Intellectual Property Law
500 W. Madison Street, Suite 1130
Chicago, IL 60661-2562
T (312) 876-1800
F (312) 876-2020
www.woodphillips.com
Fighting a Two Front War: Concurrent Proceedings in Court and at the
Patent Office
The power of validity proceedings at the United States Patent and Trademark Office (“USPTO”) over concurrent litigation in court is highlighted in the recent Federal Circuit decision Fresenius USA, Inc. v. Baxter Int'l, Inc., No. 2012‐1334, ‐1335, slip op.(Fed. Cir. July 2, 2013). The Fresenius litigation began as a declaratory judgment action by Fresenius seeking to invalidate patents belonging to Baxter. During the litigation, Fresenius also filed a request for ex parte reexamination at the USPTO. The court case was not proceeding well for Fresenius with an adverse judgment of more than $14 million, but at the last moment a favorable reexamination decision invalidated the patents at issue and saved Fresenius from the hefty judgment. The dispute began in 2003 when Fresenius filed a declaratory judgment action in district court seeking to invalidate three Baxter patents, and Baxter counterclaimed for infringement. In 2005, as that district court litigation proceeded, Fresenius filed a request for ex parte reexamination in the USPTO. After a jury trial in 2007, the district court issued a judgment as a matter of law that invalidity had not been proven. A further trial on infringement damages yielded an award of over $14 million and an injunction. At about the same time, in the concurrently running USPTO reexamination, the patent examiner had issued a final rejection of the patent claims at issue in the litigation. Baxter then appealed the USPTO rejection of its claims, and Fresenius appealed the district court judgment of infringement of those claims. On appeal of the district court judgment, the Federal Circuit affirmed the validity of one of the Baxter patents, and sent the case back to the district court to recalculate damages and reconsider injunctive relief. The district court again fixed damages at over $14 million, leading to further cross‐appeals to the Federal Circuit. As the federal court proceedings were going on, the rejection of the Baxter patent claims in the USPTO reexamination proceeding was affirmed by the Federal Circuit. Baxter did not seek a writ of certiorari to the Supreme Court, and the USPTO rejection was final when the cross‐appeals from the later district court proceeding reached the Federal Circuit. Because the patent had been invalidated in the reexamination proceedings, the Federal Circuit threw out the judgment of infringement and the corresponding damages against Fresenius. The majority on the Federal Circuit panel reasoned that the fully appealed and final USPTO rejection invalidated the patent, leaving no valid patent on which to base the ongoing infringement suit. (A dissent took the position that the validity of the patents had been fully litigated by the parties, and that the judgment of the courts was final and unassailable by a different branch of the government, in this instance, the USPTO.) In handling patent infringement disputes for our clients, Wood Phillips remains mindful of available concurrent court and USPTO proceedings, provides strategic advice in that regard, and can handle all such proceedings where appropriate. 2