Sunrise Medical HHG, Inc. v. AirSep Corp.

AMENDED FINDINGS OF FACT WITH CONCLUSIONS OF LAW

D. BROOKS SMITH, District Judge.

TABLE OF CONTENTS

I. AMENDED FINDINGS OF FACT

A. The Parties

B. The Patents In Suit

1. The Claims

a. The ‘303 Patent

b. The‘224 Patent

2. The Specifications

a. The ‘303 Patent

b. The ‘224 Patent

3. The Prosecution History of the ‘303 Patent

C. Sunrise’s Entry Into the OCD Market

D. AirSep’s Development of the ImPulse Select

E. The Witnesses

F. Likelihood of success on the merits

1. Ownership

2. Infringement

a. The ‘303 Patent

i. Whether AirSep’s ImPulse Select “Employed a Method” in Violation of the ‘303 Patent CO CO

ii. Alleged Non-infringement of Invacare Venture Device CO CO

iii. Non-infringement Defense of Providing a Dose During Exhalation t-CO

(A.) Claim Construction Testimony t>

CO

(B.) The Accused Device Can Provide a Dose of Oxygen during Exhalation CO

(C.) The FDA Investigation CO —CJ Cl

iv. Equivalence of Fluidic Control Versus Electronic Control CO <1

v. Whether the Sequence of Steps of the ImPulse Select Matches the Sequence of Steps Required by the ‘303 Patent CO -q CO

vi. Does the Accused Device Meet the “At Least As Great A Rise” Limitation of Claim 3? O OO CO

vii. AirSep’s Non-Infringement Opinion Regarding the ‘303 Patent T-ri 00 CO

viii. Has Any Other Person Used the ImPulse Select in Violation of the ‘303 Patent? CO OO

ix. Did AirSep Intend Any Entity to Use the ImPulse Select in Violation of That Patent?

b. The ‘224 Patent

i. AirSep’s Development of the ImPulse and ImPulse Select

ii. Structure and Operation of the ImPulse Select

iii. The Evolution of the Bypass Valve

iv. Definition of Bypass Valve

v. Claim Construction Testimony

vi. The ImPulse Select’s Bypass Valve

vii. AirSep’s Patents and Patent Applications

viii. AirSep’s Testing of the EX 2000.

ix. The Bench Study Article and Comparison of the EX 2000 to the ImPulse Select CO CO to

x. Sunrise’s Testing of the Accused Device to Determine Infringement CO SO CO

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3. Validity (O

a. The ‘303 Patent (O

i. The Disclaimer CO

ii. One of Ordinary Skill in the Art CO

iii. The Combination of U.S. Patent No. 2,766,752 (Meidenbaur) and Smith Reference

b. The ‘224 Patent

i. One of Ordinary Skill in the Art

ii. The OMS 20/50 Reference (Claim 1)

iii. The Combination of OMS 20/50 Reference and the European Patent (Claims 2-6) o Oi

iv. The Combination of the ‘627 Patent, the ‘881 Patent and the European Patent O

v. Other Indicia of Obviousness rH

c. Sunrise’s Patent Search ~ EX 2000 rH

4. Enforceability rH

a. Patent Misuse--The Puritan Bennett License-The ‘303 Patent rH

b. Inequitable Conduct - The ‘224 Patent rH

5. Prior Adjudication/Reissue and Reexamination rH

Irreparable Harm rH o

1. Sunrise’s Allegations of Lost Market Share and Price Reduction t — i

a. Alleged Price Reduction rH

b. Alleged Reduction in Market Share 04

2. Sunrise’s Reputation and Goodwill 04

3. Sunrise’s Patent Policies 04

4. The Annual Report 04

5. Market Life of Sunrise’s Products 04

6. Sunrise’s Delay in Bringing the Action 04

7. Sunrise’s Lost Profits 04

8. Non-Commercialization of the ‘303 Patent CO

9. AirSep’s Ability to Meet a Judgment CO

Balance of Hardships CO K

False Patent Marking CO

1

CONCLUSIONS OF LAW

II.JURISDICTION AND VENUE 434

III. STANDARDS FOR ISSUING A PRELIMINARY INJUNCTION 434

IV. LIKELIHOOD OF SUCCESS ON THE MERITS 436

A. Ownership 436

B. Infringement 437

1. Claim Construction Principles 437

a. General Precepts 437

b. Means-Plus-Function Claims 439

2. Infringement Principles 440

a. Literal Infringement 441

b. Doctrine of Equivalents 441

c. Prosecution History Estoppel 442

3. Comparison of the ‘303 Patent Claims to the Accused Method 443

a. Does AirSep Directly Infringe Claim 3 of the ‘303 Patent Under 35 U.S.C. § 271 (a)? 443

b. Is There Direct Infringement of Claim 3 by Others? 443

i. Literal Infringement 443

ii. Prosecution History Estoppel and Infringement of Claim 3 Under The Doctrine Of Equivalents. 446

c. Whether AirSep Intentionally Induced Direct Infringement of Claim 3 448

4. Comparison of the ‘224 Patent Claims to the Accused Device 448

a. Literal Infringement 448

b. Doctrine of Equivalents 448

C. Validity 450

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1. 35 U.S.C. §102 ~Anticipation H ai

2. 35 U.S.C. § 103 --Obviousness M en

3. Scope and Content of the Prior Art DO en

4. Level of Ordinary Skill in the Art W oí

5. The Lack of Differences Between the Claims and the Prior Art CO oí

a. Whether Claims 3-5 of the ‘303 Patent are Invalid Under § 103 as Obvious

ox

CO

i. Sunrise’s Alleged Admission of Invalidity

ox

CO

ii. Whether Claims 3-5 are Obvious in View of the ‘752 Patent (Meidenbaur) over Smith

b. Whether the Claims of the ‘224 Patent are Invalid

i. Whether Claims 1-6 of the ‘224 Patent are Invalid on the Ground of Anticipation

Ox OX

ii. Whether the Remaining Claims of the ‘224 Patent are Invalid Under 35 U.S.C. § 103 in View of the OMS 50 Reference Over the European Patent

ox cn

iii. Whether Claims 1-7 of the ‘224 Patent are Invalid Under 35 U.S.C. § 103 in View of the ‘627 Patent over the OMS 50, the ‘881 Patent or the European Patent -3

6. Secondary Considerations of Nonobviousness -3

D. Enforceability -q

1. Whether Sunrise Misused the ‘303 Patent -3

2. Whether There Was Inequitable Conduct During the Prosecution of the ‘224 Patent

ox

V. IRREPARABLE HARM

a

VI. THE BALANCE OF THE HARDSHIPS

<y*

VII. WHETHER PUBLIC POLICY SUPPORTS THE GRANT OF AN INJUNCTION as 0^

VIII. CONCLUSION and ORDER o

<Ox

On February 7-11, 2000,1 held a preliminary injunction hearing in the above-captioned patent infringement case, issuing findings of fact on April 7, dkt. no. 84. Pursuant to the court’s order contained therein, the parties have filed exceptions to those findings. The following memorandum constitutes my amended findings of fact with conclusions of .law pursuant to Fed. R. Civ. P. 52(a). For the following reasons, I will deny plaintiff’s motion for preliminary injunction.

I. AMENDED FINDINGS OF FACT

A. The Parties

Plaintiff, Sunrise Medical HHG Inc. (“Sunrise”), is a California corporation having a principal place of business for its Respiratory Products Division (also known as Sunrise DeVilbiss) at 100 De-Vilbiss Drive, Somerset, Pennsylvania 15501-0635.

1

It is a subsidiary of a publicly traded company.

2

AirSep Corporation, the defendant in this action, is a New York corporation having a principal place of business at 290 Creekside Drive, Amherst, New York 14228.

3

Sunrise has asserted infringement of Claims 1 through 7 of U.S. Patent Number 5,755,224 (“the ‘224 patent”) and Claims 3 through 5 of U.S. Patent Number 4,457,-303 (“the ‘303 patent”) under 35 U.S.C. § 271 (a) and accuses AirSep of directly infringing, contributorily infringing and inducing activities which would constitute

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the infringement of the ‘224 Patent and the ‘303 Patent.

4

The accused device is an electronic oxygen conserving device (“OCD”) that provides convenience and mobility to respiratory patients with therapeutic oxygen needs, and which is marketed by Air-Sep as its ImPulse Select product. The need for such supplemental oxygen delivery methods has existed since at least as early as 1967.

5

B. The Patents In Suit

1. The Claims

a. The ‘303 Patent

Sunrise claims to be the owner of the ‘303 patent, which was issued July 3, 1984 upon the application of Dr. Gerald Durkan and entitled “Respirating Gas Supply Control Method and Apparatus Therefore.”

6

The ‘303 patent discloses and claims a method of supplying supplemental dosages of a respirating gas, such as oxygen, to a patient having an inspiration period and expiration period for every breath. The initiation of the inspiration period is sensed and a timing means is used to predetermine the duration Tx of the dose of respirating gas. The duration of Tt is less than the duration of inspiration period T2.

7

The dose is supplied immediately in response to the sensed inspiration. The dose is supplied for the duration Tx at a rate Rj which is set to provide at least as great a rise in the partial pressure of the respirating gas in the blood as the continuous application of said gas at a lower rate R2 for the full duration of the inspiration period T2. Put more simply, it is a method of providing oxygen at a high flow rate during the beginning of the patient’s inspiration in such a manner as to oxygenate the patient’s blood at least as well as continuously supplying oxygen at a lower, conventional rate throughout the patient’s entire inspiration.

8

One advantage of this invention is that it provides an economical and efficient method of delivery which allows for the conservation of oxygen.

9

The use of a timer to predetermine the period of the dose provides another significant advantage, enabling the volume of the pulse to be substantially constant from one breath to another, even as the respiration rate varies.

10

As acknowledged in the ‘303 patent, intermittent demand oxygen flow had been tried in the past,

11

but prior intermittent demand oxygen devices supplied oxygen for the full inspiration period

12

and some prior demand oxygen devices supplied oxygen that, although commencing with a surge in the pattern of flow at the start of inspiration, still supplied oxygen during the entire inspiration period.

13

The ‘303 patent contains eight claims, three of which are independent (Claims 1, 2, and 3) and five of which are dependent claims (Claims 4-8). Claims 1 and 2 of the ‘303 patent are apparatus claims, while Claims 3-8 are directed to a method of supplying dosages of oxygen to a person.

14

Sunrise does not contend that AirSep is

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directly or indirectly infringing independent Claims 1 or 2 of the ‘303 patent.

15

Claim 3 of the ‘303 Patent reads:

A method of supplying supplemental dosages of respirating gas to a spontaneously breathing in vivo respiratory system having an inspiration period and an expiration period, said inspiration period being of duration T2 during which period a negative pressure relative to ambient pressure exists in said in vivo respiratory system at the location whereat respi-rating gas is introduced to said system, said expiration period comprising a positive pressure relative to ambient pressure existing in said in vivo respiratory system at the location whereat respirat-ing gas is introduced to said system, said method comprising the steps of:

(1) sensing initiation of said inspiration period;

(2) using timing means to predetermine a duration Tx for which a dose of respi-rating gas is to be supplied to said in vivo respiratory system, said duration ^ being less than the duration T2 of negative pressure relative to ambient pressure occurring in said in vivo respiratory system during said inspiration period; and,

(3) supplying immediately in response to said sensed inspiration a dose of respi-rating gas to said in vivo respiratory system, said dose being supplied ■ only for the duration T1( said dose being supplied substantially at the beginning of said sensed inspiration, said dose of gas being supplied at a rate Rb said rate Ri being set at a value such that it produces at least as great a rise in the partial pressure of said gas in blood interfacing with said respiratory system as the continuous application of said gas at a lower rate R2 for the duration T2; and,

automatically repeating steps (1), (2), and (3) for a plurality of consecutive inspiration periods.

Claim 4 of the ‘303 Patent reads:

The method of Claim 3, wherein Tx is less than 0.25 X T2.

Claim 5 of the ‘303 Patent reads:

The method of Claim 3, wherein Ti is less than 0.5 second.

b. The ‘224 Patent

Sunrise also claims to be the owner of the ‘224 patent issued May 26, 1998 and entitled “Cylinder-Mounted Oxygen Management Device.” This patent was applied for by Gregory W. Good, Richard L. Dalton, Jr. and Jon Peter Gilchrist.

16

The ‘224 patent discloses and claims an oxygen management device adapted to be mounted on a post on a compressed gas cylinder for the purpose of providing a controlled flow of oxygen to a patient. The device comprises a manifold block having an opening to receive the post. The manifold block has a regulator, an over-pressure relief valve, a solenoid-operated flow control valve, and a bypass valve mounted on the manifold block and' connected with internal passageways so that no tubing or tubing connectors are used.

17

The ‘224 patent contains one independent apparatus claim (Claim 1) and six apparatus claims that depend therefrom.

Claim 1 of the ‘224 Patent reads:

An oxygen management device adapted to be mounted on a post on a compressed oxygen cylinder for delivering a controlled flow of oxygen to a patient comprising:

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a manifold block having an opening adapted to receive a post on an oxygen cylinder;

said manifold block opening having an oxygen connection adapted to engage and seal to a mating connection on an oxygen tank post;

means for securing said manifold block to an oxygen cylinder post received by said opening;

pressure regulating means on said manifold block for reducing the pressure of oxygen received from a cylinder to a predetermined low level; an overpressure relief valve on said manifold block;

a solenoid operated flow control valve on said manifold block arranged for initiating and interrupting the delivery of oxygen from the cylinder to a patient;

a bypass valve on said manifold arranged in parallel with said solenoid operated flow control valve;

flow restricting means in series with said bypass valve to limit said oxygen flow through said bypass valve; means for manually opening and closing said bypass valve; and,

control means responsive to inhalation by a patient for opening said solenoid operated flow control valve to deliver a dose of oxygen to a patient.

Claim 2 of the ‘224 Patent reads:

An oxygen management system, as set forth in claim 1, and further including an annular housing enclosing said manifold block, said pressure regulating means, said overpressure relief valve, said solenoid operated flow control valve, said bypass valve, said flow restrictor and said control means, and wherein said annular housing has an opening aligned with said manifold block opening and adapted to receive a post on an oxygen cylinder.

Claim 3 of the ‘224 Patent reads:

An oxygen management system, as set forth in claim 2, and further including an oxygen pressure gauge mounted on said manifold block and adapted to indicate the pressure oxygen in said manifold block from an oxygen cylinder.

Claim 4 of the ‘224 Patent reads:

An oxygen management system, as set forth in claim 2, and further including a knob extending from said housing for movement between first and second positions, and means for opening said bypass valve when said knob is in said first position and for closing said bypass valve when said knob is in said second position.

Claim 5 of the ‘224 Patent reads:

An oxygen management system, as set forth in claim 4, wherein said bypass valve has a valve stem movable between open and closed positions, and wherein said valve stem is moved by said opening and closing means to said open position when said knob is moved to said first position and to said closed position when said knob is moved to said second position.

Claim 6 of the ‘224 Patent reads:

An oxygen management system, as set forth in claim 2, and further including means on said housing for selecting and indicating the effective pulse flow rate delivered to an inhaling patient by said solenoid operated flow control valve.

Claim 7 of the ‘224 Patent reads:

An oxygen management system, as set forth in claim 1, and wherein said manifold block includes a plurality of oxygen passages connecting said pressure

regulating means, said overpressure relief valve, said solenoid operated flow control valve, said bypass valve, and said flow restricting means, and wherein said oxygen passages have a total volume of no greater than 0.1 cubic inch.

Claims 2 through 7 depend from Claim 1; thus, claims 2 through 7 incorporate each and every element of Claim 1 as if the limitations of Claim 1 were repeated within Claims 2 through 7.

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2. The Specifications

a. The ‘303 Patent

The timing means of the ‘303 patent predetermines the duration of the pulse, Tx , of the ‘303 Patent. The timing means includes a closed loop fluidic circuit 104 engaged with a power stream source 46 such that the power stream intersects the closed loop 104 at port 96c. When no negative pressure is being sensed, the power stream is vented to the atmosphere 96a.

18

As acknowledged in the ‘303 patent, fluidic logic elements have been used in prior intermittent demand oxygen systems.

19

[[Image here]]

Negative pressure in the cannula, which occurs only when a user is inhaling, is sensed by a pressure sensor. A first fluid signal, generated by means 64 on output leg 70, is applied to the second generating means 96 on line 102. If negative pressure is not sensed or ceases, then

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the fluid is cut off from the line 102. Line 102 is attached to the bottom portion of the closed loop 104a of second generating means 96.

The fluid separates along two paths. The first path pushes the power stream to divert the power stream from port 96a to outlet port 96b and thus to the valve line 100. The power stream flows along the valve line and actuates the valve 110 to an open position. The fluid flowing along the second path travels around the closed loop 104 with a variable orifice 106 and an elastomeric balloon 108 attached to the closed loop 104. The variable orifice 106 and elastomeric balloon 108 delay the fluid following along the second path for a predetermined period of time (Tx) depending the size and capacities of the variable orifice and elastomeric balloon chosen. The sizes and capacities are chosen such that the time it takes the fluid to flow along the second path is much less than the inspira-tory period of the patient. When the fluid following along the second path reaches the other side of the power stream, this fluid equalizes the power stream at port 96c by effectively pushing the power stream back so that it vents to the atmosphere through port 96a. This also has the effect of closing the fluidically operated demand valve and shutting off the supply of oxygen to the patient.

