Fresenius USA, Inc. v. Baxter International, Inc.
721 F.3d 1330
| Fed. Cir. | 2013Background
- Baxter owned U.S. Patent No. 5,247,434 (the '434 patent); Fresenius sued for declaratory judgment of invalidity and noninfringement; Baxter counterclaimed for infringement. After claim construction Fresenius conceded infringement of claims 26–31 but challenged validity.
- District court JMOL reversed a jury verdict of invalidity as to claims 26–31; district court later entered damages and (stayed) injunction; this Court affirmed validity of claims 26–31 and remanded limited issues (royalties/injunction) (Fresenius I).
- While remand proceedings continued, Fresenius filed PTO ex parte reexamination of claims 26–31; the PTO rejected those claims as obvious based on prior art not relied on in the district court (including Lichtenstein and Thompson).
- The PTO Board and then this Court in In re Baxter affirmed cancellation of claims 26–31; a reexamination certificate cancelling those claims issued.
- Because the district-court infringement suit was not yet finally concluded on remand when the PTO cancellation became final, the panel held the PTO cancellation extinguished Baxter’s cause of action in the pending litigation and vacated and remanded the district court judgment with instructions to dismiss.
Issues
| Issue | Plaintiff's Argument (Fresenius) | Defendant's Argument (Baxter) | Held |
|---|---|---|---|
| Whether a PTO reexamination cancellation of asserted claims must be given effect in pending district-court infringement litigation | Reexamination cancellation is controlling and extinguishes the patentee’s cause of action in pending suits | (N/A — court treated reexamination as operative) | Yes — a final PTO cancellation of the asserted claims extinguishes the patentee’s cause of action in a pending (not-final) infringement suit; case dismissed |
| Whether the earlier appellate decision affirming validity precludes giving effect to the later PTO cancellation | The earlier appellate judgment is not final for all purposes because the case was remanded for further proceedings | Baxter: the 2007/2009 liability determination and past-damages award are final and preclusive; PTO cannot override them | The court held the prior appellate decision was not final in the sense that would bar application of an intervening final PTO cancellation while the infringement proceedings remained pending on remand (citing Mendenhall) |
| Whether collateral-estoppel or res judicata prevents the PTO from cancelling claims after a judicial ruling of validity | Fresenius argued intervening PTO decision is binding; lower court decisions and precedent allow reexamination to resolve validity even after litigation | Baxter argued collateral estoppel and finality should bar PTO reexamination effect | Court held statutory reexamination authority and precedent require recognizing PTO cancellation in pending, non-final litigation; collateral estoppel does not bar PTO reexamination effect here |
| Whether applying the PTO’s cancellation in pending litigation violates separation-of-powers (Plaut) | (Court majority) Applying an intervening final PTO cancellation in a case that is not finally concluded does not violate separation of powers; courts must apply the law/decisions in effect when they render decision | Baxter argued (and dissent contended) that allowing PTO to override prior judicial adjudication violates Article III and Plaut | Court held no constitutional violation: Plaut prohibits reopening final judicial judgments, but here the suit was not final; intervening administrative final determinations are effective in pending suits |
Key Cases Cited
- Moffitt v. Garr, 66 U.S. 273 (1861) (reissue/surrender of patent cancels original patent and pending suits fall if patent does not exist at trial)
- Plant v. Spendthrift Farm, Inc., 514 U.S. 211 (1995) (retroactive legislative change cannot reopen final judicial judgments; discusses separation of powers)
- Simmons Co. v. Grier Bros. Co., 258 U.S. 82 (1922) (intervening authority can require district court to conform interlocutory proceeding to later controlling decision when case not final)
- McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898) (reissue power and effect on original patent rights)
- Mendenhall v. Barber-Greene Co., 26 F.3d 1573 (Fed. Cir. 1994) (intervening invalidation in a concurrent proceeding can bar enforcement in a pending case that was remanded and not final)
- In re Baxter Int’l, Inc., 678 F.3d 1357 (Fed. Cir. 2012) (this Court affirmed PTO reexamination rejection of the '434 claims; explained PTO relied on prior art not considered in district court)
- Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) (reexamination statutory purpose; PTO may cancel defectively examined patents)
- Slip Track Sys. v. Metal Lite, Inc., 159 F.3d 1337 (Fed. Cir. 1998) (cancellation in reexamination can require dismissal of related stayed litigation)