By Scott A. McKeown
| May 19, 2014
Court Declines Review of Finality Issue
The CAFC first considered the validity of Baxter International’s U.S. Patent 5,247,434 (the ‘434 patent) on appeal from a patent infringement litigation with Fresenius. In that first 2009 appeal (now commonly referred to as Fresenius I), the Court upheld the patent over certain prior art. After Fresenius I, the litigation dispute went back to the district court on a damages related remand.
Meanwhile, in May 2012 a patent reexamination proceeding initiated by Fresenius in 2007 made its way to the CAFC. The reexamination was based on much the same prior art as previously considered in Fresenius I. This time, the CAFC affirmed the determination of the PTAB (then BPAI) that the claims were obvious over the applied prior art applying the more liberal standards for USPTO challenges. En banc review was then sought, but declined by the CAFC. A petition of certiorari on the seemingly conflicting results was also pursued, but denied by the Supreme Court.
Thereafter, Fresenius II made it’s way to the CAFC to determine whether the outstanding damage award of the district court was enforceable in light of the CAFC’s decision in In re Baxter (2012). The CAFC held that since the damage award was not yet final, it was essentially voided by the cancellation of the patent in reexamination. Once again, en banc review was sought, and denied by the CAFC, last summer. A second petition for certiorari was then pursued for Fresenius II. This most recent petition was denied today, finally ending the dispute.
Given the high court's lack of interest in Fresenius I, which more squarely presented the issue of seemingly conflicting final results, it is not at all surprising that the latest plea to the highest court was also denied.
The amicus briefing in particular sought to inject a broader policy spin on the finality determination of Fresenius II. But, in the end, the fact pattern of this dispute was simply too unique. 30+ years of ex parte patent reexamination experience has resulted in analogous situations occurring once or twice. While the amicus briefs warned of a flood of reexamination requests in view of the Fresenius result, experience has demonstrated the exact opposite. That is, such ex parte patent reexamination challenges are far from effective, and routinely outlast most litigation disputes. For this reason, the world of post grant patent challenges has evolved since the early 1980's to the expedited, inter partes style opposition of the America Invents Act. (AIA)
The new patent challenge proceedings of the AIA such as Inter Partes Review (IPR) and Post Grant Review (PGR) must be initiated relatively early in patent disputes, and must conclude within 12-18 months of trial institution. As, such, outside of perhaps the ITC, it would be unlikely for a concurrent court proceeding to reach determination before the USPTO's Patent Trial & Appeal Board (PTAB). Thus, the concern that these proceedings could serve to undermine an earlier damage award is also misguided.
For the short term at least, Covered Business Method (CBM) patent challenges are the exception. CBM proceedings can be filed late in a litigation. For example the SAP v. Versata dispute is one that immediately comes to mind. Yet, once the anomaly of pre-AIA verdicts are worked out of the system, it is hard to imagine that an infringer would play out years of litigation in the hopes of unplugging a significant damage award by CBM (if even available), or take their chances on a slow, one-sided reexamination proceeding.