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[[Image here]]

In the absence of negative pressure, that is, when inspiration ceases, there is no fluid traveling along the first path. Thus, the power stream is not pushed to outlet port 96b but reverts instead to port 96a and is vented to the atmosphere.

20

The absence of a fluid signal on output leg 70 of the generating means 64 results in suppression of the source means 98 (not pictured), which includes solenoid valve 110. Thus, no respirating gas is applied to the patient during expiration.

21

Nowhere in the patent specification is a method or apparatus described which is designed to or theoretically capable of delivering respirating gas to a patient during expiration. Moreover, the ‘303 patent specification draws a distinction between fluidic versus electronic circuits. At column 2, lines 24-30, the specification provides (emphasis added):

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Of the prior art devices that attempt to detect apneic events, many, (including the devices disclosed in U.S. Pat. No. 3,357,428 to Carlson and 4,206,754 to Cox) periodically generate electrical (as

opposed to fluidic)

signals which are electrically monitored to determine when a patient has ceased to 'breathe satisfactorily and which activate an alarm as a warning indicator.

The structure for the timing means, as claimed in Claim 3, is described in the specification as follows:

The fluidic path 104 has thereon one or more timing means, such as a fluid restrictive device 106 and/or a capacitance device 108. As shown in the embodiment of FIG. 1, the restrictive device 106 is a variable resistor and the capacitance 108 is a variable capacitance, such as an elastomeric balloon. The restrictive device 106 and the capacitance 108 may be interchanged with similar restrictive devices or capacitances having different values and capacitances.

22

The ‘303 Patent specification further explains that various sizes and types of elas-tomeric balloons or other appropriate devices may be chosen from the variable capacitance device 132.

23

The specification does not provide for a timing means comprising switches and an electrical circuit.

In the abstract, the patentee recites that “[t]he demand gas circuit (20) of the respirator supplies respirating gas to a patient at the beginning of an inspiration and for a time period which is a fraction of the duration of the inspiration.” The specification further describes this relationship as follows:

an object of this invention is to provide a respirator apparatus and method of operating the same wherein respirating gas is supplied to a patient substantially at the beginning of an inspiration and for a time period thereafter which is a fraction of the duration of inspiration.

24

The patentee again refines this fractional delivery method with the following statement: “Preferably the duration of application of the respirating gas to the patient is less than 0.25 of the duration of an inspiration.”

25

In technical language, the patentee reiterates the relationship between the duration of the first fluid signal ^-inspiration) and the second fluid signal (Ti-oxygen delivery) as follows:

Thus, the second generating means 96 generates a second fluid signal on line 100, the second fluid signal having a duration related to the duration of the first fluid signal applied from output leg 70 on line 102. The duration of the first fluid signal on line 102 and the second fluid signal on line 100 are in a predetermined relationship which is dependent upon the values and sizes chosen for the timing means comprising second generating means 96. Such values and sizes should be chosen for this embodiment such that the ratio of the duration of said second fluid signal to the duration of said first fluid signal, and hence the duration of the inspiration, is less than 0.25. In many cases the ratio may approximate 0.125, if desired.

26

b. The ‘224 Patent

The specification of the ‘224 patent teaches:

[T]he components which comprise the gas management device 10 of the present invention are contained within the housing 13. These components ... include a manifold block 27, a pressure regulator 28, a pressure relief valve 29, the pressure gauge 20, a manually operated bypass valve 30, a solenoid-operated flow control valve 31, a manually adjustable constant flow limiting valve

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or flow restrictor 32, a printed circuit board 33, and a battery (not shown).... Many of these components are integral with the manifold block 27 and are therefore, in fluid communication with each other through a plurality of internal passageways in the manifold block 27. Therefore, an advantage of the gas management device 10 is that no tubing or tubing connectors are used within the device 10. The only tubing and connectors used is [sic] external to the device 10 in conjunction with delivering oxygen from the device 10 to a nasal cannula worn by the patient.

27

The specification continues:

The cylinder post may be provided with various standard connection configurations, for example, with a conventional CGA 870 connection. The oxygen cylinder post 13 includes a valve 45 which is operated with a suitable wrench (not shown) to allow pressurized oxygen to flow from the cylinder 14 to the manifold 27.

28

The ‘224 patent describes a “post” as requiring a valve within the post.

29

In addition, the patent examiner cited nine patents

30

and a flyer having a photograph thereon of the OMS 50 (a prior art device manufactured by plaintiff) attached to a yoke-type regulator and mounted on the post of an oxygen tank.

31

Notwithstanding the references cited by the examiner, all ' claims in the patent application were allowed by the Patent Office.

32

[[Image here]]

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[[Image here]]

The specification of the ‘224 patent, at column 5, lines 42-46, further recites (emphasis added):

The bypass valve 30 is connected to bypass the flow control valve 31 to selectively supply a continuous flow of oxygen to the patent [sic]. The flow limiting valve 32 is connected

in series with

the bypass valve 30 to establish the rate of oxygen flow when the bypass valve 30 is open. The flow limiting valve 32 may be a manually adjustable needle valve which is set to the desired constant flow rate. Alternately, the flow limiting valve 32 could be replaced with a fixed orifice flow restrictor.

As stated, the flow restricting means set forth in claim 1 of the ‘224 patent can be a fixed orifice and need not be adjustable.

33

Nowhere, however, does the patent specification describe an apparatus that entirely eliminates the need for a flow limiting valve or fixed orifice flow restrictor. Nor does the patent specification directly describe an apparatus having a flow limiting valve integral with the bypass valve, such that the bypass valve might also perform the function of flow limiting valve 32. Defendant also makes the textual argument that “[t]he patentee’s use of the phrase ‘in series with’ is unmistakably clear and in contrast to the term ‘integral’ which the patentee defines later in the specification.” It points out column 7, lines 30-39, at which the patentee states:

A number of the valves and components have been described as being integral with the manifold block 27. As used herein, the term “integral” means that the components are at least mounted directly on the manifold block 27 and in some cases may share common components with the manifold block 27. For example, a valve seat may be machined directly in the manifold block 27, while other components of the valve may be mounted on the manifold block 27.

By using the phrase “in series with,” defendant contends, the patentee intentionally drew a distinction between separate structures and structures that are “integral” with one another.

3. The Prosecution History of the ‘303 Patent

The Applicant’s claims as originally filed contained no limitation directed to Tx be

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ing less than

Tz.

34

This limitation was added to overcome the Examiner’s rejection of the Application based upon U.S. Patent No. 3,910,270 to Stewart, U.S. Patent No. 4,054,133 to Myers, and D. Auerbach

et al.

(“the

Chest

reference”).

35

To distinguish Stewart,

36

Applicant argued that:

The operation of Stewart is easily contrasted with Applicant’s claimed method. Applicant supplies a pulse of gas having duration Tx which is less than the duration T2 of negative pressure relative to ambient occurring in said in vivo respiratory system during inspiration.

Thus, even if it were argued that Stewart supplied a pulse, Tj for the pulse would

equal

T2 so that the patient could not inspire further.

[Cjontrary to the patent’s desired time frame for respiration, Stewart supplies gas even during a time when the patient would otherwise be exhaling. With Applicant’s method, on the other hand, gas supply can

never

last longer then the patient’s inspiratory effort.

37

Applicant next argued that this limitation also overcame

Chest

In

Chest,

oxygen is supplied to the patient throughout inspiration.... The

Chest

article provides no teaching or even a clue that the supply of oxygen in the negative demand mode could be terminated earlier than the cessation of a detected negative pressure... .

38

Applicant further stated that

it cannot be said that the device described in U.S. Patent No. 4,054,133 to Myers and whose operation is reported in

Chest

provides a pulse of respirating gas having a duration Tx which is less than the duration T2 of inspiration as claimed by Applicant.

Applicant supplies a pulse of gas during an early part of the portion of a respiratory cycle in which a negative pressure occurs in the in vivo respiratory system, but not for the entire portion of the cycle wherein negative pressure occurs .... The beauty of Applicant’s method is that Applicant can accomplish the same physiological result using less gas by supplying the pulse for the time Tj rather than supplying gas for the duration T2.

39

Applicant also recited:

[Pjrior art methods and systems have attempted to supply a patient with supplemental gas either throughout respiration or throughout inspiration upon demand.

Rather than continually supplying a patient with supplemental gas, or rather than just supplying a patient with supplemental gas throughout inspiration, Applicant’s method and apparatus capitalize upon the effective early stage in-

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spiratory phenomenon recognized by Applicant. In accordance with this phenomena [sic], Applicant has concluded that it is more advantageous to apply a greater volume of respirating gas (such as oxygen) per second and to apply the oxygen only during an effective early stage of inspiration.

The pulse has a duration Tj which is less than the duration T2 of the inspiration.

40

The Examiner conducted an interview with Applicant on March 29, 1983. At that time, a proposed claim was submitted to distinguish the prior art of record.

41

The Examiner suggested revisions to the proposed claim, specifically that the limiting language “said dose being supplied only for a duration Tx” be added. Applicant adopted this suggested limitation in his May 6, 1983 amendment to application Claim 58, which ultimately issued as patent Claim 3.

42

In that amendment, the Applicant reiterated that the limitation in the claims that Tx be less than T2 was necessary to overcome prior art references directed to devices and methods that supplied a dose of respirating gas throughout the inspiration period:

[Rjather than just supplying a patient with supplemental gas throughout inspiration (as is done by the Auerbach and Myers et al. references relied on by the Examiner), Applicant supplies a dose of respirating gas only for the duration Tx which is less than the duration T2... ,

43

The Examiner, in his third and last office action, rejected application Claim 58 on obviousness grounds. In arguing that the limitation directed to Tx being less than T2 overcame the cited prior art, Applicant stated:

Auerbach et al. certainly do not recognize a method wherein the shortening of the duration of gas supply has a favorable physiological effect on a patient.

[I]t [is] inconceivable that Auerbach et al. were concerned with shortening the duration of the supply of gas to a time period less than the duration of negative pressure or that the same would even be feasible given the particular mechanical structure involved.

44

In so distinguishing the prior art, Applicant further explained the meaning of the limitation that Tx be less than T2. In particular, Applicant explained that the duration of the dose of gas Tx is in a predetermined relationship with the duration of inspiration T2:

[W]hile the point in túne at which the supply of Applicant’s dose begins is dependent upon the sensing of the initiation of inspiration, the point in time at which Applicant’s dose is terminated, and hence the duration T1; is not strictly governed for each inspiration by the duration of the inspiration nor the sensitivity of the sensor.

45

This limitation was added by way of Applicant’s October 18, 1983, Amendment. It was added to overcome U.S. Patent 4,106,-503 to Rosenthal,

et al.,

which, according to Applicant, “was cited against a corresponding foreign application filed by Applicant.”

46

Following a second interview with the Examiner held on September 20, 1983, the Applicant amended application Claim 58 to include the limitation “using timing means to predetermine a duration T]..”

47

The Applicant describes the claimed “timing means” as follows:

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The choice of values and sizes for the particular elements (particularly the resistance 106 and the capacitance 108) determine the duration of the second fluid signal which controls the application of a dose to the patient. In this regard, the specification states at page 18 that “An appropriate value is chosen for the resistance of a variable resistor 106 and a capacitance 108 of appropriate maximum capacity is chosen so that the first fluid signal traveling around the closed loop fluidic circuit 104 will be delayed for a predetermined time before the signal reaches the second end 104b of the fluidic circuit.”

48

The relationship between Tx and T2 is further acknowledged and emphasized in patent Claims 4 and 5, which depend upon Claim 3 of the ‘303 patent. These dependent claims recite specific relationships between Tj and T2 as follows:

4. The method of Claim 3, wherein Tj is less than 0.25xT2.

5. The method of Claim 3, wherein T2 is less than 0.5 second.

Finally, following Applicant’s request that the Rosenthal patent “be made of record in the prosecution file of the Captioned application,” Applicant distinguished the claimed invention over Rosenthal by stating that “the Rosenthal

et al.

apparatus requires a reset switch 34, meaning that the apparatus is

not

capable of operating in an automatically recycling mode in the manner claimed by Applicant.”

49

In all, the patent examiner cited eighteen patents

50

and three articles

51

considered during the examination of the ‘303 patent. Notwithstanding the acknowledged prior art and the references cited by the examiner, claims 3, 4 and 5 as amended were ultimately allowed by the Patent Office.

52

C. Sunrise’s Entry Into the OCD Market

In 1993, Sunrise purchased DeVilbiss and operated it as a subsidiary until it became a division of Sunrise.

53

The following year, Sunrise purchased the assets of PulsAir.

54

PulsAir owned the ‘303 patent and sold an OCD under the name of OMS 20/50, which utilized this patented technology.

55

Sunrise began selling the OMS 20/50 immediately after its purchase of PulsAir and continued to market it until the summer of 1997.

56

The OMS 20/50 utilized the technology claimed in the ‘303 patent inasmuch as it used a timing means to time the delivery of the pulses of oxygen, which would be supplied at the onset of inspiration and only for a duration of time less than the time of inspiration.

57

In 1995, Sunrise put together a team to develop its next generation OCD product. Gregory W. Good, Richard L. Dalton and Peter Gilcrest invented the subject matter which later became the EX 2000.

58

They applied for a patent which issued on May 26, 1998 as the ‘224 patent. The inventors, as is customary in such circumstances, assigned their right and interest in the ‘224 patent to their employer, Sunrise.

59

The new EX 2000 OCD was first shown to the marketplace at the November 1996 Med-Trade show.

60

Sunrise invested at least

*368

$526,319 in wages, materials and capital expenses to develop the EX 2000.

61

The EX 2000 differs significantly from the OMS 20/50. First, the EX 2000 is made to be used only on oxygen cylinders with an 870 style post, because, unlike the OMS 20/50, the EX 2000 has an internal regulator adapted only to such a post. Second, the EX 2000 fits directly over the oxygen cylinder post and does not hang off to the side as the OMS 20/50 and its external regulator do. Third, the EX 2000 has an internal pressure relief valve, as well as a bypass valve to provide a flow of oxygen around the control valve when continuous flow rather than pulsed oxygen is desired, or in the event of battery failure. The OMS 20/50 had neither an internal regulator nor pressure relief valve. The EX 2000 also has a flow restrictor to limit flow through the bypass valve to an acceptable dosage rate of 2 liters per minute. Finally, the EX 2000 does not utilize the internal tubing of the OMS 20/50. The functions are instead designed into the manifold block.

62

According to Greene, the EX 2000 utilizes the technology of both the ‘224 patent and claims 3 to 5 of the ‘303 patent.

63

D. AirSep’s Development of the ImPulse Select

AirSep developed its first OCD in 1996, under the name of ImPulse, with a company named Medisonic. The ImPulse was first commercially available in November 1996.

64

The ImPulse was designed to compete directly with the Chad OCD.

65

Like the Chad unit, the ImPulse provides a pulse of oxygen on intermittent breaths, and, like both the Chad OCD and the OMS 20/50, utilized an external regulator.

66

Air-Sep still sells the ImPulse today, albeit in minuscule quantities.

67

In the summer of 1997, AirSep decided to develop a new OCD. This project -commenced with a meeting during which the design of the EX 2000 was reviewed and discussed.

68

The principal designer of the ImPulse Select was Norman McCombs,

69

one of whose first actions was to take apart and examine an EX 2000

70

that had been given to him by Joseph Priest, the President of AirSep.

71

McCombs performed an extensive evaluation of all aspects of the EX 2000, by means of visual inspection, disassembly and measuring the pressures.

72

As developed, the ImPulse Select has three modes, an “A” mode, a “B” mode and a continuous flow mode.

73

During development, the “A” mode was referred to by AirSep as the “AirSep” or Chad mode because it provides the same type of dosing methodology as the Chad and the original ImPulse devices.

74

The “B” mode was referred to by AirSep as the “DeVilbiss” mode because it provides the same type of dosing methodology as the Sunrise/DeVil-biss EX 2000,

75

providing oxygen for the

*369

selected pulse time on every breath.

76

The “B” mode of the ImPulse Select was specifically designed by AirSep to include the same functionality as is provided by the Sunrise/DeVilbiss EX 2000,

77

that is, to incorporate varying pulse widths on switch-selectable settings numbered from “one” to “six.”

78

The ImPulse Select also has a continuous flow mode, like the EX 2000.

79

The ImPulse Select was introduced to the market at the MedTrade show in November 1998.

80

The AirSep employees manning the display booth at the show marketed the new OCD as working just like the EX2000.

81

Like Sunrise’s OCDs, the AirSep ImPulse Select senses the initiation of inspiration.

82

It then provides a dose of respi-rating gas immediately in response to sensed inspiration.

83

The ImPulse Select supplies a pulse of oxygen in response to the detection of inhalation by the pressure sensor. The length of this pulse is predetermined, not by fluidic circuitry as in the ‘303 patent, but by a resistor and capacitor network comprising an electronic timing means.

84

Thus, the ImPulse Select has a timer that controls the predetermined time T^

85

Every time the OCD senses a breath, a resistor and capacitor in the timing circuit predetermine the time that the delivery valve will be on.

86

When a patient uses the ImPulse Select, the duration of Tj is less than the duration of T2 in the vast majority of circumstances.

87

The ImPulse Select can provide oxygen during exhalation, but only if the patient is breathing very rapidly, so that the inspiration time is very short, and the ImPulse Select was set at its higher settings, giving a long pulse duration.

