NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not citable as precedent. It is a public record. 

## United States Court of Appeals for the Federal Circuit

04-1495, -1540

MALLINCKRODT, INC. and NELLCO R PURITAN BENNETT, INC., Plaintiffs-Cross Appellants,

v. MASIMO CORPORATION, Defendant-Appellant.

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DECIDED: September 7, 2005

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Before MICHEL, Chief Judge , LOURIE and PROST, Circuit Judges

. MICHEL, Chief Judge

. Masimo Corporation (“Masimo”) filed a patent infringement action against Mallinckrodt, Inc. and Nellcor Puritan Bennett, In c. (collectively “Nellcor”) in the United States District Court for the Central District of California, asserting that Nellcor willfully infringed Masimo’s U.S. Patent Nos. 5,769 ,785; 6,206,830; 6,263, 222; and 6,157,850 by manufacturing and selling it s O4, O5, and O5CI models of pulse oximeters. Nellcor counterclaimed against Masimo, alleging t hat Masimo infringed U.S. Patent No. RE36,000 by manufacturing and selling its ow n line of pulse oxim eters that employ Signal Extraction Technology (S ETTM). Nellcor also alleged that Masimo’s assertedpatents were invalid on anticipation, obvious ness, indefiniteness, lack of written description, and lack of enablem ent grounds under 35 U.S.C. §§ 102, 103, and 11 2, and unenforceable due to inequitable conduct. Following a six-week trial, a jury found in favor of Masimo as to willful infringement and validity. The parties filed post-trial motions seeking to overturn the jury’s verdict. In response to these motions , the distric t court reversed the jury’s verdic t that the ’785 patent was infringed. Mallinc k rodt v. Masimo , No. 00-6506, slip op. at 21 (C.D. Cal. July 14, 2004). It upheld the j u ry’s verdict that t he ‘222 and ‘850 patents were not invalid and infringed, id. at 15, 36, 40, but reversed the jury’s finding of willfulness, i d. at 27. The district court nevert heless declined to enter a permanent injunction prohibiting Nellcor’s c ontinued infringement of these two patents

. Id. at 68. The district court also upheld the jury’s ve rdict that the ‘830 pat ent was not invalid and infringed, id. at 40, but again reversed the jury’s findin g of willfuln e ss, id. at 27. The district court subsequently held a benc h trial on the alleged indefiniteness of the ‘222 patent and on inequitable conduct. It held that the ‘222 pat ent was not invalid for indefinit eness. Id. at 48. It also held that Ma simo procured the ‘830 patent by engaging in inequitable conduct, thus rendering that patent unenforceable. Id. at 58. The district court did not, howev er, find t he ‘222 or the ‘850 pat ents unenf orceable for inequitable conduct. Id. at 60-61. Masimo appeals the district court’s grant of judgment as a matter of law (“JMOL”) of noninfringement of the ‘785 patent, JMOL reversing the jury’s finding t hat Nellcor infringed the ‘222 and ‘850 patents willfully , and denial of a per mane nt injunction wit h respect to the ‘222 and ‘850 pat ents. Masimo also appeals t he district court’ s judgment

04-1495, -1540 2of unenforceability of the ‘830 patent. Nellc or cross-appeals the district court’s JMOL upholding t he jury’s verdict of infri ngement of the ‘222 patent and validity of the ’222 and ‘850 patents. Nellcor further cross-appeals t he district c ourt’ s judgment of enforceability of the ’222 and ‘850 patents. The appeal was submitted for decision after oral argument on Ju ly 7, 2005. We hold that t he district court correctly entered judgment in al l res pects, exc e pt for the reversal of the jury’s verdict of infringem ent of the ‘785 patent and the denial of a permanent injunction to redr ess Nellcor’s infringement of the ‘222 and ‘850 patents. Accordingly, the district court’s judgment is affirmed-in-part, reversed-in-part and remanded

. I. BACKGROUND
A. The Techn o log y and Asserted Patents The patents involved in this c a se re late to pulse oxim etry, a non-invasive diagnostic procedure for measuri ng the lev e l of oxygen saturation in a patient ’s arterial blood. A pulse oximeter has two main components: (1) a s ens or attached to a patient’s finger to ac quire signals; and (2) a monitor with electronics and softw are that processes the signals to calculat e and dis p lay arterial blood oxy g en saturation and pulse rate. If a patient moves while the sensor is attached to his finger, that move ment may disrupt the signal by causing erratic “noise,” whic h results in inacc u rate readings. T he development of “adaptive filter s” permitted resolution of varying levels of “noise” to isolate the desired signal. i. ‘785 Patent The ‘785 patent is entitl ed “Signal Proces sing Apparatus and Method,” but is commonly referred to as the “Linear Relation ship” patent. Masimo asserted claims 29

04-1495, -1540 3and 30 of the ‘785 pat ent against Nellcor. Thes e two claims are directed to a method of making physiological measurements by passi ng light of two different wavelengths through a physiological medium to generate two re sulting signals. Each result ing signal contains the desired measurem ent and “noise.” The wavelengths are, nevertheless, chosen so that there will be a linear relations hip between the resulting “noise ” component s. That linear relationship is m anipulated to remove the “nois e ” from the resulting signals, thereby yielding the des ir ed physiological measurement. Claim 29 recites in pertinent part: passing light energy of at least fi rst and second wav e lengths through a light-absor ptive phys i ologic medium to a light-sensitive d e tector to generate, respectively , first and second s i gnals . . . the first and second wavelengths selected based on light abs orption characteristics of the physiologic medium such that a subs tantially linear relationship exists between the secondary portion of the fir s t and second s i gnals; and combining said first and second signals to generate a signal which is primarily correlated to the physiolog ic measurement por tions, the step of combining comprising using the linear relationship to s ubstantially remove the secondary portion of the signals. ‘785 patent , col. 54, ll. 1-16 (emphasis added). Claim 30 d epends from claim 29. It narrows the physiologic measurement to “i nformati on indic a tive of arterial bloo d absorption. ” ‘785 pat ent, col. 54, ll. 21-21. T he ‘785 patent was a sserted against only Nellcor’s O5CI pulse oximeter. ii. ‘830 Patent The ‘830 patent is entitl ed “Signal Proces sing Apparatus and Method,” but is commonly referred to as the “S elf-Optimizing Filter” patent. Masi mo asserte d claims 9, 14, 20, and 25 again st Nellc or’s O4, O5, and O5CI pul se oxim eters. These claims include bot h apparatus and proc ess claims for a self-optimizing filter that adjusts in

04-1495, -1540 4response t o changes in the si gnals to optimize the output. Claim 9, a representative apparatus claim, recites in pertinent part: a filter res ponsive to signals represent ing t he first and secon d s i gnals to filter the first and the sec ond s i gnals, wherein the fi lter adjusts its transfer function in response to changes in at least one of the first and the second signals and in response to an evaluat ion of an error to optimize at least one of a first and a second f iltered output signals . . . ‘830 patent , col. 44, ll. 24-30. iii. ‘222 Patent The ’222 patent is ent itl ed “Signal Process i ng Patent,” but is com m only referred to as the “Kalman Filter” patent . Masimo asserted claims 1, 4, 16, 17, 18, 21, 22, and 23 against Nellcor’s O4, O5, and O5CI puls e ox imeters. The majority of the asserted claims are directed to the us e of a Kalman filter. Claims 17 and 18 are ref e rred to by the parties as the “motion” claims. They are directed to filtering t he signals described in the other asserted Masimo patents to determi ne arterial oxygen satu ration. Cla im 17 recites: A phys i ological monit o r that computes ar t e ri al ox ygen saturati on i n ti ssue material having arterial and v enous blood, the physiological monitor comprising: a light emitter which emits lights of at least first and second wavelengths; a light detector responsive to light from said light emitter whic h has passed through body tissue having art e rial and v enous blood, said light detector providing at least firs t and sec ond intens ity signals associated with said at least fi rst and second wavelengths, each of said first and second intensity si gnals having, during motion of the tissue, at least a first portion i ndicative of arterial blood and a second signal portion indic a ti ve of motion induced nois e ; and a signal pr ocessor responsive to the first and sec o nd intens ity signals to calculate arterial oxy g en saturation without signific ant interference in the calc ulation from the motion induced nois e portion of the first and second intensity signals.

04-1495, -1540 5‘222 patent , col. 74, ll. 57-67; col. 75, ll. 1-8 (emphasis added). Claim 18 is dependent on claim 17 and narr o ws the motion-induc ed “noise ” to that caused by ven ous blo od. ‘222 patent , col. 75, ll. 10-11. iv. ‘850 Patent The ‘850 patent is entitled “Signal Processing Ap paratus,” but is commonly referred to as the “Par allel Engine” paten t. Masimo as serted independent c l aim 1 and dependent claims 10, 11, 12, 15, 17, and 22 against Nellcor’s O4, O5, and O5CI puls e oximeters. The ass e rted claims describe an “alternative calculation” method wherein two signals are processed in par allel and a nalyzed to determine which o n e of the two represents the more accurate arte rial ox ygen saturation level.
B. The Relationship Betw een Mas i mo and Nellcor In the 1980s, Joe Kiani and M ohamed Diab collaborat ed to solve the “motion problem” encountered in the puls e oximetry field by using parti cular filtering algorithms. Beginning in 1991, they f iled several patent appl ications, whic h r e sulted in numerou s issued pat ents, including the four asserted in this appeal. In 1998 , they founded a small private company in Mission Vi ejo, California called Masimo, an acronym for “Methods for Artifact Suppressi on In Motion.” In 1992, Kiani met with two Nellcor r epresentatives, Drs. David Swedlow and Tom Yorkey, to discuss Masimo’s motion-tole rant technolog y. Masimo originally planned to either sell or licens e its te chnology to an established medical devic e company like Nellcor. Kiani shared a “black box” demonstration of a motion-tolerant pulse oximeter prototype with Nellcor, but did not disclos e its inner workings.

