Fresenius USA, Inc. v. Baxter International, Inc. , 733 F.3d 1369 ( 2013 )

United States Court of Appeals
for the Federal -Circuit
______________________
FRESENIUS USA, INC., AND
FRESENIUS MEDICAL CARE HOLDINGS, INC.,
Plaintiffs-Appellants,
v.
BAXTER INTERNATIONAL, INC., AND
BAXTER HEALTHCARE CORPORATION,
Defendants-Cross Appellants.
______________________
2012-1334, -1335
______________________
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,
Illinois, 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,
California.
MICHAEL E. FLOREY, Fish & Richardson P.C., of
Minneapolis, Minnesota, filed a response to the petition
for plaintiffs-appellants. With him on the response was
JUANITA R. BROOKS, of San Diego, California.
PETER G. PAPPAS, Sutherland Asbill & Brennan LLP,
of Atlanta, Georgia, 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.
1 Circuit Judges CHEN and HUGHES did not
participate.
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.
FOR THE COURT
November 5, 2013 /s/ Daniel E. O’Toole
Date Daniel E. O’Toole
Clerk
United States Court of Appeals
for the Federal Circuit
______________________
FRESENIUS USA, INC. AND
FRESENIUS MEDICAL CARE HOLDINGS, INC.,
Plaintiffs-Appellants,
v.
BAXTER INTERNATIONAL, INC. AND
BAXTER HEALTHCARE CORPORATION,
Defendants-Cross Appellants.
______________________
2012-1334, -1335
______________________
Appeal from the United States District Court for the
Northern District of California in No. 03-CV-1431, Judge
Phyllis J. Hamilton.
______________________
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 rehear-
ing 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 1,
2 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
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 in-
fringement 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 damag-
es for infringement is “founded on the validity of his
patent.” Worden v. Searls, 121 U.S. 14, 25 (1887). As the
panel majority pointed out, so long as the judgment in the
infringement action is not final, “the language and legis-
lative history of the reexamination statute show that
Congress expected . . . that cancellation of claims during
reexamination would be binding in concurrent infringe-
ment 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 reexamina-
tion statute. 66 U.S. 273, 282–83 (1880); 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
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 3
infringement is only final when a judgment has been
entered that would irrevocably allow execution and pay-
ment.
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 Frese-
nius 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 litiga-
tion, we decided in In re Baxter it was not entitled to
collateral estoppel effect in the PTO proceedings. See 678
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 (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. 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 Su-
preme 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. The Supreme Court explained that the Third Circuit’s
4 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
original appellate mandate had not ended the case be-
cause it was not “a final decree . . . that finally adjudi-
cate[d] upon the entire merits, leaving nothing further to
be done except the execution of it.” Id. at 88. Thus, even
though the questions of 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.
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 redeter-
mination of liability.” Id. at 1580. We nonetheless gave
effect to our adjudication of invalidity because “the [origi-
nal] 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 judg-
ment 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 Restate-
ment (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.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 5
In both Simmons and Mendenhall the courts had ren-
dered 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 subse-
quent adjudication of invalidity, we would contravene
controlling Supreme Court authority in Simmons and
controlling Federal Circuit authority in Mendenhall. 1
1 Qualcomm, Inc. v. FCC, 181 F.3d 1370 (D.C. Cir.
1999) is not to the contrary. That case did not hold that
an interim determination was immune to the effect of a
later final decision in another proceeding. It simply con-
strued certain Congressional legislation as inapplicable to
an earlier court decision. See 181 F.3d at 1378–81.
Judge O’Malley’s reliance on Bosch v. Pylon Manufac-
turing Corp., 719 F.3d 1305 (Fed. Cir. 2013) (en banc), is
misplaced. That decision concerned whether a district
court’s decision was sufficiently final to be appealable
under 28 U.S.C. § 1292(c)(2), a very different question
than the one presented here. That section allows appeals
in cases that “would otherwise be appealable . . . and [are]
final except for an accounting.” Id. It does not speak to the
effect of such judgments outside the context of appealabil-
ity.
