Free Memorandum - District Court of Arizona - Arizona

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Ira M. Schwartz (I.D. No. 010448) Michael A. Cordier (I.D. No. 014378) DeCONCINI McDONALD YETWIN & LACY, P.C. 7310 N. 16th Street, Suite 330 Phoenix, Arizona 85020 Telephone (602) 282-0500 Facsimile (602) 282-0520
Attorneys for Plaintiff

IN THE UNITED STATES DISTRICT COURT IN AND FOR THE DISTRICT OF ARIZONA

DECONCINI MCDONALD YETWIN & LACY, P.C.

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Erchonia Medical Inc., et al Plaintiff, v. Miki Smith, et al Defendants. ____________________________________ Erchonia Medical Inc., et al Plaintiff, v. Miki Smith, et al Defendants. ____________________________________ Robert E. Moroney, LLC Plaintiff, v. Erchonia Medical, Inc., et al Defendants.

Case No.:CIV 02-2036-PHX-MHM Consolidated with CIV 02-2048-PHX-MHM and CIV 02-2353-PHX-MHM

7310 North

16th Street, Suite 330 Phoenix, Arizona 85020

ERCHONIA MEDICAL INC. AND KEVIN TUCEK'S RESPONSIVE BENCH MEMORANDUM RE: THE EFFECT OF THE PENDING REISSUE FOR U.S. PATENT NO. 6,013,096

Case 2:02-cv-02036-MHM

Document 342

Filed 08/11/2006

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Erchonia Medical Inc. and Kevin Tucek (collectively referred to "Erchonia") submit this responsive memorandum to Robert E. Moroney and Robert E. Moroney LLC's Bench Memorandum Re: Effect of Reissue Application for U.S. Patent No. 6.013,096 (the "REM Memorandum"). This responsive memorandum is submitted pursuant to the

Court's directions at the status conference held on June 29, 2006. I. Background

As explained in the REM Memorandum U.S. Patent No. 6,013,096 (the "'096 Patent") was issued on January 11, 2000. This is the patent which Erchonia has alleged is infringed by several of the defendants in this case. Prior to filing this lawsuit, Erchonia submitted a reissue application with the United States Patent and Trademark Office seeking to add additional broader claims to the `096 Patent. Patent law permits such an application if the patentee has not claimed all that he was entitled to, provided such reissue application is filed within 2 years of the original issue of the patent. 35 U.S.C.§251. After the reissue application was filed Erchonia filed this patent infringement action. Patent law provides that original patent remains in effect until the reissue patent application is processed and the reissue patent issued. 35 U.S.C. § 252. Upon completion of the reissue application process the original patent must be surrendered and the reissue patent is then issued. Id. II. Effect of Reissue Application

DECONCINI MCDONALD YETWIN & LACY, P.C.

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However, it should be noted that infringement of the original application can occur as long the original patent remains in effect. Id. Of course, once the reissue patent is issued and the original patent surrendered, only the reissue patent can be infringed. 35 U.S.C. § 252. Importantly, a reissue application and proceeding has little effect upon pending litigation, unless the claims are amended in some substantial way. 35 U.S.C. § 252; See e.g. Vernay Laboratories Inc. v. Industrial Electronic Rubber Company, 234 2
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F.Supp. 161, 164 (D.C. Ohio 1964). If the claims in the original application and the reissue are substantially identical, the surrender of the original application and issuance of the reissue patent should not affect any pending action. Id. As a procedural matter, the original patent claims cease to exist upon the issuance of the reissue patent. Therefore, it is necessary to amend the complaint to assert the reissue patent once it is issued. New Jersey Machine Inc. v. Alford Industries, Inc., 1991 WL 340196 (D. N.J. 1991) (The substitution is merely procedural to the extent the reissue contains identical claims in the original patent). Of course, the Court may review the file history of the reissue application to assist in the interpretation of reissued patent claims. See T.J. Smith and Nephew Ltd v. Parke, Davis & Co., 623 F.Supp 808, 812 (D.C. Utah 1985); See also Standard Oil Company v. American Cyanamid Co., 744 F.2d 448, 452 (Fed. Cir. 1985). A review of the reissue application in this case (See Exhibit 1 to the REM Memorandum) indicates that during the prosecution of the reissue patent, Erchonia maintained all of the original claims and sought to add additional new and broader claims. As noted in REM's Memorandum, the reissue application was filed in November 2001. Despite the fact that reissue applications are to be given priority for review over other pending applications, this reissue application has been pending for approaching 5 years. Erchonia has availed itself of every reasonable effort to expedite the processing of this application. In 2004, in an effort to expedite the reissue proceeding, Erchonia cancelled all of its pending new claims and requested that the patent be reissued with the original claims. On January 2006, Erchonia was issued a Notice of Allowability as to the pending original claims. III. Recent Procedural History

DECONCINI MCDONALD YETWIN & LACY, P.C.