04-1495, -1540 6In 1993, the parties commenced business di scussions. Nellcor provided Ma simo with raw data to test in one of Masimo’s moti on-tolerant pulse oximet er prototypes. In exchange, Masimo provi ded Nellcor with test re sults. Masimo als o gave Nellcor a copy of a PCT applic ation, which co rrelated to one of it s 1991 patent applic at ions. In 1994, Nellcor broke off disc ussions wit h Masimo, ex plaining that it ch anged its strategy and decided to manufacture and market its moti on-tolerant technology itself. In 1998, Masimo launched its SETTM technology in the United States. In 1999, Nellcor introduced a new moti o n -tolerant technology called the O4 algorithm in its prev iously mar k eted N-3 95 pulse oximeter. Thereafter, Nellcor introduced later gener ations of the O4 algorith m, called the O5 and O5CI algorithms. As noted above, Nellcor’s pu ls e oximeters incorpor ati ng the O4, O5, and O5CI algorithms are the accused products in this action. C. Prior Litigation Between Masimo and Nellcor In 2000, Masimo sued Nellcor for infringem ent of claims 16 and 28 of U.S. Patent No. 6,036,642, asserting that Nellcor’s N-39 5 and MP- 404 pulse oximeters met all of the asserted claim limitations. In July of 200 0, Masimo filed a m o tion for a preliminar y injunction t o prevent Nellcor from continui ng to sell the two ac cused products. In August of 2000, Nellc or filed a motion for summary judgment of noninfringement or, in the alternative, of invalidity. In September of 2000, the dist rict court conducted a hearing on the p a rties ’ motions. The parties specifically address ed the claim constructions for the terms “adaptive filter” and “adaptive s i gnal processor” as used in c l aims 16 and 28. In October of 2000, the district court construed the te rms “adaptive filter” and “adaptiv e

04-1495, -1540 7signal processor” without explanat ion as requiring a specific type of adaptive filter known as an “adaptive noise canceler.” Masimo Corp. v. Mallinckrod t Inc. , No. 99-1245, slip op. 1 (C.D. Cal. Oct. 4, 2000) (“ Masimo I ”). The district court then granted summary judgment in favor of N e llcor, bec aus e it found that Nellcor’s accused produc ts do not use an adaptiv e nois e canceler. Id. at 2. The district c ourt also denied Masimo’s motion for a preliminary injunction. Id. Masimo appealed, and this court affirmed. Masimo Corp. v. Mallinckrodt Inc. , 18 Fed. Appx. 852 (Fed. Cir. Aug. 8, 2001) (“ Masimo II ”). D. Relationship Betw een Masimo I and the ‘830 Patent
In Masimo I , Steven Jensen appeared bef ore the di s t rict court as counsel for Masimo. At the claim construction hearing in September of 2000, he argued that the terms “adaptive filter” and “adaptive signal processor” should be broadly c onstrued and not limited to requiring an “ adaptiv e noise canceler.” Three days after the hearing, Jensen amend ed the application leading to the ‘830 patent, adding separ ate independent claims to an “adaptive filter” and an “adaptive signal proc essor.” For each independent c l aim, Jens en als o added dependent claims “wherein the adaptive filter [or adapt ive signal processor] is an adaptive noise canceler.” On October 4, 2000, the district court construed the terms “adaptive filter” and “adaptive s i gnal processor” narro wly, as noted abov e. Masimo did not, however, notify the PTO during the prosecution of the ‘830 patent of either the Masimo I litiga t ion or the claim cons truction issued by Masimo I court, even though the same terms were implicated in both proceedings. In October of 200 0, the PT O issued a notice of

04-1495, -1540 8allowance f o r the application leading to t he ‘830 patent, and the patent issued in March of 2001.

II. DIS CUSSION

A. JMOL Mo tions on Jury Verdicts

We review the grant or denial of a party’s motion for JMOL de novo , reapply i ng the district court’s J M OL standard. Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co. , 308 F.3d 1167, 1185 (Fed. Cir. 2002). In doing so, this court mus t consider all the evidence that was plac ed before the jury and draw all reasonable inferences in favor of the party who prevailed on that issue. Richardson-Vicks Inc. v. Upjohn Co. , 122 F.3d 1476, 1479 (Fed. Cir. 1997).
i. Whether the district court erred by granting JMOL of noninfringement of the ‘785 patent At the outset, the district court not ed that Masimo offered the software specification for the O4 algorit hm used in Nellcor’s O4 pulse oximeters, not the one in Nellcor’s O5CI product. Having made this obs ervation, the district court nevertheless addressed the merits of Nellc or’s challenge to the jury’s verdict. The district cou r t agreed wit h Nellcor t hat it was not apparent from the O4 software specification that the combination of the two signals in Nellcor’s O5CI pulse oxim eter, called an “€mix signal,” is “primarily correlated to t he physiologic m easurement port ion of the first and second signal” and has “nois e ” substant ially remov ed, as required by the asserted claims of the ‘785 patent

. Mallinckrodt , slip op. at 20. The district court likewis e noted that Masimo did not offer expert testimony to show that t he €mix sig n a l was s u b s tantially “n oise” free.

04-1495, -1540 9Id. T hus, the district court concluded that su bstantial ev idence did not support the jury’s verdict that claims 29 and 30 wer e literally infringed. Id. at 21. Masimo argues that the district court er red in reversing the jury’s verdict. It contends that the district c ourt overlooked the parties’ sti pulation that the O4 software specification represents that of the O5CI product and other evidence supp orting the jury’s verdict. Masimo points out that the O4 software specif ication makes clear that the O5CI product uses a linear combination of r ed and infrared signals to cancel “noise” and to allow oxygen saturation levels to be meas ured during periods of motion, thus meeting the limitations of claims 29 and 30. Masimo also asse rts th at its expert, Dr. Jack Goldberg, testified bas ed upon his review of the O4 software specification that Nellcor’s O5CI pulse oximeter infr inges the ‘785 patent. Alternatively, Masimo claims that it is entitled to a new trial on the issue of infringement under the doctrine of equivalent s bec ause the district court refused to instruct the jury to consider that theory of liability. B y ov erturning the jury verdict of literal infringement, without or dering a trial on the issue of equivalent infringement, Masimo argues that the district court wro ngly left the question of infringement by equivalents unanswer ed. Nellcor argues that the district court did not misunderstand that the O4 software specification did not apply to the O5CI product. Rather, Nellcor claims that the district court analy z ed the O4 software specification wit h the understanding that it applied to the O5CI product. The O4 software specification, Nellcor claims, simply does not establis h that the combined signal present in the O5CI product has “no i se” removed. Additionally , Nellcor points out that its expe rt, Dr. Benjamin Friedl an der, testified in

04-1495, -1540 10detail that the O5CI product does not operate in the same manner as set forth in claim s 29 and 30 of the ‘785 patent. In fact, Nellc or points out that Friedlander explained that the O5CI product operates in t he reverse manner, to wit, pres erving “noise” in the combined s i gnal. With respect to Masimo’s alternative argument regarding infr ingement under the doctrine of equivalent s, Nellcor claims that Masimo must offer particulariz ed evidenc e regarding t he insubst antiality of the differ ences between each clai m limitation and the accused device in or der to show equivalent s. Nellcor claims that Masimo did not introduce such evidence, thus justifying the distri ct court’s refusal to instruct the jury t o consider inf r ingement under t he doctrine of equivalents. We agree with Masimo that the combinatio n of the O4 software specification and Golberg’s testimony adequately supports the jury’s verdict of literal infringement. At the outset, Ma simo is correct that the parties stipulated that t he O4 software specification, which was in ev idenc e, is r epres entative of the O5CI softw are specification, which wa s not in evidence. Indeed, the pr etrial conference order specific ally identifies the source code contained in the O4 software specificat ion as representative of the source code in Nellcor’s O 5 CI produc t. The district court’ s oversight was, howev er, harmless becaus e the district court substantively analyzed t he O4 software specification as though it constituted the software specific ation for Nellcor’s O5CI product. Our review of the O4 software specific ation reveals that a reasonable jury could have concluded that the O5CI product infringes claims 29 and 30 of the ‘785 patent. While the O4 software specificat ion does not ex p lic itly state that th e resultin g signa l is free of “noise,” it offers an equati on used to calculate that signal:

04-1495, -1540 11€mix = (1+ w) * (€ir – w*€red) The O4 software specification s t ates that the letter “w” in the equation r e presents a chosen mixing weight. When the mixing weight of 0.55 is selected, the specification states it “is intended t o cancel the influ ence of deoxyh e moglobin in €mix and [gamma] mix. Deoxyhemoglobin is more abundant in non-arterial blood, which influences the plethysmograph primarily due to motion and respiratory artifacts.” The explanator y language accompanying t he equation suggests that any “noise” caused by motion is accounted for and removed by incorporati ng an appropriate mixi ng weight into the resulting signal calculation. The numeric value for the re sulting signal thus represents only arterial oxy gen saturation, exactly as set forth i n claims 29 and 30 of the ‘785 patent. Additionally , a reasonable jury coul d have found infringement based upon Goldberg’s testimony alone, without resort to the O4 software specific ation, and certainly with the two combin ed. Gol d berg ex pressl y testi f ied t hat the O5CI product infringes independent claim 29 of the ‘785 patent: Q: It looks like you did s o me more looking at Nellcor documents. Let’s take a look at Exhibit 5073, and te ll me what you’v e done in this ex hi bi t. A: Okay. This is the same quote that we dis c ussed ear lier. This is a further description of that linear c o mbination step. That’s apparent in the O5CI adaptive comb filter . And the W is the multiplier. It was the W that was present in that multiplie r box. And the W has a range, and when W equals [0].55, the intention is to cancel the influenc e of deoxyhemoglobin at the output of that combiner. That is to canc el the influence of v enous blood in the output of the combiner. As it s a ys, deoxy hemoglobin is more abundant in nonarterial blood. This quote we’ve looked at before. THE COURT: Yes, we have. Q: Nonarterial means venous? A: Yes. THE COURT: We’ve been over that.

04-1495, -1540 12Q: All right. So your conclusion wit h regard to this third or final step of claim 29? A: My opinion is that claim 29 of Ma simo’s ‘785 patent is infringed by Nellcor’s O5CI products. That Nellcor’s expert, Friedlander, offe red cont radictory testimony does not automatically negate the impact of Goldberg’s testimony or render it less than substantial. He testified: Q: There is some sort of multiplic ation going on somewhere; correct? A: The epsilon red is multiplied by some number and subtracted from epsilon IR. Q: And the resulting s i gnal – and we ’ll see in a minute whether this is in fact the resulting signal – the resulting sig n al is what? A: Well, the resulting signal is also “noise.” Q: So in the O5CI, we start with “ noise.” We do some calculations, and we end with “noise;” is that correct? A: That is correct.

