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Plaintiffs,
Defendants.
______________________________________
ORDER
This matter came before the Court upon consideration of the Motion for Preliminary
Injunction (the “Motion”) (Docs. 4 and 5) filed by Plaintiffs LifeWatch Services, Inc.
(“LifeWatch”) and Card Guard Scientific Survival, Ltd. (“Card Guard”) (collectively, “Plaintiffs”);
the response in opposition thereto (the “Response”) (Doc. 47) filed by Defendants Medicomp, Inc.
(“Medicomp”) and United Therapeutics Corporation (“UTC”) (collectively “Defendants”); and the
reply to the Response filed by Plaintiffs (Doc. 53). The Court held an evidentiary hearing and
heard oral argument on Thursday, January 28, 2010 (Doc. 62). Upon careful review of the parties’
memoranda, the declarations and exhibits filed in support thereof (see Docs. 6, 38, 39, 40, 44-1
and 54) and the evidence presented at the hearing, Plaintiffs’ Motion will be denied.
I. Statement of the Case
Card Guard is the owner of U.S. Patent No. 7,542,878 (the “‘878 Patent”),1 which
describes a method and mobile cardiovascular telemetry (“MCT”) device for monitoring a
patient’s heart (Doc. 5 at 3-4).2 Unlike Holter or event monitors, Plaintiffs’ LifeStar MCT monitor
is attached to a cell phone containing software that processes cardiac data from the patient in real-
time. If certain disturbances, such as an arrhythmia, are detected, then the software wirelessly
then analyzes the electrocardiogram and, if a serious problem is detected, contacts the patient’s
Plaintiffs brought suit on November 6, 2009, alleging, inter alia, that Defendants’
CardioPAL SAVI Wireless Cardiac Event Monitor (the “SAVI MCT”) infringes on the ‘878
Patent (see generally Doc. 1). On November 10, 2009, Plaintiffs filed their instant Motion to
enjoin Defendants from putting the SAVI MCT on the market prior to trial (Doc. 5 at 1-2).3
1
In addition to the ‘878 Patent, Card Guard owns U.S. Patent No. 5,730,143, which is also at
issue in this case (see Doc. 1, ¶ 10). Plaintiffs’ Motion for Preliminary Injunction, however, pertains
only to Defendants’ alleged infringement of the ‘878 Patent (Doc. 5 at 3 n.1).
2
Plaintiffs’ market their device as the “LifeStar Ambulatory Cardiac Telemetry (ACT).” See,
e.g., LifeStar ACT Ambulatory Cardiac Telemetry, http://www.lifewatch.com/siteFiles/1/282
/5005.asp. For sake of clarity, the Court refers to Plaintiffs’ device as the “LifeStar MCT” and refers
to Defendants’ allegedly infringing product as the “SAVI MCT.”
3
When Plaintiffs’ filed their Motion, the SAVI MCT was still pending approval by the Food
and Drug Administration. At the hearing, however, Defendants’ counsel represented to the Court that
the SAVI MCT had since been approved. Defendants nevertheless agreed not to release their device
until the Court ruled on Plaintiffs’ Motion.
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II. The Preliminary Injunction Standard in Patent Cases
A preliminary injunction is an extraordinary remedy that should only issue where the
intervention of a court of equity is essential to protect property rights against irremediable injuries.
Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-312 (1982) (citations and quotations omitted).
To obtain a preliminary injunction, the movant must establish that: (1) it is likely to succeed on the
merits; (2) it will likely suffer irreparable harm in the absence of the injunction; (3) the threatened
injury to the movant outweighs the harm an injunction may cause the nonmovant (i.e., the balance
of the equities tips in the movant’s favor); and (4) granting the injunction is not adverse to the
public interest. See, e.g., Winter v. Natural Res. Def. Council, Inc., 129 S.Ct. 365, 374 (2008)
(citations omitted); Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375-76 (Fed. Cir.
2009) (citations omitted); Oakley, Inc. v. Sunglass Hut Int’l, 316 F.3d 1331, 1338-39 (Fed. Cir.
These four factors, taken individually, are not dispositive in a patent case. Amazon.com,
Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001). Instead, the Court must
carefully weigh and measure each factor against the others and against the form and magnitude of
the relief requested. Id. However, the patentee must establish both of the first two factors, i.e.,
likelihood of success on the merits and irreparable harm. Amazon.com, Inc., 239 F.3d at 1350
(“case law and logic both require that a [patentee] cannot be granted a preliminary injunction
unless it establishes both of the first two factors . . .”) (emphasis added); Vehicular Techs. Corp. v.
