United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT Re: Dkt. Nos. 139, 148
EDWARD J. DAVILA, District Judge.
Plaintiff Cave Consulting Group, LLC, ("CCGroup" or "Plaintiff") brings the instant action for patent infringement against Defendant OptumInsight, Inc., f/k/a Ingenix, Inc., ("OptumInsight" or "Defendant"). Presently before the Court are the parties' cross-motions for summary judgment. Having carefully reviewed the parties' briefing and considered the parties' arguments from the hearing on December 12, 2014, the Court GRANTS in part and DENIES in part OptumInsight's motion for summary judgment, and DENIES CCGroup's motion for summary judgment for the reasons explained below.
CCGroup is a California corporation with a principal place of business in San Mateo, California. OptumInsight is a Delaware corporation with a principal place of business in Minnesota. CCGroup is the owner by assignment of all right, title and interest in the U.S. Patent No. 7, 739, 126 ("the Cave 126 Patent" or "the 126 Patent"). OptumInsight is the owner by assignment of all right, title, and interest in the U.S. Patent Nos. 7, 222, 079 ("079 Patent") and 7, 774, 252 ("252 Patent") (collectively "the Seare Patents"). CCGroup and OptumInsight both develop and market software and services used to evaluate various parameters of healthcare delivery, including the efficiency of healthcare providers. The patents-in-suit are related to technology for measuring and evaluating physician efficiency. "Efficiency" means comparing the cost of care provided by an individual physician to the cost of care provided by a relevant peer group.
CCGroup claims that OptumInsight's Impact Intelligence product infringes claims 1, 9, 10, 11, 22, and 29 of its 126 Patent. OptumInsight claims that CCGroup's Cave Grouper product infringes claim 1 of the Seare Patents. The Seare Patents have a priority date of June 23, 1994.
A. The Patent Claims
Relevant here are asserted claims 22 and 29 of the Cave 126 Patent,  which state as follows:
22. A method implemented on a computer system of determining physician efficiency, the method comprising:
obtaining medical claims data stored in a computer readable medium on the computer system;
performing patient analysis using said obtained medical claims data to form episodes of care utilizing the computer system;
performing output process based on performed patient analysis utilizing the computer system, the output process comprising: assigning episodes of care to physicians; and applying a first maximum duration rule to identify episodes of care;
assigning at least one physician to a report group utilizing the computer system;
determining eligible physicians and episode of care assignments utilizing the computer system;
calculating condition-specific episode of care statistics utilizing the computer system;
calculating weighted episode of care statistics across medical conditions utilizing a predefined set of medical conditions for a specific specialty type utilizing the computer system; and
determining efficiency scores for physicians from said calculated condition-specific episode of care statistics and said weighted episode of care statistics calculated across medical conditions utilizing the computer system.
Asserted claims 1 of the Seare Patents:
A computer-implemented process for processing medical claims comprising a computer performing the following:
(a) reading a medical claim data, input as at least one of a plurality of data records, into a computer memory;
(b) validating each of the at least one of a plurality of data records for at least one of a diagnosis code and a treatment code;
(c) reading at least one pre-defined relationship between the at least one of a diagnosis code and a treatment code in the validated at least one of a plurality of data records and pre-defined episode treatment categories; and
(d) grouping the validated at least one of a plurality of data records to an episode treatment category based upon the pre-defined relationship, each episode treatment category having a dynamic time window defining a time period which validated at least one of plurality of data records may be grouped to an episode treatment category.
(e) classifying the patient data records into at least one of a plurality of episode treatment groups, each of the plurality of episode treatment groups being defined by an episode treatment category.
B. Procedural History
This suit is an outgrowth of a lawsuit filed by OptumInsight against CCGroup in Minneapolis, Minnesota. OptumInsight dismissed the Minnesota lawsuit. CCGroup filed its Complaint in this Court seeking a declaratory judgment on the patent infringement allegations made against it by OptumInsight.
In its Second Amended Complaint ("SAC"), CCGroup claims that OptumInsight infringes its Cave 126 Patent, and seeks a declaratory judgment that CCGroup does not infringe OptumInsight's family of Seare Patents and that the Seare Patents are invalid.
In its Answer to CCGroup's SAC, OptumInsight claims that it does not infringe the 126 Patent and that the 126 Patent is invalid, and counterclaims that CCGroup directly infringes the Seare Patents.