. . . Q: And now, having in mind what signals are combined and what t h e result is, can you compare that, please, to claim 29. A: Yes. Let me just read in t he claim it says combine said first a n d second s i gnals. What they are t a lking about is combining the re d and the infrared signals. That little box whic h – by the way, the little box doesn’t appear in the Nellcor document. It’s something that Mr. Goldberg or whoever prepared the s lide added. The inputs to that box where the ep silon R and eps ilon IR, which are not the red and infrared signals. But they are some “noise” signals derived from it. And then there is the question of outputs. It says to generate a signal which is primarily correlated to the physiologic measurement portion. But t hat box s hown by Mr. Goldberg generates a signal which is “noise.” And it’s not correlated to the physiologic portion, the physiol ogic measurement portion. So neither the inputs nor the outputs of what was pointed out in that slide corres pond to what’s in the claim. His testimony summarily disc ount s the signif i cance of the multiplier without addressing why it does not function to remove “noise,” unlike Goldberg’s tes t imony. Lacking this critical explanation, we are har d pressed to conclude that Friedla nder’s testimony in an y way either overcomes or calls into question the substantiality of Goldberg’s testimony,

04-1495, -1540 13especially when cons idered toge ther with the O4 sof t ware s pec ification. Moreover, a jury is entitled, based upon its as sessment of Goldberg’s and Fr iedlander’s credibility, to discount in whole or in part either witness’ s testimony for neither has been rebutted conclus i vely by some authoritative document or shown to be inherently implausible. It is apparent here that the jury chose to credit Goldberg’s testimony ov er Friedlander’s in finding that the O5CI product literally infrin ges the ‘785 patent. For these reasons, we conclude that the supporting ev idence was substantial and that the district court erred in overturning the jury’s verdict of literal infringement. ii. Whether the district court abused its discretion by failing to give colla teral estoppel effect to the constructi on of the “filter” terms in Masimo I w a rranting a new trial on the issue of infringement and valid ity of the ‘222 patent Nellcor argues that the district court erred in not cons truing the terms “Kalman filter,” “filtering,” “proce ssor,” “signal proc essor,” “a daptive s i gnal processor,” and “adaptive filter” (collectively, “f ilter” terms) as used in claims 1, 4, 16, 17, 18, 21, 22, and 23 of the ‘222 patent. Nellcor contends that the district c ourt should have ac corded the “filter” terms the same meaning that the dist rict court gave to the t e rm “adaptive filter” in Masimo I , which this court affirmed on appeal in Masimo II . By declining to do so, Nellcor contends that it was prejudiced and is entitled t o retry all issues relat e d to the ‘222 patent

. Masimo responds that the claim construction of the “filter” terms is not relevant to any judgment on appeal becaus e Nellc or did not challenge the jury’s verdict of literal infringement of the ‘222 patent post-trial. Even if Nellcor had, Masimo argues that Masimo I and Masimo II are narrow holdings, intended only to res o lve Nellcor’s motion for summary judgment of noninfringement of the ‘ 642 patent . As such, Masimo

04-1495, -1540 14maintains that the district court correct ly rejected the claim construction from Masimo I on grounds that the present ca se involv es different pat ents with different claims, specifications, and pros ecution histories. At the outset, we note that the law of t he regional circ uit applie s to the issue of collateral estoppel. See Bayer AG v. Biov ail Corp. , 279 F.3d 1340, 134 5 (Fed. Cir. 2002). Under Ninth Circuit law, a district c ourt’s decis ion to apply collateral estoppel is reviewed for abuse of discretion. See Plaine v. McC a be , 797 F.2d 713, 718 (9th Cir. 1986). A party seeking to invok e collater al estoppe l bears the burden to prove three elements: (1) the issue at stak e must be identical to the on e alleged in the prior action; (2) the issue must have been actually litigat ed; and (3) the determination of the issue in the prior litigation mus t have been a necess a ry part of the judgment in the prior action. Trevino v. Gates , 99 F.3d 911, 923 (9th Cir. 1996). Here, the first element is pl ainly not met. Nellcor asks the district court to apply the definition of “adaptiv e filter” from the ‘642 patent to the “filter” terms i n the ‘222 patent. Nellcor does not, howev er, cite any ev idence showing that t he use of the “filter” terms in the ‘222 pat ent is identical to t he use of the term “adaptiv e filter” in the ‘642 patent. While both the ‘642 and ‘222 patent s ulti mately trace priority to U.S. Application No. 07/666,060, filed on March 7, 1991, the specificat ions of the ‘642 and ‘222 patents are not identical. Claim terms in the two pa tents, therefore, may or may not carry the same meaning, depending on t he use of the terms in the wri tten descript i on. This is particularly true in light of the advancement s made in the field of pulse oximet ry between th e filing date of the ‘6 4 2 patent in June of 19 98 and the filing d a te of the ‘222 patent in October of 1997.

04-1495, -1540 15With regard to the “adaptive filter” te rm i n particula r, which appears only in dependent claim 22 of the ‘222 patent, w e rec ogniz e that the same terms in related patents are presumed to ca rry the same meaning. See Omega Eng’g, Inc. v. Raytek Corp. , 334 F.3d 1314, 1334 (Fed. Cir. 2003) (“[W]e presume, unless otherwis e compelled, that the same claim term in t he same patent or related patents carries the

same cons trued meaning.”). Nellcor, nonethel ess, does not raise this argument, and we are not persuaded that t he presumption should app l y. Although both patents trace priority to the ‘060 applicati on, the ‘222 pat ent is not descendent from the ‘642 patent. Additionally , the ‘222 patent is primarily directed to the use of a certain kind of filter, namely a Kalman filter, to remove motion-induc ed “nois e .” The ‘642 patent, by contrast, does not s o limit the type of filter used to r e move “noise.” Cons equently, t h e district court was not in any way bound by collateral estoppel to give effect to the Masimo I claim cons truction of the term “adaptive filte r” in this case. We thus conclude that Nellcor is not entitled to retry all issues related to the ‘222 patent.

iii. Whether the district court erred in o vertu rning the jury ’s verdict of willfu l infringement w i th respect to the ‘222, ‘850, and ‘830 patents The distric t court found that Masimo failed to present clear and convinc i ng evidenc e from which a jury coul d either conclude or infer t hat Nellcor was aware of the ‘222, ‘850, and ‘830 patents and proceeded with its inf r inging activities without a good faith belief that the asserted pat ents were invalid and/or not infringed. With respect to Nellcor’s awareness, the district court noted that the three patents issued only a short time before Masimo asserted them against Nellco r, making it highly unlikely that Nellc or knew of their existence. Mallin ckrodt , slip op. at 24. Also, th e district court found that the jury could not hav e inferred that Nellco r was aware of the asserted patents based on

04-1495, -1540 16Masimo’s evidenc e, including a summary of Masimo’s patents prepared by Yorkey , Nellcor’s announcem ent that Masimo had fi ve patents, or Kiani’s discus s ions wit h Nellcor, because thos e documents were ge nerated more than two years after the three asserted patents issued. Id. at 25. The district court also found that Ma simo presented no evidence upon whic h a jury could infer that Nellcor acted in bad fait h. The district cour t observed that Nellcor did not become aware of the as serted patents until Masimo filed suit, at which time, it sought the advice of counsel t o prepare a defense. Id. at 26. The district court observed that Nellc or, after consultation with counsel, sought to defend itself from Masimo’s infringement allegations by asse rting that the ‘222, ‘850, and ‘830 patents were invalid and/or not infringed. Id. The district court conc luded that these defenses were reasonable in light of Nellcor’s prior success usin g them in the Masimo I litigation. Id. Lastly, the district court addressed Masi m o ’s argum ent that Nellcor copied its patented technology, finding t hat there was no evidenc e from which a reasonable jury could have concluded there was copying. Id. at 27. The district court noted that Masimo’s copying ar gument rested on the te stimony of Kiani, who stated that he engaged in numerous meetings with Nellcor regarding Masimo’s technology. Id. T h e district court found, however, that Kiani di d not testify that he told Nellcor about the patented features. Thus, the district court reasoned that a jury would have had to speculate there was copying based s o lely on the fact Kiani met with Nellcor, b u t concluded that such speculation does not ri se to the level of c l ear and c o nvinc i ng

04-1495, -1540 17evidenc e. Id. A ccordi ngl y, the di stri ct court hel d that Masi mo fai l ed to meet i t s burden of proving willfulness. Masimo argues that the district court e rred in reversing the jury’s finding t hat Nellcor’s infringement of the ‘222, ‘850, and ‘830 patents was wil lful for several reasons. First, Masi mo claims that Nellc or regularly monitored the patent literature and was aware of Masimo’s patents. For example, Masimo points out that Dr. Ross Flewelling, Nellcor’s former Director of Technology Dev e lopment, maintained an intelligence file on Masimo, which identif ied Mas i mo’s publish ed and iss ued patents. Second, Masim o asserts that Nellc or had acce ss and motivation to copy Masi mo’s inventions . Indeed, Masimo points out that Kiani m e t with Nellcor personnel, Swedlow and Yorkey, an d discussed the idea of using ad aptive filte r s in pu ls e o x im etry to solve the motion problem. Masimo also points out that Kian i even showed Nellc or a prototype as early as 1992 and allowed Swedlow to test it. T her eafter, in 1993, Masimo further states that it provided Nellc or with a copy of a PCT application, which dis c losed the inventions claimed in the ‘222, ‘850, and ‘830 patent s. Third, Ma simo contends tha t Nellcor’s post-suit conduct does not evidence good fait h. Although Nellcor’s former president testified that she believed that the present litigation would be f a vo rable to Nellcor lik e the Masimo I litigation, Masimo emphasizes, she admitted that she did not understand how the decision in Masimo I related to the ‘222, ‘830, and ‘850 patent s. Finally, Masimo stresses that Nellcor, after being s ued by Masimo for patent infringement, did not obtain a legal opin ion concerning whether its products were infringing or whether the asserted patents were valid. This failure, Masimo claims, was par ticularly egregious in light of Nellcor’s long- standing policy of ens uri ng its “products did not infringe any other

04-1495, -1540 18company’s patents.” It thus av ers that the jury could hav e found that Nellcor did not present a good faith def ense to its alleged infringement of the ‘222, ‘830, and ‘85 0 patents. Nellcor argues that Masimo merely spec ulates that Nellco r was aware of the asserted patents without presenting any conc rete evidence showing that Nellc or actually possessed c opies of those patents . Nellc or also as serts its relia nce on defenses that it raised in Masimo I does not show lack of good faith. Additionally, Masimo contends that the absence of an op inion of counsel does not permit an advers e inference o f willfulnes s pursuant to Knorr-Bremse Systeme Fuer Natzfahrzeuge GMBH v. Dana Corp. , 383 F.3d 1337 (Fed. Cir. 2004) ( en banc ). Nellcor thus maintains th at the district court properly drew inferences favorable to Nellc or in overturning the jury’s finding of willfu l ness a s to t he ‘222, ‘830, and ‘850 pate n ts. We agree with Nellcor that Masimo did not present sufficient evidence to support the jury’s verdict of willfulne ss. Willfulness is a questio n of fact that must be determined from the totality of the circums t ances and proven by clear and convinc i ng evidence. Knorr-Bremse , 383 F.3d at 1342-43. As Nellcor ar gues, Masimo does not identify any specific ev idence upon which a reasonable ju ry could have found that Nellc o r was, for certain, aware of the ‘222, ‘830, and ‘850 patent s. Masimo instead offered evidenc e upon whic h a jury could only surmise awar eness. Just because Nellco r regularly monitored the patent literature, for example, does not mean that Nellcor aut o matically knew about the asserted patents. Indeed, as noted by the dist rict court, it seems high ly unlik ely that Nellcor could have k nown of the ‘222 patent because it issued only one day before Masimo filed its infri ngement suit against Nellcor.

