PTO Reexamination Decision Is Binding In Concurrent Infringement Litigation
Many patents are involved in parallel proceedings post-grant proceedings before the United States Patent and Trademark Office ("PTO") and infringement litigation in the courts. What happens when the courts and the PTO do not reach the same conclusion concerning a patent's validity? There is little guidance when there is a conflict in the judgments. However, on July 2, 2013, the United States Court of Appeals for the Federal Circuit addressed the impact of a USPTO post-grant determination of patent invalidity on a damages award by a district court. In Fresenius USA, Inc. v. Baxter Int'l., Inc., the Federal Circuit clarified what happens when the PTO cancels a claim in a reexamination even after there has been a court judgment.
In Fresenius, the Federal Circuit vacated the district court's decision and remanded with instructions to dismiss the findings of validity and infringement. While the litigation was ongoing, the patent in suit was being reexamined by the United States Patent and Trademark Office ("PTO"). The district court held that the patent claims were valid and infringed. However, the PTO later issued its reexamination ruling, finding that the asserted claims were invalid. On appeal, the Federal Circuit noted that cancellation of asserted claims in a reexamination proceeding should be given effect in pending infringement litigation.
Baxter International, Inc. and Baxter Healthcare Corporation ("Baxter") own U.S. Patent No. 5,247,434 ("the '434 patent"), which covers kidney dialysis machines with a touchscreen. In 2003, Fresenius USA, Inc. and Fresenius Medical Care Holdings, Inc. ("Fresenius") filed a declaratory judgment action against Baxter, seeking a ruling that the '434 patent was invalid and not infringed. Baxter counterclaimed for infringement. In February 2007, the district court ruled in favor of Baxter, finding the patent valid and infringed. In September 2009, the Federal Circuit affirmed the decision that the '434 patent was valid, but remanded to the district court to reconsider damages.
While the district court litigation was pending, Fresenius sought ex parte reexamination of the '434 patent by the PTO. In December 2007, the PTO examiner determined that the patent claims were invalid, and in March 2010, the Patent Trial and Appeals Board affirmed the examiner's decision. In May 2012, the Federal Circuit affirmed. But a couple of months earlier, in March 2012, the district court had entered final judgment against...
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