United States Court of Appeals
for the Federal Circuit
______________________
FRESENIUS USA, INC. AND
FRESENIUS MEDICAL CARE HOLDINGS, INC.,
Plaintiffs-Appellants,
v.
BAXTER INTERNATIONAL, INC. AND
BAXTER HEALTHCARE CORPORATION,
Defendants-Cross Appellants.
______________________
2012-1334, -1335
______________________
Appeal from the United States District Court for the
Northern District of California in No. 03-CV-1431, Judge
Phyllis J. Hamilton.
______________________
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 so by
creating a new regime wherein a district court’s final
adjudication can be undone by later decisions of the
Patent and Trademark Office (“PTO”). While I do not
believe—as the panel dissent does—that the PTO had no
authority to assess the patentability of the patents in suit
or impact the patent owner’s ability to enforce those
patents against other putative infringers, I believe the
2 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
PTO’s actions cannot, and should not be permitted to,
dislodge the judgment for past infringement awarded to
Baxter. 1
In this case: (1) the district court resolved all issues of
validity, infringement, past damages, and the right to
post-verdict relief; (2) our court affirmed the resolution of
these issues on appeal; and (3) the United States Supreme
Court denied Fresenius’ petition for a writ of certiorari.
Following the denial of cert, neither the district court, nor
this court, could disturb Baxter’s entitlement to damages
for infringement. But, according to the majority, the PTO
could—and did—erase Baxter’s adjudicated right to be
compensated for that infringement. Under no reasonable
application of the law, however, could the PTO’s actions
eradicate that judgment. For the reasons below, I dissent
from this refusal to consider this case en banc.
I. BACKGROUND
Fresenius filed suit in district court seeking declara-
tory judgments of invalidity and non-infringement with
respect to three of Baxter’s patents. Baxter counter-
claimed for infringement, and, after Fresenius stipulated
to infringement, Baxter prevailed on the issue of validity.
Ultimately, a jury awarded Baxter $14.266 million, and
the district court entered judgment in accordance with
that verdict. The court then assessed the need for, and
proper form of, injunctive relief. It determined that an
injunction was appropriate, but delayed entry of that
1 I do agree with the panel dissent (and the Court of
Appeals for the District of Columbia in Qualcomm Inc. v.
FCC, 181 F.3d 1370 (D.C. Cir. 1999)) that the panel
majority’s decision has constitutional implications arising
from principles dating back to Marbury v. Madison, 5 U.S.
(1 Cranch) 137, 177 (1803). See Qualcomm, 181 F.3d at1379–80.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 3
injunction for nine months to allow Fresenius a reasona-
ble period of time in which to design around Baxter’s
patented invention. To protect Baxter in the interim, the
district court imposed an obligation on Fresenius to pay a
royalty to Baxter on any post-verdict sales of infringing
machines and related goods. Both parties appealed
portions of that judgment to this court.
In Fresenius’ first appeal to this court, it challenged
the district court’s: (1) grant of judgment as a matter of
law on the issue of validity; (2) entry of a permanent
injunction; (3) choice of royalty used for post-verdict sales;
and (4) claim construction. See Fresenius USA, Inc. v.
Baxter Int’l, Inc., 582 F.3d 1288, 1293–94 (Fed. Cir. 2009)
(“Fresenius I”). Fresenius did not appeal the pre-verdict
damages awarded by the jury. Id. In Fresenius I, we
invalidated asserted claims from two of the three patents
at issue, but did not disturb either the finding of in-
fringement as to the third patent—U.S. Patent No.
5,247,434 (“the ’434 patent”)—or the pre-verdict damages
award. Id. at 1294–1302. We also found that the district
court acted within its discretion to grant a permanent
injunction against Fresenius’ continued infringement. We
remanded the matter to the district court, however, for
the limited purpose of considering two discrete issues in
light of our decision: (1) the continuing propriety and
scope of any permanent injunction; and (2) the proper
measure of any royalty to be paid on post-verdict sales
pending the effective date of that injunction. 2 Id. at 1302.
