Ryan B. McCrum at Jones Day considers the Fresenius v Baxter ruling and its potential impact on patent litigation in the US.
In a case that could have a dramatic impact on patent cases going forward, the Federal Circuit in
Fresenius v Baxter Int’l, 721 F.3d 1330 (Fed. Cir. July 2, 2013) remanded with instructions to dismiss the case based on a successful bid for re-examination of the asserted patent, which concluded after the Federal Circuit had already affirmed the validity of the asserted patent on appeal. At the time the Federal Circuit dismissed the case, the only issues that had not been finally resolved related to damages. The Federal Circuit had already found the asserted claims valid and infringed. But, because there had not been a “final” judgment entered in the district court case, the Federal Circuit held that the intervening invalidity determination by the United States Patent and Trademark Office (USPTO), which was later affirmed by the Federal Circuit, required dismissal of the district court action.
The decision to remand with the instruction to dismiss turned primarily on the meaning of the word “final.” Even though the issue of validity had been finally resolved, the Federal Circuit held that as long as any issue remains open, no matter how minor, a final order establishing liability is not truly final, and a subsequent finding of invalidity by the USPTO will require dismissal of the case. Not surprisingly, Baxter and two organizations (IPO and BIO – see en banc review section for details) have urged the Federal Circuit to rehear the appeal en banc.
They argued several points:
1) the Court applied the wrong definition of “final”;
2) the Court improperly allowed an administrative decision to displace the judgment of an Article III Court;
3) the Court’s decision eliminates certainty and incentivizes gamesmanship;
4) the Court’s decision conflicts with prior precedent;
5) the Court failed to consider equitable factors. In a somewhat surprising decision, the Federal Circuit refused to hear this case en banc. As a result, the original decision of the three-judge panel (one of which vigorously dissented) currently stands, and will remain standing if no petition for Supreme Court review is granted. If any petition for certiorari is denied, or it is granted but the Supreme Court affirms the Federal Circuit’s ruling, it could have a significant impact on how practitioners approach patent litigation in the future. This article discusses the background of the case and its potential impact.
Fresenius I – the district court action: This case has a long history, arising from a declaratory judgment action filed by Fresenius on April 4, 2003 in the Northern District of California with respect to three Baxter patents (hereafter referred to as the ‘434 patent, the ‘027 patent and the ‘131 patent).Baxter filed counterclaims of infringement on all three patents. A jury returned a verdict in Fresenius’ favor in 2007, finding most of the asserted claims of all three patents invalid. That verdict, however, was reversed after the district court granted Baxter’s motion for JMOL. Request a free trial to read more.
Ryan B. McCrum, Partner, Jones Day
Ryan is a member of the Ohio Bar. This article reflects only the author’s present considerations and views, which should not be attributed to Jones Day or to the author’s or Jones Day’s former or present clients. © 2013 Ryan B. McCrum. All Rights Reserve