Fresenius USA, Inc. v. Baxter International, Inc. (Fed. Cir. 2009)
Three judges, three opinions with a unanimous majority opinion written by Judge Gajarsa and two competing concurring opinions by Judges Dyk and Newman. The majority opinion (see below) renders most of Baxter's asserted dialysis claims obvious. The two concurring opinions focus on the fact that the remaining still-valid claims are currently under reexamination at the USPTO and question whether a stay is appropriate.
Judge Dyk suggests that a final determination of the case may need to be stayed "pending the outcome of the reexamination." Notably, Judge Dyk argues that the currently-valid claims are "of dubious validity in light of our holding."
I join the majority opinion on the understanding that it does not foreclose the district court in its discretion from staying further proceedings pending the outcome of the reexamination before the U.S. Patent and Trademark Office. While Fresenius did not establish the invalidity of claims 26–31 of the '434 patent in the district court proceeding, those claims on their face are of dubious validity in light of our holding that claims 1–3 and 13–16 of the '131 patent and claim 11 of the '027 patent are invalid. It is entirely possible that the U.S. Patent and Trademark Office will finally conclude that claims 26–31 of the '434 patent are also invalid.
Judge Newman writes in response to Judge Dyk and argues that a stay would be
[inappropriate] at this stage in this protracted litigation, after full trial and decision in the district court, after full appeal and ruling of the appellate court and with only a modified remedy remaining on remand. . . . A stay of finality, after the issues of validity and infringement have been litigated and decided by the district court and appealed to the Federal Circuit, is a distortion of the role of reexamination.
I remain a strong supporter of the principle of reexamination. It can be a useful and powerful tool for the benefit of both patentees and those interested in restricting or eliminating adversely held patents. However, if routinely available to delay the judicial resolution of disputes, the procedure is subject to inequity, if not manipulation and abuse, through the delays that are inherent in PTO activity.
Majority Opinion:
The jury held that Baxter's patents covering a hemodialysis machine with a touch-screen interface were invalid as obvious. In a post-jury JMOL decision, district court Judge Armstrong (N.D.Cal.) held that the jury verdict was not supported by substantial evidence – and thus that the claims remained valid. On appeal, the Federal Circuit largely reversed – finding that the jury had sufficient evidence to decide either way.
The jury yes/no decision here shows signs of the 'black box' effect that renders such decisions largely unassailable. Rather than attacking the jury's reasoning, the appeal can only question whether the defendant had provided sufficient evidence of obviousness (regardless of whether the jury actually relied upon that evidence).
Where, as here, the jury made no explicit factual findings regarding obviousness, we must determine whether the implicit findings necessary to support the verdict are supported by substantial evidence.
Permanent Injunction: The court had ordered a permanent injunction to stop ongoing infringement. On appeal, the Federal Circuit vacated that decision after finding some of the claims invalid. On remand, the district court is instructed to "revise or reconsider the injunction in light of the fact that only claims 26–31 of the '434 patent remain valid and infringed."
Based on Judge Dyk's argument regarding dubious validity, this case appears to now create a situation suggested by Justice Kennedy in his eBay concurrence. In that opinion, Kennedy argued that the "suspect validity" of patent claims "may affect the calculus under the four-factor test." Thus, even though the claims have been held valid, their marginal validity could weaken the patentee's case for permanent injunctive relief.
Notes:
- This is an interesting and nuanced opinion that includes much more than what is discussed here.
