in this Court are:

Jones Day: John J. Normile; Gregory A. Castanias; Luke A. Sobota; Paul R. Gugliuzza

Skadden Arps Slate Meagher & Flom LLP: Daniel A. DeVito; Douglas R. Nemec; Edward V. Filardi; James L. Leonard, Jr.; Justin J. Daniels; P. Anthony Sammi; Rachel Blitzer; Stacey Cohen; Thomas J. Dougherty

For Baxter only: Sidley Austin LLP: David T. Pritikin; Jon M. Spanbauer; Marlee Jansen; Scott B. Familant; William H. Baumgartner

For Baxter only: Foley Hoag LLP: Donald R. Ware; Nathan C. Henderson

For Fenwal only: Nutter McClennen & Fish LLP: Daniel J. Gleason; Timothy D. Johnston; Heather B. Repicky

ii

TABLE OF CONTENTS

Page

CERTIFICATE OF INTEREST.................................................................................i

TABLE OF AUTHORITIES .....................................................................................v

TABLE OF ABBREVIATIONS ..............................................................................ix

STATEMENT OF RELATED CASES....................................................................xi

JURISDICTIONAL STATEMENT ..........................................................................1

STATEMENT OF ISSUES .......................................................................................1

STATEMENT OF THE CASE..................................................................................2

A. Preliminary Statement ...........................................................................2

B. Procedural History.................................................................................4

STATEMENT OF FACTS ........................................................................................5

A. Blood and Blood Donation....................................................................5

B. Centrifugation, the ’983 Patent, and the Prior Art ................................7

C. Prosecution History of the ’983 Patent ...............................................12

D. The ’983 Patent as Issued....................................................................13

E. Development of the ALYX® System ..................................................14

F. The ALYX® System............................................................................16

SUMMARY OF ARGUMENT ...............................................................................17

STANDARDS OF REVIEW...................................................................................20

ARGUMENT ...........................................................................................................21

I. CLAIM 16 OF THE ’983 PATENT IS INVALID FOR OBVIOUSNESS AND FOR ANTICIPATION BY PRIOR INVENTION .................................................................................................21

iii

A. Because Claim 16 Merely Combines and Reduces the Size of Known Elements to Reach a Predictable Result, It Is Invalid for Obviousness.........................................................................................21

1. Every Element of Claim 16 Was Known in the Prior Art ........22

2. Claim 16 Combines Known Elements to Yield a Predictable Result .....................................................................26

B. Because Baxter Conceived of Every Element of Claim 16 Before Rochat and Reduced a Prototype to Practice Eight Months Before Rochat Filed His Patent Application, Claim 16 Is Invalid for Anticipation by Prior Invention ....................................35

1. Undisputed Evidence Shows That Baxter Conceived Every Element of Claim 16 by April 8, 1998, Prior to the Earliest Conception Date Asserted by Haemonetics ................36

2. Baxter Exercised Reasonable Diligence to Reduce the ALYX® System to Practice and, in Fact, Did Reduce the ALYX® System to Practice Eight Months Before Rochat Filed His Patent Application.....................................................44

II. UNDER A PROPER CONSTRUCTION OF “CENTRIFUGAL UNIT,” THE ALYX® SYSTEM DOES NOT INFRINGE CLAIM 16; UNDER THE DISTRICT COURT’S CONSTRUCTION, THE CLAIM IS INVALID FOR INDEFINITENESS ..........................................46

A. The District Court Erred by Construing “Centrifugal Unit” to Have Two Different Meanings in the Same Claim.............................46

B. As Interpreted by the District Court, Claim 16 Is Invalid for Indefiniteness.......................................................................................53

III. BECAUSE HAEMONETICS SOUGHT DAMAGES FOR FUTURE INFRINGEMENT, HAEMONETICS IS NOT ENTITLED TO AN INJUNCTION AGAINST THE ACCUSED DEVICE OR A PROVISIONAL ROYALTY ........................................................................59

CONCLUSION........................................................................................................63

iv

ADDENDUM

Amended Judgment (Aug. 19, 2009) ...........................................................A1

Claim Construction Order (Aug. 16, 2007)..................................................A2

Order Denying Fenwal’s Motion for JMOL of Prior Invention (Mar. 18, 2009) ...........................................................................................A23

Order Denying Fenwal’s Motion for JMOL of Noninfringement (Mar. 18, 2009) ...........................................................................................A24

Order Denying Fenwal’s Motion for JMOL of Obviousness (Mar. 18, 2009) ...........................................................................................A25

Order Granting Haemonetics’ Motion for a Permanent Injunction and Provisional Royalty and Haemonetics’ Motion for Prejudgment Interest (June 1, 2009) ................................................................................A26

Permanent Injunction and Provisional Royalty (June 1, 2009)..................A45

Order Granting in Part and Denying in Part Fenwal’s Motion to Modify the Permanent Injunction and to Alter or Amend the Order on Prejudgment Interest (June 24, 2009).........................................................A48

U.S. Patent No. 6,705,983, the Patent in Suit...........................................A105

Oral Statement of the District Court Denying Both Parties’ Motions for JMOL on the Issue of Indefiniteness (Jan. 28, 2009) .......................A3720

Oral Statement of the District Court Sua Sponte Reconsidering and Granting Haemonetics’ Motion for JMOL on the Issue of Indefiniteness (Jan. 29, 2009).................................................................A3791

v

TABLE OF AUTHORITIES

Page

CASES

Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313 (Fed. Cir. 2003) ..........................................................................53

In re Appelburg, 37 F.2d 620 (C.C.P.A. 1930) ..............................................................................32

Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc.,555 F.3d 984 (Fed. Cir. 2009) ............................................................................34

Bicon, Inc. v. Straumann Co., 441 F.3d 945 (Fed. Cir. 2006) ............................................................................47

Boston Scientific Scimed, Inc. v. Cordis Corp., 554 F.3d 982 (Fed. Cir. 2009) ............................................................................20

Burroughs Wellcome Co. v. Barr Laboratories, Inc., 40 F.3d 1223 (Fed. Cir. 1994) ............................................................................43

Canadian Ingersoll-Rand Co. v. Peterson Products of San Mateo, Inc., 223 F. Supp. 803 (N.D. Cal. 1963), aff’d in part, rev’d in part, 350 F.2d 18 (9th Cir. 1965) ................................................................................32

Chef America, Inc. v. Lamb-Weston, Inc., 358 F.3d 1371 (Fed. Cir. 2004) ....................................................................51, 52

Coleman v. Dines, 754 F.2d 353 (Fed. Cir. 1985) ............................................................................36

ConnectU LLC v. Zuckerberg, 522 F.3d 82 (1st Cir. 2008).................................................................................62

Digital Biometrics, Inc. v. Identix, Inc., 149 F.3d 1335 (Fed. Cir. 1998) ..........................................................................52

DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006) ..........................................................................62

vi

Ecolochem, Inc. v. Southern California Edison Co., 227 F.3d 1361 (Fed. Cir. 2000) ..........................................................................31

Ericsson, Inc. v. Harris Corp., 352 F.3d 1369 (Fed. Cir. 2003) ..........................................................................20

Exxon Research & Engineering Co. v. United States, 265 F.3d 1371 (Fed. Cir. 2001) ..........................................................................53

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234 F.3d 558 (Fed. Cir. 2000), vacated, 535 U.S. 722 (2002)...........................32

Frigidaire Corp. v. General Necessities Corp., 46 F.2d 58 (6th Cir. 1931) ..................................................................................32

Garcia-Rubiera v. Calderon, 570 F.3d 443 (1st Cir. 2009)...............................................................................20

Gardner v. TEC Systems, Inc., 725 F.2d 1338 (Fed. Cir. 1984) (en banc) ..........................................................33

Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966)................................................................................................21

Herman Nelson Corp. v. John J. Nesbitt, Inc., 4 F. Supp. 703 (E.D. Mich. 1933), aff’d sub. nom. Herman Nelson Corp. v. American Blower Corp., 84 F.2d 171 (6th Cir. 1936) ....................................33

Holmwood v. Sugavanam, 948 F.2d 1236 (Fed. Cir. 1991) ....................................................................44, 45

Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986) ..........................................................................44

Innogenetics, N.V. v. Abbott Laboratories, 512 F.3d 1363 (Fed. Cir. 2008) ..............................................................19, 61, 62

Innovative Scuba Concepts, Inc. v. Feder Industries, Inc., 26 F.3d 1112 (Fed. Cir. 1994) ............................................................................20

Invitrogen Corp. v. Clontech Laboratories, Inc., 429 F.3d 1052 (Fed. Cir. 2005) ..........................................................................43

vii

KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007).................................................................................... passim

In re Lindberg, 194 F.2d 732 (C.C.P.A. 1952) ............................................................................34

Mahn v. Harwood, 112 U.S. 354 (1884)............................................................................................52

Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572 (Fed. Cir. 1996) ............................................................................35

Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc), aff’d, 517 U.S. 370 (1996) .....20, 32, 51

Omega Engineering, Inc. v. Raytek Corp., 334 F.3d 1314 (Fed. Cir. 2003) ..........................................................................49

Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348 (Fed. Cir. 2007) ..........................................................................28

Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) ..........................................................31

Powers-Kennedy Contracting Corp. v. Concrete Mixing & Conveying Co.,282 U.S. 175 (1930)......................................................................................31, 32

Ritchie v. Vast Resources, Inc., 563 F.3d 1334 (Fed. Cir. 2009) ....................................................................30, 35

S3 Inc. v. nVIDIA Corp., 259 F.3d 1364 (Fed. Cir. 2001) ..........................................................................20

Sandt Technology, Ltd. v. Resco Metal & Plastics Corp., 264 F.3d 1344 (Fed. Cir. 2001) ..........................................................................36

Sitrick v. Dreamworks, LLC, 516 F.3d 993 (Fed. Cir. 2008) ............................................................................23

United States v. Kayser-Roth Corp., 272 F.3d 89 (1st Cir. 2001).................................................................................20

viii

Van Brode Milling Co. v. Cox Air Gauge System, Inc., 161 F. Supp. 437 (S.D. Cal. 1958)......................................................................33

Wilson Sporting Goods Co. v. Hillerich & Bradsby Co., 442 F.3d 1322 (Fed. Cir. 2006) ..........................................................................50

In re Wolfe, 251 F.2d 854 (C.C.P.A. 1958) ............................................................................32

Wynfield Inns v. Edward LeRoux Group, Inc., 896 F.2d 483 (11th Cir. 1990) ............................................................................62

STATUTES AND RULES

28 U.S.C. § 1295........................................................................................................1

28 U.S.C. § 1331........................................................................................................1

28 U.S.C. § 1338........................................................................................................1

28 U.S.C. § 2107........................................................................................................1

35 U.S.C. § 102........................................................................................................35

35 U.S.C. § 103............................................................................................21, 31, 34

35 U.S.C. § 112............................................................................................12, 51, 53

Federal Rule of Appellate Procedure 4......................................................................1

Federal Rule of Civil Procedure 50 .................................................................3, 4, 53

OTHER AUTHORITIES

Manual of Patent Examining Procedure § 2144.04 (8th ed. 2001, rev. 2008)...............................................................................33, 34

1 Dan B. Dobbs, Law of Remedies § 1.1 (2d ed. 1993)...........................................62

36 C.J.S. Federal Courts § 608 (2003)....................................................................60

ix

TABLE OF ABBREVIATIONS

Parties Baxter Baxter Healthcare Corporation Fenwal Baxter Healthcare Corporation and Fenwal Incorporated,

collectively (unless the context indicates otherwise) Haemonetics Haemonetics Corporation

Defined Terms

(___:____) Column and line number in patent ’163 patent U.S. Patent No. 5,656,163, issued August 12, 1997, entitled

“Chamber for Use in a Rotating Field to Separate Blood Components” (A7067-123)

’983 patent or the patent

U.S. Patent No. 6,705,983, issued March 16, 2004, entitled “Compact Centrifuge Device and Use of Same” (A105-15), the patent in suit

2RBC Two units of red blood cells A___ Appendix page(s) ALYX® system ALYX® Component Collection System; a portable

automated device that employs continuous centrifugation and a rigid disposable separation chamber to collect two units of red blood cells during one donation from a human donor

ALYX® separation cup or ALYX® cup or the accused device

The rigid, disposable vessel in which blood separation occurs in the ALYX® system, sold by Fenwal as part of the ALYX® Component Collection System disposable kits

court or district court United States District Court for the District of Massachusetts, Honorable Nathaniel M. Gorton presiding

Court United States Court of Appeals for the Federal Circuit examiner Patent and Trademark Office examiner JMOL Judgment as a matter of law MPEP Manual of Patent Examining Procedure (8th ed. 2001, rev.

2008)

x

PTO United States Patent and Trademark Office RBC(s) Red blood cell(s) All emphases in this brief are added and internal quotation marks are omitted unless otherwise indicated.

xi

STATEMENT OF RELATED CASES

After the jury verdict of infringement in this case (Haemonetics Corp. v.

Baxter Healthcare Corp., No. 05-cv-12572 (D. Mass.)), Fenwal redesigned its

ALYX® separation cups around Haemonetics’ ’983 patent, as that patent had been

interpreted by the district court. Fenwal has sought leave from the district court to

supplement its pleadings with a counterclaim seeking a declaration that the

redesigned cups do not infringe the ’983 patent under the district court’s

interpretation. Fenwal is aware of no other related case.

JURISDICTIONAL STATEMENT

The district court had jurisdiction under 28 U.S.C. §§ 1331 & 1338(a) and

entered an amended final judgment on August 19, 2009. This appeal, noticed on

August 27, 2009, is timely. 28 U.S.C. § 2107(a); Fed. R. App. P. 4. This Court

has jurisdiction under 28 U.S.C. § 1295(a)(1).

STATEMENT OF ISSUES

I. Invalidity: Whether Fenwal is entitled to judgment of obviousness

where the ’983 patent combines and reduces the size of prior-art centrifuges to

yield a result so predictable that the inventor did not even test the purported

invention; and whether Fenwal is entitled to judgment of anticipation by prior

invention where indisputable documentary and testimonial evidence shows that

Fenwal (i) conceived the invention no later than twelve days prior to Haemonetics’

earliest asserted invention date and (ii) actually reduced the invention to practice

eight months before Rochat filed the application for the ’983 patent.

II. Claim Construction/Noninfringement: Whether the court erred by

construing the term “centrifugal unit” to refer to an assemblage of a centrifugal

vessel and tubing in its first use in claim 16 of the ’983 patent, but then construing

that same term to refer to the centrifugal vessel alone in its second and third uses in

that very same claim; and whether the ALYX® system infringes under a proper

construction.

2

Indefiniteness: Whether the court erred by granting Haemonetics’ motion

for JMOL on the issue of indefiniteness and by denying Fenwal’s motion on the

same issue, when both the claim and specification give conflicting indications

about where to measure the “radius” and “height” of the “centrifugal unit” and the

parties presented conflicting evidence on the issue at trial; and whether Fenwal is

entitled to JMOL of invalidity due to indefiniteness in light of this conflicting

textual and extrinsic evidence.

III. Remedy: Whether Haemonetics was entitled to an injunction against

the accused device and a royalty on post-verdict sales when Haemonetics had

already sought and recovered from the jury damages for future infringing sales.

STATEMENT OF THE CASE

A. Preliminary Statement

Almost every element of Haemonetics’ asserted patent claim can be found in

one prior-art reference that the inventor knew about but did not disclose to the

examiner—Baxter’s ’163 patent covering its prior-art Amicus® centrifugation

device. The sole supposed “innovation” of Haemonetics’ ’983 patent is reducing

the dimensions of the cup in which fluid separation occurs. But this is a manifest,

common-sense solution to the known problem of larger-sized prior-art centrifuges,

and so the asserted patent claim is invalid, as a matter of law, for obviousness.

3

Even if there were something nonobvious about the dimensional limitations

of the ’983 patent, the defendants offered undisputed documentary and testimonial

evidence at trial showing that Baxter employees—who were working to

miniaturize the similar Amicus® device—independently conceived a separation

cup containing every element of the asserted claim before the inventor, including

the size limitations. Indisputable evidence also shows that Baxter reduced its cup

to practice eight months before the inventor. Thus, the patent is invalid for

anticipation by prior invention.

The district court’s errors on invalidity compounded its pre-trial error in

construing the term “centrifugal unit” to refer to two different objects in the very

same patent claim. Moreover, even if the district court’s construction of

“centrifugal unit” could be sustained, the patent is insolubly ambiguous regarding a

key element of the claim at issue, namely, where the “radius” and “height” of the

“centrifugal unit” should be measured, as shown by the conflicting intrinsic

evidence as well as the conflicting evidence presented by the parties at trial. The

court erred in granting—on sua sponte reconsideration and without explanation—

Haemonetics’ Federal Rule of Civil Procedure 50(a) motion for JMOL on the issue

of indefiniteness.

After granting Haemonetics’ motion for JMOL without explanation (let

alone a written opinion), the court committed a final error at the remedies phase of

4

the case: It granted Haemonetics a provisional royalty on and an injunction against

Fenwal’s post-verdict sales of the accused device, even though Haemonetics asked

the jury to award damages for future infringement and the jury’s instructions

imposed only a starting date, not an ending date, for the assessment of damages.

