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Lifescan Scotland, Ltd v. Shasta Technologies

July 19, 2012

LIFESCAN SCOTLAND, LTD,
PLAINTIFF,
v.
SHASTA TECHNOLOGIES, LLC, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Edward J. Davila United States District Judge

District Court For the Northern District of California

ORDER DENYING MOTION FOR JUDGMENT ON THE PLEADINGS AND DENYING MOTION TO STAY 15 (Re: Docket Nos. 43 and 44) 16

Pending before the court are (1) Defendant Instacare Corp. ("Instacare") and Defendant Pharmatech Solutions, Inc.'s ("Pharmatech") motion for judgment on the pleadings, or, in the 20 alternative, to stay; and (2) Defendant Conductive Technologies, Inc. ("Conductive") and 21 Defendant Shasta Technologies, LLC's ("Shasta") motion to stay. For the reasons discussed below, 22 Instacare and Pharmatech's motion for judgment on the pleadings or, in the alternative, to stay is 23 DENIED. Conductive and Shasta's motion to stay are DENIED. 24

I.BACKGROUND

A.Pleadings

On September 9, 2011, Plaintiff LifeScan Scotland, Ltd. ("LifeScan") filed its Complaint 27 initiating this action. In the Complaint, LifeScan alleges a declaratory judgment action for infringement of U.S. Patent No. 5,708,247 (the '247 patent) and of U.S. Patent No. 6,241,862 (the 2 '862 patent). The Complaint alleges the following facts: 3 4 the name OneTouch Ultra, which are designed for use with the OneTouch Ultra family of glucose 5 monitors. See Compl. ¶¶ 15, 17, 18, 20. The OneTouch Ultra test strips are manufactured by 6 methods within the scope of the '247 or '862 patent claims. Id. ¶ 19. 7

the name Genstrips ("Genstrips"), which are also designed to work with the OneTouch meters to 9 provide accurate and useable readings. Id. ¶ 23. The process for manufacturing Genstrips is within 10 the scope of one or more claims of the patents-in-suit. Id. ¶ 31.

LifeScan owns the '247 and the '862 patent and sells strips for blood glucose testing under Defendants manufacture or threaten to manufacture test strips for glucose diagnostics under Shasta has applied to the United States Food and Drug Administration ("FDA") for pre- market approval of Genstrips and has applied to various regulatory bodies around the world 13 seeking to market its Genstrips in those countries. Id. ¶¶ 24-25. Shasta and PharmaTech have 14 entered an agreement regarding the control, management, and distribution of Genstrips, including distribution within the United States. Id. ¶ 26. Shasta, PharmaTech, or InstaCare have entered into 16 an agreement with Conductive regarding the manufacture of Genstrips, including for distribution 17 within the United States. Id. ¶ 27. On May 24, 2011, InstaCare issued sales guidance regarding 18

Genstrips, projecting 2011 sales at $41.8 million and 2012 sales at $206.6 million. Id. ¶ 32. 19

According to InstaCare's website, InstaCare anticipates making over $40 million in Genstrips 20 commercial sales in 2011, either within the Unites States or outside of the United States. Such sales 21 outside the United States do not require FDA approval. Id. ¶ 44. Defendants have taken substantial 22 steps in preparation to make Genstrips or have Genstrips made, including, but not limited to 23 designing the Genstrips, applying for FDA approval of the Genstrips, arranging for distribution of 24 the Genstrips, and stockpiling Genstrips in the United States for distribution upon regulatory 25 approval. Id. ¶ 61 27 actively induced infringement and threaten to actively induce infringement of one or more claims 28

Based on these facts, LifeScan alleges that Shasta, InstaCare, and PharmaTech have of the '247 patent by having Genstrips made for distribution within the United States. Id. ¶¶ 63, 71. 2

LifeScan further alleges that LifeScan is under a reasonable apprehension that the Defendants will 3 infringe or actively induce infringement of the '247 patent and the '862 patent. Id. ¶¶ 64, 72. 4

On October 14, 2011, Instacare and Pharmatech filed their Answer and Shasta and Conductive filed their Answer.

