CAFC : US PTO Litigation Alert™

Baxter Loses $23.5 Million Judgment to Later Reexamination: Judgment not “Sufficiently Final”

Scott Daniels | July 3, 2013

The power of reexamination was demonstrated once again in the CAFC’s decision yesterday in Fresenius v. Baxter Int’l.  There, the Court vacated an infringement judgment and an award of damages, because of a later finding of invalidity by the Patent Office in a reexamination proceeding.  For practitioners, the panel’s decision is consistent with the Court’s precedent since In re Swanson.  Also, the decision might clarify the period of time in which judgments are vulnerable to later reexaminations.  In the words of the panel majority, the answer is when the final judgment is “sufficiently final.”

The procedural history of the case is important:

  • In 2003 Fresenius filed a declaratory judgment action against Baxter International, alleging that certain claims 26–31 of U.S. Patent No. 5,247,434 were invalid and not infringed.
  • Baxter counterclaimed for infringement.
  • In 2005 Fresenius requested reexamination of the claims.
  • In 2007 the trial court entered judgment against Fresenius, finding that the ’434 claims were infringed and not invalid.
  • On appeal, the CAFC affirmed the determination that the claims were not invalid, but remanded to the trial court to reconsider its injunction and post-verdict damages.
  • In 2010, while the litigation was pending on remand, the PTO completed a reexamination of the ’434 patent, determining that all asserted claims were invalid.
  • In 2012 the CAFC affirmed the PTO’s invalidity determination from the reexamination proceeding, and issued its mandate.
  • In 2012 the trial court entered judgment against Fresenius in the pending infringement action, awarding Baxter $23.5 million.  Both sides appealed.

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Another Reason to Choose Reexamination

Scott Daniels | August 28, 2012

Reexamination practitioners are fond of listing the advantages that reexamination offers an accused infringer, as compared to defending an infringement action in District Court.  Last month the list grew a little longer, at least for the handful of cases in which the enablement of an allegedly anticipatory reference is an issue.

It has long been recognized that an examiner in routine examination or in a reexamination may rely on a prior art patent, based on its disclosure alone – there is no need for the examiner to establish that the disclosure of the patent is enabling, because of a rebuttable presumption that the patent is enabled.  This presumption applies to both the claimed and the unclaimed subject matter in the prior art patent.  This principle is, of course, different from infringement actions and ITC investigations, where the initial burden is on the accused infringer to show that an allegedly anticipatory prior art patent is enabled.

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Choose Inter Partes Reexamination

Scott Daniels | May 23, 2012

The CAFC categorized its decision yesterday in PlaSmart v. Kappos as “non-precedential,” but the case teaches important lessons regarding the current state of reexamination.  First, one cannot assume that each reviewing panel strives to affirm the decision from below – the PTO Board scrutinizes the examiner’s decision, and the CAFC is equally careful in reviewing the Board’s decision.  Second, the obviousness analysis established in KSR remains a potent weapon for those challenging the validity of a patent.  And finally, inter partes reexamination – with its option for the reexamination requester to participate even through the CAFC appeal – is much superior to ex parte reexamination. 

The patent claimed a scooter (tricycle) with a safety improvement, reducing the likelihood of the scooter flipping over.  The significant limitation recited “a supporting arm frontwardly extended from said driven portion of said twister member,” with a safety wheel mounted to the free end of the “supporting arm.” During reexamination, the examiner found that the primary reference satisfied this “supporting arm” limitation; the examiner then rejected claim 1 as anticipated by the primary reference and as obvious over a second reference in view of the primary reference.  On the other hand, the examiner found a series of dependent claims, added in the reexamination, to be patentable because the references failed to show attachment of the safety wheel in the same position as required by those added claims. 

The PTO Board reversed the anticipation rejection of claim 1, finding that the primary reference failed to disclose the claimed attachment of the “supporting arm” to the tricycle; specifically, the Board found that the arm disclosed in the prior art drawing was attached to a base plate, not the twister member as required by all the claims.  The Board also faulted the combination of art relied upon by the examiner, for resulting in a ridiculous scooter having two safety wheels, both raised off the ground.  Thus, the PTO refused to reject claim 1 as anticipated and refused to reject the new claims as obvious.

The requester appealed this refusal to reject to the CAFC who affirmed the PTO’s refusal to reject claim 1 as anticipated, the CAFC agreeing with the PTO that the prior art arm drawing was attached to a base plate, not the twister member. 

The CAFC, however, was not so charitable regarding the PTO’s refusal to reject the claims as obvious over the prior art references.  It concluded that the primary references disclosed each aspect of the claimed invention, except for the claimed safety driving structure discussed above.  It acknowledged that the primary reference failed to “place those universal wheels in the exact locations” required by the patent claims.  It found, however, the primary reference disclosed an additional wheel placed in front of the twister member to improve stability.  The CAFC then determined that “modifying the scooter [of the secondary reference] to prevent tipping by placing [ ] a safety wheel in front of the twister member would thus be  obvious for one skilled in the art of trying to increase stability in the direction of movement.”

