United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE
before the Court is Defendants' Motion for Partial
Summary Judgment Regarding Patent Invalidity Under 35 U.S.C.
§ 102(b) (On-Sale Bar Affirmative Defense) (Dkt. #220).
After reviewing the relevant pleadings, the Court denies
November 2, 2015, Tech Pharmacy filed suit against Golden
Gate National Senior Care LLC d/b/a Golden LivingCenters
(“GLC”) and Alixa Rx LLC (“Alixa”),
alleging patent infringement. Specifically, Tech Pharmacy
asserts Claims 7, 9, and 10 from U.S. Patent No. 7, 698, 019;
Claims 5, 7, and 8 from U.S. Patent No. 8, 209, 193; Claims
1, 2, and 6 from U.S. Reissue Patent No. RE44, 127; Claims 1
and 4 from U.S. Patent No. 8, 612, 256; and Claim 1 from U.S.
Patent No. 8, 954, 338 (collectively, the
“patents-in-suit”). The patents-in-suit
articulate a system and method for enhanced distribution of
pharmaceuticals in long-term care facilities.
January 22, 2016, Tech Pharmacy amended its complaint to add
state law claims of fraud, breach of contract, trade secret
misappropriation, and equitable estoppel to the original
patent infringement claims. On September 1, 2016, Plaintiff
further amended its complaint to add Fillmore Capital
Partners LLC, Fillmore Strategic Management LLC, and Fillmore
Strategic Investors LLC (collectively with Alixa and GLC,
“Defendants”) to the state causes of action (Dkt.
March 31, 2017, Defendants' filed their motion for
partial summary judgment (Dkt. #220). On April 21, 2017, Tech
Pharmacy filed it response (Dkt. #245). On April 28, 2017,
Defendants' filed a reply (Dkt. #249). On May 4, 2017,
Tech Pharmacy filed a sur-reply (Dkt. #255).
purpose of summary judgment is to isolate and dispose of
factually unsupported claims or defenses. Celotex Corp.
v. Catrett, 477 U.S. 317, 323-24 (1986). Summary
judgment is proper under Rule 56(a) of the Federal Rules of
Civil Procedure “if the movant shows that there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A dispute about a material fact is genuine when
“the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986).
Substantive law identifies which facts are material.
Id. The trial court “must resolve all
reasonable doubts in favor of the party opposing the motion
for summary judgment.” Casey Enters., Inc. v. Am.
Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir.
party seeking summary judgment bears the initial burden of
informing the court of its motion and identifying
“depositions, documents, electronically stored
information, affidavits or declarations, stipulations
(including those made for purposes of the motion only),
admissions, interrogatory answers, or other materials”
that demonstrate the absence of a genuine issue of material
fact. Fed.R.Civ.P. 56(c)(1)(A); Celotex, 477 U.S. at
323. If the movant bears the burden of proof on a claim or
defense for which it is moving for summary judgment, it must
come forward with evidence that establishes “beyond
peradventure all of the essential elements of the
claim or defense.” Fontenot v. Upjohn Co., 780
F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears
the burden of proof, the movant may discharge the burden by
showing that there is an absence of evidence to support the
nonmovant's case. Celotex, 477 U.S. at 325;
Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424
(5th Cir. 2000). Once the movant has carried its burden, the
nonmovant must “respond to the motion for summary
judgment by setting forth particular facts indicating there
is a genuine issue for trial.” Byers, 209 F.3d
at 424 (citing Anderson, 477 U.S. at 248-49). A
nonmovant must present affirmative evidence to defeat a
properly supported motion for summary judgment.
Anderson, 477 U.S. at 257. Mere denials of material
facts, unsworn allegations, or arguments and assertions in
briefs or legal memoranda will not suffice to carry this
burden. Rather, the Court requires ‘“significant
probative evidence'” from the nonmovant to dismiss
a request for summary judgment. In re Mun. Bond Reporting
Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982)
(quoting Ferguson v. Nat'l Broad. Co., 584 F.2d
111, 114 (5th Cir. 1978)). The Court must consider all of the
evidence but “refrain from making any credibility
determinations or weighing the evidence.” Turner v.
Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir.
move for summary judgment based on the patents-in-suit being
invalid under the on-sale bar doctrine articulated in 35
U.S.C. § 102(b).
35 U.S.C. § 102(b), a patent is invalid if “the
invention was . . . in public use or on sale in this
country more than one year prior to the date of the
application for patent in the United States.” 35 U.S.C.
§ 102(b). In Pfaff v. Wells Electronics, Inc.,
525 U.S. 55 (1998), the Supreme Court established a two-part
test for determining when the on-sale bar invalidates a
patent. The Pfaff test requires that more than one
year before the date of the patent application, the invention
(1) be the subject of a commercial sale or offer for sale;
and (2) be ready for patenting. Id. at 66-67. The
“critical date” for assessing the validity of a
patent is the date that falls one year before the date the
patent application was filed or the date a patent application
claims priority. Here, the parties agree the critical date is
November 3, 2002 because each of the patents-in-suit claim
priority to November 3, 2003 patent application. Determining
whether an invention is “on-sale” within the
meaning of Section 102(b) is a question of law based on
underlying facts. Dana Corp. v. Am. Axle & Mfg.,
Inc., 279 F.3d 1372, 1375 (Fed. Cir. 2002) (citing
Intel Corp. v. Int'l Trade Comm'm, 946 F.2d
821, 829 (Fed. Cir. 1991)). Issued patents generally enjoy a
presumption of validity. Ruiz v. A.B. Chance Co.,
234 F.3d 654, 662 (Fed. Cir. 2000). Defendants bear the
burden of proving invalidity by clear and convincing
evidence, and the burden never shifts to Tech Pharmacy to
assert Tech Pharmacy sold and offered to sell pharmacy
services to long-term care facilities using its KVM Envoy
machine (“Envoy”). Defendants refer to alleged
sales to Country Village Care, Gulf Health Care Center, Pine
Tree Lodge, and the Rosemont facilities that all took place
between January 2002 and September 2002 (Dkt. #220 at p. 6).
Each sale included a fee provision directed specifically to
use of the Envoy (Dkt. #220 at p. 3). By September 2002,
Defendants contend the Envoy machine was fully optimized, and
Tech Pharmacy used a September 9, 2002 letter from one of its
customers to sell services to other long-term care facilities
(Dkt. #220, Exhibit F at 170:16-19; Dkt. #220, Exhibit H at
Pharmacy maintains the on-sale bar does not apply since the
patents-in-suit were neither sold nor offered for sale before
November 3, 2002 critical date. Tech Pharmacy argues the
inventors of the patents-in-suit conceived and reduced the
claimed inventions to practice in 2003. As part of the
inventors' development, Tech Pharmacy entered into
agreements between January and September 2002 with five
long-term health facilities that used the Envoy machine. Tech