Federal
Circuit Finds PTO Cancellation Of Claims To Be Given Effect In Pending
Infringement Litigation
In Fresenius USA, Inc. v. Baxter
International, Inc., Appeal Nos. 2012-1344, -1335), a race to “final
judgment” led the Federal Circuit to affirm the PTO finding of invalidity of
claims which it had previously affirmed not invalid, then give the finding of
invalidity effect in the litigation which it had remanded for damages.
A basic timeline of the pertinent events:
· In 2003, Fresenius filed suit seeking
declaratory judgments of invalidity and non-infringement on three Baxter
patents. Baxter counter-claimed for
infringement.
· In October 2005, Fresenius requested ex parte reexamination of the three
patents, and the PTO found substantial new questions of patentability and
initiated reexamination proceedings in 2006.
· In the district court a jury returned a
verdict in Fresenius’ favor, finding relevant claims to be invalid. But in February 2007, “the district court
granted Baxter’s motion for judgment as a matter of law (JMOL), finding that
Fresenius had presented insufficient evidence to support the jury’s
invalidity verdict, and that Fresenius had therefore not proven that the
claims of the patents were invalid.”
· In 2008 the jury awarded damages and the
district court awarded Baxter an injunction, then stayed the injunction and
awarded ongoing post-verdict royalties. Both parties appealed.
· In September 2009, the Federal Circuit reversed-in-part,
holding that the asserted claims of two patents were invalid;
affirmed-in-part, holding that the ‘434 patent claims had not been shown to
be invalid; vacated-in-part, with respect to the district court’s injunction
and royalty awards; and remanded, “for the district court to revise or reconsider
the injunction.”
· In March 2010, the Board of Patent Appeals and
Interferences affirmed an examiner’s rejection of the pertinent claims of the
‘434 patent, and in July 2010 denied a request for rehearing. Baxter then appealed to the Federal
Circuit.
· In March 2012 the district court awarded
Baxter post-verdict damages at a reduced royalty rate. Both parties appealed and in May 2012 the
district court granted Fresenius’ motion to stay execution of the new
judgment pending this appeal.
· In May 2012 the Federal Circuit affirmed the
PTO’s rejection of the ‘434 patent’s claims and in October of 2012 it denied
a request for rehearing. The Federal Circuit “explained that this
determination was not inconsistent with our holding in the infringement
litigation because, unlike the district court in the infringement litigation,
the examiner ‘sufficiently identified the corresponding
structure’…Furthermore, the examiner ‘based [the] rejections on prior art
references that were not squarely at issue during the trial on the invalidity
issues.’” The Federal Circuit mandate
issued in November 2012, and Baxter did not petition for certiorari. The PTO issued a certificate cancelling
claims 26-31 of the ‘434 patent in April 2013.
The Federal Circuit discussed
the history of reissue and reexamination and their effect on open
infringement litigation, stating that “[i]n 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.”
Baxter agreed that any pending
litigation in which the claims are cancelled becomes moot, but argued that
the cancellation of the claims could not be given effect at this point
because the validity of the ‘434 patent and Fresenius’ infringement liability
were conclusively decided in 2007 and that judgment was “final” and “binding.” The Court noted that while the district court
judgment was final for purposes of appeal, and might have preclusive effect
in another case between the parties, it “was not sufficiently final to
preclude application of the intervening final judgment in In re Baxter.” ( Fed.
Cir. affirmation of the PTO’s cancellation of claims).
The Federal Circuit also held that their September 2009
affirmation that the ‘434 patent claims were not invalid, was not a final
judgment. “It is also clear that our
remand decision in Fresenius I was not sufficiently final to prevent
the application of In re Baxter (May 2012) in the pending suit.” The Court explained that it is settled law
that, “[t]o rise to that level, the litigation must be entirely concluded so
that [the] cause of action [against the infringer] was merged into a final
judgment . . . one that ends the litigation on the merits and leaves nothing
for the court to do but execute the judgment.”
