Fresenius v. Baxter: Concurrent Proceedings at CAFC and PTO

 Category: Administrative Law 


By: Jesus Hernandez, Blog Editor/Contributor 

TitleFresenius USA, Inc. v. Baxter Int'l, Inc., No. 2012-1334, -1335 (Fed. Cir. July 2, 2013) (Newman, J., dissenting).
Issue"[T]he question in this case is whether, under the reexamination statute, the cancellation of claims by the PTO is binding in pending district court infringement litigation." Fresenius, at *9-10.
Holding"In sum, under either the reissue or reexamination statute, if the PTO confirms the original claim in identical form, a suit based on that claim may continue, but if the original claim is cancelled or amended to cure invalidity, the patentee’s cause of action is extinguished and the suit fails." Fresenius, at *9-10.


Procedural History

"While the litigation was pending on remand, the United States Patent and Trademark Office (“PTO”) completed a reexamination of the ’434 patent and determined that all asserted claims were invalid. We affirmed the PTO’s determination in the reexamination proceeding,and our mandate issued. Meanwhile the district court entered judgment against Fresenius in the pending infringement proceedings. Both parties appealed. In light of the cancellation of the asserted claims of the ’434 patent, and the fact that the infringement suit remainspending before this court, Fresenius argues that Baxterno longer has a cause of action.ʺ Fresenius, at *2.

Legal Reasoning

(On Post Issuance Proceedings)

"As with the reissue statute, the language and legislative history of the reexamination statute show that Congress expected reexamination to take place concurrent with litigation, and that cancellation of claims during reexamination would be binding in concurrent infringement litigation." Fresenius, at *16.

(On Finality)

"It is important here to distinguish between different concepts of finality. 'Definitions of finality cannot automatically be carried over from appeals cases to preclusion problems.' See 18A Charles A. Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 4432 (2d ed. 2002). We are also not dealing with finality for purposes of determining the potential res judicata effect of this infringement litigation on another suit. We are concerned instead with whether the judgment in this infringement case is sufficiently final so that it is immune to the effect of the final judgment in the PTO proceedings, as affirmed by this court in In re Baxter." Fresenius, at *19.

“An order that establishes liability but leaves open the question of damages or other remedies . . . [is] not final for purposes of preclusion under traditional analysis.” 18A Charles A. Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 4432 (emphasis added) (2d ed. 2002) (citing G. & C. Merriam Co. v. Saalfield, 241 U.S. 22, 28, 29 (1916)). 'Reversal and remand for further proceedings on the entire case defeats preclusion entirely until a new final judgment is entered by the trial court or the initial judgment is restored by further appellate proceedings.' Id.” Fresenius, at *20-21.

(On Constitutionality)

"Our decisions giving effect to the PTO’s cancellation of claims asserted in pending suits are fully consistent with our duty to 'apply the law in effect at the time [we] render[a] decision.' Bradley, 416 U.S. at 711. The general principle stated in Moffitt, Thorpe, and Plaut controls regardless of whether the plaintiff’s cause of action is 'extinguished' by the repeal of a statute or by the PTO’s cancellation of a claim pursuant to reexamination." Fresenius, at *27.



(On Post Issuance Proceedings)"The PTO can neither invalidate, nor revive, a patent whose validity the court has adjudicated. Such administrative authority would render the court’s judgment no more than 'advisory.'” Fresenius, Newman, J. dissent at *4.
(On Finality)"Whether a judgment, not “final” in the sense of 28 U.S.C. § 1291, ought nevertheless be considered “final” in the sense of precluding further litigation of the same issue, turns upon such factors as the nature of the decision (i.e., that it was not avowedly tentative), the adequacy of the hearing, and the opportunity for review. “Finality” in the context here relevant may mean little more than that the litigation of a particular issue has reached such a stage that a court sees no really good reason for permitting it to be litigated again." Fresenius, Newman, J. dissent at *16 (citing Lummus Co. v.Commonwealth Oil Refining Co., 297 F.2d 80, 89 (2d Cir.1961).).
"Here, Fresenius contested liability and lost, by declaratory action brought in the district court, and on appeal to the Federal Circuit. All that remained on remand was an updating of the post-judgment royalty. The judgment of validity of the ’434 patent was not subject to redetermination, and was final in all aspects relevant to the PTO reexamination proceedings. The remand for post-judgment royalty had no impact on patent validity." Fresenius, Newman, J. dissent at *24.
(On Constitutionality)"Here only one constitutionally permissible outcome is available. Just as this court’s adjudication of the validity of claims 26–31 of the ’434 patent can not be relitigated between Baxter and Fresenius in another court, neither can it be overridden by the PTO on reexamination at Fresenius’ initiative. See Chi. & S. Air Lines, 333 U.S. at 113; United States v. O’Grady, 89 U.S. (22 Wall.) 641, 648 (1874) (“[I]t is quite clear that Congress cannot subject the judgments of the Supreme Court to the reexamination and revision of any other tribunal or any other department of the government.”)." Fresenius, Newman, J. dissent at *12.

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