Such an impermissible double recovery cannot be sustained under the law.

B. Procedural History

On December 22, 2005, Haemonetics sued Baxter in the United States

District Court for the District of Massachusetts for infringement of the ’983 patent.

(A116-19.) Fenwal was later added as a defendant. (A62; A813-15.) The district

court on September 16, 2008 granted Fenwal’s motion for summary judgment of

noninfringement of claims 1-7 and 9 (A1214-25), based on the court’s construction

of disputed terms in claims 1-7, 9, and 16-19 (A2-17). Haemonetics ultimately

limited its allegation of infringement to claim 16 only. (A3538.)

At trial, Fenwal asserted, among other defenses, that claim 16 was invalid

for indefiniteness. At the close of evidence, both parties moved for JMOL on this

issue (and others) under Federal Rule of Civil Procedure 50(a). (A3585-86;

A3699-3700.) The court initially denied both motions (A3721), but, the very next

day and without any explanation, the court sua sponte reconsidered and granted

Haemonetics’ motion. (A3792.) The jury then determined that claim 16 was not

invalid and was infringed by Fenwal’s ALYX® separation cup. (A102-04.) It

5

awarded Haemonetics $11,335,935 in lost-profits damages and $4,349,835 in

reasonable-royalty damages. (A104.) The court also awarded prejudgment

interest of $2,321,494 (A51-52), for a total damage award of $18,007,264. (A1.)

In addition, the court entered a permanent injunction prohibiting Fenwal,

beginning on December 1, 2010, from making, using, distributing, offering to sell,

or selling “Alyx System disposable kits (as embodied by Trial Exhibit 1240),”

which include the separation cup. (A45.) The court also ordered Fenwal to pay

Haemonetics a 10% royalty on sales of the infringing ALYX® kits made after the

jury verdict of infringement. (A46.)

After trial, Fenwal timely moved for JMOL on the issues of invalidity due to

obviousness (A3892), anticipation by prior invention (A3848), and

noninfringement (A3868). The district court denied each motion by endorsement,

without an opinion. (A23-25.)

STATEMENT OF FACTS

A. Blood and Blood Donation

Human blood consists of four primary components: red blood cells (RBCs),

white blood cells, platelets, and plasma. (A548.) The primary function of red

blood cells is to carry oxygen to body tissues. (A3132.) RBCs are medically

useful in many situations, from replacing blood loss due to trauma or surgery to

treating diseases like hemophilia and anemia. (Id.)

6

There are two methods of obtaining RBCs (or any other individual blood

component) from a donor. Approximately 90% of blood donations are “manual

donations,” given as whole blood taken from a donor’s vein. (A3134.) Later, the

blood is separated into its constituent parts using a centrifuge or a filter. (A3131-

32.) The other method for obtaining RBCs, first developed in the 1960s and 1970s,

is called “apheresis.” (A3132.) In apheresis, whole blood is drawn from a donor

and separated while the donor is connected to an automated separation system. (Id.)

The desired blood components are immediately removed and stored. (Id.) The

other blood components are returned to the donor, along with a saline solution so

that when the donor completes the procedure blood volume has not changed. (Id.)

Because apheresis returns uncollected blood components to the donor, the process

can be used to collect two units of RBCs during one donation, as opposed to the

single unit of RBCs collected during a manual donation. (A548-49.) A unit of

RBCs is the quantity of red cells collected from approximately one pint of blood.

(A3133.)

Roughly 70 to 80% of blood collection in the United States takes place on

mobile blood drives run by organizations such as the American Red Cross.

(A3131.) Currently, Haemonetics sells two RBC apheresis devices that are

sufficiently portable for use at mobile drives: (1) MCS®+, introduced in 1995, and

(2) Cymbal™, introduced in 2007. (A1815.) Both of Haemonetics’ products

7

employ “batch processing,” in which a fixed volume of blood is withdrawn, then

separated, and then returned to the donor. (A1816; A7124.) This process repeats

many times until a full donation is collected. (A7124.)

In 2003, Fenwal introduced its portable RBC apheresis device, the ALYX®

system. (A1815-16.) In contrast to Haemonetics’ batch processing products, the

ALYX® system employs “continuous processing,” in which blood both enters and

exits the separation vessel during operation and is continuously withdrawn and

reinjected into the donor. (A1816; A7124.) Continuous processing provides a

faster donation time and higher quality RBC units than batch processing. (A3411-

12.)

B. Centrifugation, the ’983 Patent, and the Prior Art

The apheresis devices sold by Haemonetics and Fenwal, as well as the

technology described in the ’983 patent, employ centrifugation to separate blood

components. Centrifugation involves the placement of a fluid in a vessel, which is

then rotated at high speed, exerting a centrifugal force on the fluid. That force

separates the fluid’s components based on their different densities and rates of

settling, as illustrated below. (A3.)

8

(A184.) Because RBCs are the densest component of human blood, they are

pushed to the vessel’s outer wall as the vessel rotates. (Id.)

Haemonetics owns the ’983 patent by assignment from its inventor, a former

Haemonetics employee and Swiss national named Jean-Denis Rochat. (A7279-90;

A3142.) The patent “describes a method and apparatus for the separation and

collection of blood components through a continuous centrifugal system.” (A2.)

Entitled “Compact Centrifuge Device and Use of Same,” the ’983 patent relates to

a sub-assembly that comprises a vessel (or “cup”) in which fluid components are

separated through centrifugation, and the associated tubing through which fluid

flows in and out of the vessel. (A105-15.)

The tubing connects the spinning vessel to a non-rotating support structure

(and ultimately to the donor), and forms a question-mark shape around the vessel,

as shown below in a simplified version of figure 1 of the ’983 patent. (A3.)

9

Because the vessel is rotating, the tube also rotates to prevent the tube from

twisting and breaking. (Id.)

(A185.)

The claim at issue, claim 16, includes limitations directed toward the

dimensions of the “centrifugal unit.” It recites a “centrifugal unit having a radius

between 25 and 50 mm and a height between 75 and 125% of the radius.” (A115.)

Principles of continuous centrifugation have been known generally for many

years (A3), and were known in this particular art before Rochat applied for

the ’983 patent. See, e.g., U.S. Patent No. 4,109,855 (A219-25). Likewise, a

height-to-radius ratio within the range claimed in the ’983 patent is disclosed by,

among other things, the prior-art ’163 patent, which covers Baxter’s Amicus®

device and was invented by Baxter engineer Richard Brown. (A3162-63; A3185-

86; A7067-123.) Rochat, however, never disclosed the ’163 patent to the examiner

10

during prosecution of the ’983 patent (A105), even though he admitted that he

knew about it and “probably” had a copy of it in his files (A3185). The prior art

also discloses centrifugal vessels with radii between 25 and 50 mm, including

Haemonetics’ PCS® product, which has a radius of 40 mm. (A3148; A6103.)

Fenwal was denied access to almost all of the “18 feet of files” relating to

Rochat’s patent application. (A3158.)1 But from Rochat’s testimony and the

limited documents he produced, it is clear that he consulted the equations

developed by Richard Brown in his article, The Physics of Continuous Flow

1 Although Haemonetics brought this suit at Rochat’s urging (A6638),

Haemonetics successfully thwarted Fenwal’s efforts to obtain discovery from Rochat. Throughout discovery, Haemonetics stated it “[did] not control Mr. Rochat” (A1313), and that information concerning Rochat’s conception and reduction to practice was “not presently known to [Haemonetics]” (A1283). Left with no other option to gather this crucial discovery, Fenwal obtained in September 2007 a Letter of Request Pursuant to the Hague Convention. (A1029-34.) But when Rochat produced documents in September 2008, he produced them not through the Hague Convention procedures, but through Haemonetics’ counsel. (A2365-68.) And when Fenwal finally obtained a Hague Convention examination in November 2008 (just two months before trial), Rochat revealed that he had met with Haemonetics’ counsel prior to the proceedings. (A2314-15.) Haemonetics’ counsel represented Rochat at the examination, lodging objections to Fenwal’s questions. (A2298-99.) Yet when Rochat appeared on Haemonetics’ trial witness list (filed on January 2, 2009 (A1838)), and Fenwal objected that it still had not been able to depose him, Haemonetics’ counsel claimed that “Mr. Rochat cannot be made available by Haemonetics,” allegedly due to a “long-standing frigid relationship.” (A2589-90.) In light of this maneuvering, Fenwal moved to bar Rochat’s testimony at trial. (A2288-89.) But the court denied the motion, instead granting Fenwal a three-hour deposition on the eve of trial. (A73; A2588-93.) Haemonetics finally produced Rochat for a deposition at 5:30 p.m. on the night before trial began. (A2973.)

11

Centrifugal Cell Separation, 13 Artificial Organs 4 (1989) (A7124-40), to design

the claimed centrifugal device. (A3185; A6264.)

The series of equations developed by Brown consists of five variables and

two constants. (A3453.) As Brown himself explained at trial, “you can arrange

these [variables and constants] properly to give you any term you need to know.”

(Id.) Specifically, what Brown’s equations demonstrate is that the functionality of

a centrifuge turns on the area of the separation chamber, as measured at the

separation interface between the more-dense RBCs and the less-dense plasma,

typically in the middle of the chamber. (A3449-50; A3453; A7133.) Accordingly,

Brown testified that his equations use interior measurements of the separation

chamber—not exterior measurements—to calculate the required dimensions for a

functional centrifuge. (A3453.) Because the product of exterior height and radius

would not yield separation chamber area (or g-force), Brown testified that exterior

dimensions have no predictive value and do not relate to the functionality of the

centrifuge. (Id.)

As Brown’s seminal article shows, to calculate separation chamber area, one

would multiply the internal height of a chamber by its internal length (i.e., its

circumference). (Id.; see, e.g., A7134 (showing example of separation chamber “5

cm high” with a length of 13 cm, “resulting in separation chamber area[] of 65

[cm2]”).) If necessary, one could easily extrapolate a radius (r) measurement from

12

the length, or circumference (C), of the chamber through the known equation C =

2�r. (A3507; A3906 n.2.) Because it is the length of the separation chamber at the

interface that is relevant to calculating functional area, Brown testified at trial that

he would likewise measure the radius from the center of the centrifugal unit to the

blood interface. (A3453.)

C. Prosecution History of the ’983 Patent

Rochat first filed the application for the ’983 patent in the European Patent

Office on April 9, 1999. (A4571-5189 (prosecution history).) Issued claim 16

began as claim 15 of a translated Patent Cooperation Treaty application. (A4684-

85.) Original claim 15 contained no limitation regarding the height or radius of the

centrifugal unit. (Id.) Before the PTO, Rochat cancelled original claim 15 and on

October 6, 2001 added corresponding claim 36. (A4788.) Claim 36 contained the

limitation of a “centrifugal unit having a radius that is smaller than approximately

50 mm and a height that is approximately 75% greater than the radius.” (A4792.)

On April 3, 2003, in the only office action taken on the application, the

examiner rejected claim 36 under 35 U.S.C. § 112 ¶ 1 “as containing subject matter

which was not described in the specification in such a way as to reasonably convey

to one skilled in the relevant art that the inventor(s), at the time the application was

filed, had possession of the claimed invention.” (A4852.)

13

Otherwise, the examiner concluded, claim 36 would be allowable over the

prior art because

[t]he prior art of record does not teach or fairly suggest the recited blood centrifuge having a centrifugal unit with the claimed radius and height. Applicant has established the criticality of and therefore the nonobviousness of the radius and height parameters throughout the specification (including but not limited to size and weight reduction, ease of transport and handling, disposability and economical cost, and enabling the re-injection of the donor’s erythrocytes).

(A4854.)

In response to the office action, Rochat amended claim 36 on July 28, 2003

to its current form in issued claim 16. (A4867.)2 The ’983 patent issued on March

16, 2004. (A105.)

D. The ’983 Patent as Issued

As issued, claim 16 recites:

A centrifugal unit comprising a centrifugal component and a plurality of tubes, said unit to turn around an axis to separate the components of a liquid, blood in particular, with such plurality of tubes displaying a single tubular component wherein said unit includes:

a base in the form of a disk;

an external cylindrical wall extending from the base;

an internal cylindrical wall extending from the base and separated by the external wall so as to define a ring-shaped separation chamber among each other;

2 Rochat made a similar narrowing amendment to claim 40, which

corresponds to issued claim 20. (A4868.)

14

a tubular housing almost extending coaxially to said rotating axis from the base to receive an end of a tubular unit; and

a plurality of channels extending radially in the base of the centrifugal unit, with each channel providing communication between a respective tube of the tubular unit and the separation chamber, with the centrifugal unit having a radius between 25 and 50 mm and a height between 75 and 125% of the radius.

(A114-15.)

E. Development of the ALYX® System

In 1996, the Fenwal Division of Baxter3 began its Cygnet project with the

goal of creating a small, portable device for the collection of 2RBC that would

provide a donation time similar to that of whole blood donation. (A3342-43;

A3439-40.) In 1997, Baxter introduced its Amicus® device, which is designed

primarily to collect platelets. (A3343; A3439.) In the Amicus® system, blood

component separation takes place inside of a separation chamber made from

flexible plastic (a so-called “flexible bag”). (A3440.) As shown below, the

Amicus® separation chamber contains two separate sections wrapped around a

support mandrel. A first-stage processing chamber separates RBCs from platelet-

rich plasma, and a second-stage processing chamber then separates the platelets

from the plasma. (A3343.)

3 Fenwal became an independent corporation when Baxter divested its

Transfusion Therapies business (which includes the ALYX® system) in March 2007. (A813-14.) To be consistent with the trial record, this brief refers to the company that developed the ALYX® system as “Baxter.”

15

(A7086; see also A8988-89 (sample of a component of the Amicus® device, filed

with the Clerk’s office).)

As discussed in detail below (see infra at 28), in May 1997 Baxter scientist

Richard Brown, whose work Rochat relied on, conceived a device for collection of

2RBC by simply using the RBC-collecting half of the Amicus® separation chamber.

(A3454.) Eliminating the second-stage platelet processing chamber would, Brown

recognized, reduce the length (and, hence, the radius) of the Amicus® separation

chamber by approximately one-half. (Id.) As a result, the Cygnet team christened

its device—which would become the ALYX® system—the Amicus® Junior.

(A3342.)

In miniaturizing the Amicus® centrifuge, the Cygnet team experienced a

problem with the now-smaller flexible separation chamber wrinkling while in use.

16

(A3440.) But in March 1998, Baxter engineer Kelly Smith and her colleagues

solved this problem by designing a chamber made of hard, molded plastic instead

of flexible plastic. (A3345; A3440-41.) Thus, in early April 1998, the Cygnet

team repeatedly documented its conception in an effort to determine how to best

manufacture the commercial product. (A3344-51; A5190; A6642-7062; A7205-12;

see also infra Part I.B.1.) Baxter’s first successful test of an ALYX® prototype

occurred in August 1998. (A3353-54; A6419-25; see also infra Part I.B.2.)

F. The ALYX® System

Baxter began selling the ALYX® system in 2003. (A1815.) Consistent with

the goal of the Cygnet project, the ALYX® system is a portable automated device

that employs continuous centrifugation to collect two units of RBC per donation.

(Id.) This case centers around the rigid, disposable vessel in which blood

separation occurs. In the depiction below, a portion of the vessel has been

removed to show the internal separation chamber.

17

(A8955-56; see also A8987; A8990 (physical exhibits of the ALYX® separation

chamber, filed with the Clerk’s office).) Fenwal sells the vessel as part of the

ALYX® system disposable kits, which contain all the supplies needed for one

donation, including a needle, saline solution, and anticoagulant. (A3413.)

SUMMARY OF ARGUMENT

I. The district court erred by denying Fenwal’s motions for JMOL that

claim 16 of the ’983 patent is invalid.

Obviousness: The prior art discloses every element of claim 16. The result

of combining and, at most, reducing the size of these known elements was so

predictable that the inventor himself saw no need to even test the purported

invention. Indeed, Haemonetics and Rochat both conceded that the “innovation”

of the ’983 patent is reducing and proportioning the dimensions of the separation

cup. But the Supreme Court has long held that a reduction in size or change in

proportion is an unpatentable application of mere mechanical skill. In light of the

predictability of result and the common-sense demand for a centrifuge of reduced

size, claim 16 is obvious under KSR International Co. v. Teleflex Inc., 550 U.S.

398 (2007).

Prior Invention: The testimony of Baxter engineer Kelly Smith, the

documentary evidence of the development process, the corroborating testimony of

other Baxter employees, and the expert testimony of Dr. Robin Felder—none of

18

which was disputed—establish as a matter of law that the Baxter team completed

the “mental act” of miniaturizing the Amicus® device on or before April 8, 1998,

which was twelve days prior to Haemonetics’ earliest asserted conception date.

This evidence also shows without dispute that Baxter actually reduced the ALYX®

system to practice nearly eight months before Rochat filed the application that led

to the ’983 patent. Accordingly, claim 16 is also invalid for anticipation by prior

invention.

