ALM Properties, Inc.
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Humble to a Fault
It's not every day that federal appeals court judges ignore one of their own court's decisions in favor of a ruling by another federal agency. But that's what two judges at the U.S. Court of Appeals for the Federal Circuit did in Mayprovoking fury from the panel's third judge.
The case involved a kidney dialysis patent held by Baxter International. The Federal Circuit had affirmed the patent's validity before the Patent and Trademark Office ruled the other way. When two Fed Circuit judges supported the PTO's decision, the third judge, Pauline Newman, had some tough words for her colleagues.
In her dissent, Newman tore into them for what they did and how they did it. "No authority, no theory, no law or history, permits administrative nullification of a final judicial decision," Newman wrote. It was her second dissent in six months blasting the court for supposedly undermining its own authority when considering a PTO patent reexam. "Even if the Federal Circuit were believed to have erred in its prior decision, the mechanism for correcting an unjust decision is by judicial reopening, not by administrative disregard," she added.
The majority opinion, written by Circuit Judge Alan Lourie and joined by Judge Kimberly Moore, upheld a decision by the PTO's Board of Patent Appeals finding that various claims in a Baxter patent for a kidney dialysis machine were invalid. The PTO's ruling stemmed from a patent reexamination initiated in 2006 by Baxter rival Fresenius USA, which had also challenged the patent in a 2003 declaratory judgment suit.
A federal jury found the patent invalid in 2007, but U.S. District Judge Saundra Brown Armstrong in Oakland revived the patent after rejecting Fresenius's claims of prior art. In 2009 the Federal Circuit agreed with the lower court. The PTO issued its decision the following year, concluding that the reexam process looked to a different standard of proof and that the PTO "is not bound by the [Federal Circuit's] determination."
Like the PTO board, Lourie and Moore focused on the different standards used by the agency and the courts. In PTO reexams, the standard is "a preponderance of the evidence," while the federal courts hew to a "clear and convincing" standard. They also noted that Fresenius had presented new prior art to the patent examiner that the district court never considered. And the majority went to great pains to emphasize that "this case is not about the relative primacy of the courts and the PTO, about which there can be no dispute," and that it was not "erroneously elevating a decision by the PTO over a decision by a federal district court, which decision has been affirmed by this court."
Newman wasn't mollified. "My colleagues justify the PTO's authority to overrule judicial decisions on the argument that the standard of proof is different in the PTO than in the courts," she wrote in the dissent. "That theory is flawed, for obviousness is a question of law, and the PTO, like the court, is required to reach the correct conclusion on correct law. Any distinction between judicial and agency procedures cannot authorize the agency to overrule a final judicial decision." David Bario