Titan Wheel Int’l, Inc., 141 F.3d 1084, 1088 (Fed. Cir. 1998); Reebok Int’l Ltd. v. J. Baker, Inc.,
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At the preliminary injunction stage, the Court “may rely on affidavits and hearsay materials
which would not be admissible evidence for a permanent injunction, if the evidence is ‘appropriate
given the character and objectives of the injunctive proceeding.’” Levi Strauss & Co. v. Sunrise
Int’l Trading, Inc., 51 F.3d 982, 985 (11th Cir. 1995) (citation and quotation omitted).
III. Analysis
The only claim of the ‘878 Patent at issue in Plaintiffs’ Motion is Claim 1,4 which
discloses:
two assessments: the likelihood that the defendant has infringed (or will infringe) the patent; and
4
Plaintiffs’ Motion does not explicitly contend that the SAVI MCT infringes on any particular
claim in the ‘878 Patent (Doc. 5 at 9, noting that “LifeWatch need only show that one of the claims
asserted in the underlying litigation is likely to be infringed”). However, the Motion contains a chart
that includes a column heading labeled “Claim 1 of U.S. Patent No. 7,542,878,” which putatively
“illustrates that Medicomp’s SAVI [MCT] is covered by the ‘878 Patent” (Doc. 5 at 9). Other than
this chart, however, Plaintiffs make no reference in their Motion to any particular claim in the ‘878
Patent. Accordingly, the Court has simply assumed – as Defendants’ counsel also assumed at the
hearing – that Plaintiffs have sought preliminary injunctive relief only on Claim 1of the ‘878 Patent.
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the likelihood that the patentee will prevail at trial as to any validity issues that are raised by the
defendant. Oakley, Inc., 316 F.3d at 1338-39; Titan Tire Corp., 566 F.3d at 1377. Here, however,
Defendants have conceded infringement for purposes of opposing Plaintiffs’ Motion (Doc. 37 at 2
n. 1). Accordingly, the Court need only assess Plaintiffs’ likelihood of success in light of the
the patent’s validity at the preliminary injunction stage, then the patentee must respond with
countervailing evidence and argument demonstrating that the invalidity defense lacks substantial
merit. Titan Tire Corp., 566 F.3d at 1378-79. The Court must then determine, in light of the
existing record and after considering the evidence for and against validity, whether it is more likely
than not that the alleged infringer will be able to prove at trial that the patent is invalid. Id. at
1378-80. In sum, it is the movant who must persuade the Court that, despite the challenge to
validity, it is likely to succeed on the merits at trial on the validity issue. Id. at 1377.
1. Priority Date
As a threshold matter, the Court concludes, solely for purposes of this Order, that Claim 1
of the ‘878 Patent has a priority date of March 3, 1998. On its face, however, the ‘878 Patent
reflects only that it is a standard continuation of “application No. 10/876,139, filed on Jun. 23,
2004, now abandoned, which is a continuation-in-part of application No. 10/086,633, filed on Mar.
4, 2002, now Pat. No. 7,222,054, which is a continuation-in-part of application No. 09/261,136,
filed on Mar. 3, 1999,5 now Pat. No. 6,366,871" (Doc. 1-2 at 2). Whether Claim 1 is entitled to a
5
Defendants note in their Response that the ‘878 Patent incorrectly identifies the filing date of
the ‘136 Application as occurring in 1999 and that the correct filing date for the ‘136 Application was
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March 3, 1998 priority date, in light of the continuations-in-part of the other prior applications and
patents (including, in particular, the ‘633 Application and ‘054 Patent, for which the inventor of
the ‘878 Patent is not currently listed as an inventor6), is unclear on the present record. However,
as discussed, infra, because the Court concludes that the prior art references extant on March 3,
1998 raise a substantial question as to the anticipation and obviousness of Claim 1, the Court need
Defendants make three arguments regarding the validity of Claim 1. First, even assuming
that the ‘878 Patent has a priority date of March 3, 1998, Defendants contend that Claim 1 is
anticipated or obvious in light of U.S. Patent No. 5,876, 351 (filed April 10, 1997) (“Rohde”), U.S.
