MDS (Can.), Inc. v. RAD Source Techs., Inc.

Error was not found when a district court found that a contract relinquishing rights to use a patent was not breached when the relinquishing party developed and used similar new technology.

Opinion (Per Curiam): Rad Source Techs., Inc. ("Rad Source") developed and patented medical technology that uses X-Rays to irradiate blood. It later entered into a licensing agreement with MDS (CAN), Inc. ("MDS") in which it relinquished the right to manufacture or sell certain blood irradiating products that used the patent. Rad Source later developed a new blood irradiating product and began marketing it. MDS sued, claiming breach of contract. The district court determined that Rad Source’s new product did not infringe the patent and, therefore, that Rad Source had not breached the contract through its new product. MDS appealed to the 11th Circuit. The Federal Circuit has exclusive jurisdiction to hear appeals from U.S. District Courts where the District Court’s jurisdiction is based in whole or in part on 28 U.SC. 1338 (U.S. District Courts have exclusive jurisdiction for civil actions arising from an Act of Congress relating to patents). Because the district court’s jurisdiction was premised on diversity jurisdiction, rather than sec. 1338, the 11th Circuit had jurisdiction to hear the appeal. When an Appellate Court reviews a District Court’s infringement determination it conducts a two part analysis. First, it conducts a de novo review of the District Court’s claim construction, then it determines whether or not the lower court committed clear error in deciding if the accused device reads on those claims. The 11th Circuit determined that the patent required the blood bag be rotated 180 degrees between radiation sessions. Because the new device continuously rotated the bags during the application of radiation, the Appellate Court decided that the District Court did not clearly err when it determined that Rad Source’s new product did not infringe the patent. The court also decided that given the continuous rotation, the district court did not err in determining that the product was noninfringing under the doctrine of equivalents. Therefore, the Appellate Court AFFIRMED the District Court's ruling that the contract was not breached.