On August 9, 2012, the Court held a claim construction hearing. The Court construed "weighted episode of care statistics" to mean "cost or length of care statistics for a group of medical conditions calculated using the relative importance of each condition to the others of the group." The Court ruled that the ordinary meaning of "determining eligible physicians and episode of care assignments" applied. The Court construed "maximum duration rule" to mean a "rule based on a maximum time period(s) that is used to group claim data pertaining to a patient's medical condition(s) into an episode(s) of care."
CCGroup now moves for summary judgment of noninfringement of the Seare Patents, and invalidity of the Seare Patents. OptumInsight moves for summary judgment of noninfringement of the Cave 126 Patent, invalidity of the Cave 126 Patent, and validity of the Seare Patents. CCGroup has also moved to exclude the testimony of OptumInsight's expert witness Dr. Mark Rattray ("Rattray"), Dr. J. William Thomas ("Thomas"), and Catharine Lawton ("Lawton"). OptumInsight has moved to exclude testimony of CCGroup's damages expert witness Michael Lewis concerning CCGroup's alleged damages.
II. LEGAL STANDARD
A motion for summary judgment should be granted if "there is no genuine dispute to any material fact and the movant is entitled to a judgment as a matter of law." Fed. R. Civ. R. 56(c); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The moving party bears the initial burden of informing the court of the basis for the motion and identifying the portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
If the moving party meets this initial burden, the burden then shifts to the non-moving party to go beyond the pleadings and designate specific materials in the record to show that there is a genuinely disputed fact. Fed.R.Civ.P. 56(c); Celotex, 477 U.S. at 324. The court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, the mere suggestion that facts are in controversy, as well as conclusory or speculative testimony in affidavits and moving papers, is not sufficient to defeat summary judgment. See Thornhill Publ'g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Instead, the non-moving party must come forward with admissible evidence to satisfy the burden. Fed.R.Civ.P. 56(c); see also Hal Roach Studios, Inc. v. Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1990).
A genuine issue for trial exists if the non-moving party presents evidence from which a reasonable jury, viewing the evidence in the light most favorable to that party, could resolve the material issue in his or her favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); see also Barlow v. Ground, 943 F.2d 1132, 1134-36 (9th Cir. 1991). Conversely, summary judgment must be granted where a party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.
CCGroup asserts that OptumInsight infringes method claim 22 and apparatus claim 29 of the Cave 126 Patent. OptumInsight asserts that CCGroup infringes claim 1 of both Seare Patents. The parties both deny infringement and contend that the asserted claims of the patents of the other side are invalid. Thus, the primary factual issues in dispute are: 1. whether the claims of the asserted patents are invalid; and 2. whether the asserted patents are infringed.
The Court begins by addressing the parties' invalidity arguments. OptumInsight contends that the asserted claims of the 126 Patent are invalid because they do not meet the requirements set forth in 35 U.S.C. §§ 102(a), 102(b), 102(g), or 112. OptumInsight contends that Seare Patents are valid over the asserted prior art. CCGroup contends that the asserted claims of the Seare Patents are invalid because they do not meet the requirements set forth in 35 U.S.C. §§ 102(b) or 112.
i. The Cave 126 Patent
OptumInsight argues that the asserted claims are invalid as anticipated under 35 U.S.C. §§ 102(b) and 102(g) because Impact Intelligence works the same as its predecessor product, Impact Analysis, therefore, Impact Analysis satisfies every element of the asserted claims and qualifies as prior art because it was:
(a) sold or offered for sale more than a year before the March 2, 2004 filing date of the 126 Patent;
(b) publicly used by others in the United States more than a year before the March 2, 2004 filing date of the 126 Patent; and
(c) made in the United States before the invention date (March 2, 2004) of the 126 Patent claims and was not abandoned, suppressed, or concealed.
OptumInsight also argues that the asserted claims of the 126 Patent are invalid as anticipated under 35 U.S.C. § 102 because the Cave webpage article (the "Cave Advertisement") satisfies every element of the asserted claims and qualifies as prior art because it was posted on the Internet more than a year before the March 2, 2004 filing date of the 126 Patent.
Finally, OptumInsight argues that the asserted claims of the 126 Patent are invalid under 35 U.S.C. § 112, first paragraph, because there is no description of "Applying a... maximum duration rule to identify episodes of care."
a. Whether Impact Analysis was "on sale" and was ready for patenting before March 2, 2003 pursuant to 35 U.S.C. § 102(b)?
OptumInsight believes it is entitled to summary judgment on the grounds that a June 4, 2002 contract with Presbyterian Healthcare Services ("PHS") provided that "IHCIS will deliver the Impact Analysis applications and associated supporting databases via mutually agreed upon formats and transmission media" ...