88

There was testimony to the effect that this would happen less than one percent of the time.

89

AirSep acknowledged that only 0.3% of the ImPulse Select units shipped are returned for this reason.

90

Only when the ImPulse Select is- operated in the “B” mode at setting “6” would oxygen be supplied during exhalation, and then only to patients at breathing rates of more than 35 breaths per minute. Flow rate 6 is the longest flow rate setting of the ImPulse Select; if that setting is reduced, the likelihood of a patient ever receiving oxygen during exhalation is likewise reduced.

91

At settings 1 to 5 of the ImPulse Select, a patient will not be supplied with oxygen during exhalation even at 35 breaths per minute.

92

For every setting of the ImPulse Select, except setting 6 in the B mode, Tx is less than 0.5 second.

93

Assuming that 10% of users of the ImPulse Select have restrictive lung disease, only 0.23% of ImPulse Select users would have an inspiration period of less than one-half second.

94

Indeed,

*370

in seven of the twelve possible settings of the ImPulse Select, Tx is less than .25 tirhes T2 when the inspiration period is one second or greater.

95

The ImPulse Select also has a flow restricting orifice. The valve seat of the Impulse Select bypass valve has the smallest cross-sectional area of any part of the bypass path. This orifice controls the rate of flow to 2 liters per minute, and oxygen must pass through this orifice (in continuous flow mode) to reach the patient.

96

Thus, the bypass circuit of the ImPulse Select has a valve which includes a choking (restricting) orifice that controls flow. Oxygen through this circuit moves from an inlet port, past the valve components, through a valve seat containing the choking orifice, and into the outlet port.

Plaintiff contends that these two components are arranged in a serial manner as required by the ‘224 patent.

97

The fact that the valve seat of the ImPulse Select bypass valve and the choking orifice are coincident, it argues, does not alter the function of the units. If the valve seat of the ImPulse Select and the choking orifice were separated, plaintiff asserts that the function would remain the same.

98

AirSep stipulates that the ImPulse Select has every element of the claims of the ‘224 patent except the flow restricting means “in series with” the bypass valve.

99

The infringement analysis of the ‘224 patent is therefore dependent entirely on the resolution of that sole issue.

E. The Witnesses

Dr. David Greene is the Vice President of Technology for the Respiratory Products Division of Sunrise Medical HHG, Inc.

100

Mr. Richard Kocinski is the President of the Respiratory Products Division of Sunrise Medical HHG, Inc.

101

Mr. Peter Bliss, Sunrise’s technical expert, is a partner in a consulting firm called Valley Inspired Products. Valley Inspired Products does design engineering consulting, product testing, education and marketing services, all directed at respiratory product manufacturers.

102

Mr. Bliss has been a paid consultant to Sunrise prior to his involvement in this litigation.

103

Mr. Bliss has been paid approximately twenty thousand dollars by Sunrise for a project of redesigning one of Sunrise’s liquid oxygen units.

104

Dr. William Messner, Sunrise’s technical expert, is an associate professor at Carnegie Mellon University.

105

Mr. James Alessi is an engineer at Air-Sep Corporation and is a named inventor on a utility and design patent directed to the ImPulse Select.

106

Mr. Norman McCombs is the Senior Vice President of AirSep.

107

Mr. McCombs is a named inventor on a utility and a design patent application directed to the ImPulse Select and a separate patent application directed to the bypass valve of the ImPulse Select.

108

*371

Mr. Joseph L. Priest is the President and Chief Operating Officer of AirSep Corp.

109

Mr. Mark Mizerkiewicz is an engineer and a research and design manager at AirSep Corporation and has been employed by AirSep since 1996.

110

Mr. Andrzej Klimaszewski is a senior project engineer for AirSep Corporation who specializes in electronics.

111

Mr. Kli-maszewski has been an AirSep employee approximately eight years.

112

Mr. Donald Hunter is an engineering manager with Sunrise and was the designated corporate witness on the issue of Sunrise’s testing and comparison of the accused device.

113

Mr. Gregory Good is a former employee of Sunrise and one of the named inventors of the ‘224 Patent.

114

Mr. Good left the employ of Sunrise in February of 1997.

115

Mr. Daniel Easley is the former President of the Respiratory Products Division at Sunrise and is the current President of Sunrise’s Mobility Products Division at Sunrise. He left his position as President of the Respiratory Products Division in May of 1999.

116

Mr. Sam Kumar, AirSep’s expert, is the President of Teknocraft, Inc., a valve/control component designer and manufacturer located in Florida.

117

Mr. Kumar has an extensive background in fluidic control components, having studied the same while obtaining his master’s degree in mechanical engineering and subsequently working for the Corning Fluidics Department for approximately five years.

118

In addition, Mr. Kumar taught certain courses and seminars while working for Corning.

119

Mr. Kumar is a named inventor on several patents directed to valves and valve components.

120

Mr. Kumar has worked with Puritan Bennett and Sunrise Medical in the past.

121

Mr. Ronald Kareken is a registered patent attorney and counsel to AirSep Corporation.

122

F. Likelihood of success on the merits

1. Ownership

AirSep disputes Sunrise’s claim to ownership of the ‘224 Patent,

123

because no assignment history of the ‘224 Patent was introduced into evidence, either by way of documentary evidence or witness testimony on the patent’s chain of title.

124

Sunrise, however, points to evidence that the inventors of the ‘224 patent directly assigned all their right and title to the patent to Sunrise, and that Sunrise consequently owns all right and title to the ‘224 patent.

125

I conclude that Sunrise does in fact own the ‘224 patent.

Sunrise also purports to own the ‘303 Patent.

126

This ownership claim is more problematic, requiring an examination of a somewhat convoluted chain of title. Dr. Gerald Durkan, the named inventor of the

*372

‘303 Patent, assigned certain rights to the ‘303 Patent to Tritec, Inc. through an assignment dated June 8, 1982. Dr. Durkan kept a reversionary interest to the ‘303 Patent.

127

Tritec, Inc. assigned its rights, title and interest to the ‘303 Patent to TriTec Industries on May 26, 1983. PX 21 and 22.

128

On or before August 1983, CRY02 Corporation purchased TriTec Industries, Inc.

129

On August 1, 1983, TriTec Industries, Inc. (a subsidiary of CRY02 Corporation) granted what purports to be a security interest in the ‘303 patent to Kirealdie, Randall

&

McNabb.

130

That document is drafted as a conditional assignment which, if the underlying note is paid, is then void; otherwise and until then, it grants a full assignment of the patent to Kirealdie. On July 5, 1984, TriTec Industries, Inc. granted a conditional assignment and second security interest to State Street Bank and Trust Company.

131

On February 8, 1988, CRY02 Corporation assigned all interest in the ‘303 patent of both it and its subsidiary TriTec Industries, Inc. to DOC Technologies, Inc.

132

Also on February 8, 1988, DOC Technologies, Inc. granted a security interest in the ‘303 patent to Healthdyne, Inc.

133

On July 7, 1989, DOC Technologies, Inc. assigned its interest in the ‘303 patent to PulsAir Anstalt.

134

On January 18, 1994, PulsAir Anstalt assigned' its interest in the ‘303 patent to DeVilbiss Health Care, Inc., which was at that time a wholly-owned subsidiary of Sunrise.

135

On June 27, 1997, Sunrise merged with its wholly-owned subsidiary, DeVilbiss Health Care, Inc., so that DeVilbiss Health Care, Inc. was no longer a separate company, but instead became a Sunrise division. The interest of DeVilbiss Health Care, Inc. was thus assigned to Sunrise.

136

Defendant contends that no assignment exists from any entity to Cry02 of the rights to the ‘303 Patent. Thus, when Cry02 executed an assignment of the patent on February 8,1988 to DOC Technologies, Cry02 did not in fact own any right, title or interest to the ‘303 Patent. And even if Cry02 did have rights to the ‘303 Patent at one time, defendant argues, it transferred those rights to Kirealdie, Randall & McNabb by way of security interest five years before it purported to assign them to DOC Technologies.

As a result, defendant argues, the February 8, 1988 assignment from Cry02 to DOC Technologies did not transfer any rights to the ‘303 Patent. If defendant is correct, this defect in title would appear to propagate down the entire chain:

i,e.,

as of July 7, 1989, DOC Technologies did not own any rights to the ‘303 Patent, so its assignment to PulsAir Anstalt did not work to transfer any interest in the patent, either.

On August 15, 1991, Kirealdie and Dur-kan executed

nunc pro tunc

assignments, effective February 8, 1988 and July 6, 1989, respectively, of their security and reversionary interests in the ‘303 patent to

*373

DOC Technologies, Inc.

137

Defendant complains that the

nunc pro tunc

assignments are nothing more than an attempt to validate what it considers to be the previously ineffective, encumbered, July 7, 1989 assignment from DOC Technologies to Pul-sAir Anstalt, from which, of course, DeVil-biss purportedly acquired its interest in the ‘303 Patent which it later assigned to plaintiff. Thus, defendant argues that if the

nunc pro tunc

agreement is invalid, DOC Technologies never owned any right, title or interest to the ‘303 Patent and neither does Sunrise;

138

if Sunrise does not own the ‘303 Patent, Sunrise does not have standing to bring the instant patent infringement action based on the ‘303 Patent.

2. Infringement

a. The ‘303 Patent

i. Whether AirSep’s ImPulse Select “Employed a Method” in Violation of the ‘303 Patent

Defendant argues that Sunrise adduced no evidence, testimonial or documentary, that AirSep has employed a method using the ImPulse Select that infringes the method of Claim 3 of the ‘303 Patent. To the contrary, it contends that the evidence adduced shows only that AirSep manufactures and sells the ImPulse Select device to its customers, home health care dealers, who, in turn, provide the device to patients needing such a device.

139

ii. Alleged Non-infringement of Invacare Venture Device

Dr. Greene performed an infringement analysis of the ‘303 Patent as compared to a device called the Invacare Venture.

140

one of the salient features of which is that the valve always remains open for a fixed duration of one second.

141

If a patient on the Invacare Venture breaths rapidly enough, his or her inspiration time may be less than one second,

142

in which case the Invacare Venture would provide a dose of oxygen during a portion of the patient’s exhalation.

143

As discussed

supra,

claim 3 of the ‘303 Patent requires that the dosage interval ^ always be less than the inspiratory period T2, but notably, according to defendant, Sunrise never sued Invacare for infringement of the ‘303 Patent.

144

The ImPulse Select also provides a dose of oxygen for a range of fixed periods of time, dependent on the positions of the various selector switches.

145

Plaintiff responds that it is irrelevant that Invacare was never sued for infringement of the ‘303 patent because the Invacare Venture had an inspiration period that was always one second.

146

In contrast, the longest pulse time of the ImPulse Select in the B6 setting is only 0.5 second.

147

Thus, far fewer patients are likely to receive a dose of oxygen during exhalation with the ImPulse Select than with the Venture.

*374

iii. Non-infringement Defense of Providing a Dose During Exhalation

(A.) Claim Construction Testimony

No claim, including claim 3, of the ‘303 Patent requires normal breathing patterns as a limitation of the claim,

148

nor does Claim 3 require normal operating circumstances or conditions as a limitation.

149

In addition, the ‘303 Patent specification does not describe normal or typical breathing patterns as a qualification to the limitation of Tj being less than T2.

150

Rather, Tj must always be less than T2 in order for the claim to be satisfied.

151

(B.) The Accused Device Can Provide a Dose of Oxygen during Exhalation

Defendant argues that the use of the ImPulse Select does not practice a method with a step of “using timing means to predetermine a duration Ti for which a dose of respirating gas is to be supplied to said in vivo respiratory system,

said duration Tx being less than the duration T2

of negative pressure relative to ambient pressure occurring in said in vivo respiratory system during said inspiration period.”

152

Plaintiff, for its part, admits that the accused device

can

(although almost never does) provide oxygen during exhalation,

153

but emphasizes that the ImPulse Select, operating in “B” mode, was

designed

and is

intended

to supply oxygen to a patient only during inhalation.

154

In support of that contention, plaintiff notes that the ImPulse Select patient manual provides that an “actual oxygen delivery to the patient occurs only at the exact point in the breathing cycle when the patient starts to inhale,” and that “the ImPulse Select does not deliver oxygen during exhalation.”

155

It also points out that there are no AirSep documents or advertisements indicating that the ImPulse Select is intended to provide oxygen during exhalation, and that the ImPulse Select has never been marketed as anything but a device that provides oxygen only during inhalation.

156

AirSep has received complaints from customers who have returned the ImPulse Select because it provided a dose during exhalation,

157

but only 0.3% of the users of the ImPulse Select have experienced the provision of oxygen during exhalation and returned the OCD.

158

Thus, some number of ImPulse Select users less than 99.7% do not receive oxygen during exhalation. Through March of 1999, only four out of 3,039 ImPulse Select units were returned because of the provision of oxygen during exhalation. This return ratio has remained consistent. There has not been a month where more than two ImPulse Select units were returned due to the provision of oxygen diming exhalation.

159

Specifically, the roughly 0.3% of the users of the ImPulse Select who receive oxygen during exhalation do so because of their unusual breathing pattern, such as excessive exhaling or hyperventilation.

160

These are the only reasons of which Air-Sep is aware that will cause a patient to receive oxygen during exhalation.

161

When an AirSep customer calls to complain that

*375

an ImPulse Select is providing oxygen during exhalation, the customer is forwarded to the product manager who explains that 0.3% of the population may have a breathing pattern that is not conducive to use with the ImPulse Select.

162

Although there is no AirSep literature where the average human breathing rate is referred to as anything but 20 breaths per minute,

163

Mr. Bliss’ charts for breathing frequencies of 35 breaths/min., 40 breaths/min., and 60 breaths/min. demonstrate the ImPulse Select providing oxygen during exhalation at flow setting 6.

164

Mr. Bliss’ charts for breathing frequency were tested at an Inspiration over Exhalation (I/E) ratio of 1 to 2.

165

Patients with restrictive lung disease are candidates for an ImPulse Select OCD device.

166

According to an article by Dr. Tobin, approximately five percent of patients with restrictive lung disease have an inspiratory time of less than 0.5 seconds.

167

These patients tend to breathe faster with more time spent inhaling and have an I/E ratio of 1 to 2 or 1 to 2.5.

168

The average inspiration period for restrictive lung disease patients is 0.96 seconds with a standard deviation of 0.24.

169

Statistical analysis predicts that only 2.28% of these patients would have an inspiration period less than .5 second which is the longest pulse setting on the ImPulse Select. Also, only about 10% of the users of the ImPulse Select have restrictive lung disease. 'Hence, plaintiff argues that only 0.228 percent of the users of the ImPulse Select would use the ImPulse Select in a manner that does not practice the method of claims 3 to 5.

170

Chronic obstructive pulmonary disease (COPD) patients, however, are also candidates for an Impulse Select OCD device, and these patients may have I/E ratios of 1 to 3 or 1 to 4.

171

With these I/E ratios, the inspiration time is shorter and the inspiration peak on the charts is narrower.

172

Thus, at only 30 breaths per minute and an I/E ratio of 1 to 4, the pulse delivered by the ImPulse Select would extend beyond the inspiration period.

173

Nevertheless, a more typical patient with a one second inspiration period using the ImPulse Select would never be provided oxygen during the exhalation period and would appear to practice the method of claim 3 of the ‘303 patent.

174

Only under the above-discussed unusual circumstances involving the ImPulse Select operating in Mode B at setting 6 and the patient breathing at a rate in excess of about 30-35

*376

breaths per minute will a patient using the ImPulse Select receive oxygen during expiration.

175

Turning to the technical reasons why the ImPulse Select can deliver a dose of oxygen during expiration, the monostable vibrator used in the ImPulse Select’s control circuit provides a signal to the valve for a fixed duration which is unaffected by anything in the patient’s breathing pattern once it starts to deliver.

176

Because the duration of the pulse is fixed, if a patient starts exhaling before the pulse actually ends, the dose will be partially delivered during exhalation.

177

The ImPulse Select will therefore deliver a dose of oxygen to a patient while the patient exhales if the inhalation time is less than pulse delivery time.

178

Providing a dose during exhalation and having the dose extend beyond inspiration are characteristics of the device as a result of the design of the circuit.

179

The ImPulse Select can also pulse a dose that begins during exhalation. The balancing circuit responds to high pressure in the tubing. Usually, that high pressure is generated when the valve opens. In some cases, however, a patient will generate a high enough pressure during exhalation to cause the balancing circuit to be activated.

180

Once this happens, the balance becomes upset.

181

This condition will be interpreted by the circuit as an inhalation, causing triggering to occur and oxygen to be delivered. This pulsing is also due to the structure of the balancing circuit.

182

In view of these facts, Mr. Kumar’s professional and expert opinion, reached with a reasonable degree of professional certainty, is that the method used by the accused device does not infringe Claim 3 of the ‘303 Patent, either literally or under the doctrine of equivalents.

183

(C.) The FDA Investigation

The Food and Drug Administration (“FDA”) has regulatory authority over OCDs and their manufacturers.

184

In early 1999, the FDA contacted AirSep in followup to a customer’s comment under the MEDWATCH program that the ImPulse Select device’s propensity to fire upon exhalation had caused a hypoxic condition with certain patients.