II. Claim Construction/Noninfringement: The district court erred by

construing the term “centrifugal unit” to refer to the assemblage of the separation

cup and tubing in the term’s first usage in claim 16, and to refer to the separation

cup alone in the term’s second and third usages in that same claim. The district

court’s effort to correct what Haemonetics claimed was a drafting “error”

improperly created an internal inconsistency in the claim and disregarded the plain

language of the patent, which makes clear that “centrifugal unit,” as used in claim

16, refers to the assemblage of the cup and tubing. Moreover, because the size of

this assemblage determines the overall size of the device, this construction accords

with what Rochat and Haemonetics stated to be the purpose of the ’983 patent—to

provide a portable centrifuge of reduced size over the prior art. Because Fenwal’s

ALYX® system infringes only if the dimensions of the “centrifugal unit” are

measured to the external outermost points of the separation cup alone (i.e., not

19

including the tubing), Fenwal is entitled to a judgment of noninfringement as a

matter of law under a proper claim construction.

Indefiniteness: Even if the district court’s construction of “centrifugal unit”

as limited to the cup itself could be sustained, the district court erred by granting

Haemonetics’ motion for JMOL on the issue of indefiniteness. Claim 16 recites a

“centrifugal unit” with a “height” and “radius” within certain ranges, but the patent

gives no definitive answer as to how those dimensions should be measured, as

shown by the patent itself and the conflicting evidence presented at trial. In light

of this ambiguity, the district court’s grant of JMOL to Haemonetics should be

reversed, and JMOL should be entered in Fenwal’s favor.

III. Injunction and Going-Forward Royalty: Because Haemonetics

repeatedly requested damages for future infringement and the jury awarded

damages under an instruction that set forth a starting date—but no ending date—

for damages assessment, the district court erred under Innogenetics, N.V. v. Abbott

Laboratories, 512 F.3d 1363, 1380 (Fed. Cir. 2008), by additionally granting

Haemonetics an injunction against future sales of the ALYX® kit and awarding

Haemonetics a 10% royalty on post-verdict sales of ALYX® kits. This Court

should vacate the district court’s order of permanent injunction and provisional

royalty.

20

STANDARDS OF REVIEW

This Court “review[s] a district court’s grant or denial of a motion for JMOL

in a patent case de novo, reapplying the JMOL standard used by the district court.”

Ericsson, Inc. v. Harris Corp., 352 F.3d 1369, 1373 (Fed. Cir. 2003). Under that

standard, the Court reviews “the jury’s conclusions on obviousness, a question of

law, without deference.” Boston Scientific Scimed, Inc. v. Cordis Corp., 554 F.3d

982, 990 (Fed. Cir. 2009). Likewise, “[p]riority of invention is a question of law to

be determined based upon underlying factual determinations.” Innovative Scuba

Concepts, Inc. v. Feder Indus., Inc., 26 F.3d 1112, 1115 (Fed. Cir. 1994). Claim

construction and interpretation are questions of law reviewed de novo, see

Markman v. Westview Instruments, Inc., 52 F.3d 967, 970-71 (Fed. Cir. 1995) (en

banc), aff’d, 517 U.S. 370 (1996), and because the issue of indefiniteness “is a

matter of construction of the claims,” it, too, “receives plenary review on appeal,”

S3 Inc. v. nVIDIA Corp., 259 F.3d 1364, 1367 (Fed. Cir. 2001). The Court reviews

the decision to grant or deny an injunction for abuse of discretion, Garcia-Rubiera

v. Calderon, 570 F.3d 443, 455-56 (1st Cir. 2009), but a “district court by

definition abuses its discretion when it makes an error of law,” United States v.

Kayser-Roth Corp., 272 F.3d 89, 100 (1st Cir. 2001).

21

ARGUMENT

I. CLAIM 16 OF THE ’983 PATENT IS INVALID FOR OBVIOUSNESS AND FOR ANTICIPATION BY PRIOR INVENTION

A. Because Claim 16 Merely Combines and Reduces the Size of Known Elements to Reach a Predictable Result, It Is Invalid for Obviousness

Under 35 U.S.C. § 103(a), “[a] patent may not be obtained . . . if the

differences between the subject matter sought to be patented and the prior art are

such that the subject matter as a whole would have been obvious at the time the

invention was made to a person having ordinary skill in the art.” The analysis

under § 103 is objective and proceeds as follows: “the scope and content of the

prior art are to be determined; differences between the prior art and the claims at

issue are to be ascertained; and the level of ordinary skill in the pertinent art

resolved.” KSR, 550 U.S. at 406 (quoting Graham v. John Deere Co. of Kan. City,

383 U.S. 1, 17 (1966)). A straightforward application of these factors shows that

the prior art disclosed every element of claim 16 and that the only difference (if

any) between the prior art and the patent claim is the reduced size of the device. In

view of the clear desirability of a smaller centrifuge and the predictability that a

smaller centrifuge would function successfully, claim 16 is invalid for obviousness.

The district court erred by denying—without explanation—Fenwal’s motion for

JMOL of invalidity due to obviousness.

22

1. Every Element of Claim 16 Was Known in the Prior Art

The evidence and testimony presented at trial indisputably show that the

prior art disclosed every element of claim 16. Haemonetics presented two

witnesses on the prior art: the inventor, Rochat, and an expert, Dr. George Russell.

Rochat and Russell, while conceding that all other elements of the claim were

disclosed in the prior art, maintained that the prior art may not have disclosed a

plurality of channels extending radially in the base of the centrifugal unit and did

not disclose a centrifugal unit with a 75 to 125% height-to-radius ratio or a radius

between 25 and 50 mm. (A3153-55; A3207-08.) But the prior art—including

the ’163 patent, which Rochat knew about but did not disclose in the ’983

application (A3185; A3495)—plainly discloses each of those elements, as

Fenwal’s expert, Dr. Robin Felder, made clear. (A3506-07.)

a. Plurality of channels extending radially in the base. As Dr. Felder

testified (id.), items 92, 94, 96, 98, and 100 in figure 24 of the ’163 patent disclose

the limitation of “a plurality of channels extending radially in the base of the

centrifugal unit, with each channel providing communication between a respective

tube of the tubular unit and the separation chamber.”4

4 In its Markman order, the district court construed “channels extending

radially in the base” to mean “channels extending radially in or on the base.” (A17.)

23

(A7087.) Rochat and Russell, on the other hand, testified that they were uncertain

whether the prior art disclosed this limitation. (See A3155 (Rochat: “[N]ot totally

sure.”); A3208 (Russell: “I’m a little fuzzy about the channels being in the prior

art . . . .”).) These witnesses’ subjective “fuzziness” on the subject does not create

a genuine dispute. See Sitrick v. Dreamworks, LLC, 516 F.3d 993, 1001 (Fed. Cir.

2008) (equivocations do not create a genuine issue of fact).

b. Height-to-radius ratio. At trial, Rochat measured a sample Amicus®

device and conceded that it disclosed a height-to-radius ratio within the 75 to 125%

range claimed. Rochat testified that the device had a diameter of 15¼ cm (for a

radius of 7� cm) and a height of 7¾ cm, for a height-to-radius ratio of 101.6%.

(A3162-63.)

24

Similarly, the ’163 patent discloses a centrifugal unit with a height between

75 and 125% of the radius, as Dr. Felder testified. (A3507.) Figure 18 and table 2

of the ’163 patent, shown below, disclose a chamber with an “Overall length (A),”

or circumference, of 19½ inches.

(A7083; A7112.) Dividing this circumference by � yields a diameter of 6.21

inches, and further dividing by 2 yields a radius of 3.10 inches. The ’163 patent

also discloses a chamber with an “Overall height (B)” of 213/16 inches. This height

is 90.6% of the radius, within the 75 to 125% range recited in claim 16.

25

c. Radius between 25 and 50 mm. The prior art also discloses a

“centrifugal unit having a radius between 25 and 50 mm.” As Rochat testified,

Haemonetics’ own PCS® product is prior art with a radius of 40 mm. (A3148; see

also A3220; A6103.) The exhibit Haemonetics used at trial to document Rochat’s

conception (excerpted below) shows that he compared the machine he was

developing, the “Biofluid Lasso” centrifuge, with Haemonetics’ prior-art device,

which had a diameter of 80 mm, i.e., a radius of 40 mm. (A3148.)

(A6103.)

Likewise, the first-stage RBC-processing chamber described in the ’163

patent—which Baxter used as the starting point for its 2RBC chamber (see infra at

28)—has a length of 10� inches (or 257.175 mm), for a radius of 40.93 mm when

wrapped around the support mandrel, as described in that patent. (A7112 tbl.2.)

Finally, as explained below, Brown’s predictive equations, which Rochat relied on,

clearly teach one of skill in the art how to design a centrifuge with a radius

between 25 and 50 mm. Thus, the prior art discloses every element of claim 16.

26

2. Claim 16 Combines Known Elements to Yield a Predictable Result

a. Claim 16 cannot withstand scrutiny under the common-sense

approach to obviousness set forth in KSR and this Court’s precedents. In KSR, the

Court wrote that

[w]hen there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense.

550 U.S. at 421. The lone “improvement” claimed by Rochat over the prior art

was reducing and proportioning the dimensions of the separation cup. (A3186.)

But in light of the common-sense need for smaller centrifugal devices, it was

obvious to reduce the size of those prior-art devices through equations known in

the literature. Indeed, the ’983 patent itself notes the “obvious” desirability of

smaller devices. (A113 (8:35-37).) At trial, witnesses from both sides recognized

that developing a smaller device was crucial to conducting RBC apheresis on a

large scale, given that most blood is collected in mobile settings. (See, e.g., A3135

(Vice President and Chief Medical Officer of Haemonetics); A3342 (Baxter’s

Kelly Smith); A3406 (Fenwal’s Senior Director of International Sales).)

Furthermore, a successful result from a centrifuge of reduced size was entirely

predictable—as shown by Rochat’s determination that testing the height and radius

27

was unnecessary. (A3155-56.) Claim 16 is therefore invalid for obviousness

under KSR, and the district court erred by denying Fenwal’s motion for JMOL.

In light of the predictive equations developed by Richard Brown, it would

have been obvious for a person skilled in the art5 to use those equations to design a

centrifugal device with a radius between 25 and 50 mm. (A3507 (Dr. Felder

testifying that “[a]ll the elements are [in the prior art] to make that device, and you,

simply, reduce the size by half, using known equations in the literature”).) Indeed,

for the Cygnet team, it was a matter of common sense to create a smaller

separation device that collected RBCs only. It eliminated the second-stage

platelet-collecting section of the Amicus® separation chamber and thereby reduced

the overall radius of the separation chamber by about one-half. As Dr. Felder

explained at trial, the Amicus® separation unit

is a much larger unit, but as we know from the [’163] patent . . . the emphasis in this patent was to separate multiple components of blood as opposed to the two-[unit] red blood cell device, which the ALYX represents (indicating). So, [the Amicus®] has much more blood to separate (indicating). So, it would have been obvious to take one component of that, which is just the red cell separation [chamber], and reduce the size by half.

(Id.)

5 Dr. Felder testified that a person of ordinary skill in the art would have a

bachelor’s degree in engineering with two years of experience with centrifugation technology and separation principles. (A3500; A3511.) Haemonetics’ expert agreed that a person of ordinary skill in the art would be an engineer. (A3205.)

28

Cutting off the platelet chamber is exactly what Richard Brown did when he

pitched the idea of a smaller, portable 2RBC device to Baxter’s Cygnet team in

May 1997:

I showed them the Amicus separation system . . . . And it’s broken out into two chambers, as you can see. This side looks like the one we separate the platelets in, and the other side is for red cells. And you put blood into the red cell side, and out comes packed cells at a very high concentration, a concentration very suitable for collecting a double red cell product. And I said this is what you need to get a good product, I said, but not exactly. And I already precut this bag and I grabbed both ends. . . . I just snapped it. This is all you need. And I held up the little red cell. . . . And I had been babying a coffee cup. And I wrapped the chamber around the cup and said that’s all your rotor needs to be.

(A3454.) Here, as in KSR, there was an identified problem—the large size of

prior-art centrifuges—and a common-sense solution that was obvious to try—

taking existing devices and making them smaller.

Because of Brown’s predictive equations, a “skilled artisan would have had

a reasonable expectation of success” with the device claimed in the ’983 patent.

Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1361 (Fed. Cir. 2007). In fact, Rochat

testified that once he “conceived” the height-to-radius ratio claimed in the ’983

patent, he was so certain his device would work that he performed no testing:

Q. . . . Please tell the jurors was there any testing, actual testing of various prototypes or any testing whatsoever to establish in your mind that the one to one ratio was invention?

29

A. I did not do any test. It is a question of geometry, and for a geometry question, you don’t need any tests to do with blood and anything.

(A3155.) When Rochat equivocated about whether he tested various radii and

heights in developing the ’983 patent, he was impeached with the following

testimony from his deposition:

Question: You recall that certain testing was done to determine the optimal dimensions that are set forth in your patent?

. . . .

Answer: We did not test several radius and several H, because that is really – it is – you don’t really have to test that.

Question: Because that’s in the formula, that’s in calculations?

Answer: Yeah, yeah.

Question: And anybody can get that; that’s not new, correct?

Answer: Uh-huh.

(A3156.)

Rochat’s testimony that it was unnecessary to test the device because the

smaller radius and height were “not new,” shows that his combination of known

elements yielded predictable success. In fact, a successful result from a centrifuge

of reduced dimensions was so predictable that Baxter engineers Kelly Smith and

Thomas Westberg testified they did not even consider seeking a patent on the

ALYX® dimensions. (A3365; A3444.) Westberg explained: “We didn’t see

30

anything novel about the dimensions. They were based on Rich Brown’s

formula. . . . [W]e saw no reason to patent that.” (A3444.)

Recently, in Ritchie v. Vast Resources, Inc., this Court wrote that

[a]mong the inventions that the law deems obvious are those modest, routine, everyday, incremental improvements of an existing product or process that confer commercial value (otherwise they would not be undertaken) but do not involve sufficient inventiveness to merit patent protection. This class of inventions is well illustrated by efforts at routine experimentation . . . .

563 F.3d 1334, 1337 (Fed. Cir. 2009). Rochat, like the inventor in Ritchie, created

his device by the “routine” application of mechanical skill—i.e., using Brown’s

predictive equations to reduce the size of the prior art. Rochat himself admitted the

“common,” rudimentary nature of his claimed advancement:

Q. . . . How does what you developed and which ultimately became the Rochat ’983 patent differ from what had been done previously, as far as you know?

A. It was generally the weight and generally the dimensions of the machines were a lot larger, and I think it’s a common process in the technology that, at the beginning, we don’t look to be as small and as smart as possible. It’s a common way to work. I don’t have no reason why nobody thought about that earlier.

(A3151.)

In short, claim 16 responds to the common-sense need for smaller

centrifuges in a common-sense way—reducing the size of prior-art centrifuges.

Because the centrifuge developed by Rochat simply combined known elements

31

and functioned in a manner so predictable that it required no testing, claim 16 is

invalid for obviousness under KSR.6

b. The Supreme Court has long held that merely changing the

dimensions of a known apparatus is an obvious alteration. In Powers-Kennedy

Contracting Corp. v. Concrete Mixing & Conveying Co., the holder of a method

and apparatus patent for transporting concrete argued that he had “discovered new

principles, namely, that concrete could be moved by compressed air.” 282 U.S.

175, 184 (1930). However, the Supreme Court noted that “[m]ethods and

apparatus for moving concrete by compressed air had been previously invented”

and that “[o]ther apparatus closely approximating that of the patent in suit had been

used for transporting grout.” Id. Powers-Kennedy flatly rejected the patentee’s

argument that these methods and apparatus “were unfit for concrete” because “the

pipes and parts were not of sufficient size.” Id. at 185. Instead, the Court held that

“obviously a mere change in proportion would involve no more than mechanical

skill and would not amount to invention.” Id.7

6 The near-simultaneous development of the device by both Baxter and

Rochat (see infra Part I.B.) further shows that the invention would have been obvious to one of skill in the art. See Ecolochem, Inc. v. S. Cal. Edison Co., 227 F.3d 1361, 1379 (Fed. Cir. 2000). Haemonetics did not argue in either its closing argument or JMOL brief that any secondary considerations supported a finding of nonobviousness. (A3800-08; A3958-68.)

7 While the nonobviousness requirement of § 103 has since replaced the “invention” standard, cases arising prior to the 1952 Patent Act still frequently provide guidance. See, e.g., Phillips v. AWH Corp., 415 F.3d 1303, 1315-16 (Fed.

32

In accord with Powers-Kennedy, many courts, including this Court’s

predecessor, have routinely held that a mere reduction in the dimensions of a

known device is not patentable. See, e.g., In re Wolfe, 251 F.2d 854, 856 (C.C.P.A.

