“Insufficiently Final” Court Judgments Subject to USPTO Reexamination Decision

Ken Salen | July 10, 2013

Fresenius USA v. Baxter Int’l.

July 2, 2013

Panel:  Newman, Dyk, Prost.  Opinion by Dyk.  Dissent by Newman.


The CAFC vacated an infringement judgment and an award of damages because of a later finding of invalidity by the Patent Office in a reexamination proceeding. The CAFC held that because (1) the USPTO canceled the asserted claims while (2) the infringement suit remains pending before the CAFC, Baxter no longer has a cause of action.


The Federal District Court granted summary judgment of validity of a number of Baxter’s claims found in its U.S. Patent No. 5,247,434 (a computer-controlled kidney dialysis apparatus with a touch screen). In 2009 the CAFC affirmed a portion of the validity decision, giving Baxter a number of judicially-proclaimed valid claims. District court awarded judgment against Fresenius. Before appeal of the decision was complete, the USPTO completed its reexamination of the patent and found the same claims invalid, which decision was affirmed on appeal.

Procedural history of the case:

  • 2003 – Fresenius filed a declaratory judgment action against Baxter International, alleging that claims 26–31 of Baxter’s U.S. Patent No. 5,247,434 were invalid and not infringed; Baxter counterclaimed for infringement.
  • 2005 – Fresenius requested reexamination of the claims.
  • 2007 – District court entered judgment against Fresenius, finding that the ’434 claims were infringed and not invalid.
  • 2009 – On appeal, CAFC affirmed the determination that the claims were not invalid, but remanded to the District court to reconsider its injunction and post-verdict damages.
  • 2010 – While the litigation was pending on remand, USPTO completed a reexamination of the ’434 patent, determining that all asserted claims were unpatentable over prior art that was not cited during the district court proceeding.
  • March 2012 – District court entered judgment against Fresenius in the pending infringement action, awarding Baxter $23.5 million. Execution stayed, pending present appeal.
  • Both sides appealed the District court’s 2012 holding to the CAFC.
  • May 2012 – CAFC affirms USPTO, declined to review the USPTO’s patentability determination from the reexamination proceeding.
  • April 2013 – USPTO cancels claims of ‘434 patent.

The CAFC held that because (1) the USPTO canceled the asserted claims while (2) the infringement suit remains pending before the CAFC, Baxter no longer has a cause of action.

Baxter agreed that when a claim is canceled, any pending litigation on that patent is moot, but argued that its case against Fresenius was no longer pending. The district court ruled that Fresenius infringed and that the patent was not invalid in 2007, so that ruling should be stand, it said. Baxter asserted that the 2007 judgment is “final” and “binding” on the parties.

The CAFC (Judge Dyk) framed the issue as “whether, under the reexamination statute, the cancelation of claims by the PTO is binding in pending district court infringement litigation.” Judge Dyk emphasized that the CAFC was “not dealing with finality for purposes of determining the potential res judicata effect of this infringement litigation on another suit.” Rather, the case raises the question of whether the judgment in this infringement case is “sufficiently final” so that it is immune to the effect of the final judgment in the PTO proceedings.

The CAFC then emphasized that no final court judgment has been entered.

Although the District court’s judgment had been entered in November of 2007 for an appeal to the CAFC, and although “that judgment might have been given preclusive effect in another infringement case between these parties, it was not sufficiently final” to preclude application of the intervening final reexamination judgment in In re Baxter.

Further, the CAFC held that subsequent remand to the District court did not merely leave “nothing for the court to do but execute the judgment.” The CAFC held that several aspects of the district court’s original judgment were as yet unresolved, such as royalties and injunctive relief

Where the scope of relief remains to be determined, there is no final judgment binding the parties or the court.

The CAFC vacated the District court’s judgment, remanding the case with instructions to dismiss. Costs awarded to Fresenius.

A lone dissent was filed by Judge Newman, who argued that the majority ruling is an unconstitutional violation of separation of powers. However, even she acknowledged that the opinion is consistent with previous court decisions.


This ruling that the results of a patent reexamination can eviscerate infringement judgments that are still on appeal will make reexamination more attractive for defendants and could lead judges to stay more cases to avoid making rulings that are later negated. Note that a lower standard of proof and the broadest reasonable interpretation standard of claim construction apply at the USPTO.

Before this ruling, in cases where re-examination would take longer than the lower court proceeding, defendants would often opt not to seek it. But this decision makes clear that as long as the reexamination is concluded before the last appeal, review at the PTO is a powerful tool.

Baxter involved ex parte reexamination of the patent, traditionally a lengthy process. However, the America Invents Act has created several new proceedings (inter partes review, a program for reviewing certain business methods) at the USPTO to review patents, which the law mandates must be completed within one year.

Plaintiffs should be inclined to consider a negotiated agreement with the defendant.

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