The September 2009 affirmation that the ‘434 patent
claims were not invalid was not a final judgment because it was remanded to
reconsider damages. Therefore it does
not prevent the application of the May 2012 affirmation of the invalidity of
the ‘434 patent claims to the remanded litigation. And although the district court determined
the damages in March 2012, that did not prevent the Federal Circuit from
affirming the PTO finding of invalidity in May 2012.
The dissent argued that the PTO was bound by the Fresenius I affirmation that the ‘434
patent claims were not invalid.
Federal
Circuit Affirms Jurisdiction Proper Before The U.S. Court Of Federal Claims
In United States Marine v. U.S. (Appeal No. 2012-1678) the Federal
Circuit affirmed an order transferring the case to the U.S. Court of Federal
Claims.
US Marine believed that the Navy
improperly disclosed its proprietary technical drawings to a competitor, and
filed suit in district court under the Federal Tort Claims Act. The district court found the U.S. liable
for trade secret misappropriation. On
appeal, the Court of Appeals for the Fifth Circuit reversed the district
court, finding that the district court lacked subject matter
jurisdiction. The case was then
transferred to the U.S. Court of Federal Claims.
On appeal, the Federal Circuit
questioned the rational of the Fifth Circuit, but affirmed that the U.S.
Court of Federal Claims had jurisdiction under the Tucker Act.
Federal
Circuit Affirms JMOL Of Invalidity
In Novozymes v. DuPont, Appeal No. 2012-1433, the Federal Circuit
affirmed a district court’s judgment as a matter of law that claims were invalid.
The district court granted
Novozymes’ motion for summary judgment on the issue of infringement and
denied DuPont’s motion for summary judgment of invalidity under written
description and enablement requirements. After a jury concluded that the claims were not invalid and awarded
Novozymes over $18 million, the district court granted DuPont’s post-trial
motion for Judgment as a Matter of Law that the claims are invalid under 35
U.S.C. § 112 for failure to satisfy the written description requirement. Novozymes appealed and the Federal Circuit
affirmed.
The patent claimed an enzyme
modification to improve acid and heat tolerance for enhanced stability. The parent application disclosed seven
potential parent enzymes to be used and thirty-three amino acid positions as
“promising mutation targets” at which one of forty possible mutations could
be made. The district court “noted
that the 2000 application did not point out the specific variants later claimed
in the ‘723 patent…and analyzed precedents in which patent claims had been
held invalid due to an underlying written description that set forth a broad,
generic group of structures without specifically identifying the
later-claimed species among many possible options.”
Although previous courts had
found claims valid where the description included the claimed variant with
several other possibilities, not all of which worked, the Novozyme parent
application did not specifically describe the variant in the current claim. It “contains no disclosure of any variant
that actually satisfies the claims, nor is there anything to suggest that
Novozymes actually possessed such a variant at the time of filing.” The Federal Circuit thus concluded that the
claims of the ‘723 patent were “invalid for failure to satisfy the written
description requirement of § 112,” and affirmed the district court’s entry of
judgment as a matter of law on that basis.
Federal
Circuit Reverses Grant Of Summary Judgment
In Plantronics,
Inc. v. Aliph, Inc. (Appeal No. 2012-1355),
the Federal Circuit reversed a district court’s grant of summary judgment on
the grounds of obviousness. The district court found on summary judgment that the
patent claims were obvious, and then concluded that the objective indicia of
non-obviousness did not overcome the finding of obviousness.
On appeal, the Federal Circuit
reversed because the district court failed to give proper consideration to
objective indicia of non-obviousness prior to reaching its conclusion
on obviousness. The Federal Circuit
stated that all evidence pertaining to objective indicia of non-obviousness
needed to be considered before the district court reached its obviousness
conclusion. Accordingly, the Federal Circuit reversed the grant
of summary judgment. |