1958) (“[G]iven the idea of using a roller for massage, we see nothing patentable in

making the roller small enough and of an appropriate material for oral use. The

differences are mere change of size and substitution of material of the most

obvious kind, on a par with the differences between a hairbrush and a toothbrush.”);

In re Appelburg, 37 F.2d 620, 621 (C.C.P.A. 1930) (“While decreasing or

increasing the size of the known units . . . may produce a valuable and efficiently

working mechanism which is conducive to commercial success, this fact does not

necessarily suggest invention.”); Frigidaire Corp. v. Gen. Necessities Corp., 46

F.2d 58, 59 (6th Cir. 1931) (“[I]t was not invention to put [a smaller device] into

practice by utilizing the well-known elements of the larger devices.”); Canadian

Ingersoll-Rand Co. v. Peterson Prods. of San Mateo, Inc., 223 F. Supp. 803, 807

(N.D. Cal. 1963) (“[T]here is no invention in merely making a smaller, more

compact version of well known devices . . . .”), aff’d in part, rev’d in part, 350 (continued…) Cir. 2005) (en banc); Markman, 52 F.3d at 977-78; see also Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 234 F.3d 558, 602 (Fed. Cir. 2000) (Michel, J., concurring in part and dissenting in part) (“[M]ore recent Supreme Court cases . . . are remarkable in the degree to which they cite nineteenth century cases, and in their express insistence on adhering to older precedent.”) (citations omitted), vacated, 535 U.S. 722 (2002).

33

F.2d 18 (9th Cir. 1965); Van Brode Milling Co. v. Cox Air Gauge Sys., Inc., 161 F.

Supp. 437, 442 (S.D. Cal. 1958) (“[M]ere changes of size . . . do not amount to

patentability.”); see also Gardner v. TEC Sys., Inc., 725 F.2d 1338, 1341, 1345

(Fed. Cir. 1984) (en banc) (affirming ruling of invalidity for obviousness where a

prior-art patent disclosed all except “dimensional limitations” of a device with

“narrower nozzles” than the prior-art patent); MPEP § 2144.04 (“Changes in

Size/Proportion” “normally require only ordinary skill in the art and hence are

considered routine expedients . . . .”).

Invalidating a patent on a radiator smaller and lighter than prior radiators,

one court summarized why mere changes in size do not warrant patent protection:

It is true that a smaller unit was desired. That desire is still with us. A heating unit which would properly heat and ventilate a room without occupying more space than the lady’s thimble would be still more desirable than what we now have. Bigness is not a thing to be desired in heaters and ventilators. It is not a matter of taste, but just a matter of common sense. . . . Every schoolboy who bumps his head against one of these units is still wishing it were smaller. It is not invention to make something smaller and lighter. . . . Such a builder is not an inventor, but, at best, a good mechanic.

Herman Nelson Corp. v. John J. Nesbitt, Inc., 4 F. Supp. 703, 706 (E.D. Mich.

1933), aff’d sub. nom. Herman Nelson Corp. v. Am. Blower Corp., 84 F.2d 171

(6th Cir. 1936). In other words, common sense—a paramount consideration under

KSR—teaches that there is almost always a demand for, and commercial value in, a

34

smaller device. A smaller version of known elements is thus an obvious and

unpatentable mechanical change.

Haemonetics acknowledged at the Markman hearing that “what is new and

what is claimed to be unique is reducing and proportioning the dimensions of the

[separation] cup.” (A901.) Rochat similarly admitted at trial that “[i]t is [the]

purpose of the patent to reduce the size of the factor of 2 . . . . It’s really the

purpose of the patent.” (A3186.) Such mechanical changes are not patentable

under § 103.8

c. Applying the common-sense approach of KSR, this Court in Ball

Aerosol & Specialty Container, Inc. v. Limited Brands, Inc. ordered a district court

to grant judgment of obviousness where “the prior art disclose[d] all the limitations

of the claims,” the patent addressed “a known problem,” and the claimed invention

“would have been entirely predictable and grounded in common sense.” 555 F.3d

8 It was therefore error for the examiner to allow the radius and height limitations on the basis of “size and weight reduction” and “ease of transport and handling.” A4854; see In re Lindberg, 194 F.2d 732, 735 (C.C.P.A. 1952) (“[I]t is not regarded as inventive to merely make an old device portable or movable without producing any new and unexpected result.”); accord MPEP § 2144.04 ¶ V(A) (“Fact that a claimed device is portable or movable is not sufficient by itself to patentably distinguish over an otherwise old device unless there are new or unexpected results.”).

The examiner’s remaining grounds for allowing the radius and height limitations—“disposability and economical cost” and “enabling the re-injection of the donor’s erythrocytes” (A4854)—plainly do not withstand scrutiny. Apheresis devices with inexpensive, disposable separation chambers were well-known in the prior art, as shown by, among many other examples, the ’163 patent (which Rochat knew about but did not disclose to the examiner), and the Amicus® device.

35

984, 991, 993 (Fed. Cir. 2009); see also Ritchie, 563 F.3d at 1337 (invalidating

patent claim that substituted borosilicate glass (“a standard product with well-

known properties”) for ordinary glass in a sexual aid because the substitution “was

not a venture into the unknown”). Here, too, the prior art contains every limitation

of claim 16. Common sense taught that a smaller centrifugal device would have

been desirable. (See, e.g., A3135; A3342; A3406.) And known equations gave

Rochat a reasonable expectation that his resized device would function properly, as

shown by his stated view that testing the radius and height was wholly unnecessary.

(A3155-56.) The district court’s denial of Fenwal’s motion for JMOL should be

reversed, and judgment of obviousness should be entered in Fenwal’s favor.

B. Because Baxter Conceived of Every Element of Claim 16 Before Rochat and Reduced a Prototype to Practice Eight Months Before Rochat Filed His Patent Application, Claim 16 Is Invalid for Anticipation by Prior Invention

A person is not entitled to a patent if, “before such person’s invention

thereof, the invention was made in this country by another inventor who had not

abandoned, suppressed, or concealed it.” 35 U.S.C. § 102(g)(2). This Court has

held that “priority of invention goes to the first party to reduce an invention to

practice unless the other party can show that it was the first to conceive the

invention and that it exercised reasonable diligence in later reducing that invention

to practice.” Mahurkar v. C.R. Bard, Inc., 79 F.3d 1572, 1577 (Fed. Cir. 1996).

Undisputed evidence shows that Baxter conceived every element of claim 16

36

before Rochat and that Baxter was the first to reduce the invention to practice. In

light of this evidence, the district court erred by denying (again, without

explanation, A23) Fenwal’s motion for JMOL of anticipation by prior invention.

1. Undisputed Evidence Shows That Baxter Conceived Every Element of Claim 16 by April 8, 1998, Prior to the Earliest Conception Date Asserted by Haemonetics

Conception is “the complete performance of the mental part of the inventive

act. All that remains to be accomplished, in order to perfect the act or instrument,

belongs to the department of construction, not invention.” Coleman v. Dines, 754

F.2d 353, 359 (Fed. Cir. 1985). Conception is analyzed under a “rule of reason”

that requires consideration of the totality of the evidence. See Sandt Tech., Ltd. v.

Resco Metal & Plastics Corp., 264 F.3d 1344, 1350-51 (Fed. Cir. 2001). At trial,

Haemonetics asserted conception on April 20, 1998. (A3802.)9 But Fenwal,

having begun work on miniaturizing the Amicus® device in 1997, conceived of

every element of claim 16 no later than April 8, 1998.

a. Thomas Westberg testified at trial that he led the Baxter Cygnet team,

whose goal “was to create a small, portable 2RBC device.” (A3439.) As

discussed above, in May 1997, Richard Brown presented to the Cygnet team an

9 Haemonetics based this assertion on a document that Rochat claimed showed a “one-to-one” height-to-radius ratio. (A3143-45; A6264.) But Rochat did not include the “one-to-one” ratio in the original patent claim that became claim 16. (A4684-85.) In addition, the document does not disclose many other elements of claim 16. (A3505; A6264.) At trial, Rochat did not even compare this document to claim 16. (See A3139-63; A3184-96.)

37

idea for a smaller centrifuge—based on the Amicus® system—that could collect

2RBC. To illustrate how that device would have a separation chamber about one-

half the size of the Amicus®, Brown simply took the two-chambered Amicus®

separation chamber, snapped it in half, and wrapped the red-cell chamber around

the coffee cup he was holding. (A3454; see supra at 28.) Accordingly, as Kelly

Smith explained, the Cygnet team grew to call its work-in-progress “the Amicus

Junior . . . because for our needs we didn’t need [the] entire [Amicus®] separation

chamber.” (A3342.) Brown, Westberg, and Smith worked on designing the

“Amicus® Junior” throughout 1997. (A3454.)

b. Smith testified in detail about her early-1998 work on the miniaturized

Amicus® separation chamber, which would later become the accused ALYX®

separation cup. Describing a drawing dated March 11, 1998 (excerpted below),

Smith noted that it shows a 2RBC flexible bag separation chamber based on “one-

half of the Amicus.” (A3344.) Specifically, the drawing shows a centrifugal unit

that turns around an axis; a plurality of tubes displaying a single tubular component

(the umbilicus); a disk-shaped base; external and internal walls defining a ring-

shaped separation chamber; a coaxial tubular housing; and a separation-chamber

diameter of 2.75 inches (or 69.85 mm), for a radius of 34.93 mm, “approximately

half of the Amicus diameter.” (Id.)

38

(A6649.)

As discussed, as the Cygnet team reduced the dimensions of the Amicus®

device, the flexible separation chamber experienced wrinkling problems. (A3345;

A3440.) In late March 1998, the team resolved this problem by using a molded

chamber. (A3345.) On April 1, 1998, Smith and her colleague Michel Joie

exchanged the first sketches of a rigid separation chamber. (Id.) As the excerpts

below show, these sketches illustrate a centrifugal unit turning around an axis, with

a plurality of tubes, a single tubular component, external and internal walls

defining a ring-shaped separation chamber, and channels in the base. (See A3346.)

39

(A6642.)

Smith testified that as of April 8, 1998, Baxter had decided to pursue a

structure for the cup consisting of an annular top molded into a bottom plate

containing channels for blood flow. (A3348; A3351.) As the excerpt below shows,

this model has a disk-shaped base and a plurality of channels that extend radially in

that base.

(A5190.)

40

Finally, as shown below, Smith created a sketch on April 8, 1998 showing

the internal dimensions of this rigid separation chamber in relation to the formula

for the area of the separation chamber. (A3349-50.)

(A7211.) To calculate the height and radius above, Smith testified that the Cygnet

team aimed to create a chamber with an area of 100 cm2 because that is the area of

the RBC chamber in the Amicus® device. (A3350.) Beginning with an area of 100

cm2, Smith determined that a separation chamber with an internal radius of 3.4 cm

(or 34 mm—within the range claimed in the ’983 patent) and an internal height of

4.7 cm (or 47 mm), would function properly. (Id.)

Thus, as Smith put it, by April 8 Baxter had the “full concept” for the

ALYX® system, including the separation cup. (A3351.) After that date, Smith

testified, “we began designing it on the computer in preparation for building our

first prototypes.” (Id.) The following chart shows where—in addition to the prior-

art Amicus® device and ’163 patent—each element of claim 16 can first be seen in

the evidentiary record:

41

Element Text Document (Date)

16A A centrifugal unit comprising a centrifugal component and a plurality of tubes,

A6646-50 (March 11, 1998)

16B said unit to turn around an axis to separate the components of a liquid, blood in particular,

A6646-50 (March 11, 1998)

16C with such plurality of tubes displaying a single tubular component

A6646-50 (March 11, 1998)

16D wherein said unit includes: a base in the form of a disk;

A6646-50 (March 11, 1998)

16E an external cylindrical wall extending from the base;

A6646-50 (March 11, 1998)

16F an internal cylindrical wall extending from the base and separated by the external wall so as to define a ring-shaped separation chamber among each other;

A6646-50 (March 11, 1998)

16G a tubular housing almost extending coaxially to said rotating axis from the base to receive an end of a tubular unit; and

A6646-50 (March 11, 1998)

16H a plurality of channels extending radially in the base of the centrifugal unit, with each channel providing communication between a respective tube of the tubular unit and the separation chamber,

A5190 (April 7, 1998)

16I with the centrifugal unit having a radius between 25 and 50 mm and

A6646-50 (March 11, 1998)

16J a height between 75 and 125% of the radius.

Baxter’s Amicus® device (1997) (A3439); ’163 patent (1997) (A7067-123); Brown’s equations (1989) (A7124-40)

42

Thomas Westberg, the Cygnet team leader, corroborated Smith’s conception

testimony. At trial, reviewing the same documents as Smith, Westberg reiterated

that “the concept from April 1” was what Baxter “refined” and “tested” over the

next several months to develop the commercial version of the ALYX® system.

(A3440-42.) Likewise, Fenwal’s expert, Dr. Felder, testified that the document

containing Smith’s April 8 sketch contained every element of claim 16 of the ’983

patent. (A3504.) On cross-examination, Haemonetics did not challenge Dr.

Felder’s interpretation of Smith’s development documents. (A3508-16.) Yet on

Fenwal’s motion for JMOL, the district court gave no reason why this indisputable

evidence did not establish Baxter’s prior invention. Instead, the court simply

denied Fenwal’s motion by endorsement. (A23.)

c. Haemonetics has claimed that Fenwal cannot show prior invention

because Baxter did not recognize and appreciate the invention of “a height between

75 and 125% of the radius,” emphasizing that Smith’s invention documents do not

specifically articulate that limitation. (A3936-39.) There are at least two flaws

with this argument. First, the ’983 patent did not “invent” the claimed height-to-

radius ratio—it was disclosed in the prior art by both the Amicus® device and

the ’163 patent, as discussed above. Because that ratio was not an “inventive

feature[]” of the patent, there was no need for Baxter to have any special

43

“appreciation” of it. See Invitrogen Corp. v. Clontech Labs., Inc., 429 F.3d 1052,

1063-64 (Fed. Cir. 2005).

Second, the fact that Smith’s documents do not specifically recite “a height

between 75 and 125% of the radius” also does not defeat prior invention. A

“document is not itself a conception, for conception occurs in the inventors’ minds,

not on paper. The draft simply corroborates the claim that they had formulated a

definite and permanent idea of the invention[] by the time it was prepared.”

Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1230 (Fed. Cir.

1994).10 Rather, “[t]he idea must be definite and permanent in the sense that it

involves a specific approach to the particular problem at hand” and “[i]t must also

be sufficiently precise that a skilled artisan could carry out the invention without

undue experimentation.” Id. at 1229-30. Here, indisputable documentary evidence,

as well as the undisputed testimony of Smith, Westberg, and Brown show, as a

matter of law, that Baxter had formulated the definite and specific idea of a

centrifugal unit of roughly the same height-to-radius ratio as the Amicus®, which

as admitted by Rochat and as shown in the ’163 patent, had a height-to-radius ratio

within the claimed range. Indeed, the objective of the Cygnet team was to create a

miniaturized version of the Amicus® centrifuge—the “Amicus® Junior”—for

10 Indeed, Haemonetics itself relied on this principle when it argued that Rochat’s April 20, 1998 document, which does not explicitly articulate “a height between 75 and 125% of the radius” (among many other elements, see supra n.9), nonetheless evidenced conception of claim 16. (See A3145; A6264.)

44

collection of 2RBC. Given this objective, the unrefuted documentary evidence

illustrating the elements of claim 16, and Richard Brown’s equations (which can be

used to determine any dimension of a separation chamber (A3453)), it is plain that

Baxter conceived claim 16 before Rochat.

2. Baxter Exercised Reasonable Diligence to Reduce the ALYX® System to Practice and, in Fact, Did Reduce the ALYX® System to Practice Eight Months Before Rochat Filed His Patent Application

An inventor may reduce an invention to practice by either (i) filing a patent

application (constructive reduction to practice), Hybritech Inc. v. Monoclonal

Antibodies, Inc., 802 F.2d 1367, 1376 (Fed. Cir. 1986), or (ii) constructing a

product embodying the claims and showing that the embodiment “actually worked

for its intended purpose,” Holmwood v. Sugavanam, 948 F.2d 1236, 1238 (Fed. Cir.

1991). Haemonetics conceded that Rochat did not reduce his device to practice

until he filed his patent application on April 9, 1999. (A3750.) Because, as

explained below, undisputed evidence shows that Baxter exercised reasonable

diligence to, and in fact did, reduce the ALYX® system to practice in August 1998,

the district court should have granted Fenwal JMOL of invalidity based on prior

invention.

At trial, Kelly Smith testified about Baxter’s efforts to actually reduce the

conceived ALYX® separation chamber to practice. Smith testified that Baxter

produced its first prototype by May 1998, based on the concept developed in early

45

April. (A3351-52; see also A6710.) She also testified that, in 1998 and 1999, she

“was 100 percent dedicated to the ALYX project” and that “in fact, all of [her]

time was spent developing the separation chamber and the separation process.”

(A3352.)

Baxter successfully tested an ALYX® prototype in August 1998. Smith

explained that, for a separation chamber to be feasible, it must demonstrate at least

80 hematocrit, meaning that at least 80% of the volume is red cells, and no more

than 20% of the volume is plasma. (Id.) Confirming the entries in her laboratory

notebook (A6419-20; A6425), Smith explained that, in a test with a prototype

chamber on August 26, 1998, the Cygnet team achieved 81% and 83% hematocrit

on two different samples. (A3353.) At this point, Baxter had demonstrated that

the ALYX® system “actually worked for its intended purpose,” Holmwood, 948

F.2d at 1238, and had as a matter of law reduced it to practice. Westberg

corroborated Smith’s testimony about the successful prototype test in August 1998.

