Fresenius United States, Inc. v. Baxter Int'l, Inc.

Decision Date05 November 2013
Docket NumberNos. 2012–1334,2012–1335.,s. 2012–1334
Citation733 F.3d 1369
PartiesFRESENIUS USA, INC., and Fresenius Medical Care Holdings, Inc., Plaintiffs–Appellants, v. BAXTER INTERNATIONAL, INC., and Baxter Healthcare Corporation, Defendants–Cross Appellants.
CourtU.S. Court of Appeals — Federal Circuit

OPINION TEXT STARTS HERE

Appeals from the United States District Court for the Northern District of California in No. 03–CV–1431, Judge Phyllis J. Hamilton.

On Petition for Panel Rehearing and Rehearing En Banc.

Michael J. Abernathy, K & L Gates, LLP, of Chicago, IL, filed a combined petition for panel rehearing and rehearing en banc for defendants-cross appellants. With him on the petition were Sanjay K. Murthy and Devon C. Beane; and Christina N. Goodrich, of Los Angeles, CA.Michael E. Florey, Fish & Richardson P.C., of Minneapolis, MN, filed a response to the petition for plaintiffs-appellants. With him on the response was Juanita R. Brooks, of San Diego, CA.

Peter G. Pappas, Sutherland Asbill & Brennan LLP, of Atlanta, GA, filed a brief for amicus curiae Intellectual Property Owners Association in support of the petition. With him on the brief were Ann G. Fort and Stephanie G. Stella. Of counsel were Richard F. Phillips and Kevin H. Rhodes, Intellectual Property Owners Association, of Washington, DC.

Michael A. Gollin, Venable LLP, of Washington, DC, filed a brief for amicus curiae Biotechnology Industry Organization in support of the petition. With him on the brief were William D. Coston, Martin L. Saad, and Christopher S. Crook, of Washington, DC.

Before RADER, Chief Judge, NEWMAN, LOURIE, DYK, PROST, MOORE, O'MALLEY, REYNA, WALLACH, and TARANTO, Circuit Judges. 1

DYK, Circuit Judge, with whom PROST, Circuit Judge, joins, concurring in the denial of the petition for rehearing en banc.

O'MALLEY, Circuit Judge, with whom RADER, Chief Judge, and WALLACH, Circuit Judge, join, dissenting from the denial of the petition for rehearing en banc.

NEWMAN, Circuit Judge, dissenting from the denial of the petition for rehearing en banc.

PER CURIAM.

A combined petition for panel rehearing and rehearing en banc was filed by defendants-cross appellants, and a response thereto was invited by the court and filed by plaintiffs-appellants. The petition for rehearing was referred to the panel that heard the appeal, and thereafter the petition for rehearing en banc, response and briefs of amici curiae were referred to the circuit judges who are authorized to request a poll of whether to rehear the appeal en banc. A poll was requested, taken, and failed.

Upon consideration thereof,

It Is Ordered That:

(1) The petition of defendants-cross appellants for panel rehearing is denied.

(2) The petition of defendants-cross appellants for rehearing en banc is denied.

(3) The mandate of the court will issue on November 12, 2013.

DYK, Circuit Judge, with whom PROST, Circuit Judge, joins, concurring in the denial of the petition for rehearing en banc.

The court today rightly denies the petition for rehearing en banc. We write to briefly comment on the dissents to the denial of rehearing.

As discussed in the panel majority opinion, Judge Newman's view is simply inconsistent with longstanding authority. Judge O'Malley does not entirely agree with Judge Newman, see O'Malley, J., dissenting opinion at 1372, but argues that there is in fact a final judgment here. The dissents share one characteristic, however. They urge that a plaintiff should be allowed to secure damages for infringement of a patent that has been conclusively found invalid by the PTO.

Nothing in the statute or common sense supports the peculiar result urged by the dissents. The result in this case reflects a choice made by Congress and recently reaffirmed in the America Invents Act § 6, Pub.L. No. 112–29, 125 Stat. 284 (2011). A patentee's right to damages for infringement is “founded on the validity of his patent.” Worden v. Searls, 121 U.S. 14, 25, 7 S.Ct. 814, 30 L.Ed. 853 (1887). As the panel majority pointed out, so long as the judgment in the infringement action is not final, “the language and legislative history of the reexamination statute show that Congress expected ... that cancellation of claims during reexamination would be binding in concurrent infringement litigation.” Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1339 (Fed.Cir.2013).