Tracking KSR, the CAFC concluded that “such modification is nothing more than a predictable use of prior art elements (universal wheels in contact with the ground in the front of the twister member) to address a known problem (stability), and would thus have been obvious.” 

Regarding the PTO Board’s refusal to reject the newly added dependent claims, the CAFC found that the limitations recited therein were “only minor, predictable variations” of claim 1, without even mentioning any of limitations.  The CAFC therefore reversed the PTO’s refusal to reject the patent claims. 

We thus see a real hop-scotch of rulings through the reexamination process, as well as a heavy reliance on KSR at the CAFC.  Finally, and most importantly, the superiority of inter partes reexamination, over ex parte, is once again on display.  Without the full participation of the requester at the CAFC, the validity of the claims would have been confirmed.

If at first you don’t succeed ….

Darrin Auito | May 18, 2012

In Re Baxter International, Inc. (Fed. Cir. 2012)

(Reexamination No. 90/007,751)


The CAFC’s decision in In re Baxter Int’l, Inc. (Fed. Cir. 2012) highlights the distinction between a reexamination and a district court proceeding.  Specifically, the CAFC affirmed the Board of Patent Appeal and Interferences (“Board”) determination in a reexamination proceeding that claims 26-31 of U.S. Patent No. 5,247,434 (“the ‘434 patent”) are invalid – despite having previously held in a parallel litigation proceeding that the same claims were not invalid – because the courts and the USPTO use different standards to address validity.  However, the CAFC cautioned that had the claims been found to be invalid in the litigation proceeding after all appeals had been exhausted, then the PTO “ideally should not arrive at a different conclusion” during a parallel reexamination proceeding when presented with the same arguments. 


In Fresenius Med. Care Holdings, Inc. v. Baxter Int’l, Inc., No. C 03-1431 SBA, 2007 WL 518804 (N.D. Cal. Feb. 13, 2007), the district court concluded that Fresenius failed to show by clear and convincing evidence that claims 26-31 were not valid.  The CAFC affirmed the district court’s decision, explaining that Fresenius “failed to present any evidence … that the structure corresponding to the [claimed function], or an equivalent thereof, existed in the prior art” and did not identify “the structure in the specification that corresponds to the [claimed function] or compare the identified structure to those structures present in the prior art.  Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288 (Fed. Cir. 2009).  The CAFC held that the clear and convincing burden of proof “cannot be carried without clearly identifying the corresponding structure in the prior art.”

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Patentee’s Arguments in Reexamination Create Intervening Rights, Erasing $29.4 Million Verdict

Scott Daniels | September 27, 2011

The CAFC panel decision yesterday in Marine Polymer Techs. v. HemCon will do more to popularize reexamination than all the proselytizing by all the reexamination lawyers and bloggers ever could.  The Court held that an argument made by the patentee traversing a rejection in reexamination constituted a disclaimer of patented subject matter; this disclaimer triggered absolute intervening rights for the accused infringer under 35 U.S.C. §§ 252 and 307(b), thereby eliminating all damages for the period before the issuance of the reexamination certificate.  The Court also suggested that the accused infringer might also be protected by equitable intervening rights for the period after issuance of the reexamination certificate and sent the case back to the trial court for further fact-finding.

Marine had sued HemCon for infringement of the patent.  The trial judge issued summary judgment of literal infringement.  At trial last September, the jury found that the patent was valid and awarded damages of $29.4 million for past infringement, and the trial judge issued a permanent injunction barring future infringement.  A year before the trial started, however, HemCon requested reexamination.  Though Marine’s patent ultimately emerged from the reexamination without cancelation or even amendment of the independent claims, Marine was forced to make an argument in the reexamination that resulted in the jury’s verdict and the judge’s injunction being vacated by the CAFC.
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Rambus ‘918 Patent Healthy Despite Loss at PTO Board

Scott Daniels | January 14, 2011

Despite a suggestion in the blogosphere that Rambus has been “tripped up” in reexamination, its U.S. Patent No. 6,034,918 for a method of operation of a semiconductor device remains commercially strong.  Vigorously litigated patents are often tested on several fronts: in multiple District Courts cases, at the U.S. ITC, in reexamination at the PTO, and ultimately at the Federal Circuit.  To assess a patent’s strength, its status in each forum must be considered. 