(A3442.) Smith testified that, after the successful test, the Cygnet team “began to

focus on building an injection mold to produce these parts rather than using . . .

prototypes each time.” (A3354.)

Again, the district court gave no explanation in its JMOL order for why this

undisputed evidence did not establish Baxter’s prior invention as a matter of law.

Smith’s laboratory notebook and testimony, corroborated by Westberg,

46

unequivocally show that Baxter actually reduced the ALYX® system to practice in

August 1998, long before Rochat constructively reduced his purported invention to

practice in April 1999. Moreover, indisputable documentary evidence and

testimony show that Baxter conceived the ALYX® separation chamber no later

than April 8, 1998. And, in light of Kelly Smith’s full-time dedication to the

Cygnet team and Baxter’s eventual introduction of the ALYX® system, Baxter

exercised reasonable diligence to reduce its prior conception to practice. Claim 16

is invalid for anticipation by prior invention.

II. UNDER A PROPER CONSTRUCTION OF “CENTRIFUGAL UNIT,” THE ALYX® SYSTEM DOES NOT INFRINGE CLAIM 16; UNDER THE DISTRICT COURT’S CONSTRUCTION, THE CLAIM IS INVALID FOR INDEFINITENESS

A. The District Court Erred by Construing “Centrifugal Unit” to Have Two Different Meanings in the Same Claim

Before trial, Fenwal moved the court to construe various claims of the ’983

patent, including the term “centrifugal unit,” as it is used in independent claim 16

and its dependent claims 17-19. (A176-77; A194-98.) The construction of

“centrifugal unit” in claim 16 is critical because it affects the construction of the

dimensional limitations that are required of that “unit” and that appear at the end of

the claim.11

11 Of course, construction of “centrifugal unit” alone does not fully resolve

the matter because the court must also determine how to measure the “radius” and “height” of that “centrifugal unit.” See infra Part II.B. As the district court noted,

47

The parties agreed that “centrifugal unit” as used in claims 1-15 refers to the

vessel in which centrifugation occurs. (A11.) However, intrinsic evidence shows

that “centrifugal unit” as used in independent claim 16 refers to an assemblage

comprising the vessel and the tubing. Claim 16 begins by reciting “[a] centrifugal

unit comprising a centrifugal component and a plurality of tubes.” (A114.) The

parties agreed that the term “centrifugal component” refers to the vessel alone.

(A202.) If “centrifugal unit” also refers to the vessel alone, this construction

would disregard either the phrase “comprising a centrifugal component” or

“centrifugal unit,” contravening black-letter claim-construction law. See, e.g.,

Bicon, Inc. v. Straumann Co., 441 F.3d 945, 950 (Fed. Cir. 2006) (“[C]laims are

interpreted with an eye toward giving effect to all terms in the claim.”).

Likewise, the specification of the ’983 patent describes “a centrifugal unit

[that] includes a centrifugal component and a plurality of tubes.” (A111 (3:21-22);

see also A112 (5:1-5) (“[T]he mobile part that is to be discarded after each use

[consists] of three parts, cup or bowl 2, consisting of two parts 2a, 2b welded or

glued together and tubular component 9. . . . [T]his unit does not require any

impervious seal.”).) The text of the patent is clear that “centrifugal unit,” as used

(continued…) and as Haemonetics did not dispute, Fenwal’s accused ALYX® separation cup can be found to infringe only if “radius” and “height” are measured to the outermost points of the separation cup alone. (A3721.)

48

in claim 16 and its dependent claims, refers to an assemblage comprising the vessel

and the tubing.

Haemonetics, by contrast, initially stated that “centrifugal unit” in claim 16

is synonymous with the phrase “centrifugal device,” which refers to the overall

system. (A873-78.) But, likely realizing that the dimensional limitations of claim

16 do not read on the dimensions of the entire ALYX® device, Haemonetics

changed its position just days before the parties’ opening Markman briefs were due.

(A880-81.) Haemonetics at that point contended that the first usage of “centrifugal

unit” refers to “an assemblage of two elements, namely: (1) a centrifugal unit

comprising a centrifugal component, and (2) a plurality of tubes.” (A560

(emphasis omitted).) In other words, Haemonetics contended that the first usage of

“centrifugal unit” in claim 16 refers to the combined vessel and tubing, while the

second and third usages (the usages to which the “radius” and “height” limitations

refer) refer to the vessel alone. Haemonetics claimed that this was the result of a

drafting “error” (A923; A944), and conceded that this “inartful patent drafting”

resulted in its proffered construction being “an awkward reading” of the patent

claim. (A922.) Nevertheless, and notwithstanding the plain language of claim 16

defining “centrifugal unit” as including the assemblage of a vessel and tubing,

Haemonetics contended its interpretation (vessel alone) was required by the maxim

that a term should have the same meaning when used in multiple claims. (A560

49

(citing Omega Eng’g, Inc. v. Raytek Corp., 334 F.3d 1314 (Fed. Cir. 2003)).) Yet

Haemonetics had already conceded that “centrifugal unit” should have two

different meanings in the very same claim, and it offered no reason why the court

should construe the term consistently with independent claim 1, instead of

maintaining consistency within claim 16.

In its claim-construction ruling, the district court construed the first usage of

“centrifugal unit” to refer to a “combination of both the vessel and the tubing.”

(A12 (original emphasis).) As for the second and third usages, the court criticized

Haemonetics for “provid[ing] little or no explanation for why the same phrase,

‘centrifugal unit’, would be used to describe both the whole device (both the vessel

and the tubes) as well as merely the vessel component.” (Id.) Instead, the court

noted, “Haemonetics simply allows that ‘[u]nfortunately, in making this

amendment, the applicant failed to note that it was now using the same phrase,

centrifugal unit, to refer to two different concepts.’” (Id. (original emphasis and

alteration).) Nonetheless, the court agreed with Haemonetics and construed

“centrifugal unit” to refer to two distinct concepts in the very same claim. The

only reason the court offered for adopting Haemonetics’ concededly “awkward”

reading was its desire to avoid having the dimensional limitations of independent

claims 1 and 16 apply to different objects. (A13.)

50

Yet the maxim that a term should have the same meaning when used in

multiple claims does not apply when “it is clear from the specification and

prosecution history that the terms have different meanings at different portions of

the claims.” Wilson Sporting Goods Co. v. Hillerich & Bradsby Co., 442 F.3d

1322, 1328 (Fed. Cir. 2006). Here, as noted, the plain language of claim 16 shows

that “centrifugal unit” as used in that claim refers to the combined vessel and

tubing, unlike in claims 1-15.

It is also consistent with the specification to construe “centrifugal unit” to

refer to the combined vessel and tubing in independent claim 16, and the vessel

alone in other claims. For example, the Summary of the Invention begins by

describing one embodiment in which “centrifugal unit” appears to refer to the

vessel alone. (A110 (2:52-53) (“The centrifugal device includes a centrifugal unit

with a center and a rotation axis.”); see also, e.g., A111 (3:58) (referring to

“disposable rigid units,” i.e., the hard plastic cup).) The specification then goes on

to state that “[i]n accordance with another embodiment of the invention, a

centrifugal unit includes a centrifugal component and a plurality of tubes.” (A111

(3:20-22).)

Moreover, reading “centrifugal unit” to refer to the combined vessel and

tubing is consistent with the object of the invention as conceded by Haemonetics

and as reflected in the specification—to create an apheresis machine that is “small

51

and lightweight and that can readily be transported from one site to another to

allow use in mobile blood collection stations.” (A549; see also A111 (3:62-64)

(“[T]his device . . . facilitates its transportation by virtue of its reduction in terms

of weight and size . . . .”).) Indeed, the inventor himself testified that “to keep [the

tubing] as short as possible . . . is very, very important because . . . it is the main

dimension for the machine.” (A3146; accord A3149; A3195.) A claim “term can

be defined only in a way that comports with the instrument as a whole.” Markman,

517 U.S. at 389. In this case, a construction that focuses on the size of the entire

centrifuge assembly is obviously more pertinent to determining the size and

portability of the centrifuge machine than a construction that focuses solely on the

dimensions of the cup in which separation occurs, not accounting for the necessary

tubing.

Tellingly, during prosecution, Rochat had chances to fix the drafting “error”

that Haemonetics claims exists in claim 16. (See, e.g., A4853 (office action

instructing Rochat to review the claims to ensure they comply with 35 U.S.C.

§ 112 ¶ 2).) But Rochat left the claim as it was. The district court was wrong to

essentially redraft claim 16 to fix an alleged error when the inventor could have

changed the claim, but did not. See Chef Am., Inc. v. Lamb-Weston, Inc., 358 F.3d

1371, 1374 (Fed. Cir. 2004) (“[W]e construe the claim as written, not as the

52

patentees wish they had written it.”).12 The district court’s construction of

“centrifugal unit” improperly creates an internal inconsistency in claim 16, see

Digital Biometrics, Inc. v. Identix, Inc., 149 F.3d 1335, 1345 (Fed. Cir. 1998)

(“The word ‘array’ is used repeatedly in the specification. Claim 16 itself uses the

word twice . . . . Thus, whatever interpretation we assign should encompass both

uses because the same word appearing in the same claim should be interpreted

consistently.”), defeats the public-notice function of the plain language of the

patent claims, see Mahn v. Harwood, 112 U.S. 354, 361 (1884), and should be

reversed.

There can be no dispute that the ALYX® system does not infringe claim 16

if “centrifugal unit” refers to any measurement besides the external outermost

dimensions of the separation cup alone. (See, e.g., A3203 (Haemonetics’ expert

testifying that the external outermost radius of the ALYX® cup alone is 49 mm);

A3721 (district court stating that “[t]o find infringement, the jury must, by

necessity, use the outermost dimensions” of the cup).) Under a proper construction

12 The district court distinguished Chef America on the ground that, in this case, the identical dimensional limitations in claims 1-15 suggest that Rochat meant “centrifugal unit” to refer to the vessel alone in claim 16, too, even if the plain language of claim 16 indicates otherwise. (A14.) But Chef America holds that the plain language of the claim at issue trumps all else, even if that plain language provides a “nonsensical” or awkward result. See 358 F.3d at 1373-74 (construing claim on batter-coated dough to require heating the dough itself (not the oven air) to a temperature range of 400° F. to 850° F., even though “the resultant product of such heating will be something that . . . resembles a charcoal briquet”).

53

of “centrifugal unit,” Fenwal is entitled to a judgment of noninfringement as a

matter of law.

B. As Interpreted by the District Court, Claim 16 Is Invalid for Indefiniteness

Even if the district court’s construction of “centrifugal unit” could be

sustained, claim 16 is invalid for indefiniteness. Under 35 U.S.C. § 112 ¶ 2, a

patent specification must “conclude with one or more claims particularly pointing

out and distinctly claiming the subject matter which the applicant regards as his

invention.” This Court has made clear that the purpose of the definiteness

requirement is to “assure[] that claims in a patent are sufficiently precise to permit

a potential competitor to determine whether or not he is infringing.” Amgen Inc. v.

Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1342 (Fed. Cir. 2003). In

determining whether a claim satisfies § 112 ¶ 2, the Court asks whether “one

skilled in the art would understand the bounds of the claim when read in light of

the specification.” Exxon Research & Eng’g Co. v. United States, 265 F.3d 1371,

1375 (Fed. Cir. 2001). “If a claim is insolubly ambiguous, and no narrowing

construction can properly be adopted,” the claim is invalid for indefiniteness. Id.

At trial, both parties moved under Rule 50(a) for JMOL on the issue of

indefiniteness. (A3585-86; A3699-3700.) Fenwal argued that claim 16 was

indefinite because the terms “radius” and “height” could be measured at several

places, and the patent did not disclose which of those possible measurements was

54

correct. (A3699-3700.) Initially, the court denied both parties’ motions orally at

the charge conference. (A3721.) The court ruled that “[t]he evidence presented at

trial, if believed by the jury, was sufficient to support the . . . affirmative defense[],

but a reasonable jury could also conclude that the defendants did not meet their

burden of proving th[e] defense[].” (Id.) But the very next day the court sua

sponte reconsidered Haemonetics’ motion and granted it without providing any

reasoning, let alone a written opinion. (A3792.)

The district court was wrong to grant Haemonetics’ motion for JMOL on the

issue of indefiniteness. As shown above, the term “centrifugal unit,” as used in

claim 16, refers to the combined vessel and tubing. The radius and height

measurements should account for that tubing. But assuming arguendo that

“centrifugal unit” refers to the vessel alone, as the district court found, the

indefiniteness of the terms “radius” and “height” is clear. Indeed, the district court

never even tried to construe the terms “radius” and “height,” even though it

assured the parties at the pre-trial conference that there could be “further

construction at the time we send this to the jury.” (A2573.)

The patent and available extrinsic evidence provide no clear answer as to

where height and radius should be measured. On one hand, there is strong textual

and extrinsic evidence that one of skill in the art would understand “radius” and

“height” to refer to the interior dimensions of the vessel. On the other hand, the

55

jury found infringement based on the vessel’s exterior dimensions, as Haemonetics

urged. This conflicting evidence is discussed below and establishes the district

court’s error in granting Haemonetics JMOL on the issue of indefiniteness.

1. Evidence Suggesting Use of Interior Dimensions. The ’983 patent is

directed to “centrifuge systems for the general processing of fluids and, more

specifically, a centrifugal device for liquids, such as blood.” (A110 (1:13-15).)

When discussing the diameter and height of the separation cup, the specification of

the ’983 patent states:

Sizing of centrifugation cup or bowl 2 and of tubular component 9 forming the open loop is selected to permit reducing the overall dimension, weight, price and volume for this cup or bowl 2 as for the whole centrifugal device for which sizing is essentially dependent on the diameter of the centrifugation cup or bowl. If the diameter diminishes, speed must be increased. The speed increase can be limited by increasing the height of the centrifuge enclosure 3, so that the maximum flow remains practically constant, the latter being determined by obtaining a good sedimentation of the blood cells.

(A112-13 (6:66-7:9).) The italicized portions quoted above address “the physics of

the separation process,” as Richard Brown testified. (A3496-97.) Specifically,

changes in diameter and height affect the area of (and resulting g-force in) the

separation chamber, which is of course determined by the interior dimensions of

the separation chamber. (A3497.) If, for example, the interior diameter (and hence

separation chamber area) were reduced, under the equations developed by Brown,

either the rotational speed or interior height would have to be increased to maintain

56

component separation. (Id.) If the first italicized portion of the specification were

referring to a reduction in the exterior diameter of the vessel, there would be no

need to increase rotational speed or height as the specification states because

separation chamber area would remain unchanged.

The second italicized passage above reinforces this point. It refers

specifically to the height of the centrifuge enclosure 3. As shown in figure 2 of

the ’983 patent (below), centrifuge enclosure 3 is the internal area of the chamber

in which blood separation occurs.

(A107.)

Extrinsic evidence also suggests that a skilled artisan designing a centrifugal

separation chamber would understand the terms to refer to the chamber’s interior

dimensions. As noted, one skilled in the art would employ Brown’s equations just

57

like Rochat did (A3185) to determine which height and radius measurements and

rotational speed (among other characteristics) would create separation area and g-

force that would result in a functioning centrifuge. (See A7133.) As Rochat

admitted, Brown’s equations refer to blood flow, which depends on the internal

dimensions of the separation chamber, not the external dimensions. (A3160-61.)

It is only the circumferential length and height of the separation chamber at the

interface between RBCs and plasma that is relevant to calculating functional area.

(A3453.) Exterior dimensions have no predictive value and do not relate to

centrifuge functionality. (Id.) Brown and Smith confirmed that one of skill in the

art would measure the radius and the height of the chamber from its center to that

same interface. (A3346-47; A3453.)

The document Haemonetics pointed to as proof of Rochat’s “conception” of

the “1:1” height-to-radius ratio (A6264) confirms that Rochat used internal

dimensions in developing the ’983 patent. The document shows that Rochat

plugged different values of height and radius into an HR2 formula. Rochat

admitted at trial that this equation, which derives from Brown’s equations, relates

to principles of separation and the flow of blood—considerations that turn solely

on the internal dimensions of the separation chamber. (A3160-61.)

2. Evidence Suggesting Use of Exterior Dimensions. In contradiction

of the inventor himself, Haemonetics and its expert, Dr. Russell, contended that in

58

measuring the dimensions of the separation cup, the “external outermost

dimensions” of the cup must be used. (A3203; see also A3143; A3803-04; A3949-

51.) Specifically, Dr. Russell measured the radius of the ALYX® separation cup to

its outermost lip, even though that lip is solid and blood does not flow through it.

(A3209; see also A4363.) Likewise, in its opposition to Fenwal’s motion for

JMOL of noninfringement, Haemonetics claimed to find support in the

specification for an argument that “radius” and “height” should be measured to the

external outermost points. (A3948-49.) In particular, Haemonetics cited the

specification’s references to “overall dimension[s]” and the dimensions of the “cup

or bowl.” (Id.)