185

The FDA sent AirSep a copy of the MEDWATCH report on or about March 3, 1999, and also visited AirSep in February/March of 1999. Priest Tr. 2/9:63-4. The FDA also initiated an investigation of Air-Sep. Priest Tr. 2/9:63. The FDA investigated the design operation, the inspection criteria, and manufacturing with respect to the ImPulse Select. Priest Tr. 2/9:66. Mr. Priest informed the FDA that ImPulse Select is designed to provide pulses of oxygen only on inhalation and not on exhalation, and only in a single pulse.

186

The FDA issued its observations report, to which AirSep responded.

187

AirSep was not

*377

required to change the design or the mechanics of the ImPulse Select.

188

iv. Equivalence of Fluidic Control Versus Electronic Control

Defendant argues that the use of the ImPulse Select does not practice a method with a step of “using

timing means

to predetermine a duration Tj” because the timing means of the ImPulse Select uses an electronic resistor-capacitor (“RC”) circuit rather than a fluidic RC circuit.

189

Plaintiff, however, contends that use of the ImPulse Select infringes claim 3 of the ‘303 patent because its electronic timing means

190

is essentially the same as the fluidic timing means disclosed in the 'specification of the ‘303 patent.

191

According to plaintiff, the fluidic timing means of the ‘303 patent and the electronic RC timing means of the ImPulse Select perform identical functions in substantially the same way, and an electronic timing circuit could be substituted for the fluidic timing circuit disclosed in the ‘303 patent.

192

Fluidic control circuits were designed to be the equivalent of electronic control circuits.

193

Indeed, in the late sixties to seventies, fluidics was a very important science

194

and was thought of as a technology that was going to “take over the control systems world.”

195

When fluidics was first developed, it was intended that fluidics and electronics would, be used for the same purposes, although fluidics proved impractical in some applications.

196

Researchers were applying fluidics to a wide variety of applications, numerous papers were published on the subject, and researchers even tried to make a fluidically controlled computer, which failed to attain success beT cause of its unwieldy size.

197

The science of fluidics ultimately died out as electronic circuits became much less susceptible to heat, more efficient, more reliable, and

*378

more desirable from size and operational standpoints.

198

Fluidic circuits are not interchangeable with electronic circuits because fluidic circuits are different in reliability, accuracy, controllability, and function.

199

In selected applications of information processing and timing, however, fluidics can perform the same function as electrical control systems.

200

In fact, there was expert testimony that fluidic timing means are structurally and functionally equivalent to electronic timing means for the purposes of OCDs.

201

At the time the application for the ‘303 patent was filed, however, it would have been impractical to use an electronic timing means for this type of portable OCD due to the lack of sufficient electronic sensor technology as well as the increased size that would have been necessary to house an electronic timing means.

202

The structural construction of the claimed timing means in the ‘303 patent is a fluidic device that uses fluidic resistors or needle valves and a capacitor which is a movable diaphragm.

203

The capacitance of the timing means is a variable capacitance, such as an elastomeric balloon.

204

A fixed volume capacitance could not adequately perform this function and would be incompatible with the low pressures used in the fluidic logic circuit discussed herein.

205

The capacitance of the ImPulse Select, in contrast, is an electrical capacitor.

206

According to plaintiffs own expert, Mr. Bliss, an elastomeric balloon does not share a single structural similarity with an electrical capacitor.

207

The resistance described in the ‘303 Patent is not an electrical resistor, but a variable orifice or needle valve.

208

According to Mr. Bliss, there is not one structural similarity between the electronic resistor of the ImPulse Select and the fluidic resistor in the ‘303 Patent.

209

*379

Ohm’s Law states that volts equals current times resistance, and most electronic circuits perform pursuant to Ohm’s law. Using a linear version of Ohm’s law, the relationship between voltage and current will be linear as well.

210

The RC circuit of the ImPulse Select is a linear device such that the linear version of Ohm’s law applies.

211

In contrast, the relationship between pressure and flow in a fluidic circuit, in many cases, is not linear

212

Specifically, the relationship between pressure and flow in the fluidic circuit described in the ‘303 Patent may not be linear.

213

v. Whether the Sequence of Steps of the ImPulse Select Matches the Sequence of Steps Required by the ‘303 Patent

Before using the ImPulse Select, the patient selects either mode “A,” mode “B” or continuous flow.

214

The user then selects a pulse length via one of six positions of the rotating switch on the ImPulse Select. This pulse length setting is used over and over in modes A and B to predetermine the length of the pulse of oxygen initiated by sensing inspiration.

215

Thus, when using the ImPulse Select, a patient first

selects

the timing means to predetermine the duration Tj.

216

A user of the ImPulse Select does not change the mode A or B or the selector switch between breaths,

217

nor would it be practical or even reasonable, for a patient to reset the duration of T: on every breath.

218

Defendant argues that use of the Impulse Select does not practice the method of claim 3 of the ‘303 patent because the timing means of the ImPulse Select is set~ once- prior to the start of the inspiration period,

219

and because the use of the Impulse Select does not practice a method with a step of “automatically repeating steps (1), (2), and (3) for a plurality of consecutive inspiration periods.”

220

By contrast, defendant points out that the first step in utilizing the method of Claim 3 is the sensing of inspiration, then, as the second step, timing means are used to predetermine the duration Tj.

221

Specifically, in the ‘303 Patent fluidic circuit, when negative pressure is sensed, there is a signal applied to the fluidic loop, otherwise the air jet is vented to the atmosphere. Thus, if no negative pressure is applied to the fluidic circuit, there is no delivery of oxygen.

222

The resistance and the balloon capacitor together balance the pressure in the fluidic loop and shut off the flow of oxygen before the end of inspiration; once the negative pressure signal travels all the way.around the circuit, the signal will again vent to atmosphere (as if the patient were exhaling) and no oxygen

*380

will be delivered.

223

Thus, no respirating gas is applied to the patient during expiration.

224

The next dose is delayed until the patient begins inhaling again. A patient using the ImPulse Select need not intervene to cause the initiation of any of the first three steps of claim 3 of the ‘303 patent, as they are automatically repeated.

225

Thus, the repeated steps required by claim 3 are inspiration, timing means, delivery, whereas defendant contends its product operates in the order timing means, inspiration, delivery, with only the last two steps repeated.

I am persuaded that

using

a timing means to predetermine Tx means that the time is predetermined before the valve is activated, not that the patient

selects

the timing means by resetting the knob on every breath.

226

The ImPulse Select performs the former function of

using

timing means every time the unit senses a breath, because the pre-selected resistor and capacitor in the timing circuit predetermine the time that the valve will be on.

227

Nothing in claim 3 requires the

resetting

of the period Tx on every breath, nor does the specification of the ’303 patent makes any such suggestion.

228

Thus, the ImPulse select performs the same steps in the same order as set forth in claim 3: inspiration, timing means, delivery, with all three steps repeated.

vi. Does the Accused Device Meet the “At Least As Great A Rise” Limitation of Claim 3?

Claim 3 of the ’303 Patent requires that a device utilizing the method produce at least as great a rise in the partial pressure of said gas in blood interfacing with said respiratory system as the continuous application of said gas at a lower rate R2 for the duration T2.

229

It is very difficult to ascertain the equivalency of the therapeutic effect of OCD devices without testing the OCD device on the patient at each activity level.

230

Mr. Bliss did not perform any tests on the ImPulse Select device to determine if the limitation of producing at least as great a rise in the partial pressure of said gas in blood interfacing with said respiratory system as the continuous application of said gas at a lower rate R2 for the duration T2 was met.

231

Nevertheless, based on a bench flow test, Bliss opined that the ImPulse Select in mode B is not as efficacious as continuous flow at sixteen breaths per minute and lower. At thirteen breaths per minute, no data were taken but his expectation was that the difference would be greater between the efficacy of the ImPulse Select

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and that of continuous flow.

232

At ten breaths per minute, he testified that the fraction of inspired oxygen would be the same as it is at fifteen breaths per minute and would be less than the fraction of inspired oxygen of continuous flow.

233

Interestingly, Figure 4 of Mr. Bliss’ article plots the fraction of inspired oxygen for respirations of 15-26 breaths per minute, and shows the ImPulse Select (operating in “B” mode at setting 2) always providing

more

oxygenation than continuous flow oxygen at 2 liters per minute. I infer from this that breathing rates under 15 breaths per minute are uncommon apd clinically insignificant. Thus, I find this evidence inconclusive at best.

vii.AirSep’s Non-Infringement Opinion Regarding the ‘303 Patent

AirSep first received notice of Sunrise’s charge of infringement regarding the ‘303 Patent when it received the complaint in this action.

234

Upon receiving notice of Sunrise’s charge of infringement of the ‘303 Patent in the complaint, AirSep immediately communicated with Mr. Kareken, a patent attorney with the firm of Jaeckle, Fleischman & Mugel, and commissioned an opinion regarding whether the ImPulse Select infringed the ‘303 Patent.

235

Mr. Ka-reken performed an analysis of the ‘303 Patent as respects the ImPulse Select device and rendered an opinion in draft form on September 21, 1999, finalizing the opinion on December 2, 1999.

236

AirSep relied upon Mr. Kareken’s unequivocal opinion of noninfringement in continuing to sell and manufacture the Impulse Select device.

237

viii.Has Any Other Person Used the ImPulse Select in Violation of the ‘303 Patent?

Defendant contends that Sunrise adduced no evidence, testimonial or documentary, that any other entity or person employs a method using the ImPulse Select that would constitute an infringement of Claim 3 of the ‘303 Patent.

238

In its response, plaintiff asserts that this contention is unsupported, and indeed, Mr. Bliss testified that ImPulse Select users infringe Claim 3.

239

ix.Did AirSep Intend Any Entity to Use the ImPulse Select in Violation of That Patent?

Defendant contends that Sunrise adduced no evidence, testimonial or documentary, that AirSep had, any actual intent to cause any person or entity to employ a method using the ImPulse Select that would constitute an infringement of Claim 3 of the ‘303 Patent.

240

In its response, plaintiff asserts that this contention is unsupported, but cites no evidence' to the contrary.

b. The ‘224 Patent

i. AirSep’s Development of the ImPulse and ImPulse Select

AirSep developed the ImPulse with a company called Medisoiiie.

241

The development process began sometime between late 1994 and early 1995, and the ImPulse was commercially available in November 1996.

242

The ImPulse is a small, lightweight device that provides up to four settings for a

*382

patient to use while ambulating.

243

It has a selector switch with an off position and four other selections. When set at the first position, the ImPulse device pulses one out of every four breaths; at the second position, it pulses every other breath; at the third, the device pulses every three out of four breaths; and at the fourth position, it delivers a pulse on every breath.

244

The ImPulse uses oxygen supply tubing with a volume of 35 milliliters connected to the male fitting on the side at one end; on the other end, the tubing is connected to a pressure regulator on the cylinder of oxygen.

245

This supply tubing caused complaints and problems because some customers would use their own tubing not purchased from AirSep or the supply tubing would become disconnected

246

Even during the time it was developing the ImPulse, AirSep had a number of ideas and concepts and improvements that it wanted to make to the next generation product. However, AirSep had to make a decision to stop development and finalize the design and manufacture the product. In addition, AirSep wanted to enter the marketplace, demonstrate a device’s success, generate profits, and then invest those profits in a second generation conserving device. Thus, AirSep first contemplated a follow-on product even prior to the release of the Impulse.

247

The features contemplated at the time included selecta-bility, multiple modes of conservation offered in one device, an all-in-one integrated conserving device regulator (following the example of the OMS 20/50), and reduced power consumption.

248

Six or seven months after the introduction of the ImPulse device, AirSep began its formal design process of the product that would become the ImPulse Select. The project became formalized in June 1997 because AirSep wanted to expand sales, improve contributions of that product to the company’s revenue and improve profitability. Development of a new product is an extremely expensive, time consuming, and resource consuming process.

249

A development meeting was held in June/July 1997 to identify features wanted in the new product and assign responsibility for investigating the feasibility of those features.

250

The primary goals of the meeting were to decide the aesthetics and design of the unit.

251

Subsequent to the design meeting, AirSep’s research and development group investigated the proposed features by determining whether the features could actually be produced and manufactured; some features, it was found, could be incorporated while others could not.

252

AirSep determined that the supply tubing could be eliminated so long as its volume was incorporated into the next generation ImPulse.

253

AirSep also experimented with the feasibility of making a pressure regulator that would enable a volume of oxygen to be included.

254

In addition, the circuitry of the ImPulse Select had to be reevaluated component by component in

*383

order to reduce power consumption.

255

Once the features were decided upon, Air-Sep contacted vendors who could assist AirSep in the manufacture of the device.

256

255

The feature of supplying oxygen on every breath .was added to the ImPulse Select because OCD patients in the marketplace have different preferences.

257

Two clinical studies showed that these patients tended to have a preference for either the “A” or “B” mode of delivery. Thus, in order to satisfy more customers in the marketplace, AirSep integrated both modes of delivery into the product.

258

As finally implemented, the ImPulse Select provides clinicians the opportunity to select from two modes of conservation, a feature the Sunrise EX 2000 does not have.

259

The ImPulse Select also has double the battery life expectancy of the EX 2000 and the capability of AC adaptation, another feature the EX 2000 lacks.

[[Image here]]

ii. Structure and Operation of the ImPulse Select

The ImPulse Select has a housing in-eluding a central cavity. The post of the oxygen tank is inserted into the central cavity of the ImPulse Select and the hous

*384

ing is removably secured to the oxygen tank by aligning pins and a fastener knob. The external elements of the ImPulse Select include an on/off switch, a pressure gauge, a rotatable selector knob that allows the patient to change the intermittent oxygen flow settings, light emitting diode (LED) indicators, a battery test button, a switch to allow the user to select either an intermittent or continuous flow of oxygen, an external power supply connector, a battery compartment, and an outlet fitting to enable delivery of oxygen to the patient through a cannula. Inside the battery compartment are the battery, battery connectors, and a mode switch that allows the user to select between the “A” and “B” mode of intermittent oxygen flow.

260

An oxygen pressure regulator is mounted in the bottom portion of the housing. The regulator supports the electronic circuit board and the pressure gauge, and contains the switches and flow control circuit components, as well as the complementary wiring and leads necessary to enable the circuit. The pressure regulator includes first and second chambers, a piston, regulator springs, and a cap. The first chamber is fluidically connected to the oxygen tank post, and the regulator spring and piston control the pressure of the supplied oxygen. The second chamber is connected to the first chamber through a passageway and maintains a predefined volume of oxygen at a pre-set pressure. Operatively connected to the second chamber is a solenoid valve that is activated by the electronic circuit board to provide intermittent oxygen flow. Also connected to the second chamber is a bypass valve that, when activated, provides continuous oxygen flow to the patient. The second chamber includes a port which is fluidically connected to the outlet fitting, which is, in turn, attached to the cannula or other type of oxygen delivery device.

261

The operation of the ImPulse Select device is controlled solely through the use of electromechanical devices. The on/off switch, the A/B mode switch, the selector switch, and the LED indicators are mounted on the circuit board, and power is supplied to the circuit board either by a D-sized battery or an external power source.

262

The circuit of the ImPulse Select is embodied in Defendant’s Exhibit 29, and has a pressure sensor, an amplifier circuit, a decision-making circuit, a programmablé array logic chip, logic gates, and selector switches.

263

The pressure sensor is connected to the patient’s cannula and monitors its pressure. Upon detection of a pressure change, the sensor will generate differential voltage that will be magnified by the amplifier.

264

The signal next goes to the decision-making circuit, which generates a trigger pulse.

265

The trigger pulse flows to the logic gates, which operate to prevent multiple triggering.

266

The electrical signal then passes through the gates to the monovibrators.

267

One of the two monovibrators generates the six-hundred-millisecond pulse, while the second generates a pulse whose length is dependent upon the position of the two selector switches. Once the combination of switches is selected, a fixed interval is set and the pulse, once it is started, will not be stopped by any other means. This pulse is then sent to the PAL chip, which determines whether or not to open the solenoid

*385

valve.

268

Once the decision to open the solenoid valve is made by the PAL chip, the valve will remain open for the fixed interval determined by the length of the pulse sent from the monovibrator.

269

The ImPulse Select circuit also has a balancing circuit to compensate for the overpressuri-zation caused by the flow of oxygen from the cylinder through the cannula.

270

A respiratory therapist selects either mode A or B by adjusting a switch in the battery compartment. The battery compartment is closed and the ImPulse Select is placed on the oxygen tank post. The valve on the oxygen tank is then opened. The selector switch is turned to the setting desired, thereby selecting a specific resistance/capacitance circuit. Once the A/B mode switch is selected and a position on the rotatable selector switch is selected, the dose, pulse time and pulse frequency are fixed. The ImPulse Select device was designed by AirSep to provide a certain dose of oxygen over a certain period of time at certain frequencies as shown below.

271

DOSAGE AND TIMING TABLE FOR THE IMPULSE SELECT

Sel. Switch Mode A_Mode B

Position ml ms freq. ml ms freq.

1 35 184 1/4 16 92 4/4

2 35 184 2/4 33 176 4/4

3 35 184 3/4 50 260 4/4

4 35 184 4/4 66 344 4/4

5 44 230 4/4 82 430 4/4

6 52 277 4/4 99 500 4/4

The ImPulse Select has a bypass circuit designed to deliver a continuous flow of oxygen at the rate of 2 liters per minute when it is opened.