04-1495, -1540 19Masimo lik ewise did not present any evidence upon which a reasonable jury could hav e found that Nellcor copied Masimo’s inv entions. Masimo’s evidenc e of copying in volved o n ly inferentia l lea p s. Ma simo asked the jury to infer that Nellcor copied Masimo’s inv entions s i mply becau se (1) Kiani engaged in meetings with Nellcor’s personnel; ( 2 ) Nellcor sought to maintain its positio n as the technology leader in the pulse oximetry market; and (3) Nellc or knew that Masimo had developed state-of-the-art technology. Nellc or’s desire to remain at t he top of the puls e oximetry market, nevertheless, does not prove copyi ng; it merely evidences the competitive nature of business. All top mark et players want to retain thei r lead over the competition. That goal does not mean that a ll such players copy the inv entions of competitors to retain their lead. Even if Nellc or was motiva ted to do so, it did not have the opportunity. Kiani’s meetings with Nellcor in no way expos ed the patented technology. Although Kiani showed Nellcor a prototyp e, Nellcor was not permitted to disassemble it or t o inspect its inner workings. Nor was Nellc or able to review engineering diagrams or software code employ ed in creating the prototype. Lastly, Masimo failed to offer any evid ence showing that Nellc or intentionally or recklessly disregarded the asse rted patents after being sued by Masimo. Contrary t o Masimo’s contention, the lack of an opini on cannot be held against Nellc or. In K n o rr Bremse , 383 F.3d at 1345, this court specifically addressed the question of whether it is appropriate to draw an adverse inference with respect to willfulne ss when a n accuse d infringer had not obtai ned legal advice. We answered t hat question in the negative. Id. Hence, the district court correctly concl uded that no reasonable jury could have found that Masimo willfully infringed the ‘222, ‘830, or ‘850 patent.

04-1495, -1540 20iv. Whether the district court erred in declining to grant JMOL that Nellcor’s N-200 pulse oximeter anticipate s the ‘ 222 patent under 35 U.S.C. § 102(b)

The distric t court concluded that Ma simo presented evidence that Nellc or’s N-200 puls e oximeter did not tolerate moti on as the term “motion” was defined by the court’s claim construction. 1 Mallinckrodt , slip op. at 38. The di s t rict court noted that Kiani and others testified t hat Nellcor’s N-200 pulse ox imeter gave readings during “motion” that did not “accu rately reflect the arteri al oxy gen saturation.” Id. In light of this evidenc e, the district court determined that a reasonable jury could have concluded that Nellcor failed to prove that its N-200 produc t anticipates claims 17 and 18 of the ’222 patent. Id. Nellcor argues that the district c ourt e rred in denying its mo tion for JMOL that Nellcor’s N-200 pulse oximeter anticipates the ‘222 patent under § 102(b). Nellcor claims that its N-200 product was able to calcul ate arterial oxygen saturation levels in the presen ce of “motion” befor e the filin g d a te of the ‘222 patent on October 6, 1997. Nellcor points out that Masimo’s expert, Dr . Steve Barker, even publ ished an article i n the Januar y 1997 iss ue of Anes thesiology containing test results showing t h at Nellcor’s N-200 product performed accurately much of t he time (“Barker Study”). In that study, Barker compared the accuracy and dropout rates of Nellco r’s N-200, Nellc o r’s N-300 0 , and a prototype of Masimo’s SET pulse oxim eters during standardized motion in he althy

1 The district court construed the term “motion” as used in the ‘222 patent to mean “movement of body tissue which c a uses erratic nois e that, in the absence of a filter, will c ause the r a tio of r ed to infrared signa ls to not a ccurately reflect the arteria l oxygen saturation.” Mallinckrodt , slip op. at 46.

04-1495, -1540 21volunteers. Barker’s data showed t hat Nellcor’s N-200 product displayed a SpO 2 value 2
within s e v en percent of control 76 perc ent of the time when the oximeter was functioning before motion began and 68 perc ent of the time when the oximeter was connected after motion began. Acco rdingly, Nellcor claims that the ava ila bility of its N-200 puls e oximeter on the m a rket at the time Masimo filed the application which issued as the ‘222 pat ent anticipates claims 17 and 18 of that patent. Masimo rebuts Nellc o r’s contention by arguing that it presented overwhelming evidenc e s howing that Nellc or’s N-200 product is inc a pable of giv i ng accurat e readings with “nois e ,” thereby not ant icipating the invention claimed in claims 17 and 18. Specifically , Masimo contends that several witnesses t e stified that Nellc or’s N-200 puls e oximeter did not perform reliably during mo tion. These witnesses included Barke r , Kiani, and James Welch, a former Nellc or em ployee. Masimo points out that Barker, the very author upon whos e st udy Nellc or heav ily r e lies, plainly stated t h at Nellcor ’s N-200 puls e oximeter “does not per form reliably during motion.” We agree with Masimo that it present ed substantial evidence upon which a reasonable jury could have found that the ‘222 pat ent was not anticipated by Nellcor’s N-200 puls e oximeter . Multip le witnesses testified about the problems encountered when using Nellcor’s N-200 pr oduct during “motion.” Notably, Barker carefully explained the bases for his testi m ony t hat Nellcor’s N-200 product does not perform reliab l y du ring motio n , which included both his own experim entation a s well as his review of the relevant literature:

2 A SpO 2 value refers to the oxygen satu ration level in a patient’s blood. See Steven J. Barker & Nitin K. Shah, The Effects of Motion on the Performance of Pulse Oximeters in Volunteers (Revised publication), Anesthesiology , Vol. 86, No.1, 101-108 (1997).
04-1495, -1540 22Q: Have you done tests to evaluate how well Nellcor’s N-200 without C-Lock performs during motion? A: Yes, I have. Q: And have you reached an opinion as to how well Nellcor’s N-2 0 0 without C-Lock performed during motion? A: Yes. Q: And what is your opinion? A: It does not perform reliably during motion. Q: And what is the basis for that opinion? A: My own experiments, as well as the review of the literature. Q: Can you c i te to any particular pi eces of literature or volume of literature that s upports that opinion? A: Certainly. There’s act ually an excelle nt pap er by William Hay that was publis hed in the Journal of Pe rinatology in 2002 in which they made comparisons. I will not dis c uss the comparison s, but among other instruments, they looked at the N-200 without C-Lock and found that it had a v e ry high late ra te of false alarms during motion. Another study by Bohnhorst and Poet s in the Journal of Critical Care Medicine, year 2000, found the same thing. This was a clinical study in a neonatal inte nsive care unit. So these were newborn babies. Again, the false al arm rate was very high with the N-200. A reasonable jury was entitled to accept Bark er’s testimony alone or in combination wit h the testimony from Kiani an d Welch, who each tes t ified that Nellcor’s N-200 puls e oximeter did not read through “motion,” over Barker’s si ngle comparative study. Doing

so, a reas onable jury readily could have f ound that it was not possible for Nellc or’s N-200 puls e oximeter to give an arterial oxygen sat u ration lev e l as required by the asserted claims of the ‘222 patent. See, e.g. , ‘222, col. 74, ll. 11 ( Claim 17 recites: “A physiologic a l monitor that computes arterial ox ygen saturation . . . compris i ng . . . a signal processor responsive to the first and se cond intensity signals to calculate arterial oxygen sat u ration wit hout significant interference in the calculation from the motion induced noise portion of the fi rst and second intensity signals .”) (emphasis added). Thus, a reasonable jury could have concluded that Nellcor’s N-200 pulse o x imeter did not anticipate the invention claim ed in claim s 17 and 18 of the ‘222 patent.

04-1495, -1540 23Even if the jury ignored all testimony from Barker, Kiani, and Welch conce r ning the problems associated with using Nellcor’ s N-200 product during motion, the jury may have found no anticipation based solely upon testimony from Masimo’s expert, Goldberg, who focused on the st ructural features of Nellcor ’s N-200 pulse oximeter and why those features were not capable of overcoming “noise.” He plainly testified that Nellcor’s N-200 product did not anticipate cl aims 17 and 18 of the ‘222 patent becaus e the features employed in that pulse oximeter, such as the bo xcar filter, were capable of filtering out only certain frequenc ies of “noise,” but not all frequencies. For example, Goldber g testified: [T]he boxc ar filter is a low pass filter, gets ri d of high frequency noise. It doesn’t get rid of er ratic noise that’s – well, I don’t want to get too technical, but the erratic noise that has the same sort of spectrum as the pulse rate itself. The really ugly noise the boxcar can’t get rid of.

. . . As such, the jury may have concluded that Nellc or’s N-200 pulse oximeter could not completely filter “nois e ” to produce an arteri al oxy gen saturation level during motion as set forth in the asserted cl aims of the ‘222 patent. Indeed, Goldberg testified to this effect: Q: Without significant interfer ence means the calculated oxygen saturation is accurate enough for the purposes of which t h e calculation is being empl oyed. And in the contex t of the claim, it’s the calculation in the presence of motion-induced nois e. So could the N-100 or N-200 c ontain a s i gnal processor to calculate arterial oxygen sat u ration wit hout significant interference as s e t forth in the claim? A: No, it couldn’t. Inas much as it doesn’t handle the m o tion-induc e d noise. It can’t meet th e limitation s of claim 17. Q: And the basis of your opinion? A: The basis of my opinion is study of the Nellcor docum entation that describes t hose products, how t hey work software specifications, the Court’s claim construction.