8 pleadings or for a stay. See Docket No. 43. On December 16, 2011, Conductive and Shasta filed 9 their motion for a stay. See Docket No. 44. On January 20, 2012, the parties appeared for a case 10 management conference. Following discussion at the case management conference about whether 11 discovery should proceed in light of Defendants having filed the instant motions to stay and motion

B.Procedural Background

On December 14, 2010, Instacare and Pharmatech filed their motion for judgment on the

for judgment on the pleadings, the undersigned ordered that the parties shall not notice depositions 13 until after the court ruling on these motions. See Case Management Order at 2:5-7, Docket No. 71.

pleadings under submission without oral argument. See Docket No. 86; Civil L.R. 7-1(b). On May 16

On March 21, 2012, the court took the motions to stay and the motion for judgment on the 17, 2012, the court granted LifeScan's motion to allow LifeScan to file the Supplemental Declaration of Eugene M. Gelernter in support of LifeScan's opposition to the motions to stay and 18 motion for judgment on the pleadings. See Decl. of Eugene Gelertner Suppl. Pl.'s Opp'n ("Suppl. 19

Gelertner Decl."), Docket No. 92-1; Order Granting Pl.'s Mot. Admin. Relief, Docket No. 95. 20

\23 early enough not to delay trial-a party may move for judgment on the pleadings." A Rule 12(c) 24 motion challenges the legal sufficiency of the opposing party's pleadings. Judgment on the 25 pleadings is appropriate when, even if all material facts in the pleading under attack are true, the 26 moving party is entitled to judgment as a matter of law. Fleming v. Pickard, 581 F. 3d 922, 925 27

II.LEGAL STANDARDS

A. Motion for Judgment on the Pleadings

Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are closed-but (9th Cir. 2009).

accepted as true and construed in the light most favorable to the non-moving party." Turner v. 3 Cook, 362 F. 3d 1219, 1225 (9th Cir. 2004). "[A]ll reasonable inferences" must be made "in favor 4 of the nonmoving party." Mediran v. International Ass'n of Machinists and Aerospace Workers, 5 No. C09--0538 TEH, 2011 WL 2746601, at *2 (N.D. Cal. July 14, 2011). "When considering a 6 motion for judgment on the pleadings, this court may consider facts that 'are contained in materials 7 of which the court may take judicial notice.'" Heliotrope General, Inc. v. Ford Motor Co., 189 F.3d 8

On a motion for judgment on the pleadings, "all material allegations in the complaint are 971, 981, n.18 (9th Cir. 1999) (citation omitted). A motion for judgment on the pleadings may be 9 granted if, after assessing the complaint and matters for which judicial notice is proper, it appears relief." Morgan v. County of Yolo, 436 F. Supp. 2d 1152, 1155 (E.D. Cal. 2006).

"beyond doubt that the [non-moving party] cannot prove any facts that would support his claim for covers motions to dismiss for "lack of subject matter jurisdiction." A motion to dismiss for lack of 16 subject matter jurisdiction under Rule 12(b)(1) may either attack the allegations of the complaint as 17 insufficient to confer subject matter jurisdiction, or attack the existence of subject matter 18 jurisdiction in fact. Safe Air for Everyone v. Meyer 373 F.3d 1035, 1039 (9th Cir. 2004) ("In a 19 facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on 20 their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the 21 truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction."). 22

23 alleges state action, presuming all allegations to be true." Rimac v. Duncan, 319 Fed.Appx. 535, 536 (9th Cir. 2009). If the attack is factual, the plaintiff's allegations are not entitled to a 25 presumption of truthfulness, a court may look beyond the pleadings to resolve factual disputes, and 26 the plaintiff has the burden of proving that jurisdiction exists. Safe Air for Everyone, 373 F.3d at 27

B. Motion To Dismiss For Lack of Jurisdiction

The court examines a portion of Instacare and Pharmatech's motion brought under Rule 12(c) as raising concerns governed by Rule 12(b)(1) of the Federal Rules of Civil Procedure, which

"In a facial attack, the court must consider whether the complaint, on its face, sufficiently 3 relations of any interested party seeking such declaration" when there is an "actual controversy." 4

The requirement for federal court jurisdiction under Article III of the U.S. Constitution and 6 the Declaratory Judgment Act is an "actual controversy." Teva Pharms. USA, Inc. v. Novartis 7

Declaratory Judgment Act demands only "that the dispute be definite and concrete, touching the 9 legal relations of parties having adverse legal interests; that it be real and substantial and admit of 10 specific relief through a decree of a conclusive character, as distinguished from an opinion advising

C. Declaratory Judgments Act

The Declaratory Judgments Act authorizes the court to "declare the rights and other legal 28 U.S.C. § 2201(a). 5

Pharms. Corp., 482 F.3d 1330, 1338 (Fed. Cir. 2007). The "actual controversy" requirement of the 8 what the law would be upon a hypothetical state of facts." MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (citations and quotations omitted). "[T]he question in each case is 13 whether the facts alleged, under all the circumstances, show that there is a substantial controversy, 14 between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id. 16

Prior to MedImmune, the Federal Circuit had generally required that a declaratory judgment plaintiff seeking declaration of non-infringement demonstrate (1) conduct by the patentee 18 that created a "reasonable apprehension" of suit on the part of the declaratory judgment plaintiff 19 and (2) present activity ...

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