272

If the ImPulse Select is in the continuous mode, the oxygen continuously flows through the continuous flow valve to the outlet fitting and then directly to the patient, thereby bypassing the solenoid valve. The continuous flow valve is comprised of a number of component parts, including a valve seat and a valve seal consisting of an O-ring. The valve is closed when the valve stem is -not actuated. When closed, the valve seal is pressed against the valve seat, thereby sealing it off and allowing no oxygen to pass through the bypass valve to the outlet port. The plunger biases the valve seal against the valve seat due to the force of the plunger spring against the plunger.

273

When the valve is open, the valve stem is depressed such that the valve stem shaft, which is integral with the valve stem, in combination with the compressed valve stem spring, exerts a force against the plunger which partially overcomes the biasing force of the plunger spring and pushes the plunger and the valve seal away from the valve seat. This action removes the seal over the valve seat, thus, allowing the flow of oxygen to the outlet port.

274

An orifice having a diameter of 0.0135 inch in the valve seat of the ImPulse Select bypass valve restricts flow in the bypass circuit to two liters per minute.

275

All oxygen flowing through the bypass circuit must flow through this valve and its 0.0135 inch diameter orifice.

276

iii. The Evolution of the Bypass Valve

Defendant’s only argument against infringement of claim 1 of the ‘224 patent is based upon the following claim limitation: “flow restricting means

in series with

said bypass valve to limit oxygen flow through said bypass valve.”

277

Prior to consider

*386

ation of the ‘224 patent, Defendant had built a prototype ImPulse Select that had a Clippard bypass valve with a large exit hole and high flow rate in the bypass circuit.

278

The Clippard valve, which is not used on the production model, was a model MAV-2C which has a flow rate of approximately 80 liters per minute.

279

This bypass valve design also included a 0.0135 inch orifice located in the manifold block downstream from the Clippard valve,

280

which restricted the flow through the circuit to the desired 2 liters per minute.

281

No ImPulse Select that had the downstream orifice was ever sold or sent outside of AirSep

282

AirSep’s technical expert, Sam Kumar, agreed that the initial design of the ImPulse Select with the original Clippard valve and 0.0135 inch diameter downstream orifice comprised a bypass valve “in series with” a flow restricting means.

283

[[Image here]]

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[[Image here]]

AirSep first learned of the ‘224 Patent in the late summer or early fall of 1998, having engaged a company that reviews the patents and public filings of companies and products. Mr. Priest received an abstract or a press release regarding the ‘224 Patent.

284

Commercial production of the ImPulse Select had not yet begun.

285

Air-Sep immediately requested a copy of the ‘224 Patent, then contacted Attorney Ronald Kareken, AirSep’s patent counsel, to review the patent and provide an opinion based on an analysis of the ‘224 Patent in view of the ImPulse Select.

286

In an attempt to design around the ‘224 patent, AirSep replaced the Clippard bypass valve, first with a specially requested Clippard valve and later with a custom designed AirSep valve. These special bypass valves incorporated a 0.0135 inch outlet orifice which itself restricts the flow to 2 liters per minute, without the need for a separate orifice downstream.

287

This change was made because the AirSep Vice President Norman McCombs who designed the ImPulse Select had some “concerns,”

288

probably related to the ‘224 patent. AirSep thus removed the downstream 0.0135 inch orifice from the design at approximately the end of October, 1998.

289

Mr. Kareken visited the offices of Air-Sep, talked with developers, and reviewed documents and devices, issuing a written opinion to AirSep on November 10, 1998.

290

His opinion, which was not qualified in any way, was that the ImPulse Select device did not infringe any of the claims of the

*388

‘224 Patent.

291

AirSep relied on Mr. Kareken’s opinion in finishing the development and eventual commercial production of the ImPulse Select.

292

The second, modified Clippard valve is the basis of the first non-infringement opinion rendered by Mr. Kareken on November 10,1998.

293

AirSep commissioned a second opinion regarding non-infringement of the ‘224 Patent in view of the ImPulse Select. Mr. McCombs contacted Mr. Kareken around Christmas time because AirSep had designed a new valve and wanted to ensure that it did not infringe the. ‘224 Patent. This third valve, designed by AirSep, has a central conical section and uses an O-ring for purposes of closing a valve seat, where the 0.0135" restriction is located. The valve seat thickness is ten thousandths of an inch or ten mils.

294

In view of the change to the device, AirSep requested that Mr. Ka-reken look at it and opine whether the change would alter his earlier opinion.

295

Mr. Kareken’s second opinion, which was dated February 2,1999, was that the modification, in the form of the third valve,

296

did not change his earlier opinion that the ImPulse Select did not infringe the ‘224 Patent.

297

The supplemental opinion was also not qualified in any way and AirSep viewed the supplemental opinion to be as strong as the original opinion of non-infringement.

298

[[Image here]]

iv. Definition of Bypass Valve

The EX 2000, the purported commercial embodiment of the ‘224 Patent, has a bypass valve located under a switch and above a port. This valve has an inlet, an outlet, a valve seal, a valve seat, and a valve actuator.

299

A valve seat is a part of any valve,

300

the elements of which include

*389

a valve stem actuating means, a plunger, a seat, an inlet and an outlet.

301

All valves must have an actuation means and something to interrupt or change the flow, as well as a sealing member

302

and a valve seat.

303

The EX 2000 valve seat and inlet duct are in series with the flow limiting valve.

304

The lower O-ring, valve stem and seal assembly are part of bypass valve 30 of the ‘224 Patent and are .in series with the flow limiting valve.

305

The upper O-ring, valve bonnet and valve stem are also components of the bypass valve assembly.

306

All valves are sized with a flow coefficient.

307

Flow coefficient, the Cv, is a measure of how much flow will go through .a valve; the higher the Cv, the more flow passes through the valve.

308

For a flow restrictor in series with a bypass valve, the flow restrictor would have to be experimented with to obtain the desired flow rate within plus or minus ten percent.

309

v. Claim Construction Testimony

“Integral” means “rigidly connected to” or “sharing components with” another part.

310

vi. The ImPulse Select’s Bypass Valve

The 0.0135 inch diameter orifice of the ImPulse Select bypass valve seat is a “fixed orifice flow restrictor”

311

and therefore a “flow restricting means” within the meaning of that language in claim 1 of the ‘224 patent.

312

There is no restrictor in the accused device’s bypass path that is not a component part of the bypass valve.

313

Rather, the structure in the ImPulse Select that restricts flow is the bypass valve itself.

314

AirSep’s technical expert, Sam Kumar, testified that the bypass circuit serves the functions of controlling both the existence (on/off) and rate of flow through it.

315

Thus, it satisfies two elements of claim 1 of the ‘224 patent,

316

leaving the question whether the means for controlling flow in the binary (on/off) sense is in series with the flow restricting means.

The location of the flow restricting orifice in the bypass circuit does not affect the function of, way of operating, or result provided by the 0.0135 inch diameter orifice. The same size orifice spaced from or at the valve outlet results in the same flow rate.

317

To demonstrate this, a test was performed on the bypass valve to determine the effect of varying the valve seat length. This test was performed by setting up á compressed gas oxygen cylinder'and placing an ImPulse Select 20 psi regulator on the cylinder, and an MKS flow meter device was attached to the regulator through tubing.

318

The bypass valves with the varying length valve seats were then inserted into the regulator, the oxygen cylinder was opened and the bypass valve

*390

engaged.

319

The pressure upstream of the bypass valve was held constant. Thirty-three valves, three valves of each valve seat length, were tested with the flow meter for the test to give a better representation of how the valve would operate.

320

A graph was created from the data obtained, which shows that the change in the valve seat length had no impact on the flow rate.

321

The logical conclusion, then, is that, in the AirSep bypass valve, all of the pressure drop takes place at the entrance to the valve seat

322

and, therefore, the depth of the valve seat does not contribute to the restriction in flow occurring at the entrance to the valve seat.

323

The orifice still controls all flow in the bypass circuit and works the same as when located spaced from the bypass valve.

324

The constituent salient elements of the bypass valve, that is, the valve sealing member, a valve seat, an inlet, an outlet, and actuator are in series with one another.

325

Accordingly, taken in consideration, with the finding that the thickness or remoteness of the orifice makes no difference in gas flow, it is evident that an orifice for restricting flow through the bypass circuit does not have to be separate from the bypass valve to be in series with the bypass valve. Because flow goes through most of the valve before it enters the orifice (and then flows only through the orifice), the orifice is in series with the rest of the valve because they are in the same flow path. Otherwise, they have to would be in parallel or not connected at all.

326

Thus, while I agree that the accused device’s valve plunger and seal are constituent parts of the bypass valve, but do not and can not constitute the entirety of a valve,

327

I must conclude that when the ImPulse Select bypass valve is open, the remainder of the bypass valve is in series with the valve seat or microduct.

328

vii. AirSep’s Patents and Patent Applications

AirSep began discussions with Mr. Ka-reken regarding patenting a number of features of the ImPulse Select OCD because it wanted to protect the aesthetics of the device, its delivery mode selectability, and its newly designed bypass valve.

329

Accordingly, AirSep decided to go forward with the preparation of a design patent and two utility patent applications directed to the aesthetics and technology employed' by the ImPulse Select and the bypass valve.

330

The design patent application was filed on October 27, 1998, and the design patent issued as D 418,559 on January 4, 2000. AirSep is the assignee of that patent. The ‘224 Patent was disclosed to the U.S. Pat

*391

ent and Trademark Office during the prosecution of D 418,559.

331

This patent shows, according to AirSep’s Mr. Priest, that the Patent Office found the design of the Impulse Select to be unique in terms of the way the ImPulse Select looks and is evidence that tends to rebut the charge that Air Sep simply copied the Sunrise EX 2000 outright.

332

The provisional patent application directed to the technology employed by the ImPulse Select was filed on October 21, 1998, and assigned serial number 60/105,-055.

333

The application was converted to a utility patent application on October 19, 1999.

334

It was assigned serial number 09/420,826 and was pending as of the time of the preliminary injunction hearing.

335

The utility patent application directed to the bypass valve was filed on May 5, 1999, and was assigned serial number 09/305,-604.

336

This utility patent application was also pending as of the time of the hearing.

337

In this patent application, the 0.0135 orifice was referred to as a “microduct” and not a “valve seat.”

338

The patent application correctly states that the microduct controls the rate of flow through the bypass valve.

339

viii. AirSep’s Testing of the EX 2000.

Joe Priest supplied Norm McCombs with a DeVilbiss unit in August of 1997,

340

AirSep having purchased an EX 2000 device that month to review it.

341

AirSep periodically purchases or otherwise obtains samples of competitors’ products,

342

the primary purpose of which is to educate AirSep’s sales force as to the features and benefits of an AirSep product as compared with those of its competitors so that the sales force can more effectively sell Air-Sep’s product to its customers.

343

AirSep tests the competing products to make sure they perform as advertised and communicates the results to its sales department.

344

AirSep evaluated the DeVilbiss EX 2000 product by making visual observations and opening up the housing.

345

AirSep observed that the DeVilbiss device did not have any way of incorporating a volume of oxygen in the device; because of that, the EX 2000 operated at a higher pressure than that used by AirSep.

346

The testing of the De-Vilbiss unit had no effect on the design of the ImPulse Select because the ImPulse Select utilizes much of the technology and features of the original ImPulse.

347

AirSep therefore did not incorporate features of the DeVilbiss PulseDose OCD into the new generation ImPulse,

348

but added additional features such as extending the battery life and including additional modes of delivery.

349

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ix. The Bench Study Article and Comparison of the EX 2000 to the ImPulse Select

Figure 8 of Mr. Bliss’ article from

Respiratory Care

shows four devices with dose periods less than one second: the ImPulse Select, the Oxymatic 301, the EX-2000, and the 02 Advantage.

350

These devices were tested with a mechanical lung to ensure a level playing field.

351

Figure 4 of Mr. Bliss’ article shows that the use of the ImPulse Select in mode “A”, the intermittent mode, provides a lower fraction of inspired oxygen at all respiratory rates. The use of the ImPulse Select in mode “B”, the “every breath” mode, also provides a lower fraction of inspired oxygen for respiratory rates below 16 breaths/min. Figure 5 of the article shows that the use of the ImPulse Select in either mode A or B provides greater oxygen use efficiency than the remainder of the devices tested.

352

The first four devices on the graph, including the ImPulse Select A and B and the EX 2000, are all operating at or near a hundred percent efficiency, within the experimental error.

353

[[Image here]]

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[[Image here]]

[[Image here]]

x. Sunrise’s Testing of the Accused Device to Determine Infringement

Mr. Hunter was the only Sunrise employee to analyze the accused device and compare the device to the claims of the ‘224 Patent.

354

Mr. Hunter’s understanding of the claims of the ‘224 Patent is his alone.

355

Mr. Hunter is not a patent attorney,

356

and did not discuss the claim interpretation used in the memorandum with Dr. Greene or any patent counsel before performing the analysis.

357

Further, Mr.

*394

Hunter did not receive any guidance from anybody as to how to evaluate and test the ImPulse Select.

358

Nevertheless, Mr. Hunter felt comfortable and qualified to perform the testing and evaluation of the Air-Sep unit and compare it to the claims of the ‘224 Patent in a “non-legalistic” way.

359

3. Validity

a. The ‘303 Patent

i.The Disclaimer

United States Patent No. 4,484,578 (“the ‘578 patent”) is a continuation of the ‘303 patent. As such, its specification is identical to that of the ‘303 patent.

360

Moreover, the ‘578 patent was examined and allowed by the same primary examiner as the ‘303 patent.

361

The ‘578 patent, which expires after the ‘303 patent, has never been asserted against AirSep in this lawsuit.

362

Claim 23 of the ‘578 patent has been disclaimed in its entirety

363

as too broad or otherwise invalid.

364

This disclaimer was filed to prevent the ‘578 Patent from extending the life of the ‘303 Patent.

365

Claim 3 of the ‘303 Patent and Claim 23 of the ‘528 Patent are identical, with the exception of the word “consecutive” versus “successive.” Greene Tr. 2/7:82. The words “consecutive” and “successive” refer to the same concept, for purposes of claim construction.

366

Sunrise admits that claim 23 of the ‘578 patent may well have been invalid before the disclaimer due to double patenting, but asserts that such double patenting does not affect the validity of the first-to-expire, ‘303 patent.

367

ii.One of Ordinary Skill in the Art

One of ordinary skill in the art would have a knowledge of fluidics and the knowledge that fluidic components can be used as timers for medical applications.

368

A person in the mid-1970s interested in designing an OCD system would have desired a device that conserves gas and increases the efficiency of the oxygen fed to a patient. The circuit of the Smith reference is relatively general in nature and can be modified to come up with a variety of different systems.

369

iii.The Combination of U.S. Patent No. 2,766,752 (Meidenbaur) and Respiratory Care Applications for Fluidics by Richard K. Smith, Respiratory Therapy, May/June 1973

U.S. Patent Number 2,766,752 (“the ‘752 patent”) entitled “Apparatus for Supplying Gas for Respiration,” was issued to P.E. Meidenbaur, Jr. on October 16,1956 as the result of an application filed November 28, 1952.

370

It discloses two embodiments, neither making use of a timer nor a timing means.

371

The embodiment of the ‘752 patent first relied upon by AirSep at trial and described with reference to Figs. 6 to 8 is a “rebreather” device in which all of the oxygen supplied to the user is drawn from the oxygen tank. No oxygen from the air is supplied to the user.

372

Thus, use of this embodiment is not a method of “supplying

supplemental

dosages of respirating

*395

gas.”

373

The ‘752 patent discloses another embodiment described with reference to Figs. 1 to 4 which supplies oxygen during the entire inspiration period without using a timer.

374

This patent constitutes prior art under 35 U.S.C. §102 (a).

The ‘752 Patent, in its second embodiment, teaches one of ordinary skill in the art a method of supplying supplemental dosages of respirating gas to a spontaneously breathing in vivo respiratory system having an inspiration period and an expiration period.

375

The ‘752 system starts off with an oxygen cylinder 10 to which a fitting 11 is connected. A regulator reduces the cylinder pressure from 2,000 or 2,200 lbs. down to 45 to 50 psi. The oxygen then goes through the passage to elements 14, 15, 16, and 18, where a bypass valve and an orifice are located. Orifice 21 feeds into a predetermined volume 22.

376

The ‘752 patent, in either embodiment, relies on orifice 21 as shown in Fig. 5 to pass oxygen from chamber 14 to chamber 18 at a controlled rate. The flow through this orifice will take place any time the pressure drop across the orifice is not equalized.

377

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[[Image here]]

The ‘752 OCD has an inlet and an outlet which is connected to a patient through a device that is similar to a cannula. With this device, the patient can cover his mouth and nose and breathe through a mask. The purpose of the ‘752 device is to deliver a dose of oxygen to the patient based on his respiratory effort. When the patient begins breathing, his breath is sensed in demand chamber 31. As the negative pressure is established, the diaphragm in demand chamber 31 starts to move, causing a connecting rod to tip a seal and open an inlet that is normally shut. As soon as the seal is tipped, a predetermined volume of oxygen stored in passage 22 is instantly delivered to the patient.

378

As the patient keeps inspiring,

*397

negative pressure stays in the demand chamber and the diaphragm keeps moving.