2 As to the measure of royalty, we said, “[i]n partic-
ular, we note that our reversal of JMOL may affect the
district court’s consideration of the putative royalty rate
that would result from a hypothetical negotiation between
Baxter and Fresenius.” Fresenius I, 582 F.3d at 1303.
And, while affirming the district court’s entry of perma-
nent injunction, we “nonetheless” vacated the injunction
4 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
In other words, infringement, validity, and past damages
were fixed between the parties. Even the trial court’s
authority to award post-verdict relief had been confirmed.
Without question, pre-verdict damages were not at issue
in the first appeal, and were not subject to revision on
remand. Our mandate issued, and Fresenius petitioned
for a writ of certiorari, which the Court denied. See
Fresenius USA, Inc. v. Baxter Int’l, Inc., 559 U.S. 1070(2010).
During the limited remand that followed Fresenius I,
the trial court recalculated the post-verdict royalty award
as directed, reducing the royalty percentages for the sales
of both the infringing machines and the related goods.
See Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d
1330, 1341 (Fed. Cir. 2013) (“Fresenius II”). Injunctive
relief was no longer at issue because the ’434 patent had
expired. 3 See id. at 1333. The district court again en-
tered judgment, both confirming its rulings as to the
questions presented on remand and reaffirming the
earlier, already affirmed, judgment in Baxter’s favor.
Both parties again appealed to this court.
While that appeal was pending, our court affirmed a
PTO decision that the relevant claims of the ’434 patent
were unpatentable. See In re Baxter Int’l, Inc., 678 F.3d
1357, 1358 (Fed. Cir. 2012). In re Baxter dealt with a
parallel reexamination proceeding that Fresenius initiat-
ed three years after it filed the district court suit against
and remanded for the district court to “revise or reconsid-
er the injunction” in light of our reversal of JMOL on two
of the patents in suit. Id. at 1304.
3 The patent at issue expired in April 2011. The
post-verdict award thus covered a finite period which was
bookended by the date of the verdict and the expiration of
the patent.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 5
Baxter seeking a declaratory judgment that the ’434
patent was invalid. See Fresenius I, 582 F.3d at 1293; In
re Baxter, 678 F.3d at 1360. 4
In affirming the PTO’s determination, we noted that,
although the PTO’s decision differed from the district
court’s resolution of the issue of validity and our affir-
mance of that resolution, our decision “[was] not about the
relative primacy of the courts and the PTO, about which
there can be no dispute.” In re Baxter, 678 F.3d at 1365
(emphasis added). We merely concluded that, under the
lesser burden of proof and broader claim construction the
PTO employs, its conclusion as to the patentability of
the ’434 patent was neither unsupportable nor unauthor-
ized. See id. at 1364–65. When this court denied en banc
rehearing in In re Baxter, moreover, four members of this
court concurred in order to reaffirm the unremarkable
proposition that PTO actions in a reexamination proceed-
ing cannot alter the binding effect of a prior judgment in a
judicial proceeding. See In re Baxter Int’l, Inc., 698 F.3d
1349, 1351 (Fed. Cir. 2012). Indeed, the PTO itself con-
ceded that, “if a federal court awards relief to a patent
holder against an infringer, a subsequent reexamination
decision that the patent is invalid does not alter [that
judgment’s] binding effect on the parties [to the litiga-
tion].” Id. (quoting PTO Response from request for re-
hearing en banc) (alteration omitted).
Our court then turned to the appeal in this case. The
panel majority here concluded that, because we affirmed
the PTO’s decision that claims 26–31 of the ’434 patent
4 The district court entered its post-remand judg-
ment on March 16, 2012, two months before we issued our
decision in In re Baxter. Thus, while both appeals were
pending at the same time, In re Baxter was ahead of this
case in the queue.
6 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
are unpatentable in In re Baxter before we had the chance
to review the district court’s recalculation of post-verdict
royalties, the entirety of the “pending litigation” had been
rendered moot. The panel majority vacated all aspects of
the district court’s judgment, and instructed the district
court to dismiss the case. Id. at 1347.
