PTO and Court conflicting rulings

Supreme Court denies cert. in Baxter (05/20/14)

In Baxter Corp. v. Fresenius USA Inc., the Federal Circuit allowed a PTO Reexamination proceeding to declare a patent invalid even after a district court found it valid and infringed. In effect, the Federal Circuit allowed the PTO administrative ruling to overrule the district court. Today, the Supreme Court denied a certiorari petition filed by Baxter to appeal that Federal Circuit decision.

BPAI reverses Fed. Cir.; Fed. Cir. says, "That's OK!" (05/19/12)

In In re Baxter, the CAFC approved of the BPAI reversing one of its own decisions. In 2007, the Northern District of California granted a JMOL motion filed by Baxter which overturned the jury's finding of obviousness of the Baxter patent, and as a result the district court upheld the validity of the Baxter patent with the stroke of a pen. Under appeal, the validity determination was upheld (but, “for somewhat different reasons…”). In parallel with the prior litigation, the PTO was conducting a reexamination of the patent, and shortly after the CAFC approval of the validity of the patent, the Reexamination Examiner held that the patent was invalid. Prior to the BPAI decision, the Director refused a request by Baxter to remand the case to the Examiner to consider the CAFC decision. On appeal, to the BPAI held:

“[a]lthough claims 26–31 were not proven invalid in court, a lower standard of proof and the broadest reasonable interpretation standard of claim construction apply at the PTO and therefore the agency is not bound by the court’s determination.” 1)

In this case, the Fed. Cir. found in favor of PTO arguments of invalidity of the patent, following substantially item-by-item, the findings of the Examiner in the Reexamination proceeding. In addition, the Fed. Cir. rejected Baxter's arguments that the PTO should be bound by the prior decision of the Federal Circuit:

We also reject Baxter’s argument that the Board erred because it . . . failed to “give serious consideration” to the district court’s Fresenius decision. […] [F]undamentally, the PTO in reexamination proceedings and the court system in patent infringement actions “take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions.” […] In particular, a challenger that attacks the validity of patent claims in civil litigation has a statutory burden to prove invalidity by clear and convincing evidence. […] Should the challenger fail to meet that burden, the court will not find the patent “valid,” only that “the patent challenger did not carry the ‘burden of establishing invalidity in the particular case before the court.’” […] In contrast, in PTO reexaminations “the standard of proof—a preponderance of the evidence—is substantially lower than in a civil case” and there is no presumption of validity in reexamination proceedings. Id. at 1378.

The court continued:

Lest it be feared that we are erroneously elevating a decision by the PTO over a decision by a federal district court, which decision has been affirmed by this court, the following additional comments must be made. When a party who has lost in a court proceeding challenging a patent, from which no additional appeal is possible, provokes a reexamination in the PTO, using the same presentations and arguments, even with a more lenient standard of proof, the PTO ideally should not arrive at a different conclusion.

However, the fact is that Congress has provided for a reexamination system that permits challenges to patents by third parties, even those who have lost in prior judicial proceedings. Usually one would expect that any such reexamination, such as the one before us, would raise new issues. In this case, the patent examiner relied on new prior art that had not been raised in the prior district court proceeding. Why Fresenius did not present that prior art before the district court we do not know. But the Director apparently found that a substantial new question of patentability had been raised and the examiner was then entitled to conduct a reexamination on the basis of the new art presented and her search of the prior art. Thus, this case is not about the relative primacy of the courts and the PTO, about which there can be no dispute. Finally, we could not conclude that the PTO was barred from conducting the reexamination of the ’434 patent because of the final judgment in Fresenius without overruling Ethicon and Swanson, which we cannot do.


Judge Newman dissented, stating: “My colleagues appear unperturbed by the agency’s nullification of this court’s final decision. Instead, the court itself ignores our own prior final decision, although it is the law of this case. Thus the court violates not only the constitutional plan, but also violates the rules of litigation repose as well as the rules of estoppel and preclusion—for the issue of validity, the evidence, and the parties in interest are the same in this agency reexamination as in the finally resolved litigation. No authority, no theory, no law or history, permits administrative nullification of a final judicial decision. No concept of government authorizes an administrative agency to override or disregard the final judgment of a court. Judicial rulings are not advisory; they are obligatory.” She further stated, “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. 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. 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. […] This procedure did not occur in this case.”

Board Decision, 2010 WL 1048980, at *12 (citing Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1429 (Fed. Cir. 1988); In re Swanson, 540 F.3d 1368, 1377 (Fed. Cir. 2008) ).

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