379

Oxygen flow, however, slows because the volume in 22 is exhausted. The restrictor 21 retards further flow into chamber 22 so that substantial quantities of oxygen are not passed on to the patient, even during the remainder of inspiration, except for whatever gas can pass through the re-strictor during that time. Thus, the diaphragm keeps moving under negative pressure until it hits a hammer-like piece which opens the device to allow atmospheric air to pass through to the patient. Thus, in the ‘752 OCD, the patient gets only a predetermined quantity of oxygen, the vast majority of it for a short period of time, while receiving mostly atmospheric air for the remainder of the inspiration effort.

380

In the operation of either embodiment of the ‘752 patent, during the expiration period when the demand valve is closed, oxygen accumulates in the medium pressure demand storage chamber 22. The volume of gas accumulated (at standard pressure and temperature) is nine cubic inches of oxygen.

381

Thus, if a three-second breathing cycle is assumed (one second inspiration and two seconds expiration) the flow rate through orifice 21 must average 4.5 cubic inches per second (9 cubic inches divided by 2 seconds equals 4.5 cubic inches per second). When the demand valve 45 opens to release the nine cubic inches of oxygen accumulated during the expiration period, the pressure across the orifice 21 will lower and flow will continue through the orifice 21 for the remainder of the inspiration period at a rate

at least

4.5 cubic inches per second. Orifice 21 merely retards the flow during inhalation by the user.

382

Oxygen is supplied through orifice 21 to the user of the ‘752 apparatus during the entire inspiration period

383

Moreover, as the breathing rate increases, the amount of oxygen supplied to the user by the apparatus of the ‘752 patent cannot increase beyond the fixed rate permitted by orifice 21.

384

This is a characteristic of oxygen management systems that do not use a timer to control a high flow rate Rx pulse of oxygen. The best illustration of this behavior is Figure 4 of Bliss and McCoy, “A Bench Study Comparison of Demand Oxygen Delivery Systems and Continuous Flow Oxygen,”

Respiratory Care,

August 1999, Vol. 44, No 8.

385

As the breathing rate increases for the systems that use a timer (the EX 2000, the Impulse Select and the Oxymatic 301), the oxygen delivered per breath remains substantially constant. All the other devices supply decreasing amounts of oxygen per breath as the breathing rate increases.

386

Claim 3 of the ‘303 Patent does not require a uniform supply of oxygen from breath to breath as the breathing rate increases, but it does require “at least as great a rise in the partial pressure of said gas in blood interfacing with said respiratory system” as would be provided by continuous flow gas delivery.

The ‘752 Patent teaches one of ordinary skill in the art an inspiration period being of a duration T2 during which period a negative pressure relative to ambient pressure exists in an vivo respiratory system at the location at which respirating gas is introduced to said system.

387

In the ‘752 Patent, for the inspiration period T2, a

*398

negative pressure relative to atmospheric exists in the demand chamber, which continues as long as the inspiration effort lasts.

388

The inspiration period T2 is also the only time oxygen is supplied.

389

The ‘752 Patent will not allow a pulse of oxygen beyond the inspiratory effort,

ie.,

into the expiratory effort of the breathing cycle, because the diaphragm and the connecting rod will go back to its original position and shut off the air flow as soon as positive pressure is sensed.

390

The ‘752 Patent also teaches to one of ordinary skill in the art an expiration period comprising a positive pressure relative to ambient pressure existing in an vivo respiratory system at the location at which respirating gas is introduced to that system. When the patient using the ‘752 Patented device starts to exhale, the positive pressure is sensed.

391

The ‘752 Patent further teaches one of ordinary skill in the art the step of sensing initiation of the inspiration period. Once negative pressure is sensed, the diaphragm starts to move; this is the sensing mechanism.

392

In the ‘752 Patent, before sensing starts, the valve seat is closed and no oxygen is being fed. Inhalation must occur in order for the diaphragm to move and release the oxygen. Thus, the ‘752 Patent teaches to one of ordinary skill in the art the step of supplying immediately in response to said sensed inspiration a dose of respirating gas to an in vivo respiratory system.

393

The ‘752 Patent also teaches one of ordinary skill in the art said dose being supplied substantially at the beginning of said sensed inspiration, said dose of gas being supplied at a rate The rate Rj is delivered by the captured volume of gas in the volume 22. That captured volume or dose is supplied substantially at the beginning of the inspiration cycle.

394

Although the volume of oxygen delivered in the ‘752 Patent is predetermined, that patent does not teach variable timing, however.

395

The article entitled Respiratory Care applications for Fluidics by R. K. Smith was published in the Respiratory Therapy Magazine in May/June of 1973.

396

This also constitutes prior art under 35 U.S.C. §102 (a).

The Smith reference generally teaches how to use different fluidic components that can be used in a circuit to be able to sense a patient’s inhalation pressure and initiate oxygen flow to the patient. It also teaches how to build a timer either on the inspiratory or expiratory side so that one can vary the time using a variable needle valve. The Smith reference discloses that a sensor would be attached to a patient and its output fed another fluidic device called a flip-flop. The output of the flip-flop starts a valve that supplies oxygen, and the same signal that initiates the valve also is fed into a timer. One can set the timing with the variable needle valve so when the time expires, the signal will shut off the gas supply to the patient.

397

*399

[[Image here]]

The R.K. Smith article, however, teaches the use of fluidic timers in a ventilator system that supplies all of the patient’s oxygen.

398

The Smith reference, like the rebreather embodiment of the ‘752 patent, does not disclose a method of “supplying supplemental dosages of respirating gas.”

399

Moreover, in the various systems described in the article, oxygen is always provided for the entire inspiration period. The fluidic timers disclosed in the R.K. Smith article are used only to override the normal action of the fluidic circuit that awaits and responds to the patient’s normal breathing cycle. Thus, if the patient fails to move from inspiration to expiration naturally or from expiration to inspiration naturally, the override timers activate the valve controlling the supply of oxygen to the patient.

400

The timers disclosed in the R.K. Smith article are connected into the fluidic circuit such that a pulse of oxygen less than the full inspiration period can never be supplied.

401

The Smith reference further shows the use of a balloon as a variable capacitor,

402

such as Defendant’s Exhibit 51, to function as a timing device.

403

Defendant’s Exhibit 51 has a diaphragm or balloon-like structure which is sandwiched between two metallic parts that are dark in color. The diaphragm is the light-colored piece which has a tab that sticks out.

404

*400

The Smith reference teaches one of ordinary skill in the art the step of using timing means, although not specifically to predetermine a duration Tj. for which a dose of respirating gas is to be supplied to an in vivo respiratory system.

405

The structure in the Smith reference that discloses the timing means is the variable resistor and variable (balloon) capacitor, while the timing means disclosed in the ‘303 Patent reference is a variable restrictor such as a needle valve and a variable capacitor such as an elastomeric balloon.

406

The timing means disclosed by the Smith reference is structurally equivalent to but does not perform, for the reasons already discussed, the identical function of the timing means disclosed in the ‘303 Patent specification.

407

The Smith reference teaches one of ordinary skill in the art a structure which is equivalent to the elastomeric balloon and variable capacitance as disclosed in the ‘303 Patent. The structure in the Smith reference at Fig. 7 is the diaphragm which is sandwiched between the metal.

408

The diaphragm expands and contracts like a balloon because there is a small chamber where the diaphragm, which is made of a flexible membrane such as rubber, is located and in which it can move.

409

The ‘752 Patent in combination with the Smith reference also hints at the idea of setting duration Tx less than the duration T2,

410

but, because the ‘752 Patent provides

some

oxygen during the entire inspiration and the timers in the Smith reference do not teach delivering oxygen only for a portion of inspiration, these two sources do not teach the concept outright. In addition, the ‘752 Patent provides a short burst of gas for technical, not therapeutic, reasons, so it does not show the motivation to employ that concept that the ‘303 Patent teaches. Thus, I conclude, contrary to Ku-mar’s testimony, that the ‘752 Patent and the Smith reference do not teach one of ordinary skill in the art a pulse dose duration less than the total inspiratory effort.

411

I also note that there is no simple way to take a fluidic timer from the R.K. Smith article and install it in the apparatus of the ‘752 patent. Even if somehow a timer were to be installed in the apparatus of the ‘752 patent, a true pulse dose system would not be provided because orifice 21 of the ‘752 patent would still allow a limited amount of oxygen to flow for the entire duration of inspiration, which would cease flowing only when expiration caused the diaphragm to move the rod and seal the valve, again trapping a predetermined volume to be delivered at the beginning of the next inspiration. The timers of the R.K. Smith article could not be used with the ‘752 patent without redesign and modification of the apparatus described in the ‘752 patent.

412

There is also no factual evidence in the record of a suggestion in the prior art or other motivation for the person of ordinary

*401

skill to pick and choose from the ‘752 patent and the R.K. Smith article to construct an apparatus, the operation of which would practice the method of claims 3 to 5 of the ‘303 patent.

413

Defendant claims that the motivation to one of ordinary skill in the art to combine the Meidenbaur and Smith references is that one who was trying to design an oxygen dosing system would look to Meidenbaur because that patent teaches the idea of giving doses of oxygen at the initiation of inspiratory effort and then shutting off the supply of oxygen for the remainder of inspiration.

414

The Meidenbaur system, however, is implemented in a 1950s style, which is cumbersome, non-portable and mechanical.

415

The Smith reference teaches an updated physical mechanism to accomplish the initiation and hints at how to go beyond curtailing the flow to shut off the gas supply altogether before the end of inspiration.

416

But again, even if one examined both of these pieces of prior art, there would be no motivation to produce a system that delivers the entire dose in a short burst at the beginning of inspiration, as defendant has pointed to no evidence that such a dosing protocol was desirable or had any commercial demand. As defendant’s expert himself pointed out, although the ‘752 Patent and the Smith references were available, there was no commercial impetus to combine them, as medical companies in the 1970s were focusing on ventilators and oxygen concentrators. Portable oxygen delivery systems only became commercially important in the early 1980s.

417

Moreover, the ‘752 patent and R.K. Smith article are no closer prior art than was before the patent examiner when the ‘303 patent application was submitted. The Auerbach

et al.

article cited by the examiner and explained at col. 1, 11. 9-26 of the ‘303 patent is as pertinent as the ‘752 patent. Like the ‘752 patent, in the devices tested by Auerbach, “the oxygen supplied for the full duration of the inspiration tend[ed] to commence with a surge in the pattern of flow.”

418

The devices as disclosed in the ‘752 patent had been known in the art for years. The ‘303 patent also acknowledges that fluidic circuits had been employed in “prior art ventilators,” of which the R.K. Smith article is merely one example,

419

and fluidic timing means had been available at least as early as the early 1970s. The dosing method set forth in claims 3 to 5 of the ‘303 patent, however, still remained for Dr. Durkan to invent in about 1980.

420

b. The ‘224 Patent

i. One of Ordinary Skill in The Art

One of ordinary skill in the art is an imaginary person who has, at the time a product or a component is designed, access to all the records from the past, whether those records be patents or articles. In other words, one of ordinary skill in the art has a warehouse of information available to him or her to use to solve the particular problem in a particular field.

421

More specifically, in the time frame of 1994 through 1996, one of ordinary skill in the art of building or designing an oxygen delivery system would have at least the following attributes: some mechanical skills; exposure to basic pneumatic compo

*402

nents such as regulator and compressor fittings, valves, solenoid valves, and tubing; three to five years of experience; knowledge of testing and flow and pressure sensing. A mechanical engineering degree would not be required.

422

In the art of oxygen delivery systems, one of ordinary skill in the art would know that the main consideration is to reduce weight and bulkiness, conserve oxygen and reduce power consumption.

423

In addition, a person of ordinary skill in the art would have some experience in building pneumatic manifolds.

424

Such a person would also be familiar with applications relative to oxygen delivery systems such as medical, scuba diving, mountain climbing and aviation.

425

This person could also have existed in the 1950s as well as the 1990s.

426

ii. The OMS 20/50 Reference (Claim 1)

The OMS 20/50 is an oxygen management system that is connected to a compressed oxygen cylinder and delivers a controlled flow of oxygen to a patient.

427

Sunrise manufactured and sold the OMS 20/50 OCD prior to developing the EX 2000 and prior to submitting a patent application, serial no. 651,273, directed to the technology of the EX 2000.

428

Sunrise sold the OMS device from the time Sunrise purchased PulsAir to about the summer of 1997.

429

The OMS 20/50 device constitutes prior art under 35 U.S.C. §102 (a).

430

The OMS 20/50 has a manifold,

431

into the back of which oxygen flows from the regulator.

432

There is an opening in that manifold where there is a fitting which connects to a regulator via tubing.

433

The connector on the input side of the OMS 20/50 was a very short, metallic rigid connector.

434

A tool or a wrench is needed to remove the OMS 20/50 from the regulator.

435

Attached to the manifold is a pulse valve, and there is also a path going to a bypass valve.

436

Oxygen comes out of either of the valves through an orifice into the output.

437

The OMS 20/50, as used with a yoke-type regulator, did not comprise a single manifold block but rather a manifold block for the OMS 20/50 and a separate manifold block for the regulator.

438

The OMS 20/50 has a sensor that is responsive to inhalation,

439

and a high-pressure solenoid valve.

440

The OMS 20/50 also has a flow restrictor in series with a bypass valve, and a switch to open and close the bypass valve manually.

441

The OMS 20/50 employed internal tubes to eon-

*403

nect its various internal components.

442

The OMS 20/50 is attached to a regulator, either directly or through a flexible hose or other fittings.

443

The EX 2000, in contrast, is an OMS 20/50 with, among other innovations, an integral regulator.

444

It has a manifold block with various pneumatic passageways which eliminate the need for internal tubing for the conveyance of gas.

445

The OMS 20/50 and the external regulators used with it, however, are separate devices. The OMS 20/50 can be used with many different regulators, including those which utilize long tubing to connect the OMS 20/50 to the regulator.

446

Sunrise did not make regulators for use with the OMS 20/50; instead, this OCD was used with regulators made by other companies.

447

Moreover, the OMS 20/50 did not have to be used with a yoke-type regulator which slides over the top of the post valve.

448

Thus, the OMS 20/50 does not include a regulator and a pressure relief valve as required by claim 1 of the ‘224 patent.

449

In sum, the OMS 20/50 was not connected directly to an oxygen cylinder post and cannot be directly mounted on an oxygen cylinder post as required by claim 1 of the ‘224 patent.

450

Only the separate regulator was connected directly to the post.

451

Put in terms of the claims language, the OMS 20/50 does not have a manifold block having an opening adapted to receive an oxygen cylinder post, nor does it have any mating connection for an oxygen cylinder post, as required by claim 1 of the ‘224 patent.

452

In addition, the prior art contains no specific suggestion that the combination of the OMS 20/50 and the yoke-type regulator be modified in the ways necessary to provide the subject matter set forth in claim l.

453

Merely fusing the manifold block of the OMS 20/50 to the manifold block of the yoke-type regulator would not result in the subject matter of claim 1. Further modification would be required to mount the bypass valve on the manifold block to eliminate the tubing connections and replace the tubing with internal passageways. Still further, the compact arrangement of the element mounted on the donut-shaped manifold block would not have been provided.

454

Nor is any evidence of a motivation to combine and then modify the OMS 20/50 and yoke-type regulator found in the record. To the contrary, the OMS 20/50 as made had the capability of being used with many different regulators, a feature that was surrendered by the configuration of the EX 2000 made according to claim 1

455

Thus, I conclude that the OMS 20/50 device does not teach to one of ordinary skill in the art an oxygen management device adapted to be mounted on a post on a compressed oxygen cylinder for delivering a controlled flow of oxygen to a pat

*404

ient.

456

Nor does the OMS 20/50 teach a

manifold block

having an opening adapted to receive a post on an oxygen cylinder.

457

In addition, the OMS 20/50 device does not teach a manifold block opening having an oxygen connection adapted to engage and seal to a mating connection on an oxygen tank post.

458

The OMS 20/50 device also does not teach means for securing a manifold block to an oxygen cylinder post, although the design of a yoke-type regulator does. The threaded T-handle secures the yoke to the oxygen post,

459

and this arrangement would show a person skilled in the art how a manifold block could be similarly attached. The securing means described in the ‘224 specification at Column 4, lines 46 through 55, is also a T-shaped threaded handle, and the respective means disclosed in the patent specification and the regulator’s T-handle perform the identical function.

460

Moreover, the OMS 20/50 device does not teach to one of ordinary skill in the art a bypass valve on the manifold arranged in parallel with the solenoid-operated flow control valve. The OMS 20/50 does have a manual valve that switches the bypass valve and is arranged in parallel with the solenoid valve

461

The OMS 20/50, however, has a bypass circuit comprising lengths of tubing external to the manifold block in which the bypass valve and flow restricting orifice were located.

462

Thus, it does not teach placing the bypass valve on the manifold block itself.

Neither the various pressure regulators used with the OMS.20/50, nor the OMS 20/50 device itself, teach to one of ordinary skill in the art a pressure regulating means on said manifold block for reducing the pressure of oxygen received from a cylinder to a predetermined low level.

463

The means disclosed in the ‘224 Patent specification at Column 4, line 66 through Column 4, line 7, is a pressure regulator 28 which reduces the relatively high pressure of gas from the gas cylinder 11 to a relatively low operating pressure. The structure of the pressure regulating means on the OMS 20/50 is the external regulator. The pressure regulating means on the OMS 20/50 and the means disclosed in the ‘224 Patent specification are structurally equivalent and perform an identical function,

464

but the key innovation is the placement of the regulator on the manifold block, making the device more compact and eliminating the need for external tubing. This is simply not shown by the OMS 20/50.