04-1495, -1540 24Accordingly, because substantial evidence s upports the jury’s verdict, the district court correctly denied Nellcor’s motion for JMOL of antic ipation of t he ‘222 patent under § 102(b).

v. Whether the district court erred in declin ing to gra n t JMOL t h at Nellcor’s O4 pulse oximeter anticipates the ‘850 patent under 35 U.S.C. § 102(g) The district court found that Nellc or’s O4 algorithm does not anticipate claims 10, 11, 12, 15, 17, and 22 of the ‘850 patent. The distric t court concluded that “[t]he jury was free to reject Nellcor’s evidence that arbitration was introduced into Nellc or’s O4 algorithm in 1993.” Mallinckrod t , slip op. at 33. In addition, the district court noted that Masimo introduced ev idence that Diab conc eived of the “alternative calculation” method by the fall of 1991. Id. In light of that evidence, th e district court concluded that a reasonable jury could have found that “Nellcor failed to meet its burden to prove that Nellcor’s O4 algorithm is prior art to the alter native calc ulation c l aims in the ‘850 patent.” Id. The district court also observed that Ne llcor alternativ ely attempted to establish prior invention by its use of “alternative ca lc ulations” in its PCSat software in 1991. Id. at 34. The district cour t noted that Nellcor’s softwar e engineer, Mr. Clark Baker, nevertheless testified that the PCSat so ftware was not used outside of Nellc or. Id. O n that basis, the district cour t decided that a reasonab le ju ry could have conc luded that the PCSat research project was “abandoned, suppres sed, or concealed” an d thus was not invalidating under § 102(g). Id. Nellcor argues that the district c ourt e rred in denying its mo tion for JMOL that Nellcor’s O4 algorithm anticipates the asserted claims of the ‘850 pat ent under § 102(g). Nellcor contends that it invented the “alter native calculation” method claimed in the

04-1495, -1540 25asserted claims of the ‘850 patent before Masi mo filed U.S. Applic ation No. 08/320,154, the parent applicatio n of the ‘850 patent, on October 7, 1994. 3 Specific ally, Nellc o r asserts that Baker tes t ified about calculatin g saturation in mu ltiple ways whe n working on the PCSat program in 1991. Nellcor point s out that Baker also testified that he began writing software to implement his “alternative calculati on” method in May of 1991 and was able to use t hat method by June of 1991. Nellcor further contends t hat Baker and Yorkey testified that they implemented Ba ker’s “alternative calculation” method in Nellcor’s O4 algorithm in the summer of 1993. Considering Baker’s activity in the early 1990s, allegedly well before Masimo had even conceived of using “alternative calculations” to remove “noise” caused by mo tion, Ne llcor maintain s that a reasonable jury could not have found the ‘ 850 patent valid under § 102(g). Masimo responds that Nellcor failed to present evidence showing that its O4 algorithm used in the 1993 ti me frame contained each and every limit ation of the asserted claims. Alternatively, Masimo ar gues that it present ed substantial ev idenc e showing that it conceived of the “alternativ e calculation” method claimed in the ‘850 patent in 1991. Masimo points out that the district court, in fact, cited various evidenc e in deny ing Nellcor’s J M OL of invalidity, in cluding testimony from Diab, one of the named inventors on the ‘850 patent, lab notebook entrie s, daytimer entries, software code, and Nellcor’s response to an interrogatory that the court read into the record at trial, stating that the inventors conceived of the invent ion set forth in the m a jority of the asserted claims as early as the fall of 1991. Hence, Masimo ar gues that the district court correctly denied Nellc or’s motion for JMOL t hat the ‘850 patent is invalid under § 102(g).

3 The ‘850 patent is a c ontinuation-in-part of the ‘154 applicat ion. The application which iss u ed as the ‘850 patent was filed on May 16, 1997.
04-1495, -1540 26We agree with Masimo that Nellcor failed to show that the alleged “alternative calculation” method that Baker conceived of in 1991 embodied eac h and ev ery limitation of the asserted claims of the ‘850 patent. B a ker’s testimony did not in any way correlate the invention he allegedly made in May of 1991 with even a single limit ation of the asserted claims of the ‘850 patent. Baker mere ly testified that as of May 17, 1991, he had “a saturation calculation being made that corresponded to the same signal processing paths as both of the two pulse rate calculations that we re deriv ed from the oximetry signal.” He likewise explained that as of June 17, 1991, one month later, he revised the PCSat software to employ “a reasonab le set of criterion [s ic] to start trying out by means of which the software would aut omatically select wh ich of the multiple available pulse rate or oxy gen s a turation estimates it would use to make up to update its final oxygen saturation and pulse rate calc ulation. ” While this testimony seems to suggest the use of a sorting process to isol ate puls e rate and /or oxygen saturation values from several possibilities, it does not explain, contrary to the l i mitations of independent claim 1, that the i nput signals containe d both a desired portion and an undesired portion or that Nellcor’s PCSat softw are used at least two possible estimates to determine a final result whic h “likely m o st closely correlates to the physiolo g ical parameter.” ‘850 patent, col. 109, ll. 12-13. Absent evidence demonstrating that Nellcor’s O 4 algorithm satisfi ed each and ev ery lim itation of claim s 10, 11, 12, 15, 17, and 22 of the ‘850 patent, we have no c hoice but to conc lude that a reasonable jury could not have found prior invent ion. Hence, we hold that the district court correctly

04-1495, -1540 27denied Nellcor’s m o tion for JMOL of invalidity of the ‘850 pa tent under § 102(g). 4
vi. Whether the district court abused its discretion in deny ing a permanent injunction to redress Nellcor’s adjudicat ed infringement of the ‘222 and ‘850 patents The district court observed that this ca se is not a “typical” patent infringement action such that the customary ru l e s concerning injunctions apply. Mallinckro d t , slip op. at 68. Rather, the district court noted that even Mas i mo emphasized that the puls e oximetry market is unique because hospitals strongly prefer to standardize oximetry products. Having made this obs ervation, the di strict court concluded that “[t]his unusual aspect of the pulse oximetry industry leads to the con c lusion that an injunct i on in this case (in the form that Masimo suggested) would be against the public interest.” Id. More specifically, the district court elaborated: Masimo’s proposed injunction would force hospitals currently using Nellcor’s infringing technologies to make a choice between two undesirable options: either work with an amalgam of oximeters of different brands, or make the substantial invest ment it would take to convert the entire hospital to a non-in fringing brand. F o rcing this choice would likely compromise patient s a fety by forcing healt h professionals to switch back and forth between types of oximeters, or by driving up the hospitals’ cost s and making care less accessible. . . . The Court [also] recognizes that at least some physicians will prefer Nellc or’s oximeters to Masimo’s products. . . . The Court is concerned that forcing physicians who hav e been trained on one product a nd who pr efer it in their practice to use a different product would compromise the safety of their patients. Id. at 69. The district court further inferred that an injunc tion would enable Masimo to control the pulse oxim etry ma rket for the duration of it s patents and beyond because, it

4 Because Nellcor failed to est ablis h that it inv ented the “alternative calculation” method in 1991, we need no t decide Masimo’s alternative argument regarding whether it pr esented substantial evidence showi ng that it conceived of the “alternative calculation” method before 1991.
04-1495, -1540 28said, hos pitals who want to standardize equipment will c onvert to Masimo’s products. Id. at 71. Finally, the district court reasoned that an injunction would allow Masimo to make some sales for which it has already been compensated since it was awarded damages for future Nellcor sens or sales and for lost hospital c o nversions. Id. To that end, the district court explained: Masimo’s damages model included co m pensation for lost hospital conversions. If an injunction is granted in this cas e , becaus e of the importance of standardization, Masimo wil l likely be able to conve r t those hospitals t hat wish to use the pat ented technology. Should those hospitals for which lost conversi on damages were awarded wish to pursue additional oximeters, they will have to conv ert to Masimo’s products to be able to standardize. Thus Masimo will rec e ive the b enefit of the actual conversion in addition to the theoret ical one for which the jury awarded damages. Id. at 72. Because t he district court conc luded, on balance, that Masimo would not suffer irreparable har m, the district court denied a permanent injunction to stop Nellc or’s infringement of Masimo’s ‘222 and ‘850 pat ents. Id. at 73. Masimo argues that the district cour t abused its dis c reti on in not granting a permanent injunction to enforce Masimo’s right to exclude, given Ne llcor’s adjudicated infringement of the ‘222 and ‘8 50 patents. Masimo contends that a court should decline a request for a permanent injunction only in ca ses involving a critical public interest, which it advocates is not the situation here. Masimo assert s there is no ev idence at all that an injunction would adversely affect pati ent care or increase hospital costs, despite the district court’s contrary findings. Even if there were such evidence, Masimo claims, it would not be enough to deny a permanent in junction against a proven patent infringer where, as here, non-infringing products are available. Addi tionally , Masimo argues that

04-1495, -1540 29its market share after its asse rted patents expire is irrele vant to whether a permanent injunction should iss ue. Any po st-expiration increas e in mark et share, it claims, is a natural consequence of the injunc tion, one that a district cour t should not hold against a patentee in dec iding whether t o issue a perm anent injunction. Lastly, it refutes the district court’s finding that a permanent injunc tion might allow Mas i mo to make sales for which it has already been compensated by t he damage award. Masimo points out that the injunction it sought would ne ither require Nellcor to recall pr evious ly sold infringing products nor prohibit Nellcor from selling replacement sensors to maintain those products. Masimo explains that it only se eks to prevent Nellc or from making futur e pulse oxim eter sales. Nellcor replies that the district court correctly found that Ma simo would not suffer the irreparable harm needed to justify a permanent injunction. Nellcor cont ends that hospitals and doctors would bear a subst antial financial burden if a permanent injunction issued, as noted by the district court. It also points ou t that the district court considered testimony that some doctors have safety concer ns about Masimo’s products. Lastly, Nellcor claims that a permanent injunction would enj oin sales f o r which Masimo has already recovered money damages becaus e Masimo’s damage model accounted for fi ve years of future sensor sales. We agree with Masimo that on the presen t record the district court abus ed its discretion in refusing to grant a permanent injunction against Nellcor for infringing Masimo’s ‘222 and ‘850 patents. “An abuse of discretion may be establis hed by showing that the district cour t either made a clear error of judgment in weighing relev ant factors, or exercis ed its di scretion based on an error of law or on findin g s which were

04-1495, -1540 30clearly erroneous.” Joy Techs., Inc. v. Flakt, Inc. , 6 F.3d 770, 772 (Fed. Cir. 1993). “Because t he ‘right to exc l ude recognized in a pat ent is but the es sence of the concept of property,’ the gener al rule is that a permanent injunc tion will iss ue onc e infringement and validity have been adjudged.” Mercexchange, L.L. C. v. eBay, Inc. , 401 F.3d 1323, 1338 (Fed. Cir. 2005) (quoting Richardson v

. Su zuki M o tor Co., 868 F.2d 1226, 1246-47 (Fed. Cir. 1989)). N e vertheless , “courts . . . in rare instances [have] exer cised their discretion t o deny injunctive relief in order to protect the public interest.” Rite-Hite Corp. v. Kelley, Inc. , 56 F.3d 1538, 1547 (Fed. Cir. 1995) ( en banc ). While the district court conducted a post- tri a l hearing in June of 2004 solely on the issue of whether to issue suc h relief, a llowing the parties the oppo rtunity to prove or disprove the need for such relief , the dist rict court’s reasons for denying a permanent injunction were neither suppor ted by the evidenc e of record nor persuasive enough to lead us to agree that this case is exceptio nal. The district cour t appeared specifica lly concerned with: (1) patient safety; (2) rising health care costs; (3) standardization in the use of puls e oximeter s; and (4) doctors’ pr ef erences. Based upon our c a reful review of the record, however, Masimo is correct that there is insuffici ent evidence to substantiat e the district court’s concerns. Nellcor offered testimony from only two doctors, Drs. Timothy Deakers and Leonard Kim, regarding their personal preferences and the need for standardization. Such testimony cannot be interpreted and cit ed as though it represents that of the majority of doctors in the United States. Moreover, Deakers practices only at two hospitals, Children’s Hospital in Los Ange les, Calif ornia and Huntington Memorial Hospital in Pasadena, Californ ia; Kim practic e s only at Hunti ngton Memorial Hospital in