Setting aside the many flaws in Haemonetics’ argument for the use of

exterior dimensions, the argument shows that there are at least four places where

the “radius” recited in claim 16 could be measured, depending on the construction

of the similarly ambiguous term “centrifugal unit”: from the axis of rotation to

some point on the question-mark shaped tubing, from the axis of rotation to the

interface of blood separation in the separation chamber, from the axis of rotation to

the internal edge of the separation cup, and from the axis of rotation to the external

outmost point of the separation cup. Likewise, depending on the construction of

“centrifugal unit,” there are at least three places where the “height” could be

measured: from the stationary component 9a at the bottom of tubular component 9

59

to the top of the question-mark shaped tubing, from the interior base of the

separation chamber to the interior ceiling of the separation chamber, and from the

exterior bottom of the separation cup to the exterior top of the separation cup.

In light of this ambiguous evidence, the district court erred by granting

JMOL to Haemonetics on the issue of indefiniteness. The grant of JMOL to

Haemonetics should be reversed, and because claim 16 is insolubly ambiguous,

JMOL should be entered in Fenwal’s favor.

III. BECAUSE HAEMONETICS SOUGHT DAMAGES FOR FUTURE INFRINGEMENT, HAEMONETICS IS NOT ENTITLED TO AN INJUNCTION AGAINST THE ACCUSED DEVICE OR A PROVISIONAL ROYALTY

At trial, Haemonetics offered evidence on, and repeatedly argued for,

damages for future infringement of the ’983 patent. Having received an award of

over $15 million that included compensation for future sales, Haemonetics was not

also entitled to have those sales enjoined or to receive a provisional royalty.

In the pre-trial memorandum, Haemonetics explained that its damages

expert, Creighton Hoffman, would opine that Haemonetics was entitled to both

past and future infringement damages, with lost profits for 90% of Fenwal’s

disposable-unit sales and a royalty on the remaining 10%. (A1813.) During the

opening statement, Haemonetics’ counsel three times asserted to the jury that

Haemonetics “lost profits equal to about $35 million”: $22 million in past

damages and $13 million in future damages. (A3000-01; see also A2997.)

60

Hoffman then testified to the jury that “damages continue on after this trial” and

explained in detail how he calculated $13 million in future damages, which, when

combined with an estimated $22 million for past damages, yield “a total of about

$35.4 million in real damages to Haemonetics as a result of the alleged

infringement.” (A3423-24; see also A8942.) Again at closing, Haemonetics’

counsel called for future damages five more times, arguing that “Haemonetics has

lost $22 million. And if the thing stays on the market . . . – that will be up to the

judge if you find infringement – Haemonetics could lose altogether . . .

approximately $35 million.” (A3804; see also A3801; A3807-08.) Nothing in the

jury charge or the verdict form instructed the jury not to award the future damages

Haemonetics requested, as would have been necessary if damages were intended to

end on a date certain. (A87-104.) Rather, in the charge, the jury was told that it

may “assess damages beginning on [April 1, 2004]”—with no end date for future

damages. (A96.)13

13 While the verdict form asked the jury to state the amount of loss

Haemonetics “has suffered” as a result of the infringement (A104), Haemonetics cannot plausibly argue that the judge’s subtle choice of verb tense limited the jury to considering only past damages. This is especially true in view of (i) the repeated references to future damages at trial, (ii) the lack of an instruction limiting recovery to past damages, and (iii) the black-letter principle that “[i]t is . . . assumed, on appeal, that the jurors considered all of the duly admitted evidence,” 36 C.J.S. Federal Courts § 608 (2003). Indeed, when Haemonetics argued at trial for $35 million in damages, it, too, frequently used tenses referring to the past. (See, e.g., A2997 (“has lost”); A3000 (same); A3001 (“has suffered”); A3807 (“lost”).)

61

With over one-third of the damages requested by Haemonetics covering

future sales, the jury returned a verdict of over $15 million in lost profits and

royalties. Yet Haemonetics later obtained an injunction against future sales, along

with a 10% royalty on sales made before December 1, 2010. The law is clear that

Haemonetics may not obtain a second, irreconcilable remedy for the same injury.

Haemonetics’ arguments and the jury’s award should have led the district court to

deny the injunction on the ground that monetary relief was adequate, and that the

harm was not “irreparable.”

In Innogenetics, this Court reversed the grant of an injunction where the

jury’s award of a “market entry fee” compensated the patentee for “possible future

sales of [the] accused products.” 512 F.3d at 1379. As here, the jury charge in

Innogenetics authorized a reasonable royalty “starting from ‘just before the

infringement began’” and “[n]owhere did the jury instructions state the reasonable

royalty would be limited to a period from the start of infringement to the date of

judgment.” Id. at 1380. In addition, as here, the record in Innogenetics was

“replete with references to the market entry fee as an amount paid in anticipation

of [the infringer’s] long-term license to sell its products.” Id. As this Court

explained, “[w]hen a patentee requests and receives [future sales] compensation, it

cannot be heard to complain that it will be irreparably harmed by future sales.”

62

Id.14 Indeed, it is fundamentally unfair to permit “duplicative recovery for the

same wrong.” Wynfield Inns v. Edward LeRoux Group, Inc., 896 F.2d 483, 488

(11th Cir. 1990); accord ConnectU LLC v. Zuckerberg, 522 F.3d 82, 90 (1st Cir.

2008); 1 Dan B. Dobbs, Law of Remedies § 1.1 (2d ed. 1993) (plaintiff is entitled

to “[no] more than one complete compensation”).

For these reasons, the injunction, as well as the royalties on post-verdict

sales (including any post-judgment interest related thereto), should be vacated.

14 See also DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1307 (Fed. Cir.

2006) (“[T]he jury had before it evidence of price erosion. Accordingly, this court has no basis to speculate that the jury did not award price erosion damages as part of its lost profits or reasonable royalty analysis.”).

63

CONCLUSION

This Court should reverse the judgment of the district court and remand with

instructions to enter a judgment of invalidity and/or noninfringement for Fenwal.

Alternatively, the Court should vacate the judgment in favor of Haemonetics and

remand with instructions to conduct further proceedings—including a retrial where

appropriate—on the issues of invalidity and noninfringement. In all events, the

Court should vacate the permanent injunction and provisional royalty entered by

the district court.

Dated: November 9, 2009 Respectfully submitted,

____________________________________

GREGORY A. CASTANIAS LUKE A. SOBOTA PAUL R. GUGLIUZZA JONES DAY 51 Louisiana Avenue, N.W. Washington, D.C. 20001 (202) 879-3939 JOHN J. NORMILE JONES DAY 222 East 41st Street New York, NY 10017 (212) 326-3939 Attorneys for Defendants-Appellants

ADDENDUM

A1

A2

A3

A4

A5

A6

A7

A8

A9

A10

A11

A12

A13

A14

A15

A16

A17

A23

A24

A25

-1-

United States District CourtDistrict of Massachusetts

________________________________

Haemonetics Corp., Plaintiff,

v.

Baxter Healthcare Corp. andFenwal, Inc.,

Defendants.________________________________

))))) Civil Action No.) 05-12572-NMG))))

MEMORANDUM & ORDER

GORTON, J.

In this patent infringement action, a jury returned a

verdict for the plaintiff, Haemonetics Corp. (“Haemonetics”), a

manufacturer of instruments and related equipment used to collect

blood and separate whole blood into its three main components

(plasma, platelets and red blood cells). Haemonetics now seeks a

permanent injunction prohibiting future infringement. It also

seeks an award for prejudgment interest.

I. Background

A. Facts

Haemonetics owns United States Patent No. 6,705,983

(hereinafter referred to as “the ‘983 patent”), which claims a

centrifugal device used for separating and collecting components

of liquids such as blood. In or around 2003, Baxter began

offering and selling a blood component collection system known as

the Alyx system, which includes an Alyx machine and a

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 1 of 19

A26

Prior to jury deliberations, the Court allowed1

Haemonetics’ motion for judgment as a matter of law on the issue

of claim indefiniteness which was, therefore, not submitted to

the jury.

-2-

corresponding disposable kit comprising a centrifugal device.

Fenwal, Inc. (“Fenwal”) later acquired from Baxter its

transfusion therapies business, including the Alyx system.

B. Procedural History

Haemonetics filed suit on December 22, 2005, alleging that

the Baxter had infringed and continued to infringe the ‘983

patent by making and selling the Alyx centrifugal device. Baxter

asserted as affirmative defenses that the patent was invalid due

to 1) claim indefiniteness, 2) obviousness and 3) prior

invention.

The parties later assented to the joinder of Fenwal as a

party-defendant in the action. On September 16, 2008, this Court

allowed Fenwal’s motion for partial summary judgment of non-

infringement of certain claims of the ‘983 patent, leaving only

Claims 16 and 17 in dispute. Haemonetics opted to pursue only

its allegation of infringement of Claim 16 at trial, however.

Trial commenced on January 16, 2009, and two weeks later the

jury returned a verdict of about $15.7 million for Haemonetics,

finding that the ‘983 patent was valid (i.e., was non-obvious and

not anticipated by a prior invention) and had been literally

infringed by the defendants.1

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 2 of 19

A27

The injunction would not apply to Baxter because that2

company no longer manufactures the infringing device.

-3-

On February 17, 2009, Haemonetics moved for a permanent

injunction against future infringement by Fenwal or, in the

alternative, a royalty on future sales of the Alyx. On March2

31, 2009, Haemonetics also moved for an award of prejudgment

interest at a rate of 12%. The defendants oppose both motions.

After the Court requested and received additional briefing

from the parties, an evidentiary hearing was held on the pending

motions on May 11, 2009. The Court considered testimony of

Timothy Costello (“Costello”), who is the Vice President of

Portfolio Lifecycle Management at Haemonetics, and Dr. Richard

Bergin (“Bergin”), Fenwal’s trial expert on damages. It also

heard oral argument and then took both motions under advisement.

C. Haemonetics’ Proposed Injunction and Royalty

Haemonetics seeks a permanent injunction:

1) to enjoin Fenwal from manufacturing or selling

a) any Alyx machines from the date of the entry of

the injunction; and

b) any Alyx disposable kits from 18 months after the

entry of the injunction or as soon as an

operational Haemonetics system is installed to

replace an Alyx system currently in use, whichever

occurs first; and

2) to require Fenwal

a) to notify any blood center currently using the

Alyx system of the injunction and of the

availability of replacement systems manufactured

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 3 of 19

A28

-4-

by Haemonetics;

b) to pay a 15% royalty on the gross sales revenue

from each Alyx disposable kit and ancillary

product (such as a cart or work station that

accommodates the Alyx) used to collect two units

of red blood cells that is sold after January 31,

2009, for use with an Alyx system installed at a

blood center prior to that date;

c) to pay a 20% royalty on the gross sales revenue

from each Alyx disposable kit and ancillary

product used to collect two units of red blood

cells that is sold after January 31, 2009, for use

with an Alyx system installed at a blood center

after that date;

d) to pay a 20% royalty on the gross sales revenue

from each Alyx disposable kit and ancillary

product used to collect i) plasma, ii) one unit of

red blood cells and one unit of plasma or iii) one

unit of red blood cells and one therapeutic dose

of plasma;

e) to provide Haemonetics with semi-annual statements

reciting the sales and related information with

respect to the Alyx products;

f) to allow Haemonetics to inspect Fenwal’s books,

records, documents and material related to its

royalty payments for at least four-and-one-half

years from the entry of the injunction; and

g) to pay post-judgment interest on all royalties

owed since January 31, 2009 through the entry of

the injunction at a rate of 0.49% in accordance

with 28 U.S.C. § 1961.

III. Legal Analysis

A. Permanent Injunction

1. Legal Standard

Following a finding of infringement, a patentee is entitled

to a permanent injunction against future infringement if it

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 4 of 19

A29

-5-

demonstrates:

(1) that it has suffered an irreparable injury; (2)

that remedies available at law, such as monetary

damages, are inadequate to compensate for that injury;

(3) that, considering the balance of hardships between

the plaintiff and defendant, a remedy in equity is

warranted; and (4) that the public interest would not

be disserved by a permanent injunction.

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

2. Application

As described below, Haemonetics has satisfied all four eBay

factors and, thus, a permanent injunction will be entered against

Fenwal, although not exactly as proposed by Haemonetics.

a. Irreparable Injury and Inadequacy of RemediesAvailable at Law

Absent an injunction, Fenwal will continue to infringe the

‘983 patent by making and selling the Alyx system. Haemonetics

argues that Fenwal, as Haemonetics’ sole competitor in the market

for portable automated systems for collecting red blood cells,

will irreparably harm Haemonetics by capturing market share that

would otherwise belong to Haemonetics (if there were no Alyx).

See Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1328 (Fed. Cir.

2008); Amgen, Inc. v. F. Hoffman-La Roche Ltd., 581 F. Supp. 2d

160, 212 (D. Mass. 2008) (finding that allowing an infringer to

be a direct competitor would irreparably cause harm to the

patentee through “lost profits, market share, and good will”).

The defendants respond that Haemonetics has always held a

majority share in the market for automated red blood cell

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 5 of 19

A30

-6-

collection systems, even after the introduction of the Alyx, thus

suggesting that the continued presence of the Alyx would cause no

harm. That argument is unpersuasive, however, because the

continued presence of the Alyx would undeniably continue to take

up market share that would otherwise belong to Haemonetics and

would continue to deprive Haemonetics of profits.

In addition, the defendants suggest that this case is

distinguishable from Acumed and Amgen because, unlike the

patentees in those cases, Haemonetics 1) has actually gained

revenue since the launching of the Alyx through the resulting

expansion of the market for automated red blood cell collection,

2) already competes with Fenwal in the relevant market and 3)

does not practice the ‘983 patent. Those points are inapposite,

however, because Haemonetics’ injury stems, in fact, from the

loss of its “right to exclude competitors from infringing the

patent.” See Acumed, 551 F.3d at 1328. Money damages cannot

compensate for Haemonetics’ inability to assert that right. Id.

The fact that Haemonetics has asked for a royalty in the event

that an injunction is not entered does not preclude it from

seeking money damages in any event, despite the defendants’

argument to the contrary.

Finally, the defendants also allege that Haemonetics has

already been compensated for future damages because its expert

specifically explained his calculations for future lost profits

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 6 of 19

A31

-7-

to the jury and the Court’s instructions to the jury did not

limit recovery to past injury. Haemonetics responds that, in

fact, the jury instructions, as well as the verdict form, refer

to damages only in the past tense and make no reference to

compensation for future harm. Clearly, when it came time to

deliberate, the jury was led to consider only past harm and

Haemonetics is not “double-dipping” by seeking an injunction.

Thus, the first two eBay factors favor the entry of an

injunction.

b. Balance of the Hardships

Haemonetics contends that its potential losses absent an

injunction counterbalance any harm Fenwal would suffer if an

injunction were entered, particularly in light of the fact that

hardship incurred from merely ceasing operations is insufficient

to tilt the scale in Fenwal’s favor. See Smith & Nephew, Inc. v.

Synthes (U.S.A.), 466 F. Supp. 2d 978, 984 (W.D. Tenn. 2006).

The defendants respond that the cost of having to design around

the ‘983 patent would be very costly and thus cause them

tremendous hardship. That hardship, however, is also

insufficient to tip the scale. See Callaway Golf Co. v. Acushnet

Co., 585 F. Supp. 2d 600, 622 (D. Del. 2008) (“The court is not

in the business of making defendants’ infringements easier to

unravel.”). Accordingly, the third eBay factor does not weigh

against the entry of an injunction.

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 7 of 19

A32

-8-

c. Public Interest

Haemonetics asserts that the public interest is not

substantially implicated by the imposition of an injunction

because the Alyx system is used in only 4.5% of all red blood

cell collection procedures (according to Haemonetics,

approximately 850 Alyx Systems are currently in use at

approximately 40-50 blood centers in the United States and

Europe). Thus, without the Alyx, Haemonetics believes that the

blood supply would not be significantly disrupted. The

defendants respond that, because each Alyx collects two units of

red blood cells (as opposed to the one unit collected by the more

commonly used manual systems), it is actually responsible for

“almost 10%” of the country’s blood supply. Moreover, they

suggest that there is currently a shortage of red blood cells and

that eliminating 10% of the supply would severely and negatively

impact public health. Haemonetics contests that there is a blood

shortage.

The defendants also contend that an injunction would give

Haemonetics a monopoly over automated red blood cell collection

which could have potentially devastating consequences such as

supply failure in the event that Haemonetics’ one manufacturing

plant were to shutdown. That contention is unpersuasive. It

does not make sense to permit one wrong, i.e. infringement of the

‘983 patent, merely to avoid a different wrong, i.e. a monopoly

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 8 of 19

A33

-9-

in the market for the automated collection for red blood cells.

Moreover, as the defendants themselves argued at trial, manual

collection devices also compete with automated devices and

provide an alternative method for collecting red blood cells

(accounting, in fact, for over 90% of the overall red blood cell

collection). The defendants contend that they are also in the

process of designing a non-infringing version of the Alyx

separation cup that would compete with Haemonetics’ automated

devices. Thus, concerns about a monopoly are over-rated.