What constitutes a final judgment in this context was addressed by the Supreme Court in Moffitt v. Garr, where the Court interpreted the reissue statute, which has the same effect on pending litigation as does the reexamination statute. 66 U.S. 273, 282–83, 1 Black 273, 17 L.Ed. 207 (1861); 35 U.S.C. § 307(b). The Court held that the surrender of a patent (the equivalent of invalidation) “is a legal cancellation of [the patent], and hence can no more be the foundation for the assertion of a right after the surrender, than could an act of Congress which has been repealed.” Id. at 283. Unless the patent remained in force “at the time of ... judgment, the suit[ ] fail[s].” Id. This is in contrast to situations where the patentee has collected on a judgment because “moneys recovered on judgments in suits” could not be “recovered back” after surrender. Id. (emphasis added). Moffitt thus makes clear that a judgment of infringement is only final when a judgment has been entered that would irrevocably allow execution and payment.

In arguing that the judgment here is final, Judge O'Malley confuses two distinct concepts of finality: (1) the preclusive effect, if any, of the original decision in Fresenius USA, Inc. v. Baxter Int'l, Inc., 582 F.3d 1288 (Fed.Cir.2009)( Fresenius I ), and (2) Fresenius I's immunity to the preclusive effect of the PTO's decision affirmed in In re Baxter Int'l, Inc., 678 F.3d 1357 (Fed.Cir.2012). While Fresenius I may have been sufficiently final to be given collateral estoppel effect in another infringement litigation, we decided in In re Baxter it was not entitled to collateral estoppel effect in the PTO proceedings. See678 F.3d at 1364–65. In any event, the potential preclusive effect of the Fresenius I decision in another infringement case cannot immunize Fresenius I from the effect of the final decision in In re Baxter. This is made clear by both Supreme Court authority and our own authority.

In Simmons Co. v. Grier Bros. Co., 258 U.S. 82, 42 S.Ct. 196, 66 L.Ed. 475 (1922), the Supreme Court held that an intervening decision on validity was binding on a pending case where liability had been resolved but a final decree had not yet been entered. The district court there originally found infringement and entered judgment. Id. at 84, 42 S.Ct. 196. The Third Circuit reversed, concluding the asserted claim was invalid, and remanded to the district court to determine the amount of damages with respect to an unfair competition claim that had been joined to the infringement claim. Id. The Third Circuit's determination with respect to the infringement claim was final in all respects. See id. Nonetheless, when the Supreme Court decided in a separate case that the asserted patent claim was not invalid, that intervening judgment was held binding in the Third Circuit litigation. Id. at 85, 91, 42 S.Ct. 196. The Supreme Court explained that the Third Circuit's original appellate mandate had not ended the case because it was not “a final decree ... that finally adjudicate[d] upon the entire merits, leaving nothing further to be done except the execution of it.” Id. at 88, 42 S.Ct. 196. Thus, even though the questionsof infringement and validity had been resolved, the judgment was not immune to the effect of the subsequent decision by the Supreme Court because it had not ended litigation on all issues. Id. at 91, 42 S.Ct. 196.

In Mendenhall v. Barber–Greene Co., 26 F.3d 1573, 1580 (Fed.Cir.1994), this court held likewise that a final judgment of infringement and no invalidity had to be overturned in light of a subsequent ruling of invalidity because the case as a whole was not final. The court originally affirmed the judgment of infringement and no invalidity but remanded “for determination of damages and other issues.” Id. at 1576. While the case was back in the district court, the asserted claims were held invalid in a separate appeal. Id. at 1577. The infringer then sought relief from the original determination on the basis of the intervening ruling. Id. at 1576. The patentee argued that the “proceedings ... [we]re too far advanced for redetermination of liability.” Id. at 1580. We nonetheless gave effect to our adjudication of invalidity because “the [original] judgment of this court on liability ... resulted in a remand for further proceedings. It was not the final judgment in the case.” Id. We explained that for a judgment to be immune to a subsequent determination of invalidity “the litigation must be entirely concluded so that [the patentee's] cause of action against [the infringer] was merged into a final judgment.” Id. (citing Restatement (Second) of Judgments § 13 (1982)). Otherwise, we explained, the intervening adjudication of invalidity forms an “overriding defense” that precludes enforcement of the now-invalid patent claims. Id.

In both Simmons and Mendenhall the courts had rendered final decisions on infringement liability potentially sufficient to create collateral estoppel; yet the decisions were held not sufficiently final to bar the preclusive effect of a final judgment in another case. If we were to hold that our judgment in Fresenius I is immune to a subsequent adjudication of invalidity, we would contravene controlling Supreme Court authority in Simmons and controlling Federal Circuit authority in Mendenhall.1

O'MALLEY, Circuit Judge, with whom RADER, Chief Judge, and WALLACH, Circuit Judge, join, dissenting from the denial of the petition for rehearing en banc.

The panel majority's decision in this case goes a long way toward rendering district courts meaningless in the resolution of patent infringement disputes. It does...

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