04-1495, -1540 31Pasadena, California. Their opi nions, therefore, can ha rdly be s a id to repres ent that of a broad spectrum of hospital s in the United States. What is more, Kim testified about just two instances wher e Masimo’s Radical pulse oxim eter performed poorly, although he mentioned without elabor ating about other instances and stated that the anesthesiology group at his hospital eventually returned to using a Hewlett Pac k ard pulse oxim eter in operating rooms after testing the Masimo Radical. Virtually every product, however, malfunctions at some point in time

. We thus are not persuaded that the two cit ed examples are sufficient to prove that Masimo’s pulse oximet ers pose a safety risk to patients. Indeed, D eakers even testified that if his child were plac ed in the neo-natal intensive care unit, he tho u ght either Nellcor’s N-200 pulse oximeter or Masimo’s SET pulse oximeter would be adequate to use on his child. Moreover, Kim admi tted during his testimony that the neo-natal intensive c a re unit of Huntingt on Memorial Hospital continued to use Masimo’s pulse oximeter, despite the fact that operating rooms in other areas of the hospital returned to using Hewlett Packard’s product. Further, neither Deakers nor Kim test ified that patient safety would be compromised if they were no longer able to use N e llcor’s products. Both doctors mentioned other acceptable brands of pulse oximeters, including ones made by Ohmeda, In Vivo, Draeger Best, Space Labs, General Electric, and Hewlett Packard. They remain available on the market in addit ion to Masimo’s and Nellcor’s pr oducts. If an injunction were to issue, doctors and hosp itals would have the option of s witchin g to any of those brands instead of Masimo’s products. The issuance of a permanent injunction certainly will not crea te the situation wher e doctors and hospit a ls, agains t

04-1495, -1540 32their will, would be forced to choose bet w een us ing Masimo’s products or Nellcor ’s infringing products, risking the possibility of being sued by Masimo for infringement

. Moreover, that hospitals may switch to Ma simo’s products and continue to use them after the expiration of the ’222 and ‘850 patents does not bear upon whether a n injunction s hould issue. As th is court has repeatedly held, it is c ontrary to the laws of property to deny a patentee the right to exc l ude ot hers from the use of his property, except in rare and unus ual circumstances such as wher e “ a patentee’s failure to practice a patented invention fr ustrates an i m portant public need for the invention.” Se e Richardson , 868 F.2d at 1246-47 (quoting Rite-Hite Corp. v. Kelley, Inc. , 56 F

. 3d 1538, 1547 (Fed. Cir. 1995)). That certainly is not the situation her e since several other companies in the market offer pulse oximeters for sale. Finally, we agree with Masimo that the district court’s conclusion that an injunction may allow Masimo to make sale s for which it has already been compensated by the damage awar d is not we ll supported by the record. As Masimo points out, the injunction it seeks here would only prevent Nellcor from making future sales of it s infringing pulse oximeters. It would not require Nellcor to recall previous ly sold infringing products or require doc tors or hos pitals to discontinue using thos e product s

. It likewise would not prevent Ne llcor from selling replacem ent sensors for previously sold infringing products. Indeed, Masimo’s proposed permanent injunction states:
2. [Nellcor], their officers, servants, agents, employees, subsidiaries, affiliates an d those persons in active concert with the foregoin g parties . . . are hereby enjoined from making, us in g, selling, offering t o sell or importing any product that includes the O4, O5, or O5CI algorithms or any product employing an algorithm that is no more than colorably different from the O4, O5, or O5CI algor ithms (“Enjoined Algorithms”). 3. Nellcor is further enjoined fr om supply i ng any software embodying the Enjoined Algorithms to others.

04-1495, -1540 33This language is no different from the routine language employed in a permanent injunction normally issued in cases wher e patent infringement has been proven. Additionally , we do not follow the district court’s conclusion regarding lost hospital conversions. There is no evidence of reco rd showing that hospitals whic h decide t o standardiz e will automatic ally select Masimo’s products; those hospitals may, as previously noted, just as likely resort to us ing Hewlett Packard pr oducts. On this basis , it is entirely unclear how or why t he distri ct court concluded that an injunction would be duplicative of the jury’s dam age award and allow for double recovery. The district court’s concern about double recovery thus appears purely speculative. Accordingly, we reverse the district court’s denial of a permanent injunction and remand the case to the district court with instructions to enter a permanent injunction. B. Bench Rul i ngs i. Whether the district court erred in holding that claims 17 and 18 of the ‘222 patent w e re not invalid for indefi niteness under 35 U.S.C. § 112, secon d paragraph The district court explained that Nellcor challenged th e definiteness of the terms “motion” and “without signific ant interference” as used in claims 17 and 18 of the ‘222 patent. Mallinckrodt , slip op. at 44. The district c ourt noted that it construed the term “motion,” as noted above, as “movement of body tissue which causes erratic noise that, in the abs ence of a filter, would caus e t he ratio of red to infrared signals not to accurately reflect the arterial oxy gen sa turation,” and the phrase “without signific ant interference” as requiring that “the calc ulat ed oxygen satura tion is accurate enough for the purpos es for whic h the calc ulation is being emp l oy ed.” Id. at 46. Acknowledgin g

04-1495, -1540 34that these constructions we re qualitativ e, instead of quant itative, it nevertheless reasoned that this distinction did not alone render the terms indefinite. Id. at 45. The district court also noted that indefinitenes s is determined from the perspective of one of skill in the art and that both parties presented evidence that those skilled in the relevant field unders t ood what was meant by the term “motion.” In fact, the district court particularly recognized: “Even Mr. [James] Corenman from Nellc or admitted that the Cour t’s construction of ‘m ot ion’ was ‘c ompletel y understandable.’” Id. at 47. Accordingly, the dist rict court found that “the clai ms of ‘motion’ an d ‘withou t signific ant interference,’ as defined by this Cour t, are sufficiently definite to give those of skill in the art notice as to what is claimed by the ‘222 patent.” Id. at 48. Nellcor argues that the district court e rred i n holding that claims 17 and 18 of the ‘222 patent were not invalid for indefinit eness under § 112, second paragraph. Nellcor asserts that the language “without significant interference in the calculation from the motion induced noise” in claims 17 and 18 is indefinite because it is not pos sible for a person of skill in the art to know from reading the ‘222 patent either how much or what kind of “motion” a pulse oximeter must be able to handle to avoid infringement. Additionally , Nellc or contends t hat the district court’s constr uction of the phrase “without signific ant interference” makes it even more difficult for a skilled artisan to understand the scope of claims 17 and 18. Masimo responds that Nellcor fails to ci te any evidenc e showing that a person of skill in the art is unable to understand the scope of claims 17 and 18. In thi s regard, Masimo points out that Corenman admitted that the language “ withou t significan t interference,” as construed by the district court, was “completely unders t andable. ”

04-1495, -1540 35Consequently, Masimo argues that the district court correctl y held that claims 17 and 18 of the ‘222 patent were not invalid for indefiniteness. We review the district court’ s determination as to indefiniteness de novo , since “[a] determination of claim in definiteness is a legal conclusi on that is drawn from the court’s performance of its duty as t he construer of patent claims.” Personaliz ed Media Communic a tions, LLC v. Int’l Trade Comm’n , 161 F.3d 696, 705 (Fed. Cir. 1998)). “A claim is ind e finite if its lega l scop e is not cle a r enough that a person of ordin a ry skill in the art could determine whether a particular [product or method] infringe s or not.” Howmedic a Osteonics Corp. v. Tranquil Prospects, Ltd. , 401 F.3d 1367, 1371 (Fed. Cir. 2005) (quoting Geneva Pharms., Inc. v. Gl axoSmithKline PLC , 349 F.3d 1373, 1384 (Fed. Cir. 2003) (alternation in original)). Apply i ng that standard here, w e conclude that Nellcor bases its indefinitenes s challenge entirely on attor ney argument. Nellcor did not adduce any evidence t o substantiate its claim of i ndefiniteness. Additionally, as Masimo points out, Corenman’s testimony, which Nellcor does not attempt to qualify or distingu is h in any way, makes clear that a person of ordi na ry skill in the art would not encounter difficulty in ascertaining the type of motion, the removal of which would res u lt in infringement of claims 17 and 18, after reviewing the court’s claim construction: Q: Now, the Court’s claim constructi on with regard to the word motion, do you find the Court’s claim construction to be indefinite or ambiguous ? A: The Court’s words are complete ly understandable. The Court said that motion was movement, erra tic movement, which would caus e an instrument with no filters to no t be able to compute accurately

. And that to me includes a wide range of possible motions. My little w i g gl e w o ul d be moti on that meet s the Cour t’s definition of motion, and a baby thrashing in a bassinet would also meet the Court’s construction for what constitutes motion.

04-1495, -1540 36Accordingly, we conc lude that t he district court correctly held clai ms 17 and 18 of the ‘222 patent are not invalid for indefi niteness under § 112, second paragraph. ii. Whether the district court abused its discretion in holding the ‘830 patent unenforceable due to inequita ble conduct To begin, the district court set forth the framework for an inequitable con duct analys is. Mallinckrod t , slip op. at 48. It observed that it must det ermine as the first step whether Nellcor demonstrated by clear and convinc i ng evidenc e that Masimo withhe ld information material to the patentability of the ‘830 patent and di d so wit h deceptiv e intent. If so, the district court then noted that it must evaluat e whether, on balanc e, Masimo’s conduct rose to the le vel of inequit able conduct. Focusing on materiality, the district court observed that the ‘830 patent shares the same s pecification as the ‘642 patent and that the s a me limitations in dispute in the Masimo I litigation were in dispute before the PTO during the prosec ution of the ‘830 patent. The district c ourt stated: “The Masimo I disput e was highly relevant t o the ‘830 patent because the ‘830 and ‘ 642 patent s share a specification, and Masimo was pursuing an amendm ent before the PTO that w ould add to the ‘830 patent exactly thos e terms being disputed in the ‘642 litigation.” Mallinck rodt , slip op. at 53. The distric t court then observed t hat Masimo argued before the PTO that the term “adaptive filter” should be broadly c onstrued. It also noted that the Masimo I court required the “adaptive filter” term to be limit ed to an “adaptive nois e canceler

. ” The district court thus reasoned: “By not disclosin g the existenc e of the [ Masimo I ] litigation, or t he Court’s ruling on the ‘adaptiv e filter’ issue, Masimo withheld mat e rial information from the PTO.” Id. at 54.