In addition, the defendants argue that forcing industry

participants to acquire and acclimate to new devices would cause

hardship to blood centers. Haemonetics concedes that such a

concern is well-taken but argues that the problem can be remedied

by a well-fashioned injunction. It recommends that an injunction

such as the one it proposes could establish an 18-month

transition period during which time Fenwal could continue to sell

Alyx disposable kits to current Alyx users. That would allow

those users to prepare for the impending discontinuance of the

sale of the kits by either planning to use manual collection

systems or installing replacement automated red blood cell

collection systems (such as Haemonetics’ MCS+8150 and Cymbal

products).

Haemonetics states that it is committed to providing

replacement machines for those Alyx machines currently in use at

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 9 of 19

A34

Haemonetics explains that it is common practice in the3

industry for manufacturers (such as the parties in this case) to

provide the blood centers with machines at no cost in

consideration for the purchase by the blood centers of the

manufacture’s disposable kits.

-10-

no cost to the blood centers. It also purports to provide3

customer support and training for the replacement machines and to

work with the blood centers in developing the requisite “standing

operating procedure” for the replacement machines as required by

the Food and Drug Administration.

Accordingly, Haemonetics’ proposed injunction would have

some impact on the public interest, and particularly on the blood

centers that currently use the Alyx, but that impact would

apparently be minimized. Thus, the public interest would not be

disserved by the entry of an injunction.

3. Other Objections of the Defendants to Haemonetics’Proposed Injunction

The defendants argue that Haemonetics’ proposed injunction

is impermissibly broad because it enjoins the “use” of the Alyx

system. They state correctly that this Court’s jurisdiction does

not extend to non-parties such as the blood centers using the

Alyx system. See Additive Controls & Measurement Sys., Inc. v.

Flowdata, Inc., 96 F.3d 1390, 1394 (Fed. Cir. 1996). The

defendants’ concern is unwarranted, however, because, although

Haemonetics’ supplemental brief refers to enjoining the “use” of

the Alyx system, its proposed injunction actually applies only to

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 10 of 19

A35

-11-

the actions of Fenwal and the Court does not intend for it to

apply to third parties.

In addition, the defendants object to Haemonetics’ proposed

injunction because it would provide Haemonetics with “free and

full access” to inspect Fenwal’s “books and records and all other

documents and material in Fenwal’s possession or control with

respect to the Royalty payments.” The defendants persuasively

argue that such access is unnecessarily intrusive.

To ensure Fenwal’s compliance with the injunction without

violating its right to corporate privacy, the permanent

injunction entered by the Court will provide for periodic

inspection by a third-party accountant. That accountant will not

have had any relationship (financial or otherwise) with either

party except that Haemonetics will bear the cost of its services

related to the injunction.

4. To What the Injunction Applies

Haemonetics requests that the injunction apply to the Alyx

disposable kits, which include the infringing centrifugal device,

and to the Alyx machines in which the disposable kits are used.

It alleges that the only use of the Alyx machine is to provide a

platform for the Alyx kit and so selling the machine is

tantamount to actively inducing infringement.

The defendants disagree. They assert that the Alyx machine

has not been found to infringe the ‘983 patent and that,

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 11 of 19

A36

-12-

therefore, its use should not be enjoined. Moreover, they

suggest that the machine could also be compatible with a

redesigned, non-infringing centrifugal device (and indeed they

claim that Fenwal expects to market such a device within 18

months). With that justification, an injunction against the

machine is not “necessary” to prevent future infringement. See

Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 777 (Fed. Cir. 1993)

(striking down an injunction that prohibited “activities that are

not necessary to prevent infringement of the patented process”).

The defendants’ argument is well-taken and the injunction will,

therefore, apply only to the Alyx disposable kits.

B. Royalty

1. Legal Standard

For those sales of the Alyx made after the jury verdict (and

before the injunction takes effect), The Court will award a

reasonable royalty to Haemonetics. Where, as here, there is no

established royalty for the sale of a product, a reasonable

royalty may be based upon “a hypothetical royalty resulting from

arm’s length negotiations between a willing licensor and a

willing licensee.” In re Cambridge Biotech Corp., 186 F.3d 1356,

1377 (Fed. Cir. 1999). In general “[t]he choice of methodology

for calculating damages is within the discretion of the district

court.” Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d

1364, 1370 (Fed. Cir. 2002).

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 12 of 19

A37

-13-

2. Application

a. Amount of the Royalty

Haemonetics suggests that its damages expert testified at

trial that 15% would be a reasonable royalty at trial based on a

hypothetical negotiation prior to a finding of infringement. It,

therefore, requests a royalty of 15% of gross sales revenue for

sales of Fenwal products used in connection with Alyx machines

that were installed in blood centers prior to the entry of the

verdict on January 31, 2009, and 20% for sales of Fenwal products

used in connection with Alyx machines after that date.

Haemonetics contends that the royalty may be different than

that awarded by the jury because “[o]nce a judgment of validity

and infringement has been entered ... different economic factors

are involved.” Amado v. Microsoft Corp., 517 F.3d 1353, 1362

(Fed. Cir. 2008). On behalf of Haemonetics, Mr. Costello

testified at the evidentiary hearing that post-verdict economic

factors, which were not presented to the jury, include Fenwal’s

current plans 1) to enter new markets previously unavailable to

it, i.e. red blood cell/plasma collection, red blood

cell/platelet collection, and plasma-only collection, and 2) to

increase its current market share (for the collection of two

units of red blood cells).

The defendants respond that 1) Haemonetics’ proposed 20%

“new market” royalty is based solely on the biased opinion of

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 13 of 19

A38

That computation is based on the fact that Haemonetics4

requested something over $22 million in lost profit damages and

was awarded something over $11 million or 50.8% to be exact

(assuming the jury awarded only pre-judgment damages). That

percentage of the requested royalty is 7.62%.

That amount is based on a model for calculating lost5

profit damages offered by Haemonetics’ expert at trial, using

30.8% in place of the 90% capture rate which appears in the

model.

-14-

Costello, a Haemonetics employee, and 2) the jury did not even

award Haemonetics the 15% royalty it requested. The defendants

contend in their memorandum in opposition to the pending motion

that, according to its expert, Dr. Bergin, the jury apparently

awarded a 7.62% royalty. At the hearing, Dr. Bergin presented4

an alternative methodology suggesting that the jury may have

awarded a royalty of exactly four percent (4%). Dr. Bergin5

suggested that a 4% royalty makes sense because that amount is

approximately double the royalty Haemonetics paid in connection

with the purchase of the ‘983 patent from its inventor.

As indicated by the equivocation of the defendants’ own

expert, it is difficult to decipher the royalty rate utilized by

the jury, particularly in light of the fact that it was

necessarily determined only from the evidence presented at trial

and the amount of damages requested. Furthermore, the defendants

contend, without legal authority, that the Court should

extrapolate a proper post-verdict royalty from the purported

royalty used by the jury.

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 14 of 19

A39

-15-

The defendants cite a transcript from a hearing in Finisar

Corp. v. DirectTV Group, Inc., No. 05-CV-00264, 2006 U.S. Dist.

LEXIS 76380 (E.D. Tex. July 7, 2006), held on July 6, 2006, in

which the court recognized that “we don’t know what the jury did”

and “the jury determined what’s in the past” whereas the Court

has to consider the future. Although the court in that case

considered the jury award, it ultimately rejected it as a basis

for determining a post-verdict royalty.

The defendants also cite Orion IP, LLC v. Mecedez-Benz USA,

LLC, No. 6:05-CV-322, slip op. (E.D. Tex. Mar. 28, 2008), where

the court determined that the royalty invoked by the jury was

close to that recommended by the plaintiff’s damages expert. The

court awarded that same royalty for post-verdict infringement

because the plaintiff failed to demonstrate why a higher royalty

should be warranted but that is not precedent for relying on the

jury’s findings in this case where certain distinguishable

factors warranting a higher post-verdict royalty exist.

Thus, rather than hypothesize about what royalty the jury

may have awarded Haemonetics, the Court will proceed to consider

the relevant factors set forth in Georgia-Pacific Corp. v. U.S.

Plywood-Champion Papers, Inc., 446 F.2d 295 (2d Cir. 1971), upon

which both Haemonetics’ damages expert at trial and defendants’

expert Dr. Bergin relied. First, it is notable that Haemonetics

did not license the ‘983 patent to anyone (regardless of whether

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 15 of 19

A40

-16-

it considered doing so), suggesting that it placed a high value

on the patent. Next, Haemonetics and Fenwal are direct and

nearly exclusive competitors in the market for red blood cell

collection. Fenwal’s use of the ‘983 patent thus prevents

Haemonetics from maintaining a monopoly on products covered by

that patent. Moreover, Fenwal has found the Alyx to be so

successful that it is expanding its use to markets other than for

the collection of two units of red blood cells (involving the

collection of plasma and platelets). All of those factors weigh

in favor of a higher royalty.

The 15% royalty sought by Haemonetics does, however, appear

to be excessive, especially considering that, 1) pursuant to its

purchase agreement, Haemonetics agreed to pay the inventor of the

‘983 patent a royalty of approximately two percent and 2)

Haemonetics itself has not used the patent. Accordingly, the

Court will award a royalty of ten percent (10%) to Haemonetics.

b. To What the Royalty Applies

Haemonetics requests that the Court require the payment of a

royalty for every infringing sale of an Alyx disposable kit and

“ancillary product” (including a cart and work station for the

Alyx system) made after the verdict. The defendants reject

Haemonetics’ proposed application of a royalty to “ancillary

products” because those products were not found to infringe the

‘983 patent. The Court will not impose a royalty on all products

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 16 of 19

A41

-17-

associated with the Alyx centrifugal device because it is

reasonable to assume that Fenwal will develop a non-infringing

device that works with the other non-infringing components of the

Alyx system. Accordingly, the royalty will apply only to sales

of the Alyx disposable kits.

Furthermore, the defendants contend that any royalty should

be calculated on the basis of “net sales,” which the defendants

suggest and the Court hereafter will define as gross sales less

returns, discounts and other price reductions, not on the basis

of gross sales as Haemonetics proposes. The defendants contend

that the gross sales figure bears no relation to the amount of

money Fenwal actually collects. That contention is reasonable

and, accordingly, the royalty will be calculated on the basis of

net sales.

c. Payment of the Royalty

Finally, the defendants request that any royalty payment be

held in escrow during the appeal of this case so that the award

may be remitted to Haemonetics if it prevails or returned to the

defendants if it does not. That request is also reasonable and

will be adopted. See Standard Havens Prods., Inc. v. Gencor

Indus., Inc., 897 F.2d 511, 516 (Fed. Cir. 1990).

C. Prejudgment Interest

Haemonetics has moved for an award of prejudgment interest

at a rate of 12% which is the statutory rate of interest for

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 17 of 19

A42

-18-

judgments in tort and contract actions in Massachusetts. See

M.G.L. c. 231, §§ 6B and 6C. The defendants do not dispute that

Haemonetics is entitled to an award of prejudgment interest but

object to an award at a rate of 12%. They point out that in

Bowers v. Baystate Techs., Inc., this Court awarded prejudgment

interest at a rate of 12% for breach of contract claims but at a

rate of “three-month U.S. treasury bills for the secondary

market” with respect to a patent infringement claim. 112 F.

Supp. 2d 185, 187-88 (D. Mass. 2000).

The Court finds no reason to depart from its previous

determination of an interest rate based on three-month Treasury

bills for the secondary market with respect to the pending patent

infringement claim. The defendants also persuasively assert that

an interest rate of 12% is excessive in light of the fact that

awards of prejudgment interest are meant “to compensate for the

delay in payment of the damages, and not to punish the

infringer.” Lam, Inc. v. Johns-Manville Corp., 718 F.2d 1056,

1066 (Fed. Cir. 1983).

The parties have stipulated that the infringing period began

on April 1, 2004. According to a Federal Reserve Statistical

Release, the three-month Treasury bill rate for the secondary

market had a mean of approximately five percent over the period

relevant to the instant award of prejudgment interest. See

Federal Reserve Statistical Release, available at

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 18 of 19

A43

-19-

http://www.federalreserve.gov/releases/h15/data/Monthly/H15_TB_M3

.txt. Accordingly, prejudgment interest will be awarded at a

rate of five percent (5%).

ORDER

In accordance with the foregoing:

1) The plaintiff’s motion for a permanent injunction

(Docket No. 291) is, with respect to the entry of an

injunction, ALLOWED but is otherwise DENIED. Theinjunction is set forth separately.

2) The plaintiff’s motion for an award of prejudgment

interest (Docket No. 315) is, with respect to the award

of prejudgment interest, ALLOWED but, with respect tothe rate of interest, is modified to provide for a

prejudgment interest rate of Five Percent (%5).

So ordered.

/s/ Nathaniel M. Gorton

Nathaniel M. Gorton

United States District Judge

Dated: June 1, 2009

Case 1:05-cv-12572-NMG Document 328 Filed 06/01/2009 Page 19 of 19

A44

-1-

United States District CourtDistrict of Massachusetts

________________________________

Haemonetics Corp., Plaintiff,

v.

Baxter Healthcare Corp. andFenwal, Inc.,

Defendants.________________________________

))))) Civil Action No.) 05-12572-NMG))))

PERMANENT INJUNCTION & PROVISIONAL ROYALTY

GORTON, J.

On January 30, 2009, a jury determined that the separation

cup used in Alyx System disposable kits manufactured by

defendants Baxter Healthcare Corp. and Fenwal, Inc. (“Fenwal”)

infringed Claim 16 of U.S. Patent No. 6,705,983 (“the ‘983

patent”) which is owned by plaintiff Haemonetics Corporation

(“Haemonetics”). Having considered the factors relevant to the

entry of permanent injunctive relief and royalty awards, and

having found such relief warranted, it is hereby ordered that:

1) commencing on and after December 1, 2010, Fenwal, its

officers, agents, servants, employees, attorneys and

all persons in active concert or participation

therewith are permanently enjoined from infringing, or

from inducing or contributing to the infringement of

the ‘983 patent by making, using, distributing,

offering to sell or selling the Alyx System disposable

kits (as embodied by Trial Exhibit 1240), or any other

blood component separation chamber that infringes the

‘983 patent;

2) commencing on and after July 1, 2009, Fenwal shall

distribute to each blood center or hospital which

previously had in place one or more Alyx System

Case 1:05-cv-12572-NMG Document 329 Filed 06/01/2009 Page 1 of 3

A45

-2-

(hereinafter referred to as “Affected Blood Center”)

the notice attached as an exhibit to this order;

3) Fenwal shall pay to Haemonetics a provisional royalty

as follows:

a) Royalty: for each Alyx System disposable kit sold

on or after January 31, 2009, a royalty equal to

Ten Percent (10%) of Fenwal’s net sales revenue

(i.e. gross sales less returns, discounts and

other price reductions) from the sale of each such

product (“the Royalty”);

b) Schedule of Payments: the Royalty owed to

Haemonetics shall be calculated on a semi-annual

calendar basis (“the Royalty Period”) and shall be

payable, in United States currency except as

otherwise provided herein, no later than thirty

(30) days after the termination of the preceding

full semi-annual period commencing on the first

day of January and July;

c) Royalty Statements: for each Royalty Period,

regardless of whether any Alyx system disposable

kits were sold during that period or whether any

Royalty is owed, Fenwal shall provide Haemonetics

with a written royalty statement which shall

i) be certified as accurate by a duly authorized

officer of Fenwal and

ii) recite, for each Affected Blood Center, the

stock number, item, units sold, quantity

shipped, gross invoice, amount billed to

customers less discounts, allowances, returns

and reportable sales for each Alyx System

disposable kit;

d) Royalty Payments for Sales Outside the United

States: all Royalty payments owed to Haemonetics

based on sales in countries outside the United

States shall accrue in the currency of the country

in which the sales are made;

e) Record Inspection and Audit: for three years after

the entry of this order, an independent accountant

to be chosen and paid for but not associated with

Haemonetics shall have the right, upon reasonable

notice, to inspect Fenwal’s books and records and

Case 1:05-cv-12572-NMG Document 329 Filed 06/01/2009 Page 2 of 3

A46

-3-

all other documents and materials in Fenwal’s

possession or control with respect to the Royalty

payments and shall, upon the request of

Haemonetics, prepare a report on the accuracy of

the Royalty Statements issued by Fenwal at

Fenwal’s expense;

4) in accordance with 28 U.S.C. § 1961, Fenwal shall pay

post-judgment interest on all royalties owing since

January 31, 2009, through the date of this order at a

rate of 0.52%;

5) this order shall be binding on all of Fenwal’s

successors and assigns; and

6) this Court shall retain jurisdiction to enforce the

provisions of this order.

So ordered.

/s/ Nathaniel M. Gorton

Nathaniel M. Gorton

United States District Judge

Dated: June 1, 2009

Case 1:05-cv-12572-NMG Document 329 Filed 06/01/2009 Page 3 of 3

A47

-1-

United States District CourtDistrict of Massachusetts

________________________________

Haemonetics Corp., Plaintiff,

v.

Baxter Healthcare Corp. andFenwal, Inc.,

Defendants.________________________________

))))) Civil Action No.) 05-12572-NMG))))

MEMORANDUM & ORDER

GORTON, J.

In this patent infringement action, a jury returned a

verdict for the plaintiff, Haemonetics Corp. (“Haemonetics”), a

manufacturer of instruments and related equipment used to collect

whole blood and separate its into its three main components

(plasma, platelets and red blood cells). After trial, the Court

entered a permanent injunction enjoining defendant Fenwal, Inc.