II. FINALITY
Once the Supreme Court denied Fresenius’ petition
for certiorari following our decision in Fresenius I, Frese-
nius’ liability for infringement, its failure to prove invalid-
ity, and its responsibility for past damages were firmly
established and beyond challenge. The only live issues
remaining in the case related to post-verdict relief. And,
even the live issues regarding post-verdict relief did not
concern the right to such relief—which was established;
the remand only asked that the court reconsider the scope
of and formula used for such relief. All other aspects of
the case had been conclusively resolved. Importantly,
those remaining calculations were ones for the court to
undertake because they fell within its equitable authority
to award prospective relief in the form of an injunction, a
compulsory license, or some combination thereof. See
Edwards Lifesciences AG v. CoreValve, Inc., 699 F.3d
1305, 1314–15 (Fed. Cir. 2012) (noting that injunctions
and royalty-bearing licenses in lieu of an injunction are
equitable remedies). As such, the PTO action could not
render the “pending” litigation moot as the panel majority
held.
The panel majority concluded, however, that the is-
sues of infringement, validity, and past damages in
Fresenius I were not sufficiently final to avoid obliteration
by the result in In re Baxter. It did so by relying on an
inapplicable and antiquated view of finality. In particu-
lar, the majority stated that it is well established, under
the traditional view of finality, that when the scope of
damages remains to be determined, there is no binding
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 7
final judgment on the parties. Fresenius II, 721 F.3d at
1341–42 (citing Restatement (Second) of Judgments
§ 13(b) (1982) and 18A Charles A. Wright, Arthur R.
Miller, & Edward H. Cooper, Federal Practice and Proce-
dure § 4432 (2d ed. 2002)). But damages were not still at
issue when the action was remanded to the district court,
and were not at issue when the PTO rendered the deci-
sion which the panel majority gives such broad-sweeping
effect. And, the panel majority’s view of finality is signifi-
cantly out of step with the law as it stands today. See 18A
Charles A. Wright, Arthur R. Miller, & Edward H.
Cooper, Federal Practice and Procedure § 4432 (2d ed.
2002) (“[R]ecent cases have suggested that preclusion may
be appropriate if the order is sufficiently firm”).
In Fresenius I, our rulings regarding the ’434 patent
were unequivocal and left nothing for the district court to
do regarding the merits. The district court was only
asked to reconsider the scope of post-verdict relief. Well-
established law recognizes finality in situations like the
one presented here—where the merits are conclusively
decided—even though other issues may remain. See 18A
Charles A. Wright, Arthur R. Miller, & Edward H.
Cooper, Federal Practice and Procedure § 4432 (2d ed.
2002) (“If an appellate court terminates the case by final
rulings as to some matters only, preclusion is limited to
those matters actually resolved by the appellate
court . . . .”); see also Restatement (Second) of Judgments
§ 13(b), (comment e) (1982) (“A judgment may be final in a
res judicata sense as to a part of an action although
litigation continues as to the rest.”).
Indeed, the district court lacked the power to disturb
the resolution of the merits on remand. For that matter,
this court lacked the power post-remand to affect the
merits. For decades, courts have ruled that the preclusion
doctrine applies to orders that establish liability but leave
open only collateral matters. For example, the Second
Circuit has held that “[c]ollateral estoppel does not re-
8 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
quire a judgment which ends the litigation and leaves
nothing for the court to do but execute judgment, but
includes many dispositions which, though not final in that
sense, have nevertheless been fully litigated.” Zdanok v.
Glidden Co., 327 F.2d 944, 955 (2d Cir. 1964) (quoting
Catlin v. United States, 324 U.S. 229, 233 (1945) and
Lummus Co. v. Commonwealth Oil Ref. Co., 297 F.2d 80,
89 (2d Cir. 1961)). The regional circuit from which this
case originates agrees: “[t]he fact that several questions
were deferred for later decision does not render the doc-
trine of res judicata inapplicable. A case remanded for
further hearing or over which jurisdiction is retained for
some purposes may nonetheless be final as to other issues
determined.” Bullen v. De Bretteville, 239 F.2d 824, 829
(9th Cir. 1956) overruled on other grounds, Lacey v. Mari-
copa Cnty., 693 F.3d 896 (9th Cir. 2012).