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North 16th Street, Suite 330 Phoenix, Arizona 85020

In April 2005, Erchonia's patent counsel contacted the Patent Office to determine the status of the pending application. Erchonia's patent counsel never spoke to the Examiner, but telephone messages were exchanged. See Exhibit A attached hereto 3
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(Erchonia's Response to Examiner's Interview Summary dated August 10, 2006 and related correspondence.) Although not clear, the message taken indicated that there was nothing to fix in the application. No interview summary of those telephonic exchanges was received at that time. See Exhibit A. This information and the previously issued Notice of Allowability was the status reported to the Court at the conference held on June 29, 2006. Most recently, Erchonia's counsel received a telephone call from REM's counsel inquiring about a recently issued telephone interview summary. This telephone call was received on approximately July 24, 2006, shortly before the filing of REM's Memorandum. It was at that point that Erchonia's patent counsel looked on-line at the status of this matter and learned of the issuance of a telephone interview summary and a related notice from the Patent Office. Erchonia disputes the content of the interview summary dated July 21, 2006 for several reasons. First, it purports to be a summary of a telephonic interview that has never occurred, although telephone messages were exchanged in April of 2006. Further, this is the first notification that Erchonia has received indicating that this matter was going to be reopened. The Interview Summary states that the reasons for reopening this matter will be addressed in an Office Action, but no Office Action has yet issued In short, these recent documents only indicate another in a series of procedural issues at the U.S.P.T.O. that have unfortunately plagued this reissue application. IV. REM's Alleged New Defenses

DECONCINI MCDONALD YETWIN & LACY, P.C.

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North 16th Street, Suite 330 Phoenix, Arizona 85020

After discussing the status of the pending reissue application REM argues what it claims are additional defenses it has in this matter. However, a review of these demonstrates that they have little merit. REM's primary defense is that Erchonia has failed to disclose material information during the pendency of the reissue application. This is not true. To bolster this assertion, REM mentions all of the information it has disclosed to Erchonia that it 4
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believes should have been disclosed, but which it contends have not been disclosed. However, a review of the discovery in this matter indicates that while this matter was pending, REM located copious amounts of material which it then disclosed to Erchonia in the hopes of locating something it could later attempt to demonstrate was material. This tactic was essentially an information dump of a great deal of irrelevant information in the hope of burying Erchonia with information. The Patent Office regulations require a good faith disclosure of only material information. See 37 C.F.R. §1.56; Manual of Patent Examining Procedure (MPEP) § 2001.05 (Information is material only if it alone or with other information presents a prima facie case of unpatentability or if it refutes or is inconsistent with a position taken by the applicant); Cf. MPEP § 1442.04 (stating that the Patent Office has no interest in receiving voluminous litigation materials which are not relevant to their consideration of the reissue application). The information in Exhibit 2 to the REM Memorandum is not material for several reasons, including: it appears to show machines which do not include a line generating laser; it shows units which are designed to be used in contact with the patient's skin, and not movable relative to the skin; some of these reference us infrared (not visible) light. Further, most of these references are in German without any translation, so it is questionable as to what these references teach. Also, many do not indicate a publication date, leading to significant questions of whether they can serve as prior art. As stated above, the Court can consider the conduct of the patentee during the application process in evaluating a patent. Therefore, in certain cases, discovery on these issues may be appropriate. However, REM has no proof of any impropriety by Erchonia and REM's arguments on this point are primarily a red herring in an attempt to make issues, where none exist. V. Current Reissue Amendment

DECONCINI MCDONALD YETWIN & LACY, P.C.