(“Fenwal”) on or after December 1, 2010, from manufacturing or

selling the infringing device, the Alyx System disposable kit,

which is used in the collection of red blood cells.

As part of that injunction, Fenwal is required, on or after

July 1, 2009, to distribute a notice of the injunction (“the

Notice”) to each blood center or hospital which previously had in

place one or more Alyx Systems. In addition, the Court ordered

an award of prejudgment interest at a rate of five percent (5%)

based on the approximate mean of the three-month Treasury bill

Case 1:05-cv-12572-NMG Document 335 Filed 06/24/2009 Page 1 of 5

A48

-2-

rate for the secondary market. Fenwal has now moved to modify

the injunction with respect to its notice requirement and to

alter the order on prejudgment interest. Haemonetics has opposed

that motion.

I. Notice of Injunction

Prior to the entry of the permanent injunction, the only

objection Fenwal raised to the Notice proposed by Haemonetics

(and later adopted by the Court) was in a footnote in its

opposition to the injunction stating simply that 1) the parties

could make the necessary arrangement with customers without the

use of a court-ordered notice and 2) the Notice was “little more

than a court-endorsed advertisement” presumably because it

informs Alyx customers that Haemonetics will offer replacement

blood separation machines. Although cursory, the objection has

not been entirely waived as Haemonetics suggests.

Fenwal now offers a more detailed objection to the Court’s

requirement that it distribute the Notice. It argues that the

Notice is not necessary because Fenwal plans to introduce a

redesigned, noninfringing disposable kit for use with the

existing Alyx machines before December, 2010. It also argues

that the Notice may disrupt the market for the redesigned Alyx

disposable kit.

Because Fenwal cannot, of course, guarantee that a

redesigned, noninfringing disposable kit for the Alyx System will

Case 1:05-cv-12572-NMG Document 335 Filed 06/24/2009 Page 2 of 5

A49

-3-

be on the market before December 1, 2010 (after which time it

will be enjoined from manufacturing or selling the infringing

device), the Notice is necessary to protect the public interest

in ensuring that there is no disruption in the collection of red

blood cells. The Notice will enable centers currently using the

Alyx System to prepare for the impending discontinuance of the

infringing disposable kit. Accordingly, the Notice requirement

will not be rescinded. It will, however, be modified to require

that Fenwal customers be informed that Fenwal is in the process

of developing a noninfringing, disposable kit for use with the

Alyx machines as a possible alternative to the use of a

Haemonetics system.

Fenwal objects to the Notice as currently drafted for two

additional reasons. First, it claims that the Notice is

inconsistent with the actual terms of the injunction entered by

the Court because it refers to enjoining the manufacture and sale

of the Alyx machines. This Court enjoined only the manufacture

and sale of the Alyx disposable kits. The reference to Alyx

machines was mistakenly included in the Notice and, accordingly,

will be omitted.

Second, Fenwal argues that paragraph 4 of the Notice

misleadingly implies that the Court has ordered the removal of

Alyx machines currently in use and the provision of replacement

machines by Haemonetics. That argument is also well-taken.

Case 1:05-cv-12572-NMG Document 335 Filed 06/24/2009 Page 3 of 5

A50

-4-

Accordingly, the Notice will be further modified as set forth

separately.

II. Prejudgment Interest

The Court applied a prejudgment interest rate of five

percent (5%) under the mis-impression that the three-month

Treasury bill rate for the secondary market had a mean of

approximately that amount for the relevant period (April 1, 2004,

through the date of judgment). Fenwal correctly points out that,

in fact, that “mean” is 3.05% through the date of the verdict,

January 30, 2009.

The judgment in this case was entered on March 31, 2009.

The mean rate of interest for the three-month Treasury bill for

the secondary market calculated through that date is 2.96%.

Haemonetics’ motion for an award of prejudgment interest through

that date, originally opposed only with respect to the rate of

interest, will now, upon reconsideration, be allowed and

prejudgment interest will be awarded at a rate of 2.96%.

In its initial motion for an award of prejudgment interest,

Haemonetics requested that interest be calculated “per annum” and

Fenwal failed to oppose that request before the Court ruled on

the motion. Although Fenwal now seeks, as one alternative,

compound interest apportioned monthly based upon each month’s

infringing sales, the Court declines to entertain that late

objection and prejudgment interest will be awarded at the rate of

Case 1:05-cv-12572-NMG Document 335 Filed 06/24/2009 Page 4 of 5

A51

-5-

2.96% per annum (not compounded) from April 1, 2004 through the

date of judgment. The calculated interest is $2,321,494. An

amended judgment is set forth separately.

ORDER

In accordance with the foregoing, the defendant’s motion to

modify the permanent injunction and to alter or amend the order

on prejudgment interest (Docket No. 331) is, with respect to the

Notice as described above, ALLOWED but is otherwise DENIED.

So ordered.

/s/ Nathaniel M. Gorton

Nathaniel M. Gorton

United States District Judge

Dated: June 24, 2009

Case 1:05-cv-12572-NMG Document 335 Filed 06/24/2009 Page 5 of 5

A52

A105

A106

A107

A108

A109

A110

A111

A112

A113

A114

A115

Page 1

1 UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSETTS

234 HAEMONETICS CORPORATION, )

Plaintiff, )5 )

)6 vs. ) CA No. 05-12572-NMG

)7 )

BAXTER HEALTHCARE CORPORATION )8 and FENWAL, INC., )

Defendants. )9

10BEFORE: THE HONORABLE NATHANIEL M. GORTON

1112

CHARGE CONFERENCE131415

John Joseph Moakley United States Courthouse16 Courtroom No. 4

One Courthouse Way17 Boston, MA 02210

Wednesday, January 28, 200918 11:13 a.m.192021 Cheryl Dahlstrom, RMR

Official Court Reporters22 John Joseph Moakley United States Courthouse

One Courthouse Way, Room 320923 Boston, MA 02210

Mechanical Steno - Transcript by Computer2425

A3720

2 (Pages 2 to 5)

Page 2

1 APPEARANCES:2 CESARI and McKENNA, LLP

By: Martin J. O'Donnell, Esq.3 88 Black Falcon Avenue

Boston, Massachusetts 022104 - and -

SHERIN & LODGEN5 By: Margaret H. Paget, Esq.

101 Federal Street6 Boston, Massachusetts 02110

On behalf of the Plaintiff.7

SKADDEN, ARPS, SLATE, MEAGHER & FLOM, LLP8 By: Edward V. Filardi Esq.,

Daniel A. DeVito, Esq.,9 Stacey Cohen, Esq.,

Douglas R. Nemec, Esq.,10 James L. Leonard, Jr., Esq., and

Rachel Blitzer, Esq.11 Four Times Square

New York, New York 10036-652212 On behalf of the Defendants Baxter Healthcare Corporation

and Fenwal, Inc.13141516171819202122232425

Page 3

1 P R O C E E D I N G S2 THE COURT: Good morning, counsel. We are here on a3 charge conference. I first would like to have my deputy pass4 out the revised verdict form that we will get to before we5 adjourn today, but just to give you a little time. It's much6 simplified by virtue of the fact that some of the issues are no7 longer in the case that were before us up to this point.8 What I'm going to do at this stage -- and maybe I9 should start by just a comment that the motions have come fast10 and furious overnight. I have tried to consider them all11 carefully. But I must just say as a general matter that the12 motion practice in this case, as much as you both seem to like13 it, is over, and it is time to submit this case to the jury.14 So with that in mind, Haemonetics' motion for curative15 instructions with respect to evidence of noninfringing16 substitutes -- that's Docket No. 245 -- is denied. Defendants'17 counsel did not violate any order of this Court by eliciting18 testimony on existing alternative designs, and he did not19 improperly elicit testimony on hypothetical alternative20 designs. Moreover, defendants' counsel did not act improperly21 by cross-examining witnesses regarding their competence to22 offer testimony on patent law issues.23 Secondly, Haemonetics' motions for judgment as a24 matter of law on the issues of prior invention, obviousness,25 and claim indefiniteness, Docket Nos. 250, 251 and 252,

Page 4

1 respectively, and the defendants' corresponding cross-motions,2 Dockets 257, 256 and 255, respectively, are all denied.3 The evidence presented at trial, if believed by the4 jury, was sufficient to support the three affirmative defenses,5 but a reasonable jury could also conclude that the defendants6 did not meet their burden of proving those defenses.7 Third, Haemonetics' motion to strike all of Doctor8 Bergin's testimony, Docket No. 254, is denied. In his trial9 testimony, Doctor Bergin did not improperly apply an analysis10 of noninfringing substitutes, and his reasoning that lost11 profits should not be awarded pursuant to the demand12 requirements of Panduit was based on valid methodology.13 Before going forward, I have one sort of a14 housekeeping question for the defendants. The Court is15 currently planning to refer to both defendants jointly in its16 final instructions to the jury. Is there any reason that the17 Court should differentiate between the two?18 MR. FILARDI: No, your Honor. I think that will be19 accurate.20 THE COURT: All right. Now, we're going to -- well,21 just one comment with respect to the verdict form that I have22 passed out to counsel, the defendants requested that a special23 verdict question with respect to measurements of the ALYX be24 put to the jury, and I am not going to do that.25 To find infringement, the jurymust, by necessity, use

Page 5

1 the outermost dimensions of the ALYX; and, therefore, questions2 about measurements would be duplicative. Moreover, the3 defendants' proposed verdict form would allow for the4 possibility of an inconsistent verdict if, for example, the5 jury were to find that there is no infringement but, then, that6 the measurements are taken using the outermost dimensions. So7 I'm not going to do that as requested by the defendants.8 Now --9 MR. FILARDI: May our exception to that be noted, your10 Honor?11 THE COURT: Yes, your exception is noted.12 What I'm going to do next is go over the proposed jury13 instructions, first, of the plaintiffs. And I will go through14 them all and then allow for comment by, first, the plaintiff15 and then the defendants with respect to the proposed16 instructions -- proposed jury instructions. Then we'll do the17 same with respect to the defendants' proposed instructions, and18 we'll allow for comments by the defendants and then by the19 plaintiffs.20 I want to caution you right away, however, that when I21 say I'm going to give the substance of a proposed request that22 it means just that. It means "substance" unless I advise23 otherwise, that it's a verbatim -- in some cases, apparently --24 I think it was the defendants -- did a lot of research on my25 former charges. In some instances they hit it right on the

A3721

8-1

Page 1

1 UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSETTS

234 HAEMONETICS CORPORATION, )

Plaintiff, )5 )

)6 vs. ) CA No. 05-12572-NMG

)7 )

BAXTER HEALTHCARE CORPORATION )8 and FENWAL, INC., )

Defendants. )9

10BEFORE: THE HONORABLE NATHANIEL M. GORTON

1112

DAY EIGHT OF JURY TRIAL131415

John Joseph Moakley United States Courthouse16 Courtroom No. 4

One Courthouse Way17 Boston, MA 02210

Thursday, January 29, 200918 9:48 a.m.192021 Cheryl Dahlstrom, RMR

Brenda Hancock, RMR, CRR22 Official Court Reporters

John Joseph Moakley United States Courthouse23 One Courthouse Way, Room 3209

Boston, MA 0221024 Mechanical Steno - Transcript by Computer25

A3791

8-2

2 (Pages 2 to 5)

Page 2

1 APPEARANCES:2 CESARI and McKENNA, LLP

By: Martin J. O'Donnell, Esq.3 88 Black Falcon Avenue

Boston, Massachusetts 022104 - and -

SHERIN&LODGEN5 By: James W. Matthews, Esq., and

Margaret H. Paget, Esq.6 101 Federal Street

Boston, Massachusetts 021107 On behalf of the Plaintiff.8 SKADDEN, ARPS, SLATE, MEAGHER&FLOM, LLP

By: Thomas J. Dougherty, Esq.9 One Beacon Street

Boston, Massachusetts 0210810 - and -

SKADDEN, ARPS, SLATE, MEAGHER&FLOM, LLP11 By: Edward V. Filardi Esq.,

Daniel A. DeVito, Esq.,12 Stacey Cohen, Esq.,

Douglas R. Nemec, Esq.,13 James L. Leonard, Jr., Esq., and

Rachel Blitzer, Esq.14 Four Times Square

NewYork, NewYork 10036-652215 On behalf of the Defendants Baxter Healthcare Corporation

and Fenwal, Inc.1617

I ND EX18

Closing Argument: Page19

by Mr. Filardi 520

by Mr. Matthews 3621

Charge to the Jury 6722232425

Page 3

1 P R O C E E D I N G S2 THE COURT: Good morning, counsel. I just wanted to3 say a few things to update you before we call the jury.4 With respect to Haemonetics' motion for judgment as a5 matter of law on the issue of claim indefiniteness -- that was6 Docket No. 252 -- the Court sua sponte has decided to7 reconsider that motion, and the motion is now allowed. And8 that issue will, therefore, not be given to the jury and will9 be removed from the verdict form.10 Second, Haemonetics' motion to strike the trial11 testimony of Doctor Robin Felder, Docket 268, is denied.12 We will now proceed with closings. Call the jury.13 MR. O'DONNELL: Your Honor, before the jury comes in,14 may we ask one thing?15 THE COURT: Yes.16 MR. O'DONNELL: Haemonetics has tried to simplify this17 case by not introducing evidence on claim 17 and willfulness,18 et cetera. We ask that there be no reference in the closing19 arguments to that simplification.20 THE COURT: Defendants have a response to that?21 MR. FILARDI: Your Honor, forgive me. I wasn't22 listening. We have to -- we have to modify some graphics.23 THE COURT: Mr. O'Donnell wants me to instruct you not24 to mention claim 17, which has been dropped from the case.25 MR. FILARDI: We will not do that.

Page 4

1 MR. O'DONNELL: Thank you.2 MR. FILARDI: But -- may we have just one moment?3 MR. DOUGHERTY: Your Honor, if you're going to proceed4 with closings now, we just need a moment then to conform the5 presentation.6 THE COURT: To do what?7 MR. DOUGHERTY: Just to be sure that the presentation8 does not reference what you just pointed out.9 THE COURT: By the "presentation," you mean the oral10 remarks of Mr. Filardi?11 MR. FILARDI: Yes, your Honor.12 MR. DOUGHERTY: Yes, and the reference to exhibits,13 yes.14 MR. FILARDI: I think I can simplify it, your Honor.15 I'll just make sure that Mr. Frank does not put up any charts16 that has indefiniteness. I think we can proceed, your Honor.17 THE COURT: Fine. All right.18 (The jury entered the room at 9:55 a.m.)19 THE COURT: Good morning, jurors. I hope you had a20 safe day away from the court in that snowstorm but we're back21 now, ready to complete this case.22 As I told you on -- when was it? -- Tuesday, the23 evidence was completed. So that leaves us now with closing24 arguments and my instructions on the law.25 By tradition, in civil cases, the defendants argue

Page 5

1 first, to be followed by the plaintiffs. So in this case, that2 means that Mr. Filardi, on behalf of the defendants, may make3 his closing argument.4 MR. FILARDI: Thank you, your Honor. Good morning,5 ladies and gentlemen. Let me begin by thanking you for your6 time. This is a -- I'm sure it's a very difficult thing for7 you, but the way our judicial system is set up -- and I'll8 explain that to you in a moment -- this issue of the9 infringement is not for the Patent Office. It's for a court10 and jury like yours. It might seem a little bit mind-boggling,11 but it's an amazing system that we have where a collective12 group of laypersons can delve into these technical issues. We13 thank you for your time. And, certainly, on behalf of Fenwal14 in this case, thank you for your time. Indulge us a little15 while longer.16 I told you in opening that there were three issues in17 this case, and that is: infringement, whether the patent is18 infringed; whether the patent is valid; and whether there are19 any damages. What we went through these past couple of weeks20 is you were hearing evidence. And I'm going to try to21 emphasize what the relevant evidence is to those three issues.22 You've heard, in our view, in Fenwal's view, evidence23 which is not relevant to this case. The respective size of the24 parties is not relevant, although, frankly, Fenwal, at this25 moment in time, is about as small a company as Haemonetics or

A3792

CERTIFICATE OF SERVICE

I hereby certify that on November 9, 2009, two bound copies of the

foregoing BRIEF OF DEFENDANTS-APPELLANTS were served by overnight

delivery on the following principal counsel:

Margaret H. Paget, Esq. Sherin and Lodgen LLP 101 Federal Street Boston, MA 02110

Attorney for Plaintiff-Appellee

______________________________ Paul R. Gugliuzza

Attorney for Defendants-Appellants

CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Federal Rule of

Appellate Procedure 32(a)(7)(B), because it contains 13,966 words, excluding the

parts of the brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii)

and Federal Circuit Rule 32(b).

2. This brief complies with the typeface requirements of Federal Rule of

Appellate Procedure 32(a)(5) and the type style requirements of Federal Rule of

Appellate Procedure 32(a)(6), because it has been prepared in a proportionally

spaced typeface using Microsoft Word 2003 in Times New Roman 14 point font.

Dated: November 9, 2009 ____________________________

Paul R. Gugliuzza Attorney for Defendants-Appellants