The Second Circuit’s Zdanok decision, authored by
Judge Henry Friendly, is instructive. In the first action in
that case, the Second Circuit reversed the trial court’s
determination, entered judgment for the plaintiffs, and
remanded to the district court to determine the scope of
damages. 327 F.2d at 947. The Supreme Court declined
to review that decision. Id. On remand, a second action
involving new plaintiffs against the same defendants was
consolidated with the first. Id. at 947–48. On a second
appeal, the Second Circuit held that the new plaintiffs
were entitled to preclude relitigation of liability, even
though damages in the first action remained unresolved.
Id. at 954–55.
The unreviewability of the merits in Fresenius I is
even firmer than in Zdanok. In Fresenius I, past damages
had already been resolved, and the only live issue related
to post-verdict relief. In other words, while the scope of
(though not the right to) post-verdict relief may have been
uncertain, Fresenius and Baxter fully litigated the merits
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 9
including past damages. The finality of those issues
should not be disturbed lightly. 5 Cf. Moffitt v. Garr, 66
5 The concurrence asserts that Worden v. Searls,
121 U.S. 14 (1887) stands for the proposition that a pa-
tentee’s right to damages is founded on the validity of the
patent. Concurrence at 2. In doing so, the concurrence
misunderstands Worden. That case merely stands for the
proposition that the right to fines for violation of a prelim-
inary injunction is founded on that injunction, which in
turn is predicated on the validity of the patent. Worden,
121 U.S. at 25 (“[Plaintiff’s right to fines and damages
were] founded on his right to the injunction, and that was
founded on the validity of [the] patent”). Indeed, Moffitt
v. Garr contradicts the concurrence’s assertion. Moffitt
held that title to damages depends on the judgment of the
court. See Moffitt, 66 U.S. at 283. And it is black letter
law that once a judgment is rendered, the cause of action
merges into the judgment and is immune to any pre-
existing defenses, such as invalidation (or cancellation—a
different concept contrary to the concurrence’s assertions)
of the claims of the patent. See Restatement (Second) of
Judgments § 18; see also Wisconsin v. Pelican Ins. Co.,
127 U.S. 265, 292–93 (1888) (“The essential nature and
real foundation of a cause of action are not changed by
recovering judgment upon it; and the technical rules,
which regard the original claim as merged in the judg-
ment, and the judgment as implying a promise by the
defendant to pay it, do not preclude a court, to which a
judgment is presented for affirmative action, (while it
cannot go behind the judgment for the purpose of examin-
ing into the validity of the claim,) from ascertaining
whether the claim is really one of such a nature that the
court is authorized to enforce it”), overruled on other
grounds, Milwaukee Cnty v. M.E. White Co., 296 U.S. 268,
278 (1935); Cromwell v. Cnty of Sac, 94 U.S. 351, 352–53
(1876) (“The judgment is as conclusive, so far as future
10 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
U.S. 273, 283 (1861) (“It is a mistake to sup-
pose. . . that. . . moneys recovered on judgments in
suits. . . might be recovered back [after a patent is can-
celled].”); McCullough v. Virginia, 172 U.S. 102, 123
(1898) (“It is not within the power of a legislature to take
away rights which have been once vested by a judg-
ment.”).