On Wednesday, the PTO Board affirmed the reexamination examiner’s rejection of independent claim 18 as being invalid over the prior art.  The examiner had already confirmed the validity, however, of the other two claims in reexamination, dependent claims 24 and 33.  The reexamination had been requested by Hynix whom Rambus had sued for infringement of the ‘918 patent in the Northern District of California.  In that case, Judge Ronald Whyte issued a judgment last March that claims 24 and 33 of the ‘918 patent, along with a number of claims from other Rambus patents, were valid and infringed. Thus, Wednesday’s Board decision, though favorable to Hynix, does not undermine Rambus’ position vis-a-vis Hynix.
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CAFC Finds HFC Patent Valid because Honeywell was not “Another Inventor” under § 102(g)(2)

Scott Daniels | October 15, 2010

This Wednesday the CAFC held in Solvay v. Honeywell that Honeywell’s activities in the United States did not constitute prior art under 35 U.S.C. § 102(g)(2) against Solvay’s U.S. Patent No. 6,730,817.  The CAFC therefore reversed the trial court’s summary judgment that the patent was rendered invalid by Honeywell’s activities.  Solvay’s ‘817 patent claims a method for making hydrofluorocarbons (HFCs) that are used in refrigeration and aerosol systems, as environmentally-friendly alternatives to chlorofluorocarbons (CFCs).

Paragraph (g) is the so-called “interference provision” of Section 102, but it also defines prior art that may be used in infringement actions, as in the present Solvay case.  Section 102(g)(2) provides in relevant part that a person is entitled to a patent if  “before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it” (emphasis added).  The issue for the CAFC was whether Honeywell was “another inventor,” i.e., had it invented the claimed process.  The CAFC said no.

Thankfully, the facts were not in dispute.
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Surviving Reexamination May Help Patentee Prove Willful Infringement

Scott Daniels | October 6, 2010

The CAFC’s 2007 decision In re Seagate contains a passage suggesting that a patentee must successfully move for a preliminary injunction in order to show that the defendant’s infringement, after the filing date of the complaint, was willful.  In dicta, the Court stated that a “patentee who does not attempt to stop an accused infringer’s activities in this manner [by seeking a preliminary injunction] should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct”).

Since Seagate numerous trial courts have considered this question of whether the patentee must seek preliminary relief.  The consensus appears to be that there is no per se rule – whether post-complaint acts of infringement were willful depends on the facts of the individual case.  Of special interest to us is the holding of the trial court in St. Clair Intellectual Prop. Consultants, Inc. v. Palm, Inc., specifically that when a patent has emerged from reexamination without narrowing amendment of the claims, the patentee had thereby established sufficient likelihood that the defendant infringed a valid patent, so that the patentee could assert willful infringement without first seeking a preliminary injunction.
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Judge Robinson Reluctantly Waits for CAFC Ruling on PTO’s Rejection of Claims in Reexamination

Scott Daniels | July 28, 2010

Last week Judge James Cohn of the Southern District of Florida withdrew a permanent injunction, deferring to a PTO advisory action finding that the patent in reexamination was invalid. On Monday, Judge Sue Robinson – in Sigram v. Cisco, 2010 U.S. Dist. LEXIS 74948 (D. Del. July 26, 2010) – with great reluctance, deferred her decision on patent validity until the CAFC determines whether the PTO correctly rejected the patent claims in two reexamination proceedings.

Sigram (SSBG) had sued Cisco in Delaware for infringement of U.S. Patent Nos. 6,954,453, 7,145,902 and 7,483,431, each related to voice over internet protocols (VoIP).  Cisco replied by requesting reexamination of the ‘453 and ‘902 patents.  (No request was filed against the ‘431 patent).  The claims were subsequently rejected and final rejections are currently on appeal at the PTO Board.  Cisco has now moved for summary judgment of invalidity, citing the same combinations of prior art that it had presented in its reexamination requests.
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Scott Daniels and Yoshiya Nakamura | July 26, 2010

English Language Version (via IPWatchdog)

In re Swansonでの一連の出来事は周知であろう。本件では、陪審員は特許は有効かつ侵害されていると評決し、CAFCはその評決に基づく地裁判決を容認した。その後、侵害被疑者は米国特許庁に特許の再審査請求を行ったところ、米国特許庁は特許クレームを拒絶した。そして、すでに特許は有効であると判断されているにもかかわらず、CAFCは特許庁の拒絶判断を維持した。CAFCは、有効性は特許庁と裁判所とで異なる争点であると述べ、明らかに相反する結果を容認したのである。これはSwansonで示された注目すべき結論を踏襲するものであり、侵害被疑者の間で再審査がそれほどよく利用されるようになった理由の一つである。

フロリダ州南地区地方裁判所のJames Cohn判事は、Swansonのアプローチをさらに一歩進め、本件Flexiteek Americas v. PlasTEAK (Case No. 08-60996-civ-Cohn/Seltzer)において、問題の特許が無効であると判断した再審査のアドバイザリーアクションに基づき、本案差し止め命令を取り下げた。

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