The OMS 20/50 device does teach to one of ordinary skill in the art an overpressure relief valve on the manifold block, although it is a distinctly “low-tech” means of implementing one. The flexible plastic tubing on the OMS 20/50 manifold will simply burst or come off in response to overpressurization.

465

The OMS 20/50 device also teaches a solenoid-operated flow control valve on said manifold block arranged for initiating

*405

and interrupting the delivery of oxygen from the cylinder to a patient. The structure in the OMS 20/50 is a solenoid valve.

466

The OMS 20/50 further teaches a flow restricting means in series with said bypass valve limit said oxygen flow through said bypass valve. The flow restricting means in the OMS 20/50 consists of a small fitting which is screwed on to the manifold block; when this fitting is unscrewed, it reveals a restricting orifice.

467

This orifice is connected by tubing directly to the bypass valve.

468

The flow restricting means disclosed in the ‘224 Patent specification is a manually adjustable needle valve or a variable orifice. This orifice is structurally equivalent to the flow restricting means described in the ‘224 Patent.

469

The OMS 20/50 device also teaches means for manually opening and closing the bypass valve. The means disclosed in the ‘224 Patent at Column 6, line 60 is valve stem 49 that operates the bypass valve.

470

The structure is a switch that pushes on a piston that opens and closes the bypass valve, while the structure on the OMS 20/50 is a toggle switch. The two respective switches are structurally equivalent and perform an identical function.

471

The OMS 20/50 device teaches to one of ordinary skill in the art a control means responsive to inhalation by a patient for opening the solenoid-operated flow control valve to deliver a dose of oxygen to a patient

472

The OMS 20/50 has a pressure transducer that senses the inhalation and triggers the solenoid valve, and the control means disclosed in the ‘224 Patent specification is a pressure sensor that senses inhalation and triggers the solenoid valve. The structure of the control means disclosed in the ‘224 Patent is structurally equivalent to the control means found on the OMS 20/50 and the structures perform an identical function.

473

What the parties refer to as 510(k) notifications are submittals of engineering and clinical information which are provided to the FDA to permit that agency to assess the safety and effectiveness of a new product with regard to a predicate product which is already on the market.

474

Such a notification was submitted for the EX 2000 to allow the FDA to judge its safety and effectiveness relative to that of the OMS 20/50. In this document, Sunrise set forth that the EX 2000 provided the same safety and effectiveness as the OMS 20/50. The other differences between the OMS 20/50 and the EX 2000 were not included in the 510(k) because they were not essential to the demonstration of substantial equivalence for safety and effectiveness.

475

Sunrise, in its 510(k) Notification to the Food and Drug Administration, stated that: “The PulseDose series devices are fundamentally repackaged versions of the OMS 20 and 50, DeVilbiss current oxygen management system. There are no significant changes in the materials or features. Therefore, based on the above-mentioned similarities, especially the dosage methodology, the PulseDose Series devices and

*406

the OMS 20 and 50 are substantially equivalent devices.”

476

Sunrise also stated that “The gas dose methodology oxygen delivery specifications and performance of the device in the PulseDose series are identical to those of the OMS 20 and 50.”

477

It further stated that: “Previous designs of the DeVilbiss OMS 50 and 20 had similar components except for the integral regulator and pressure relief.”

478

Gregory Good, a Sunrise employee and one of the inventors named on the ‘224 Patent, verified to the FDA that these statements were true, accurate and complete.

479

I place no reliance on the 510(k) notification. Its sole purpose was to demonstrate to the FDA that the EX 2000 was as safe and effective as the OMS 20 and 50. That purpose was accomplished without any discussion of the differences between the two devices as they relate to the ‘224 patent, as the only issue appears to have been the dosing methodology, something encompassed solely by the ‘303 patent. The ‘224 patent makes the EX 2000 a more space-efficient and user-friendly OCD, but simply has no effect on any phase of the OCD’s operations that go to clinical safety and effectiveness.

iii. The Combination of OMS 20/50 Reference and the European Patent (Claims 2-6)

The OMS 20/50 also lacks an annular housing enclosing the manifold block, as required by claim 2 of the ‘224 patent.

480

Instead, defendant relies upon French-language patent document EP 0629812,

481

which discloses a cap for a gas cylinder with numerous openings including an opening cut out 12, an opening under handle 22, and opening to permit access to the filling coupling 25, and opening for access to the manometer 5, an opening for access to the medium pressure outlet 6 and an opening for the low pressure outlet 7.

482

The European Patent teaches one of ordinary skill in the art an annular, doughnut-shaped housing around the integrated components enclosing the top of a gas cylinder, but the housing is nothing more than a glorified bottle cap. The patented device performs no function in the way of processing or delivering the gas, but appears merely to protect the top of the cylinder and provide for its hand-carryability. It is “annular” only to the extent that any aerosol cap is. Moreover, this annular housing, while it might from the drawings of the European patent be said to enclose a manifold block and pressure regulating means, does not enclose an overpressure relief valve, solenoid operated flow control valve, bypass valve, flow restrictor and control means, as required by claim 2 of the ‘224 patent.

483

Nor does the European patent teach an annular housing having an opening aligned with a manifold block opening and adapted to receive a post on an oxygen cylinder, because, in the gas cylinder depicted, there is no annular manifold block with such an opening; there is merely a post of some sort, and one different from those of the exhibits in this case.

484

*407

[[Image here]]

The OMS 20/50 does not teach one of ordinary skill in the art an oxygen pressure gauge mounted on a manifold block and adapted to indicate the pressure of oxygen in the manifold block from an oxygen cylinder, because the OMS 20/50 contains no pressure gauge.

485

Instead, from simple visual inspection, it is obvious that the pressure gauge is mounted on the external regulator. Thus, I cannot agree with Mr. Kumar’s expert opinion that Claim 3 of the ‘224 Patent is invalid in view of the OMS 20/50 device.

486

The OMS 20/50 does teach one of ordinary skill in the art a knob extending from the housing for movement between first and second positions, as well as the means for opening a bypass valve when the knob is in the first position and for closing the bypass valve when the knob is in the second position. The knob, here represented by a toggle switch, when it is in one position, opens the valve, and in the other position, closes the bypass valve.

487

The opening means in the OMS 20/50 is a

*408

piston element, which is actuated by a cam switch; combined together, they open and close. The opening means disclosed in the ‘224 Patent is a sloping, lower can surface 50 as shown in Figure 8 of the patent. The sloping cam of the ‘224 Patent and the cam type of switch of the OMS 20/50 are structurally equivalent and perform an identical function.

488

The OMS 20/50 device also teaches one of ordinary skill in the art a bypass valve having a valve stem movable between open and closed positions,

489

as well as a valve stem moved by the opening and closing means to the open position when the knob is moved to said first position and to the closed position when the knob is moved to the second position. The OMS has a valve stem, piston-like arrangement that moves from the open to the closed positions.

490

The OMS 20/50 further teaches a means on the housing for selecting and indicating the effective pulse flow rate delivered to an inhaling patient by the solenoid-operated flow control valve. The OMS 20/50 has a switch on the housing that selects and indicates the dose rate and the means consist of the electronics to which the switch is connected, while the selecting and indicating means disclosed in the ‘224 Patent are a series of indicators consisting of light emitting diodes. The OMS 20/50 indicators and the selectors and indicators disclosed in the ‘224 Patent specification are structurally equivalent and perform an identical function.

iv. The Combination of the ‘627 Patent, the ‘881 Patent and the European Patent

U.S. Patent No. 3,521,627 (“the ‘627 patent”) is entitled “Automatic Emergency Breathing Oxygen System for Aircraft.” It is an emergency system for supplying oxygen for a short period of time when the main oxygen system fails or when an air crewmen ejects from the aircraft.

491

The ‘627 Patent teaches one of ordinary skill in the art an oxygen management device adapted to be mounted on a post on a compressed oxygen cylinder for delivering a controlled flow of oxygen to a patient. The manifold can be adapted to receive an oxygen cylinder post for delivering a controlled flow of oxygen to a patient.

492

The cylinder post may be provided with various standard connection configurations, for example, with a conventional CGA 870 connection.

493

One of ordinary skill in the art at the time of the ‘224 invention would understand that various connection configurations would be oxygen posts with threaded posts, oxygen cylinders with regulators and gauges on them and a CGA type of connection. Such a hypothetical person would not be limited to the CGA 870 connection post.

494

The ‘627 Patent teaches one of ordinary skill in the art a manifold block having an opening adapted to receive a post on an oxygen cylinder.

495

The ‘627 patent dis

*409

closes oxygen supply bottles that have an open neck with external threads (‘627 patent, Fig. 2, item 25) that turn into internal threads (‘627 patent, Fig. 2, item 24) on a manifold block,

[[Image here]]

The ‘627 Patent also teaches a manifold block opening having an oxygen connection adapted to engage and seal to a mating connection on an oxygen tank post. With reference to Figure 2, the oxygen cylinder post 25 can be screwed into this manifold block which has inverted the opening 24.

496

The ‘627 Patent further teaches one of ordinary skill in the art a means for seeur-ing a manifold block to an oxygen cylinder post received by the opening, but not the same means disclosed in the ‘224 Patent, that is, a knob with a T-handle that secures the block to the manifold.

497

The structural components disclosed in the ‘627 Patent', in contrast, are the threaded post where the oxygen cylinder is screwed into the manifold.

498

These respective structures are not structurally equivalent.

499

*410

[[Image here]]

The ‘627 Patent does teach a pressure regulating means on the manifold block for reducing the pressure of oxygen received from a cylinder to a predetermined low level. The structure in the ‘627 Patent is the pressure reducing means which reduces the pressure coming from the oxygen bottle to a lower pressure to go into the rest of the circuit, while the means disclosed in the ‘224 Patent specification is a pressure regulator which reduces the high pressure oxygen to a lower pressure level. The respective pressure regulating means are structurally equivalent and perform an identical function.

500

The ‘627 patent, however, does not disclose an over-pressure relief valve on the manifold block.

501

The over-pressure relief valve is described in the specification of the ’224 patent as a backup safety device to the pressure regulator set to limit pressures to less than 60 psi in the example given.

502

Instead, defendant relies upon the pressure relief valve 22 of Weigl U.S. Patent No. 3,903,881

503

for a showing of a

*411

pressure relief valve. This overpressure relief valve is shown in Figure 1, which vents to the atmosphere and is mounted on manifold block 16.

504

Valve 22 is not a backup safety device to a pressure regulator but is designed to protect the patient’s lungs (rather than the equipment itself) from over-pressure.

505

Nevertheless, the ‘881 Patent teaches one of ordinary skill in the art an overpressure relief valve on a manifold block.

506

One of ordinary skill in the art would have the motivation to combine the ‘881 Patent and the ‘627 Patent because both references are similar respiratory applications. The two systems arose from similar types of problems, so one would have the motivation to look at both patents.

507

The ‘627 Patent also teaches a solenoid-operated flow control valve on said manifold block arranged for initiating the delivery of oxygen from the cylinder to a patient. With reference to Figure 2, the ‘627 Patent shows the solenoid valve that is mounted in line with the pressure regulator and which has an inlet and an outlet in the solenoid function. The solenoid valve is arranged for initiating the delivery of oxygen.

508

The solenoid-operated control valve on the manifold block of the ‘627 patent, however, can be electrically opened but not electrically closed.

509

Therefore, it is not “arranged for interrupting the delivery of oxygen,” as required by the ‘224 patent.

510

Moreover, the ‘627 patent does not disclose a “bypass valve arranged in parallel with a solenoid-operated flow control valve.” The fact that the solenoid-operated valve disclosed in ‘627 patent can be manually opened does not convert the valve to a bypass valve arranged in parallel.

511

Whether opened electrically or manually, the solenoid valve in the ‘627 patent supplies oxygen at the same instantaneous flow rate. There is also no parallel flow path.

512

The bypass circuit of the ‘224 patent, in contrast, is in parallel with the solenoid-operated flow control valve, is arranged with a flow-restricting means and can provide a different instantaneous flow rate than the solenoid-operated flow control valve which it bypasses.

513

The ‘627 patent, since it discloses no bypass valve, can likewise have no: (1) bypass valve on the manifold block arranged in parallel with the solenoid-operated flow control valve; nor (2) flow restricting means in series with the bypass valve to limit oxygen flow through the bypass valve; nor (3) means for manually opening and closing said bypass valve.

514

Finally, the ‘627 patent does not disclose a “control means responsive to inhalation by a patient for opening said solenoid operated flow control valve to deliver a dose of oxygen to a patient.”

515

The OMS 20/50, however, teaches one of ordinary skill in the art a control means responsive to inhalation by a patient for opening said solenoid operated flow control valve to deliver a dose of oxygen to a patient.

516

The OMS 20/50 discloses a pressure sensor as the control means, which is the same control means disclosed in the ‘224 Patent The respective means are structurally equivalent and perform an

*412

identical function.

517

Claim 2 of the ‘224 patent is dependent on claim 1. In addition to the elements of claim 1, the subject matter of claim 2 includes: (1) an annular housing enclosing ' said manifold block, said pressure regulating means, said over-pressure relief valve, said solenoid-operated flow control valve, said bypass valve, said flow restrictor and said control means, and (2) wherein said annular housing has an opening aligned with said manifold block opening and adapted to receive a post on an oxygen cylinder.

518

Mr. Kumar’s professional and expert opinion is that Claim 2 of the ‘224 Patent is invalid in view of the OMS 20/50 device, the ‘627 Patent, the ‘881 Patent, and the European Patent.

519

I agree that one of ordinary skill in the art would be motivated to combine these references because the ‘627 Patent teaches about integrating components and it solves the problems of having individual components loosely assembled. The European Patent shows that the integrated components could be assembled and put into a doughnut shaped housing. The ‘881 Patent has structures similar to those of the ‘627 Patent, so one of ordinary skill in the art would be motivated to combine the references.

520

The ‘627 Patent teaches one of ordinary skill in the art an oxygen pressure gauge mounted on said manifold block and adapted to indicate the pressure of oxygen in said manifold block from an oxygen cylinder; the specification describes a pressure gauge 27 mounted on the manifold.

521

The ‘627 Patent also teaches one of ordinary skill in the art a knob extending from the housing for movement between first and second positions. The ‘627 Patent describes a pin that comes out of the central plunger of this valve and which is equivalent to a knob. The ‘627 Patent further teaches a means for opening the bypass valve when the knob is in the first position and for closing the bypass valve when the knob is in the second position. When the knob of the ‘627 Patent is pushed in, it is in the first position where it is closed. When the knob is pulled, it is in the second position where the valve is open.

522

The means for opening and closing the bypass valve disclosed in the ‘224 Patent is a knob that opens and closes, which is structurally equivalent to the ‘627 Patent mechanism for opening and closing the bypass valve and performs an identical function.

523

Mr. Kumar’s expert opinion is that Claim 4 of the ‘224 Patent is invalid in view of the ‘627 Patent, the ‘881 Patent, and the European Patent.

524

The ‘627 Patent also teaches a bypass valve that has a valve stem movable between opened and closed positions, disclosing a valve stem 40 that can go from closed to open.

525

The ’627 Patent likewise teaches a valve stem that is moved by the opening and closing means to the open position when the knob is moved to the first position and to the closed position when the knob is moved to a second position. In the ‘627 Patent, the first position is when the knob is pulled and the valve is open. The knob is detented such that when the knob is pushed back in, it goes to the other detent in the closed position. Mr. Kumar’s expert opinion is that Claim 5 of the ‘224 Patent is invalid in view of the ‘627 Patent.

526

*413

v. Other Indicia of Obviousness

Sunrise also did not adduce any direct technical evidence, testimonial (expert or lay) or documentary, showing that the ‘303 Patent or the ‘224 Patent are not invalid.

527

Specifically, Mr. Bliss, in the direct and rebuttal testimony elicited by Sunrise, did not opine that the ‘303 Patent or the ‘224 Patent were valid, whether or not over the references cited against validity by Air-Sep.

528

Nevertheless, when the EX 2000 manufactured according to claim 1 of the ‘224 patent was introduced to the market, it was an instant commercial success, immediately replacing the OMS 20/50.

529

Sunrise sold approximately 4,000 oxygen conserver units from July to December 1996 (Q1 and Q2 of FY97), the six-month period preceding the introduction of the EX 2000. These units comprised OMS 20/50 products.

530

Sunrise sold approximately 4,000 oxygen conserver units in the period January to March 1997 (Q3 of FY97), of which about 95% were EX 2000 units.

531

Sunrise sold approximately 8,000 oxygen conserver units in the period April to June 1997 (Q4 of FY97) and the number increased steadily to over 10,000 for the period July to September 1997 (Q1 of FY 98), almost all of which were EX 2000 units.

532

Thus, the EX 2000 was a tremendous commercial success.

533

Moreover, those of ordinary skill in the art were in place all during the period of time the OMS 20/50 'was being marketed but none proposed the subject matter set forth in claim l.

534

Finally, the need for portability of respirator devices did not suddenly arise at the time of the invention set forth in the ‘224 patent, but had existed for years.

535

c. Sunrise’s Patent Search - EX 2000

Oliver Todd, Sunrise’s patent counsel, performed a patent search with respect to the application of the EX 2000.

536

Some of the patents revealed in the search and reviewed by Todd were those of Dr. Tiep. and Puritan Bennett.

537

4. Enforceability

a. Patent Misuse - The Puritan Bennett License — The ‘303 Patent

Sunrise has not engaged in a pattern of licensing its products.