Under these circumstances, Qualcomm, is directly on
point, and the majority should not have dismissed it out of
hand. Indeed, by doing so, the majority creates a circuit
split on this important issue. In that case, Qualcomm had
applied for a license with the FCC, which the Commission
denied. See Qualcomm, 181 F.3d at 1372. On appeal, the
United States Court of Appeals for the District of Colum-
bia reversed the FCC’s decision and remanded to the
Commission to “fashion the appropriate remedy.” Id. at
1376. Notably, because the preferential license at issue
had been granted to another party in the interim, the
proceedings at law are concerned, as though the defences
never existed. The language, therefore, which is so often
used, that a judgment estops not only as to every ground
of recovery or defence actually presented in the action, but
also as to every ground which might have been presented,
is strictly accurate, when applied to the demand or claim
in controversy. Such demand or claim, having passed into
judgment, cannot again be brought into litigation between
the parties in proceedings at law upon any ground what-
ever”). Thus, while the PTO’s cancellation of the patent
renders it prospectively invalid, the cancellation cannot
render a prior judgment for damages invalid. See Pa. v.
Wheeling & Belmont Bridge Co., 59 U.S. 421, 431 (1856)
(“[I]f the remedy in this case had been an action at law,
and a judgment rendered in favor of the plaintiff for
damages, the right to these would have passed beyond the
reach of the power of congress”).
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 11
D.C. Circuit recognized that some alternative remedy
might be needed to make Qualcomm whole for the harm
caused by the improper denial of its original license
request. Id. at 1376–77. Meanwhile, Congress withdrew
the FCC’s authority to grant the type of license at issue,
and the Commission dismissed Qualcomm’s application,
claiming it no longer had authority to act. Id. at 1374–75.
On appeal, the D.C. Circuit explained that its remand
merely assigned a ministerial role to the FCC and did not
allow it to disturb the merits of its judgment. Id. at 1377.
In other words, the decision resolving the merits was final
despite the remand to fashion an appropriate remedy.
As in Qualcomm, this court’s mandate established
that Baxter was entitled to a remedy because infringe-
ment—and the right to damages—were established and
litigated to finality. Indeed, even the right to post-
judgment relief was established. The only question was
the scope of that post-judgment remedy—a mere ministe-
rial act of re-calculating prospective relief. While Baxter
lost its prospective patent rights because of the PTO
action, that executive agency may not undermine a final
determination of past liability, damages, and the right to
appropriate post-verdict relief in this case between these
parties.
The panel majority attempts to distinguish Qualcomm
in a footnote, stating that, because the D.C. Circuit had
ordered “specific” relief on remand in that case, it is
inapplicable here. Fresenius II, 721 F.3d at 1346 n.12.
According to the majority’s reasoning, our remand in
Fresenius I was not specific enough; it claims that the
matter would have been sufficiently final to avoid being
undermined by later PTO action only if we ourselves had
determined the scope of the post-verdict relief to which
Baxter was entitled. But this effort to distinguish Qual-
comm falls flat. Indeed, the remand in Qualcomm was
even broader than our directive to the district court here.
In Qualcomm, the FCC was charged with fashioning “an
12 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
appropriate remedy,” such that the question of whether
Qualcomm could be given a license or could only be af-
forded some alternative remedy was left entirely to the
FCC. Here, the only questions left open on remand were
whether the royalty rate the district court employed to
calculate the size of the post-verdict damages needed to be
adjusted to reflect the fewer number of infringed claims
and whether the scope of the injunction should be adjust-
ed for the same reason. Qualcomm is not distinguishable.
The majority relies on two cases to support it decision:
Simmons Co. v. Grier Brothers Co., 258 U.S. 82 (1922),
and Mendenhall v. Barber Greene Co., 26 F.3d 1573 (Fed.
Cir. 1994). Neither of those cases, however, involved an
appeal from a final judgment and completed accounting
(i.e., in those cases, no measure of damages had been
established). In Mendenhall, we highlighted the interloc-
utory nature of the appeal:
A judgment on an appeal under [28 U.S.C]
§ 1292(c)(2) allowing interlocutory appeals of lia-
bility judgments in patent cases does not end the
litigation. The purpose of § 1292(c)(2) is to permit
district courts to stay and possibly avoid a bur-
densome determination of damages. This provi-
sion for interlocutory appeal does not render a
district court decision on fewer than all issues in
the case a final decision.
