Tuesday, June 12, 2012
In re Baxter: A Second Bite at the Apple Was Sweet
A couple of weeks back, the Federal Circuit decided In re
Baxter, affirming a patent office Board decision of
obviousness. 2011-1073, May 17, 2012. That
result, by itself, is hardly noteworthy.
The Board was addressing a patent in an ex parte reexamination, that not
surprisingly, was brought by a defendant involved in a patent infringement
action, Fresenius, USA , Inc. So, an
unsurprising result, with an unsurprising history. Why then, are we even talking about this
case? OK, here is the twist. In the litigation, the district court held that
Fresenius failed as a matter of law to meet its burden to prove invalidity of
the asserted claims. That decision was
appealed and the Federal Circuit affirmed, holding that “Fresenius failed to
present any evidence- let along substantial evidence- that the structure
corresponding [to one claim element] existed in the prior art.” Fresenius USA, Inc. v. Baxter,
Int’l 582 F.3d 1288, 1299 (Fed. Cir. 2009). Now, three years later, based on largely the same (but not quite identical) prior art,
the Federal Circuit affirmed the Board decision that the same claims previously affirmed are indeed
invalid as obvious.
Why the different result? The short answer is that the Board decision is based on a different evidentiary standard, there is no “presumption of validity” in reexaminations, and the standard of appellate review for board decisions is deferential, applying a “substantial evidence” standard. The original holding in Fresnius was not that the asserted claims were valid. It was a holding affirming that the defendant did not meet the clear and convincing standard to establish invalidity. In contrast, in order to reverse the Board's finding of invalidity, the Federal Circuit would have had to find that the decision was not supported by substantial evidence. In this case, the Federal Circuit found the Board’s decision was well supported. Opinion 14-15.
Baxter decision highlights
tension in the roles of the district court and the patent office. Typically, when a party looses an issue and
all appeals are exhausted, that issue cannot be relitigated by that party. Typically, government agencies are bound by final decisions of the courts.
However, the Baxter court deferred to
Congress and its own precedent noting that “Congress has provided for a
reexamination system that permits challenges to patents by third parties, even
those who have lost prior judicial proceedings.” Opinion at 15. As a result, unless Congress decides to change the
reexamination statute, the possibility remains that a party seeking to
invalidate a patent can take two full bites at the apple.