Patent No. 5,090,418 (filed Nov. 9, 1990) (“Squires”) or U.S. Patent No. 5,735,285 (filed June 4,
1996) (“Albert”).7 Defendants further contend that Claim 1 is obvious over Rohde in view of
7
Assuming the ‘878 Patent has a priority date of June 23, 2004, Defendants contend that Claim
1 is obvious or anticipated in light of J. Rodriguez et al., Capturing, Analysing, and Managing ECG
Sensor Data in Handheld Devices, in On the Move to Meaningful Internet Systems 2003: CoopIS,
DOA, and ODBASE 1133 (Meersman et al. eds., 2003) (“ECG Article”), PCT Patent Pub. WO
02/080762 (filed April 6, 2001) (“Korman”), or U.S. Patent No. 7,009,511 (filed Dec. 17, 2002)
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Squires. Second, because the USPTO recently found that Rohde, Squires, and Albert raised
substantial new questions concerning the patentability of Claim 1 and entered its “Order Granting
Request for Ex Parte Reexamination” (Doc. 55 at 6-14), Defendants argued at the hearing that,
while not dispositive, the USPTO’s re-examination order casts significant doubt on the validity of
Claim 1. Third, Defendants contend that the ‘878 Patent has been rendered unenforceable due to
inequitable conduct.8
In their Reply, Plaintiffs respond that Rohde and Albert fail to disclose each and every
element of Claim 1 (including “processing the physiological data” and “controlling a long range
transmission of the processed physiological data to a remote entity”) (Doc. 53 at 2-3). Plaintiffs
also argue that the combination of Rohde and Squires would not have been obvious and that
Defendants have failed to proffer any expert testimony as to why a person skilled in the art would
find Claim 1 obvious (Doc. 53 at 3). Finally, with respect to inequitable conduct, Plaintiffs
contend that Defendants have, inter alia, failed to demonstrate a deliberate intent to deceive the
Rohde discloses a “portable and modular electrocardiogram (ECG) medical device” that
uses a “multipurpose computerized base unit” (Doc. 40-18 at 22-23), e.g., a Nintendo Gameboy, to
monitor a patient’s ECG data (Doc. 40-18 at 16). Specifically, a patient’s ECG data are gathered
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by four attached electrodes, digitized and then sent through a removal-cartridge that plugs into the
Gameboy (Doc. 40-18 at 4, 16 and 22-23). The digitized ECG data are then displayed on the
Gameboy’s screen as a waveform for “real-time diagnosis” (Doc. 40-18 at 15). Rohde teaches that
“any portable handheld multipurpose computerized platform conforming to the claimed invention
is amenable, such as a personal digital assistant (PDA)” (Doc. 40-18 at 22). Furthermore, Rohde
[P]ortable equipment found within the prior art such as holter [monitors] . . .
require additional hardware to permit viewing of the stored signal. On-line, real-
time diagnosis cannot be made at a remote location with such prior art . . . without
telemetry to a base unit or transmission over a telephone line. The patient data
needed to make diagnoses quickly and effectively cannot be accessed readily;
therefore, the instrumentation fails to meet user needs in a real-time manner . . . .
The resulting diagnostic medical device addresses all of the shortcomings described above.
It is a low-cost, mass-produced, portable hand-held device having features including an
integrated screen, user-friendly controls, and a serial port . . . .
In addition to contemplating the use of various software for achieving different diagnostic
medical functionality, including diagnosis of “arrhythmia” (Doc. 40-18 at 16), and the use of
multipurpose PDAs other than a Gameboy, Rhode clearly discloses what may be fairly described
9
Nintendo Gameboy cartridges, of course, contain software.
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as “processing” of “physiological data,” including: the use of software that runs “QRS10 detection
Outputting of the signal via the serial port permits the acquired data to be sent via
cable to a local laptop computer or smart modem. Outputting of the signal on the
speaker or through the headphones may enhance data visualization for the clinician;
the speaker can also be used as an acoustic modem to transmit the signal from a
remote location to a hospital via a normal phone connection.
Squires discloses software (Doc. 40-20 at 17) containing “complex algorithms” (Doc. 53 at
5) that automatically screen digital ECG data to detect, inter alia, arrhythmia (Doc. 40-20 at 22).