04-1495, -1540 37Turning to intent, the district court c oncluded that Masimo had every reason to know that the Masimo I litigatio n was material to th e prosecution of the ‘8 30 patent given that (1) the same patent couns el represented Masimo in both the Masimo I litigation and the pros ecution of the applic ation whic h issued as the ‘830 patent; and (2) the same terms were in dispute in both proceedings. I ndeed, it stated: That Masimo knew that the ‘642 examiner was c oncerned that the specification supported only “adaptive nois e canceler” and not “adaptiv e filter” claims gave Masimo reason to know that the Masimo I Court’s decision essentially affirming the ‘6 42 examiner’s conc erns would be material to whether those same t e rms were patentable in the ‘830 patent, which cont ains the same specification. Id. at 55. T hat there was a pr otec tive order governing the Masimo I litigation, t he district court reasoned, could not save Masimo. Id. at 57. The distr i ct court observed th at Masimo could have requested the court to remove confidential information from the scope of the order to allo w it to disclos e remainin g inf o rmation to the PTO. Id. But, it noted that Masimo neither did so nor alerted the PTO of the ex istence of the litigation or the court’s claim construction rendered in that litigation. Id. Based upon this evidence, the district court inferred that Masi mo intended to deceive the PTO. Id. at 58. Finding that Nellcor established both materiality and intent by clear and convinc i ng evidence, the district cour t thus conc luded that Masimo committed inequitable conduct, thereby rendering the ‘830 patent unenforceable. Id. In the words of the district court: “Based upon the clear materiality of the ‘642 decis ion, the PTO’s expressed interest in the exact question being considered by the ‘642 litigation, the fact that ‘642 litigation and the ‘ 830 prosecution were happening at the same time, the fact that the same lawyer controlled both the litigation and the prosec ution, as well as Masimo’s failure to demonstrate good faith, this Court finds that Masimo committed

04-1495, -1540 38inequitable conduct by neglecting to bring the ‘6 42 litigation to the att ention of the PTO. ” Mallinckrod t , slip op. at 58. Masimo argues that the district c ourt erred in holding the ‘830 p a tent unenforceable for inequitable conduct bas ed upon its failure to disclose the Masimo I litigation to the PTO during the pr osecution of the ‘830 patent. Masimo first asserts that the district court applied an inc o rrect materia lity standard. Pursuant to 37 C.F.R. § 1.56, the undisc losed information must, Masimo cont ends, “compel[] a conclus i on that a claim is unpatent able” to establis h a prima facie case of materiality. Ac co rding to Masimo, the district court nevertheless app lied a lesser standard, stating “ Masimo I Co urt’s determination that the term[s] ‘adaptive filt er’ [and] ‘adaptive nois e canceler’ [were] clearly important to the prosec ution of the ‘830 p a tent.” Under the correct legal standard, Masimo asserts that Masimo I is not material becaus e it did not concern patentability, but instead only inv o lv ed claim construction and noninfringement. Second, M a simo ass e rts that the dist rict c ourt applied t he wrong le gal standard in inferring intent to deceive. The distri ct court erroneously in ferred intent, Masimo claims, based solely upon its pat ent attorney’s awar eness of t he Masimo I litig ation

. However, Masimo claims that its atto rney, Jensen, did not think that the Masimo I litigation had any effect on the claim sco pe support ed by the specification of the application which iss ued as the ‘830 patent when he amended the cl aims. After all, Masimo points out that Jensen testified that the district co urt did not state in its claim construction ruling that the sp ecification of the ‘642 patent did not suppor t “anything other than an adaptiv e nois e canc eler.” Moreover, that Jensen r epresented Masimo in

04-1495, -1540 39the Masimo I litigation and prosecuted the ‘830 patent, Masimo argues, does not by itself support a finding of deceptive intent. Finally, Masimo asserts that its conduct after issuance of the ‘830 patent sho w s that it routinely acted in good faith when dealing with t he PTO. Specific ally, Masimo claims that when Nellcor first deposed Jensen, Nellcor implied that certain u n disclosed information was material to the patentability of the invention claimed in ‘830 patent. Following his depos ition, Masimo explains that Jensen timely submitted that information to the PT O in all relevant pending continuati on applications. Masimo also points out that it disclosed the Masimo I litigation to the PTO during the reissue proceeding involv ing the ‘642 patent. Accor d ingly, Masi mo contends that it s pattern of good faith before the PTO shows that it did not prosecute the ‘830 patent in bad faith. Nellcor refutes Masimo’s attack on the l egal standards applied by the district court with respect to both materiality and int ent to deceive. Nellcor contends that the district court applied the correct materialit y standard under § 1.56. Nellcor argues that Masimo had a duty to disclose both the existence and the substance of the Masimo I litigation during the prosecuti on of the application leading to the ‘830 patent, especia lly after the district court iss ued its narrow claim construction for the very terms for which Masimo sought broad coverage. Nellc o r al so points out that Masimo’s duty of disclos ure did not end with the notice of al lowance, but instead c ontinued until the PTO actually is sued the ‘830 patent. Thus, even though Masimo received a notice o f allowance prior to the district court’s claim construction dec ision, Nellcor co ntends that Masimo was still obligated to alert the distri ct court of the claim construction ruling because the ‘830 patent had not yet issued.

04-1495, -1540 40Additionally , Nellc or as serts that Masimo’s intent to deceive the PTO can readily be inferred because J ensen repr es ented Masimo during both the Masimo I litigation and the prosecution of the ‘830 pat ent, knowing full well that the me aning of the terms “adaptive filter” and “adaptive si gnal processor” were at issue in both proceedings. What is more, Nellcor points out that Jens en spec ifically knew that the examining attorney for the ‘642 patent, who happened to be the same examining attorney for the ‘830 patent, questioned whether the specificat ion for the ‘642 patent could support Masimo’s “adaptive filter” claims and sought to rewrite those claims to include only an “adaptive noise canceler.” Acco rdingly, Nellcor maintains that the district court correctly held the ‘830 patent unenforceab le for inequitable conduct. “This court reviews a determination of in equit able c onduct for abuse of discret ion and reviews the underlying factual issues of materi ality and intent for clear error.” Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc. , 326 F.3d 1226, 1234 (Fed. Cir. 2003). To establish that Masimo secured t he ‘830 patent by inequitable conduct, Nellcor must prove by clear and convinci ng evidenc e that (1) the omitted or fals e information was material to the patentability of the invention; (2) Masimo had knowledge of the existence and materia lity of the information; and (3) Masimo intended to dece i v e the PTO. See Molins PLC v. Textron , 48 F.3d 1172, 1178 (Fed. Cir. 1995). Here, we agree with Nellcor that the district court di d not abuse its discretion in finding all three elements satisfied. Masimo mischaracterizes the district c ourt’s opini on with respect to the materiality and intent standards. The distri ct court did not apply the wrong materiality standard under §1.56. Paragraph (b) of that r egulation provides in pertinent part:

04-1495, -1540 41Under this section, information is mate rial to patentability when it is not cumulative to informati on already of re cord or being made of record in the application, and . . . (2) It refute s, or is inco nsistent with, a position the applic ant takes in : (i) Opposing an argument of unpatentability re lied on by the Office, or (ii) Asserting an argument of patentability

. A prima facie case of unpatentability is est ablis hed when the inf o rmation compels a conclus i on that a cl aim is unpatentable under the preponderance of ev idence, burden-of-proof standard, giving eac h term in the claim its broadest reasonable co nstruction consistent with the specification, and before any c onsideration is g i ven to evidence wh ic h may be submitted in an attempt to establis h a contrary conclusion of patentability. 37 C.F.R. § 1.56(b) ( 2000) (emphases added). The distri ct court correctly recogniz ed that the Masimo I litigation directly affe cted the patentability of the invention claimed in the ‘830 patent because the same terms were at iss ue in both proceedings. As the district court stated: “The Masimo I dispute was hig h ly relevant to the ‘830 patent because the ‘830 and ‘642 paten ts share a specification, and Mas i mo was pursuing an amendment before the PTO that would add to the ‘830 patent exactly those t e rms being disputed in the ‘ 642 litigation.” Mallinckrodt , slip op. at 53. Any decision from the district court regarding the sc ope of t he terms “adaptive filter” and “adaptive signal processor” thus would likely address wh ether the specification of the ‘830 patent supported independent claims to an “adapti ve filter” and an “adaptive si gnal processor” or whether such claim s should be rejected under 35 U.S.C. § 112 for lack of written description or lack of enablement. Hence, under the standard set forth in § 1. 56(b), applied by t he district court, we conclude that the existenc e of the Masimo I litigation and the specific issues pre s ented therein were high ly materi al to the patentability of the applicatio n which iss u ed as the ‘830 patent.

04-1495, -1540 42The Manual of Patent Examining Pr ocedur e (“MPEP”) confirms our conclusion that the Masimo I litigation was material and should have been disc losed to the PTO

. Section 20 01.06 of the MPEP st ates: “Where the subject matter for which a patent is being s ought is or has been inv o lved in litigati on, the existence of such litigation and any other material information aris ing therefrom must be brought to the attention of the [PTO].” Manual of Patent Examining Procedure § 2001.06(c) (Rev. 2, May 2004)

. Pursuant to § 2001. 06, the fact that the terms “adaptive f ilter” and “adaptive signal processor” were inv o lv ed in the ‘642 litigation, let alone were the s o le focus o f the claim construction ruling, and the particular subject of the amendment made during the prosecution of the ‘830 pat ent imposed a duty on Masimo to inform the PTO of the Masimo I litigation. Additionally , contrary to Masimo’s ar gument, the distri ct court did not apply the wrong legal standar d in inferring that Masimo intended to deceive t he PTO by withholding the existence of the Masimo I lit igation from the PTO during the prosecution of the ‘830 patent. “Intent may be inferre d where a patent applicant knew, or should have known, that withheld information would be material to the PTO’s consideration of the patent application. ” Critikon, Inc. v. Becton Dickinson Vascular Access , 120 F.3d 1253, 1256 (Fed. Cir. 1997) (citing Driscoll v. Cebalo , 731 F.2d 878, 885 (Fed. Cir. 1984)). Moreover, [n]o single factor or combination of factors can be said always to require an inference of intent to mislead; yet a patentee facing a high level of materiality and clear proof that it k new or should have known of that materiality, can expect to find it difficult to es tablish “subjective good faith” sufficient to prevent the drawing of an inference of intent to mislea d.

04-1495, -1540 43FMC Corp . v. Manitowoc Co. , 835 F.2d 1411, 1416 (Fed. Ci r. 1987) (emphasis in origina l ). The district court did not infer intent based simply upon Masimo’s knowledge of the materiality of the Masimo I litigation. Rather, the distri ct court inferred intent from the actions of Jensen, Masimo’s attorney . Any competent attorney registered to practice before the PTO should have known that the Masimo I litig ation was material to the patentability of the inv ent ion claimed in the ‘830 patent. After all, a registered attorney is required t o be familiar with the laws, regulations, and ethical standard s implicated in practicing before the PTO. Hence, that Jensen did not dis c lose the Masimo I litigation to the PTO, when he for certain knew about it since he was the lead attorney representing Masimo in that liti gation, strongly suggest s that he intended to deceive the PTO. Lastly, Masimo’s argument regarding its subjective good faith based upon its conduct outside of the prosecutio n of the ‘830 patent is unavai ling. Masimo’s attempt to show a pattern of good faith after the prosecut ion of the ‘830 patent is irrelevant to its conduct during the prosecution of the ‘830 patent. J ensen’ s subsequent disclosure in other pending applic ations does not mi tigate his failure to dis c lose the Masimo I litigation or claim construction ruling ther ein to the PTO during the pendency of the application which iss ued as the ‘830 patent. Because Jensen failed to take even the most minimal steps toward any form of di sc losure, all the while knowing that th e Masimo I litigation had to be material to the patentability of t he ‘830 patent, we can only conclude that the dis t rict court did not ab use its dis c retion in holding the ‘830 patent unenforceable for inequitable conduct.