538

Prior to the introduction of the EX 2000, Sunrise had investigated the possibility of licensing the ‘303 patent, but had at that time only a small share of the OCD market.

539

PulsAir An-stalt sued Puritan-Bennett for infringement of a number of patents, including the ‘303 patent. This lawsuit was pending when Sunrise purchased the assets of Pul-sAir Anstalt,

540

but Sunrise settled it in 1995. As part of this settlement, Puritan-Bennett was given a single, specific product license under the various patents, in-

*414

eluding the ‘303 patent.

541

Puritan-Bennett made one license payment of $25.00 under this agreement before it changed its product design to one which did not come under the licensed patents. During the license negotiations, both parties understood that the license would be of very limited duration until Puritan-Bennett changed its design.

542

Specifically, the license agreement with Puritan Bennett covers four (4) patents: the ‘303 Patent, the ‘398 Patent, the ‘578 Patent, and the ‘387 Patent,

543

all of which expire at different times.

544

Yet, the term of the license runs until the date of the expiration of the last to expire patent, and the royalty provisions do not diminish over the course of the license.

545

From this, defendant argues that Sunrise misused the ‘303 patent by using it in a scheme to derive licensing revenues from patents that would come to be expired.

Sunrise did not condition the license to Puritan-Bennett upon an agreement that the royalty would not change regardless of the expiration of some of the licensed patents. Indeed, this issue was never even discussed between those parties, who negotiated the license with the knowledge and intent that it would only generate royalties for a very short time until Puritan-Bennett introduced its redesigned product.

546

Under the license, Puritan Bennett paid $10,000 as a one-time license fee and $25.00 in royalties.

547

There is no evidence that plaintiff profited from any patent by extending it through the license beyond its statutory life.

548

Other than the settlement license with Puritan-Bennett, the ‘303 patent has never been licensed,

549

and the ‘224 patent has never been licensed under any circumstances.

550

Further, Sunrise does not wish to license either the ‘224 or the ‘303 patent because it enjoys a dominant market position and has the capacity to meet any increased demand for the EX 2000.

551

Presently, Sunrise is only running a single production shift of five days a week. Sunrise thus has two additional shifts available on those five days, as well as two additional days of capacity per week. Sunrise’s suppliers also have sufficient capacity to meet increased demand.

552

b. Inequitable Conduct - The ‘224 Patent

A two-page advertisement of the OMS 20/50 was submitted to the Patent and Trademark Office by the Applicants as part of the Applicants’ Information Disclosure Citation.

553

The advertisement was one of five references listed on the information disclosure citation. Only one page of the advertisement showed a picture of the OMS 20/50, a regulator and an oxygen cylinder. Still, the OMS 20/50 used with a yoke-type regulator mounted on a post valve was before the patent examiner.

554

*415

On the original product brochure of the OMS 20/50, a copy of which was provided to the examiner of the ‘224 patent, the OMS 20/50, the external regulator, and oxygen tank with post are plainly visible.

555

The patent Examiner was aware of and considered the OMS 20/50 device, used with an attached regulator, during the prosecution of the ‘224 patent.

556

Yet, the patent examiner never rejected claim 1 or any other claim based upon the known combination of the OMS 20/50 and the yoke-type regulator called to his attention by Sunrise.

557

[[Image here]]

Defendant correctly notes that the advertisement of the OMS 20/50 submitted to the U.S. Patent and Trademark Office does not show the opening in the manifold where the oxygen comes into the manifold or the short metal tubing connecting the OCD to the regulator.

558

It claims that a decision-imphedly a strategic one-was made to submit the OMS 20/50 advertisement instead of other available literature on the OMS 20/50, including the patient manual, even though the OMS 20/50 patient manual is a better reference for teaching someone unfamiliar with the technology about the features and operability of the OMS 20/50 device.

559

My examination of both documents, however, reveals that with respect to features relevant to

*416

the patentability of the ‘224 subject matter, the OMS 20/50 product brochure which was submitted to the patent examiner contains more relevant information than the OMS 20/50 patient manual, which contains neither relevant pictures nor diagrams.

560

There was nothing inequitable about plaintiffs choice to submit the advertisement rather than the patient manual.

5. Prior Adjudication/Reissue and Reexamination

Sunrise admits that there has been no prior adjudication of validity of the ‘303 Patent

561

and that the ‘303 Patent has not been the subject of a reissue

562

or reexamination proceeding in the U.S. Patent and Trademark Office.

563

Sunrise has also adduced no evidence, testimonial or documentary, that the public has acquiesced to the validity of the ‘303 Patent.

564

Sunrise makes the same admissions with respect to the ‘224 patent.

565

G. Irreparable Harm

1. Sunrise’s Allegations of Lost Market Share and Price Reduction

a. Alleged Price Reduction

Sunrise sold approximately 4,000 OMS 20/50 oxygen conserver units in the period July to December 1996 (Q1 and Q2 of FY97), the six-month period preceding the introduction of the EX 2000.

566

Sunrise sold approximately 4,000 oxygen conserver units in the period January to March 1997 (Q3 of FY97), about 95%' of which were EX 2000 units.

567

Sunrise sold approximately 8,000 oxygen conserver units in the period April to June 1997 (Q4 of FY97) and the number increased steadily to over 10,000 for the period July to September 1997 (Q1 of FY 98); substantially all of these sales were EX 2000 units.

568

The EX 2000 was the single largest profit margin product sold by any of Sunrise’s divisions.

569

*417

[[Image here]]

Sunrise’s sales of oxygen conserver units dropped back to 8,500, however, in the period October to December 1998 (Q2 of FY 99), during which period the AirSep ImPulse Select was announced.

570

Sunrise’s customers, including Lineare, informed it that unless Sunrise dramatically lowered the price of its EX 2000, they would begin to purchase the ImPulse Select because they regarded it as a lower priced copy of the EX 2000.

571

Sunrise’s sales remained at or near 8,000 units per quarter for 1998 (Q3 of FY99 to Q2 of FY00); indeed, Sunrise has stabilized the decline in sales volume subsequent to the introduction of the ImPulse Select, but only because Sunrise lowered its price.

572

Sunrise’s data for the number of conser-ver units sold includes the OMS 20/50, the Walkabouts, and the EX 3000,

573

some of

*418

which are individual units and some of which are EX 2000 units configured with oxygen cylinders and carrying bags.

574

As already noted, the OMS 20/50 was phased out by the summer of 1997, while the EX 3000 has sold less that 500 units since its introduction.

575

1 find the inclusion of these items to be insignificant for purposes of determining the existence

vel non

of irreparable harm.

576

Sunrise’s evidence of its average selling price excludes, as it should, intercompany and “zero dollar” complimentary transfers, as well as services and warranty items.

577

This price evidence also properly includes configured EX 2000 systems, and — less fortunately-negligible sales of items that do not contain the commercial embodiment of the ‘224 Patent, for instance, the OMS 20/50 and the EX 3000.

578

[[Image here]]

*419

The average selling price of the EX 2000 for the calendar year 1997, the first year of EX 2000 sales, was $385 per unit,

579

while the average selling price in February 2000 (when the preliminary injunction hearing was held), was $298.

580

The average selling price of the EX 2000 has continually decreased starting in Q2 of FY99, the quarter in which the AirSep Impulse Select was introduced.

581

Sunrise’s conserver revenue in the six-month period July to December 1996 (Q1 and Q2 of FY97) based upon sales of the OMS 20/50 was about 2.5 million dollars.

582

Its conserver revenue in the period January to March (Q3 of FY97), the first quarter in which the EX 2000 was sold, rose to near 3 million dollars per quarter. In the period April to June (Q4 of FY97), conser-ver revenue rose to 3.5 million dollars.

583

Sunrise’s conserver revenue from July 1997 to June 1998 (FY 1998) was 17 million dollars.

584

This comprised 20% of the division’s revenue and was the division’s most profitable product.

585

[[Image here]]

*420

The fiscal year 1998 revenues generated by the EX 2000 were $8,910,412.00.

586

If one includes the entire conserver segment, including configured devices, the revenues are approximately $17,000,000.00.

587

The net revenues for the Respiratory Products Division for fiscal year 1998 were $90,000,-000.00.

588

The Home Health Care Group revenues for fiscal year 1998 were around $350,000,000.00, while Sunrise Medical’s revenues for fiscal year 1998 were $650,-000,000.00 to $675,000,000.00.

589

[[Image here]]

The conserver segment includes the EX 2000, the EX 3000 and OMS 20/50 sales, and accounted for 18.9 percent of the Respiratory Products Division revenues for fiscal year 1998.

590

The conserver segment revenues accounted for 4.9 percent of the Home Health Group revenues, and 2.6 percent of Sunrise Medical’s revenues, for fiscal year 1998.

591

*421

[[Image here]]

The EX 2000 revenues for fiscal year 1999 were $8,177,581.00,*

592

while the con-server segment sales as a whole (again, including configured devices) were approximately $13,000,000.00.

593

The Respiratory Products Division revenues were $90,000,-000.00, the Home Health Care Group’s revenues were $355,000,000.00 and Sunrise Medical’s revenues were $660,000,000.00.

594

The eonserver segment revenues accounted for 14.4 percent of the Respiratory Products Division revenues for fiscal year 1999.

595

The eonserver segment revenues accounted for 3.7 percent of the Home Health Group revenues, and 1.97 percent of Sunrise Medical’s revenues for fiscal year 1999.

596

The ImPulse Select is purchased by the same home care dealers that purchase the EX 2000.

597

At least one customer has terminated its OCD business with Sunrise subsequent to the introduction of the ImPulse Select

598

and it will be virtually impossible for Sunrise to increase the price of the EX 2000 from the level to which it has fallen due to the sales of the ImPulse

*422

Select.

599

AirSep, on the other hand, projects that sales of the ImPulse Select will increase in 2OOO.

600

AirSep’s 2000 production and sales goals for the ImPulse Select are 1500-2000 per month.

601

The Respiratory Products Division of Sunrise is located only in Somerset, Pennsylvania, and is the only Sunrise division located there.

602

As a result of the decrease in pricing and sales volume of the EX 2000 caused by the sales of the ImPulse Select, Sunrise has been forced to lay off 35 to 40 employees from its Somerset, Pennsylvania location. This represents more than 10% of the Somerset work force. Sunrise acknowledges, however, that these were layoffs of supervisors who were cut in a streamlining move due to unacceptable revenues and not workers who actually make the EX 2000.

603

I do not find this inconsistent with Sunrise’s assertion that the price and volume problems of the EX 2000 caused the layoffs, as reduced revenues often cause businesses to cut fixed overhead costs because the line personnel who actually make the product cannot be cut without affecting output.

Although Sunrise now projects sales of conserver units for the calendar year 2000 to be 10 million dollars or less,

604

Sunrise believes that it would have been grossing twenty- to twenty-four million dollars in sales.

605

No evidence, market studies or accounting studies were submitted by Sunrise in support of this projection

606

and hence I will discount it.

Sunrise runs various and different promotions throughout various times of the year.

607

Consequently, the EX 2000 selling price fluctuates and is affected by many different factors.

608

To put it simply, Sunrise’s data is not perfectly tailored to the needs of this case. Even so, for present purposes, I find it worthy of credit and will consider it with respect to the existence

vel non

of irreparable harm.

Net Quantity

Net Sales Shipped ASP

FY1997-P7 263

FY1997-P8 $363,405 856 $424.54

FY1997-P9 $265,005 654 $405.21

FY1997-P10 $465,454 1136 $409.73

FY1997-P11 $489,027 1189 $419.29

FY1997-P12 $772,861 1886 $409.79

FY1998-P1 $763,806 1861 $410.43

FY1998-P2 $830,717 2014 $412.47

FY1998-P3 $580,870 1429 $406.49

FY1998-P4 $909,802 2302 $395.22

FY1998-P5 $538,805 1346 $400.30

FY1998-P6 $612,623 1499 $408.69

FY1998-P7 $714,429 1750 $408.25

FY1998-P8 $637,462 1570 $406.03

FY1998-P9 $662,505 1660 $401.52

FY1998-P10 $1,037,828 2604 $398.55

FY1998-P11 $896,465 2568 $349.09

FY1998-P12 $752,100 3398 $221.34

FY1999-P1 $922,692 2987 $308.90

FY1999-P2 $707,107 1815 $389.59

FY1999-P3 $777,037 2065 $376.29

FY1999-P4 $681,040 1868 $364.58

FY1999-P5 $605,229 1723 $351.28

FY1999-P6 $524,163 1396 $375.47

FY1999-P7 $870,478 2267 $383.98

FY1999-P8 $525,340 1400 $375.24

FY1999-P9 $590,946 1658 $356.42

FY1999-P10 2140

FY1999-P11 $767,565 2339 $328.16

FY1999-P12 $454,642 1471 $309.07

DX 7.

Defendant’s Exhibit 7 shows a period-by-period listing of Sunrise’s sales, quantity shipped, and average selling price. It spans from FY97, period seven through FY99, period twelve. From FY98, period nine through FY99, period one, the average selling price declined from $401.52 to $308.90 (a total of $92.62). Factors affect

*423

ing these numbers are large intercompany shipments and promotions, which were not accounted for in Defendant’s Exhibit 7.

609

Mr. Kocinski, it should be noted, did not prepare Defendant’s Exhibit 7

610

and Sunrise does not rely upon it.

611

Defendant’s Exhibit 8 is a sales volume and average selling price analysis in a different format, which has the EX 2000 listed individually on it.

612

After an examination of Defendant’s Exhibit 8, Mr. Ko-cinski determined that Defendant’s Exhibit 7 was, in fact, a sales volume and average selling price analysis for the EX 2000.

613

Defendant’s Exhibit 9 is a volume sales price report for the EX 2000, dated January 10, 2000.

614

Defendant’s Exhibit 7 is a temporal subset of Defendant’s Exhibit 9.

615

[[Image here]]

Although the time periods for Defendant’s Exhibit 7 and 9 overlap, they depict different quantities shipped, net sales and average selling prices for those same periods.

616

Thus, defendant contends that Sunrise’s demonstrative exhibits are “based on suspect information” since the charts, both produced by Sunrise, supposedly from the same data sets and covering the same period of time, show different numbers.

617

*424

Defendant points out that Sunrise did not submit any evidence showing how its sales numbers in terms of revenues, average price or number of units, shown in its demonstrative exhibits, were calculated. The simple answer to this is that these are internal Sunrise documents upon which plaintiff does not rely, and the methodology used to produce them was different from that used to prepare plaintiffs sales volume and price exhibits. Moreover, the methodology in the Sunrise documents defendant stakes so much on is demonstrably incorrect, as it includes intercompany sales, which were excluded from the exhibits prepared by plaintiff.

618

Accordingly, I find that Defendant’s Exhibits 7-9 do not impeach plaintiffs sales figures.

The EX 2000’s average selling price has fluctuated prior to, and subsequent to, the introduction of the ImPulse Select. That average price ranged from $202.68 to $483.44 during the period immediately surrounding the introduction of the ImPulse Select.

619

There is also evidence that Sunrise’s average selling prices were declining slightly prior to the introduction of the ImPulse Select.

620

Sunrise’s selling price as of the hearing was $298.00,

621

though historically Sunrise has priced its products somewhat higher when they have been first introduced to market, because it gives Sunrise the flexibility to later reduce the price to an amount which Sunrise expects the average selling price to be.

622

Like nearly all businesses in a free market, Sunrise charges a higher price for its products when they are differentiated and it can do so.

623

Generally, however, Sunrise is unable to raise its prices because the market for its products does not react well to price increases.

624

Sunrise’s dealer price list dated September 6, 1999, shows that the EX 2000’s retail price is $750.00 and the dealer and package price is $540.00. Sunrise’s October 12, 1998 dealer price list shows that the EX 2000’s retail price is $879.00 and the dealer and package price is $510.00. Sunrise’s February 1, 1998 dealer price list shows that the EX 2000’s retail price is $879.00 and the dealer and package price is $510.00. Thus, Sunrise’s published dealer price shows an increase in the dealer price of the EX 2000 from the introduction of the ImPulse Select to the present.

625

Only three percent of EX 2000 sales, however, are made at list price,

626

so I attach no significance to the fact that the published dealer price rose.

The Mobility Division of Sunrise HHG is 50 percent larger in terms of revenues than the Respiratory Products Division.

627

*425

In April/May of 1999, the relative revenue volume of the stationary oxygen products relative to the gaseous ambulatory products was that stationary products accounted for 40 to 50 percent more revenue than the gaseous products.

628

The oxygen group of the Respiratory products division had revenues of $40 to $55 million in sales while the aerosol unit had revenues of $30 to 40 million, and the remainder of the revenues came from the sleep division.

629

Dr. Greene testified that the EX 2000 sales started out virtually at triple the number of sales of the OMS 20/50,

630

that is, that Sunrise was selling ten to eleven thousand units a year in 1996 (approximately 800 to 1000 units per month).

631

Dr. Greene did not, however, perform any calculations or prepare any documents to demonstrate the alleged growth of the sales of the EX 2000.

632

Defendant contends that plaintiffs documents do not support Dr. Greene’s assertion of triple the number of sales. The EX 2000 first began sales in period 3 of fiscal year 1997, and Defendant’s Exhibit 9 shows that for the remainder of the fiscal year 1997, Plaintiff sold only 6,120 units (approximately 680 units per month),

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