Fixes Needed in Medical Software Patent Spat

SAN FRANCISCO (CN) – A federal judge on Friday dismissed with leave to amend a lawsuit claiming a data analytics company fraudulently obtained patents and bullied competitors to dominate the market for medical claims organizing software.
Cave Consulting Group, or CCGroup, sued OptumInsight in July 2015, accusing the firm of antitrust violations, false advertising and malicious prosecution.
CCGroup says Symmetry Health Data Systems, acquired by OptumInsight in 2003, lied and omitted facts when it applied for and defended patents with the U.S. Patent and Trademark Office.
Symmetry and later OptumInsight came to control 85 to 90 percent of the medical claims grouper software market after suing two competitors for infringing its “ill-gotten patents”, CCGroup claims.
When applying for a patent in June 1995, Symmetry allegedly withheld from the USPTO an offer to sell its invention to Aetna one year earlier, an event that would have invalidated the invention’s patentability at the time.
On reexamination of the patent, CCGroup says Symmetry and OptumInsight lied about the invention date to avoid having its patent rendered invalid by the USPTO.
CCGroup also claims OptumInsight tarnished its reputation by filing a patent suit against it in Minnesota in 2011 and refusing to dismiss the case with prejudice to dispel the allegations.
In an April 22 ruling, U.S. Magistrate Judge Joseph Spero found CCGroup plausibly alleged its competitor obtained software patents under false pretenses but failed to show OptumInsight knew the patents were invalid or unenforceable.
The mere claim that a product is patented “is not false or misleading unless no patent covers the product,” Spero wrote in his 28-page ruling.
To move forward with its antitrust and malicious prosecution claims, CCGroup must show its competitor acted in bad faith when asserting patent rights in the marketplace and in court, the judge said.
Spero rejected OptumInsight’s argument that CCGroup’s failure to prevail in a prior patent suit bars it from filing new claims against its competitor.
“While there is overlap on some issues, all of CCGroup’s claims in this case—two antitrust claims, a false advertising claim and a malicious prosecution claim—rely on key alleged facts that fall outside the scope of the claims in Cave I,” Spero wrote.
The judge also ruled CCGroup may seek to recover legal costs from the previous lawsuit if it proves OptumInsight engaged in monopolistic behavior.
“It is well established that antitrust plaintiffs bringing claims that previous litigation constituted unlawful anticompetitive conduct can recover the cost of their defense in that litigation as damages,” Spero wrote.
The judge gave CCGroup until May 13 to file a second amended complaint.

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