USPTO decisions rule, says appeals court
Washington DC | 03 July 2013

Patent office re-examination decisions override both district courts and the federal circuit, according to the US Court of Appeals in a case concerning a patent for a touchscreen kidney dialysis machine.

The US Court of Appeals for the Federal Circuit delivered its 2-1 judgement in favour of Baxter International on 2 July, finding the healthcare company’s patent invalid. As a result, it has “no cause of action” to pursue Fresenius USA’s infringement.

Hemodialysis machine manufacturer Fresenius brought a claim for summary judgement against Baxter in 2003 in the hope that the dialysis machine patent would be found invalid and that it could pre-empt an infringement complaint, but Baxter counterclaimed.

The US District Court for the Northern District of California issued a summary judgement against Fresenius in 2007, finding the patent valid and others valid and that the company had infringed. It issued a permanent injunction and awarded Baxter $14.266 million in damages.

On appeal in 2009, the Federal Circuit agreed with the lower court on the validity of the dialysis machine patent—infringement was not contested—but remanded the case for reconsideration of the permanent injunction and post-verdict damages, as the two other asserted patents were found invalid and so removed from the case.

While the case was pending on remand, the US Patent and Trademark Office (USPTO) completed its re-examination of the dialysis machine patent, determining that all of Baxter’s assert claims to be invalid.

After two appeals, the Federal Circuit affirmed the USPTO’s decision in May 2012, but the district court had by then already ruled against Fresenius in the pending infringement proceedings.

It delivered its judgement in March of the same year, confirming the award of $14.266 million in damages to Baxter.

But in the 2 July appeal—the latest development in what has been a 10-year legal battle—Federal Circuit judges Timothy Dyk and Sharon Prost found in a majority opinion that Baxter had “no cause of action” to pursue infringement of the dialysis machine patent against Fresenius.

In the majority opinion, in which Prost concurred, Dyk said that the district court’s delay in deciding infringement while the case was on remand from the Federal Circuit and its decision not to stay proceedings, despite the USPTO already finding the patent invalid, “became central”. As a result, the courts did not have subject matter jurisdiction over the case.

Dyk also rebuffed Baxter’s argument that the district court’s previous decision was final, because: “While the district court in 2007 entered a judgment final for purposes of appeal, and that judgment might have been given preclusive effect in another infringement case between these parties, it was not sufficiently final to preclude application of the intervening final judgment in re Baxter, and in any event, we set the district court’s judgment aside in the first appeal in the infringement case.”

The Federal Circuit was unanimous in its decision. Writing in dissent, judge Pauline Newman said: “The court today authorises the Patent and Trademark Office, an administrative agency within the Department of Commerce, to override and void the final judgment of a federal Article III Court of Appeals. The panel majority holds that the entirety of these judicial proceedings can be ignored and superseded by an executive agency’s later ruling.”

Reports suggest that Baxter may appeal against the decision.

Author: Mark Dugdale



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