Although Squires does not appear to disclose a device that simultaneously records and processes
ECG data from a patient, Squires clearly discloses a high-speed (if not real-time) means of
Albert discloses a “Heart Card-type of device” that modulates a patient’s ECG data into
audio signals (Doc. 40-22 at 14) that can then be transferred “by wireline or wireless transmission”
(Doc. 40-22 at 2 and 14) to a remote “hand-held computer device for patient monitoring” (Doc.
40-22 at 13). As the data are received at the doctor’s office, the device demodulates the audio
signal and displays the patient’s ECG data in real-time. As an object for his invention, Albert
10
“QRS,” “QRS-complex,” or “Q-R-S” describes a particular cardiac electrical position as
recognized in an electrocardiogram. STEDMAN ’S MEDICAL DICTIONARY 173820 (27th ed. 2000); see
also 1 ATTORNEYS MEDICAL DESKBOOK § 5:19 (4th ed. 2008).
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provides a “hand-held computer with proprietary software that combines with a telephone system
Upon review, the Court finds that Defendants have raised a substantial question of
invalidity. Rohde clearly discloses a PDA (or, “multi-purpose personal data accessory”) that
gathers and processes physiological data (with specific reference to, inter alia, software containing
“processed physiological data to a remote entity.” Furthermore, even assuming that Rohde fails to
disclose the transmission of processed physiological data, Squires clearly discloses software that
processes and detects arrhythmia which, notwithstanding the processing power of a Nintendo
Gameboy (Doc. 53 at 5), could have readily been employed on another PDA as contemplated in
Rohde. Rohde therefore discloses and anticipates, on the current record, each and every element
of Claim 1 and Claim 1 is obvious in light of Rohde over Squires. Moreover, the USPTO’s recent
nine-page order granting ex parte reexamination based on its finding that Rohde, Squires and
Albert raised “substantial new questions of patentability” (Doc. 55-1 at 9-11), provides additional
support for findings of anticipation and obviousness. While by no means dispositive, the Court
finds that the USPTO’s order should at least relieve Defendants of the need to produce expert
testimony as to the foregoing prior art and shifts the burden back to Plaintiffs. On the present
record, however, Plaintiffs have failed to demonstrate that Defendants’ anticipation or obviousness
defenses substantially lack merit. Accordingly, the Court finds that Plaintiffs have failed to carry
11
The Court does not address Defendants’ inequitable conduct defense at this time but in
passing would simply note that prosecuting counsel’s alleged failure to disclose the PCT rejection, in
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B. Irreparable Harm
Even assuming, arguendo, that Plaintiffs could establish their likelihood of success on the
merits, they have clearly failed to demonstrate irreparable harm. If Defendants enter the market
now and Plaintiffs prevail at trial, the damages attributable to Defendants’ infringement can be
assessed with reasonable precision and adequately compensated with monetary relief.
Based on the testimony of Defendants’ economic expert, John Jarosz, which went largely
unrebutted at the hearing, the relevant market for Plaintiffs’ LifeStar MCT is not the MCT market,
but the general market for cardiac arrhythmia monitoring. Indeed, Plaintiffs’ device and
monitoring service12 competes in an already crowded market that is still dominated, in significant
part, by Holter and event monitors (and, to a lesser extent, loop monitors). According to Plaintiffs’
own market research, MCT monitoring comprised only 10% of the total cardiac arrhythmia market
as of June 30, 2009 (Doc. 38-9 at 3). While the MCT sub-market has shown signs of growth,13
conjunction with counsel’s failure to ensure that the correct inventor’s name was included on the ‘633
Application (even after, as the Court learned at hearing, the USPTO timely notified him of the issue
and the USPTO’s correspondence sat in a file collecting dust for apparently years), have not gone
without notice.
12
Testimony and argument at the hearing revealed that participants in the MCT market generate
very little, if any, revenue from the sale of their MCT devices. It is the sale of the monitoring service
– not the device – that accounts for participants’ revenue. In fact, rather than sell its MCT device,
LifeWatch now leases (or simply gives away) its LifeStar MCT to doctors and hospitals.
13
The MCT market in the United States could see total revenues in the range of $240-$300
million dollars in 2010.