26 F.3d at 1580–81 (emphases added and citations omit-
ted). We also noted in Mendenhall that the district court
“did not lack power at any time prior to entry of its final
judgment at the close of the accounting to reconsider any
portion of its decision and reopen any part of the case.”
Id. at 1581 (quoting Marconi Wireless Co. v. United
States, 320 U.S. 1, 47 (1943)). Likewise, in Simmons, the
Supreme Court noted the interlocutory nature of the
appeal, and stated that the judgment was not “final”
because “an accounting,” which at the time was the only
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 13
procedure by which damages for infringement were
calculated, “was necessary to bring the suit to a conclu-
sion upon the merits.” Simmons, 258 U.S. at 89 (emphasis
added).
The circumstances here are entirely different. Final
judgment was entered, the calculation of past damages
had occurred, and appellate review of those determina-
tions had concluded. Baxter’s right in the judgment had
vested. In other words, unlike in Mendenhall and Sim-
mons, a true “accounting” had occurred. See Bosch, LLC
v. Pylon Mfg. Corp., 719 F.3d 1305, 1313 (Fed. Cir. 2013)
(en banc) (defining an “accounting” as used in 28 U.S.C.
§ 1292(c)(2) as including any calculation of an infringer’s
profits or a patentee’s damages, including a trial on
damages). The only remaining issues related to post-
verdict relief. The district court, in fact, lacked the power
to reopen the case to reassess Baxter’s entitlement to pre-
verdict damages. See Marconi, 320 U.S. at 47. Conse-
quently, nothing in either Mendenhall or Simmons sug-
gests that an administrative agency’s actions can
undermine the conclusive resolution of rights by the
courts. 6
6 Even setting the critical distinctions between this
case and Simmons aside, the panel majority’s reliance on
the 1922 decision in Simmons cannot be justified today.
Simmons involved a suit in equity, where the damages
calculation involved only a calculation of an infringer’s
profits and was preserved for resolution by a special
master after the court’s liability determinations were
made. Simmons, thus, predates the merger of law and
equity and the changes in the law which guaranteed
patentees and putative infringers the right to a jury trial
and authorized patentees to collect a broader range of
damages. See Bosch, 719 F.3d at 1314–17. Thus, while
the Simmons Court did state that “the ordinary rule [is]
14 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
As we have held, an adjudged infringer may face both
an injunction and a compulsory license. See Paice LLC v.
Toyota Motor Corp., 504 F.3d 1293, 1314 (Fed. Cir. 2007)
(“Under some circumstances, awarding an ongoing royalty
for patent infringement in lieu of an injunction may be
appropriate.”). An injunction and compulsory license are
both inherently prospective. While we may at times
improperly use the term “damages” as a shorthand term
to encompass the concept of the right to some prospective
monetary relief, that cannot change the equitable charac-
ter of that relief. For instance, in Paice, we rejected the
argument that there was a Seventh Amendment right to
have a jury determine any post-verdict royalty rate. 504
F.3d at 1315–16. There, we emphasized the difference
between an ongoing royalty and damages. We agreed
with the general proposition that a determination of
damages carries a right to a jury trial, but stressed the
well-established principle that “not all monetary relief is
properly characterized as ‘damages.’” Id. at 1316 (citing
Root v. Ry., 105 U.S. 189, 207 (1881); Bowen v. Massachu-
setts, 487 U.S. 879, 910 (1988)). Had our remand intend-
ed to require that the trial court reconsider “damages”
and not merely prospective equitable relief, we would
have been required to remand the matter for a new trial,
which we did not.
Indeed, Fresenius did request a new trial to deter-
mine damages after our remand, which the district court
correctly denied. See Fresenius USA, Inc. v. Baxter Int’l
Inc., Civ. No. 4:03–cv–1431, ECF No. 1095 (N.D. Cal. May
that there can be but one final decree in a suit in equity,”
we are no longer operating “in equity.” This was an
action at law which included a jury trial on damages.
Concepts of finality in an action where damages were
calculated by a special master are irrelevant.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 15
5, 2011). