Fish & Richardson won a major ruling Tuesday at the U.S. Court of Appeals for the Federal Circuit for client Fresenius USA Inc. in a patent infringement lawsuit that's more than a decade old. The ruling reversed a decision that held Fresenius liable for more than $23 million in damages and royalties for infringing Baxter International Inc.'s patented technology for hemodialysis machines used to treat kidney problems.
The Federal Circuit's decision underscores just how tricky it can be for courts to weigh challenges to patents while the Patent and Trademark Office is concurrently re-examining the patent.
The litigation began in April 2003, when Fresenius sued Baxter in U.S. District Court for the Northern District of California seeking declaratory judgments of invalidity and non-infringement on three Baxter patents. Baxter filed counter-claims of infringement. In 2006 a jury sided with Fresenius, finding the relevant claims of Baxter's three patents invalid. But the next year, U.S. District Judge Saundra Armstrong in Oakland threw out the verdict, finding insufficient evidence to support it. A subsequent jury awarded $14 million to Baxter.
On appeal, the Federal Circuit in 2009 knocked out claims on two of Baxter's patents, but upheld the third patent and remanded the case. Back at the district court, this time with U.S. District Judge Phyllis Hamilton presiding, Fresenius was ordered to pay Baxter $23 million plus interest. Both sides appealed, with Baxter arguing it was entitled to more.
While the district court litigation was ongoing, Fresenius requested in 2005 a reexamination at the PTO of claims of one of the Baxter patents–which ended up being the one remaining after the first Federal Circuit ruling. In 2007 a PTO examiner rejected those claims, and the Federal Circuit upheld that decision in 2012.
Federal Circuit Judge Timothy Dyk wrote in Tuesday's ruling that Baxter's patent claims must fail. "In light of the cancellation of Baxter’s remaining claims, Baxter no longer has a viable cause of action against Fresenius," he concluded. Dyk's opinion declared the pending litigation moot and vacated the district court’s judgment. In a sternly worded dissent that runs longer than the majority opinion, Judge Pauline Newman argued that the ruling effectively lets an administrative agency override the final judgement of an Article III court of appeals.
We spoke with Fish & Richardson's Juanita Brooks who argued the case for Fresenius at the Federal Circuit. In cases where there's an ongoing reexamination at the PTO, she said, "I think the majority is telling district courts that they should think carefully about granting a stay." She added, "I think they clarified that judgments are not final and executable unless nothing is left to be done."
Michael Abernathy of K&L Gates who represented Baxter did not immediately respond to our call and email.