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that growth has come in large part from existing clients who have simply decided to trade in their
In addition to the fact that the market for cardiac arrhythmia monitoring is already crowded
by comparable devices, there are currently seven or eight providers competing in the MCT sub-
market. Plaintiffs, with 107 sales representatives, are the second largest provider15 and captured
about 35% of the MCT sub-market with third quarter revenues of $32.48 million in 2009.16 In
contrast, Medicomp’s COO, Dr. Daniel Balda, testified that Defendants are projecting total first-
year revenues of about $4.57 million on their SAVI MCT device and monitoring services and will
have about nine sales representatives.17 Even assuming that Defendants’ projections are
conservative and that Defendants’ will double their sales force and projected revenues, Defendants
14
Medicomp, for instance, estimates that about 85% of its sales of the SAVI MCT and
monitoring services will be to existing Medicomp customers.
15
CardioNet is the largest provider of MCT monitoring services and reported third quarter
revenues of $33.3 million in 2009. CardioNet, Inc., Quarterly Report (Form 10-Q), at 5 (Nov. 6.
2009), available at http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=6590344&
format=PDF. Plaintiffs have yet to sue CardioNet, but on September 25, 2009, Plaintiffs sued
Braemar, Inc., eCardio Diagnostics, LLC and Mednet Healthcare Technologies, Inc. on substantially
the same patent infringement claims asserted here. See LifeWatch Servs. Inc. et al. v. Braemar, Inc.
et al., Case No. 1:09-cv-6001 (E.D. Ill. 2009) (Doc. 1). Plaintiffs have not, however, sought
preliminary injunctive relief in the Illinois litigation.
16
Li f e W a t c h R e p o r t s S t r o n g R es u l t s f o r 3 r d Q u a r t e r 2 0 0 9 ,
http://www.lifewatch.com/siteFiles/1/545/6919.asp. Defendants’ counsel further represented at the
hearing that LifeWatch’s 2009 annual revenues were on the order of $130 million.
17
Medicomp is a subsidiary of a $100 million-plus parent corporation. Plaintiffs did not
adduce any evidence, however, tending to show that Medicomp’s parent has significant control over
its subsidiary or that, more importantly, the parent could (or even would) attempt to aggressively
expand Medicomp’s MCT monitoring products beyond the projections provided to the Court by
Medicomp’s COO.
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would have approximately 3% to 4% of the MCT sub-market towards the middle or end of 2010.
Accordingly, Plaintiffs likely loss of market share – which must be apportioned among its seven or
eight competitors – would likely be very small (i.e., less than 1% to 2%).
Finally, the “price” of MCT monitoring services is determined by third-party payors such
as Medicare and private insurance companies. These entities do not distinguish on the basis of
brand, quality or any other subjective theory of value.18 They simply pay LifeWatch or one its
competitors a fixed reimbursement amount for whatever MCT device and monitoring service that
the participating provider prescribed to the patient. For example, if LifeWatch is paid $300 per
patient for MCT monitoring services, then Medicomp will also receive $300 per patient. In short,
no participant can gain a competitive advantage on price or quality, and participants (including
new entrants such as Medicomp) are forced to compete largely – if not entirely – on building close
relationships with the participating providers. Due to the pricing mechanism and adverse selection
present in this market, there will be no price erosion as a result of Medicomp’s entry into the MCT
monitoring market. It is therefore apparent that LifeWatch’s damages between now and trial are
Accordingly, Plaintiffs have failed to establish that they will likely suffer irreparable harm
18
Some insurance companies, however, have developed objective criteria that must be met
before a patient is eligible for reimbursement of MCT monitoring services. See, e.g., Aetna, Clinical
Policy Bulletin: Cardiac Event Monitors, at http://www.aetna.com/cpb/medical/data/1_99/0073.html.
Others have found, however, that MCT monitoring is generally not medically necessary. Medicare,
however, will reimburse for MCT monitoring and is presently the largest payor (it has recently
reduced its reimbursement rate, however).
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C. The Remaining Factors
Inasmuch as Plaintiffs have failed to establish their likelihood of success on the merits and
irreparable harm, the balance of the equities and the public interest are of no moment.
Amazon.com, Inc., 239 F.3d at 1350; Vehicular Techs. Corp., 141 F.3d at 1088; Reebok Int’l Ltd.,
32 F.3d at 1556. The Court does note, however, that these two factors also weigh against the entry
of a preliminary injunction.
IV. Conclusion
Based on the foregoing, it is ORDERED that Plaintiffs’, LifeWatch Services, Inc. and
Card Guard Scientific Survival, Ltd., Motion for Preliminary Injunction (Doc. 4) is DENIED.
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