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North 16th Street, Suite 330 Phoenix, Arizona 85020

Most recently, Erchonia has submitted an amendment to add new claims to its pending patent reissue application. See Exhibit B attached hereto (Erchonia's Claim 5
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Amendments dated Aug. 10, 2006). These amendments primarily seek to reassert the new claims which were previously submitted and then withdrawn during the reissue proceeding. Previously, Erchonia voluntarily withdrew these claims in an effort to speed the review of the reissue application and to allow the pending patent litigation to proceed quickly to a determination before this court. However, at least two factors have indicated that any expediency that could have been achieved by withdrawing those claims has been lost. First, the Patent Office has now indicated that it was reopening examination of the application; therefore, there will be no significant savings of procedural effort before the Patent Office by the removal of those claims. Second, REM has now indicated that no matter what claims are allowed during the reissue process it will seek discovery related to the proceedings before the Patent Office. Therefore, there will be additional discovery no matter what claims are the subject of the reissue proceeding. Based on these factors, Erchonia has sought to add additional claims during the reissue proceeding to obtain the full patent rights to which it is entitled. VI. Conclusion

DECONCINI MCDONALD YETWIN & LACY, P.C.

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North 16th Street, Suite 330 Phoenix, Arizona 85020

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In summary, Erchonia disputes the factual allegations set forth by REM in its bench memorandum. However, Erchonia concedes that procedurally the Court should allow the reissue proceeding to continue to conclusion, and then allow Erchonia to amend its complaint to assert infringement of the reissue patent. In this way the Court can fully and finally decide all the patent issues under the `096 Patent. Erchonia further concedes that the law generally allows the Court to consider the reissue proceedings before the Patent Office in construing and determining the reissue patent claims when issued (although Erchonia vigorously disputes that it has withheld any material information in connection with such proceedings). In conclusion, Erchonia plans to assert the reissue patent in these proceedings when the reissue patent is issued and will then prove REM has infringed the original patent and that it is entitled to relief under the reissue patent when issued. 6
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DATED this 11th day of August, 2006. DeCONCINI MCDONALD YETWIN & LACY

DECONCINI MCDONALD YETWIN & LACY, P.C.

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By s/Ira M. Schwartz Ira M. Schwartz Michael A. Cordier 7310 N. 16th St., Suite 330 Phoenix, Arizona 85020 (602) 282-0500 Attorneys for Erchonia Medical Inc. and Kevin Tucek

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North 16th Street, Suite 330 Phoenix, Arizona 85020

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Certificate of Service I certify that on August 11, 2006, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to those attorneys registered with CM/ECF: Michael Warzynski, Esq. JARDINE BAKER HICKMAN & HOUSTON PLLC 3300 N. Central Avenue, Suite 2600 Phoenix, AZ 85012 Co-Counsel for Erchonia Medical Inc. Benjamin B. Lieb, Esq. Robert Brunelli, Esq. SHERIDAN ROSS PC 1560 Broadway, Suite 1200 Denver, CO 80202 Attorneys for Robert E. Moroney, LLC, Robert E. Moroney, and A Major Difference Inc. David Bray, Esq. MARISCAL WEEKS MCINTYRE & FRIEDLANDER PA 2901 N. Central Avenue, Suite 200 Phoenix, AZ 85012 Attorneys for Robert E. Moroney, LLC, Robert E. Moroney, and A Major Difference Inc. Gregory L. Miles, Esq. Lori A. Curtis, Esq. DAVIS MILES PLLC 1550 E. McKellips Road, Suite 101 Mesa, AZ 85203 Attorneys for John and Claudette Brimhall Dominic L. Verstagen, Esq. KUNZ PLITT HYLAND DEMLONG & KLEIFIELD 3838 N. Central Avenue, Suite 1500 Phoenix, AZ 85012 Attorneys for John and Claudette Brimhall Scott A. Salmon, Esq. THE CAVANAGH LAW FIRM 1850 N. Central Avenue, Suite 2400 Phoenix, AZ 85004 Attorneys for George Gonzalez and Lorena Guzman Gordon S. Bueler, Esq. BUELER JONES, LLP 1300 N. McClintock Drive, Suite B-4 Chandler, AZ 85226 Attorneys for Miki Smith and KMS Marketing, Inc. /////

DECONCINI MCDONALD YETWIN & LACY, P.C.

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North 16th Street, Suite 330 Phoenix, Arizona 85020

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And a copy mailed to: Gale R. Peterson, Esq. Cox Smith Matthews 112 East Pecan Street, Suite 1800 San Antonio, TX 78206 Special Master s/Ira M. Schwartz

DECONCINI MCDONALD YETWIN & LACY, P.C.

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North 16th Street, Suite 330 Phoenix, Arizona 85020

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