The U.S. Court of Appeals for the Federal Circuit on Friday upheld sanctions and $4.5 million worth of attorney fees against a medical company and its lawyers for pursuing frivolous claims in a patent case.
California Central District Judge Mariana Pfaelzer sanctioned ICU Medical Inc. and its lawyers at Paul, Hastings, Janofsky & Walker in 2007 for their behavior in a patent case against Alaris Medical Systems Inc. The company is on the hook for the attorney fees, according to Pfaelzer's order (pdf). But the judge wrote at the time that both the company and its counsel had violated Rule 11, which forbids pursuing frivolous claims.
ICU Medical sued Alaris in 2004 for allegedly infringing its patent related to valves used in medical intravenous (IV) setups. ICU first accused Alaris of infringing on a patent for a "spikeless" valve -- which allowed drugs to be administered to the IV without a needle.
After losing a motion for a temporary restraining order, at which time Judge Pfaelzer raised questions about the patent's validity, ICU and its lawyers at Paul Hastings filed an amended complaint with new infringement claims. With the new claims, ICU accused Alaris of infringing on a valve that did use a "spike."
Judge Pfaelzer found that the patent with the "spikeless" claims was invalid and that the "spike" claims weren't infringed by Alaris' valves. The "frivolous construction and assertion of the 'spike' claims in the amended complaint, concurrently justified sanctions under Rule 11," she wrote at the time (pdf).
On top of that, according to the courts' rulings, internal documents revealed in the district court case showed that ICU itself didn't even believe that Alaris was infringing on its "spike" claims.
"Apparently when ICU recorded the results of a preliminary investigation of Alaris' product, ICU stated that 'there is no spike inside the device,'" wrote Judge Kimberly Moore for the three-judge Federal Circuit panel.
Neil Smith, an IP lawyer with Sheppard, Mullin, Richter & Hampton who wasn't involved in the case, said sanctions were "really hard and really unusual" for a patent case.
"Normally, they do thorough prefiling investigations or they don't take positions that are contrary to their own records," said Smith.
At the Federal Circuit, ICU Medical was represented by Fish & Richardson's Frank Scherkenbach. Asked for comment, Scherkenbach e-mailed that "we [Fish & Richardson] were not counsel who were unsuccessful in, and sanctioned by, the District Court."
Lawyers from McAndrews, Held & Malloy, who represented Alaris, said they couldn't comment publicly on the case.
A Paul Hastings partner involved in the case didn't return a call seeking comment, and a late afternoon call to Paul Hastings' spokeswoman was not immediately returned.
The case is ICU Medical Inc. v. Alaris Medical Systems Inc., 2008-1077.
