• Fred Hadidi

Does a district court’s failure to resolve a claim construction dispute always result in reversible

LifeNet Health v. LifeCell Corp.,

2015-1549, Decided: September 16, 2016

Case Summary by Fred Hadidi

Does a district court’s failure to resolve a claim construction dispute always result in reversible error? According to the Federal Circuit, the answer is no—at least not in cases when the first clear articulation of the dispute is in an appeal brief.

This case involves LifeNet’s US Patent 6,569,200, which claims soft tissue grafts that are transplanted into people in medical, orthopedic, dental, and cosmetic surgery applications. Earlier versions of similar tissue grafts had been freeze-dried and then rehydrated before implantation. Because rehydrated grafts do not behave like normal tissue, transplants using these grafts would often fail. The ‘200 patent explains that instead of freeze-drying, tissue may be preserved by replacing its water with biocompatible plasticizers (such as glycerol) that provide the hydrating functions of water. These plasticized grafts exhibit properties more similar to normal tissue (and are less likely to be rejected) than freeze-dried tissue grafts.

In the five issues raised on appeal, the main dispute related to the removal of

plasticizers from the grafts before implantation, as is recited in this claim limitation: “said one or more plasticizers are not removed from [an] internal matrix of [the] plasticized soft tissue graft prior to implantation into a human.”

At trial, defendant LifeCell argued that because its tissue grafts undergo a 2-minute rinse before implantation, at least 50% of the plasticizers in its grafts are washed away. In response, plaintiff LifeNet pointed out that even though plasticizers were removed from the “gaps and voids” of the accused grafts, LifeCell did not show that any plasticizers were removed from a graft’s “internal matrix” as recited in the claim. The trial court agreed and found infringement.

On appeal, defendant LifeCell argued that the district court should have instructed the jury that the asserted claims prohibit the removal of plasticizer from any part of the tissue graft, regardless of whether that plasticizer is bound to the internal matrix, or is found in the gaps and voids of the tissue graft. According to LifeCell, the district court’s failure to do this violated the rule in O2 Micro, in which the Federal Circuit held that “[w]hen the parties raise an actual dispute regarding the proper scope of . . . claims, the court, not the jury, must resolve that dispute.”

The CAFC disagreed, noting that the time at which the claim construction dispute is first articulated is dispositive. In this case, the parties agreed before trial that “internal matrix” should be construed to mean “the intercellular substance of such soft tissue including for example ligaments and tendons, including collagen and elastin fibers and base matrix substances”—which is how the term is defined in the ‘200 patent. Because defendant LifeCell never asked the district court to adopt its argument that “internal matrix” is synonymous with “tissue graft,” the Federal Circuit distinguished O2 Micro and affirmed the finding of infringement.

Next, defendant LifeCell cited the Federal Circuit’s earlier Cross Medical Products decision (holding that there can be no direct infringement by a single entity when a limitation is absent until a third party takes action) to support an argument that its accused grafts do not meet the “nonremoval” limitation (requiring the plasticizers to remain in the graft’s internal matrix)—because this limitation could not be performed until a surgeon actually prepares and uses a LifeCell graft.

In ruling against LifeCell, the Federal Circuit affirmed the trial court’s finding that the disputed limitation is present at the time of manufacture: “the nonremoval limitation clarifies that the recited plasticizer has not been removed and, because the plasticizer is biocompatible, can remain in the internal matrix of the tissue graft during transplantation, i.e., it need not ever be removed. This limitation … is satisfied by the graft from the moment it is manufactured unless and until the plasticizer is removed from the internal matrix before transplantation.”

In its third attempt to show reversible error, LifeCell argued the asserted claims to be indefinite because they cover both an apparatus (the graft) and a method of using that apparatus (not removing plasticizers from the graft’s internal matrix). The Court of Appeals also rejected this argument, explaining that the “nonremoval” limitation defines a property of the recited plasticizer; specifically, that it is biocompatible and does not need to be removed from the internal matrix before transplantation (in the context of the asserted apparatus claims)—meaning infringement takes place at the time of manufacture.

LifeCell next argued that the district court erred by construing the phrase “plasticized soft tissue graft” to require (among other things) that “free and loosely bound waters of hydration in the tissue have been replaced with one or more plasticizers.” In LifeCell’s view, the judge should have also required the graft to be “dehydrated” in the sense that its tissue must have “low residual moisture;” and under this proposed construction, there could be no infringement because its accused products have at least 60% moisture.

In rejecting this argument, the panel noted that the specification used “dehydrated” broadly to include both drying (desiccation) and liquid substitution. It therefore found no support for LifeCell’s proposition that the claimed soft tissue graft must be dehydrated to a certain degree or completely desiccated.

The defendant’s fifth and final challenge was to the trial court’s rejection of its anticipation and obviousness arguments. In addition to the requirements discussed earlier, the district court’s construction of the phrase “plasticized soft tissue graft” required the claimed plasticization to occur “without altering the orientation of the collagen fibers, such that the mechanical properties, including the material, physical and use properties, of the tissue product are similar to those of normal hydrated tissue.”

The Federal Circuit’s review of the record found there to be substantial evidence to support the finding that LifeCell’s prior art did not disclose a “plasticized soft tissue graft” as defined above, and concluded that “the ultimate issue on this record was a classic factual dispute that the jury was free to resolve in [plaintiff] LifeNet’s favor.”

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