04-1495, -1540 44iii. Whether the district court abused it s discretion in declining to hold the ‘222 and ‘850 patents unenforceable due to ine quitable c onduct The district court rejected Nellcor’s argument, premised upon a declaration by Yorkey, that it invented both Kalman filter s, as claimed in the ‘222 pat ent, and an “alternative calculation” method, as claimed in the ‘850 patent, b e fore Masimo. In his declaration, Yorkey stated that by “ear ly 1993” he had “coded software to implement a Kalman filt er for computing blood oxygen sa turation” and by “mid-1993” he had focused an algorithm “almost exc l usively on the use of Kalman filters.” Yorkey attached a document entitled “O4 Algorithm Performance Summary,” dated August 5, 1994, to his declaration. That document described Nell cor’s d e velopment of algorithms using alternative calculations, specif ica lly statin g t hat “[s]ince O4 calc ulates two s a turations (with and without C- Lock), O4 ar bitrates between them based on an ad hoc rule set to determine the best saturation.” The district court found, however , that Ne llc or failed to demons trate that anything in the Yor k ey declaration was material to the patent ability of t he ‘222 or ‘850 patent because Nellcor did not establish that Masi mo’s priority date was subsequent to the inventions Nellcor alleged were discussed in the Yorkey declaration. In other words, the district court reasoned: “Nellcor has not demonstrated that Ma simo could not prov e earlier conception, with either reduction to practice prior to Ne llc or’s cla i me d inv ention date or diligent work until it s reduction to practice.” Mallinckrod t , slip op. at 61. The district court, therefore, conc lud ed that Nellcor faile d to offer clear and convinc i ng evidenc e showing that the Yorkey declaration was m a terial to the patentability of the either the ‘222 patent or the ‘850 patent. Accordingly, bec ause the materi ality element

04-1495, -1540 45of inequitable conduc t was not sa tisfied, the district court dec lined to consider the intent element and held that t he ‘222 and ‘850 patents were not unenforceable. With respect to Nellcor’s alternativ e contention t hat Ma simo intentionally misrepresented to the PTO in the specific ation of the ‘222 patent the ability of Nellcor’s N-200 pulse oximet er to func tion with “noise,” the distri ct court found that Nellcor misquoted the specific ation. In particular, th e district court found t hat Nellcor took the statement that all prior ar t oximeters, which included Nellc or’s N-200 product, were “totally inoperative” during movement out of context to mislead the court. After considering the complete passage in the specif ication, the district court determined that Masimo’s statements r egarding the prior art were qualified. See ‘830 patent, col. 2, ll. 37-45. For this reason, t he district court held that Ne llcor failed to demonstrate by clear and convinc i ng evidence that the Barker Study, wh ich Nellc or claimed that Masimo should have disclos ed t o the PTO dur ing the prosecution of the ‘222 patent, was material. It thus concluded that Masimo did not commit inequitable c o nduct by not disclos ing those exper iments. Nellcor argues that the district court e rred in declining to hold the ‘222 a n d ‘850 patents unenforceable based u pon Masimo’s awareness of, but failure to disc los e , Nellcor’s prior invention of both Kalman filters and an “alter native calculation” method. 5 More specifically, Nellcor contends that Ma simo was aware of bot h Yorkey’s declaration and the attachment thereto dur ing the prosecution of the ‘222 and ‘850 patent s because Nellcor submitted those documents in response to Masimo’s motion for a preliminar y

5 Notably, Nellcor c hallenged the dist rict court’s JMOL that Nellc or’s O4 algorithm does not anticipate the ‘850 patent under § 102(g) on prior invention grounds.
04-1495, -1540 46injunction in Masimo I . Despite this awaren ess, Nellco r points out that Masi mo did no t submit either document to the PTO and, therefore, co mmitted inequitable conduct. Nellcor further argues that the district court made an error of law in find ing Masimo’s nondisc los u re to be immaterial. Nellcor claims that the dis t rict court erroneously required Nellcor to show that Ma simo could not trace priority for Kalman filters and “alternative calcul ations” to the ‘060 applicat ion filed in 199 1. Such requirement, Nellcor asserts, is beyond the materiality standar d s e t forth in § 1.56(b). Under that standard, Nellcor cl aims that Masimo should have been requir ed to submit the Yorkey declaration and attac h ment to t he PTO and then been allowed to refute the implication of prior invention with evidenc e concerning priority to the ‘060 application. Finally, Nellcor renews its alternativ e theory for why the ‘222 pat ent is unenforceable, separate from prior invention, chargi ng that the Masimo made intentional misstatemen ts about the prior art during the pr osecution of the ‘222 patent and failed to disclose material info rmation about Nellc or’s N-200 product. Masimo responds that the Yorkey decla ration and attachment are not prior art under § 102(g) because Nellcor’s activity described therein did no t precede Masimo’s date of inv ention for either Ka lman filters or “alternative calc ulations.” In characterizing the two documents as prior art, Masimo c ontends that Nellcor erroneous ly focused on Masimo’s filing date for U.S. Application No . 08/132,812, which is the parent applic ation of the ‘222 patent, and the ‘1 54 application, whic h is t he parent of the ‘850 patent , instead of Masimo’s actual dates of inv ention, whic h Masimo charges precede the Yorkey dec laration and attachment. As a resu lt, Masimo claims that it did not have a duty to submit either do cument to the PTO.

04-1495, -1540 47With respect to Masimo’s alternative ar gument, Masimo asserts that the district court correctly noted that Nellcor quoted the di scussion of prior art pul se oxim eters from the specification of t he ‘2 22 patent out of context. When correctly quoted, Masimo asserts that the specification of t he ‘222 patent merely discusses the motion problem often encountered with traditional filtering techniques. The specification of the ’222 patent did not, Masimo claims , single out any brands or pr oblems associated with those brands. Consequently, Masimo avers that t he district court correctly found that the allegedly withheld experiments involving Nellcor’s N-200 pr oduct were not material to the patentability of the ‘222 patent

. We agree with Masimo that the distri ct c ourt did not abuse its discretion in declining t o find either the ‘222 patent or the ‘850 patent unenforceable. First, Masimo is correct that Nellc or erroneously focuses its argument on the fili ng dates for the ‘812 and the ‘154 applic ations, ins t ead of the in vention dates for Kalman filters and “alternative calculations.” The district court correctly observed Masimo’s dates of inventio n a r e not synonymous with the filing dates of the ‘812 an d the ‘154 ap plications. Second, Nellcor failed to show that the acti vities des cribed in the Yorkey declaration and attachment thereto demonstr ate that Nellcor invented both Kalman filt ers and an “alternative calculation” met hod prior to Masimo. The event s described in Yorkey’s declaration occurred in the late 1993 to 19 94 time frame. Masimo, howev er, offered evidenc e showing that it invent ed the “alternative calc ulation” method in 1991. Notably, we rejected Nellc or’s challenge that the district court e rred in denying its motion for JMOL that the ‘850 patent is invalid under § 102(g) based upon Nellcor’s prior invention of the “alternative ca lc ulation” method. See infra Section II, A, v

. Because the activities

04-1495, -1540 48described in the Yorkey dec laration and atta chment c annot pre- date Masimo’s inv e ntion of Kalman filters and the “alternative calculation” method, Masimo was not obligated t o submit those documents to the PTO during the prosecution of either the ‘222 patent or the ‘850 patent. Hence, we conclude that the district court correctly found that the Yorkey declaration and attach ment thereto were not materi al to patentability and thus the district court was not bound to consider whether Masimo intended to deceive the PTO in not disclos ing those documents. Second, lik e the district court, we are not persuaded by Nellc or’s argument that Masimo made intentional misst atements about the st ate of the prior art in the ‘222 specification, all the while kn owing about the Barker Study. The district court correctly noted that Nellcor, in quoting the specific ation of the ‘222 patent, selectiv ely omitted certain wor d s and sentences that Masimo used to qualify the state of the prior art. Indeed, the specification of the ‘222 patent provides in pertinent part: Traditional signal filter ing techniques are frequently totally ineffective and grossly def icient in removing these mo tion induced effects from a sig nal. The erratic or unpredictable nature of motion induced signal components is the major obstacle in removing or deriving them. Thus, presently available physiologic a l monitors generally become totally inoperativ e during time periods when the meas urement site is perturbed. ‘222 patent, col. 2, ll. 53-60 (emphases a dded). Viewing this complete passage in context, Masimo did not misinform the PTO about the state of the prior art. Masimo used the words “frequently” and “generally” to generalize its discussion of the prior art. More importantly, as Masimo points out, the specificat ion of the ‘222 patent did not even mention Nellcor’s N-200 puls e oximeter. Thus, there was no need, much less any prompt, tri ggering Masimo to disclose the Ba rker Study to the PTO. Because Masimo did not make any misstatements to the PT O about Nellcor’s N-200 product, let alone

04-1495, -1540 49deceptively intentional ones, we conclude that the district court correctly found that the ‘222 patent is not unenforceabl e for inequitable conduct

. III. CONCLUS ION We conclude that the district cour t, in a thorough and well-reasoned opin i on, correctly reversed the jury’s finding that Nellcor’s infringement of the ‘222 and ‘850 patents was willful, correctly upheld the jury ’s finding of no anticipation under § 102(g) with respect to the ‘850 patent and under § 102( b) with respect to the ‘222 patent, did not abuse its discretion in holding that the ‘830 patent was unenforceable due t o inequitable conduct or in declining to hold the ‘222 and ‘850 pa tents unenforceable o n inequitable conduct grounds, correctly declined to grant a new trial on the issue of infringement and validity of the ‘ 222 patent based on collateral estoppel, and correctly held that claims 17 and 18 of the ’222 pat ent w e re not i n vali d fo r indefiniteness under § 112, second paragraph. Thus, we affirm-in- part. Nevertheless , because the district court erred in overturning the jury’s verdict of literal infringement as to the ‘785 patent and in declining to grant a permanent injunction to redress Nellcor’s proven infr ingement of the ‘222 and ‘850 patents, we reverse-in-part. We conseque ntly remand the case to the district court with instructions to enter a permanent injunction in favor of Masim o with respect to the ‘222 and ‘850 patents and to re-adjust damages, if necessary, under the re-instated jury verdict of infringement of the ‘785 pat ent.

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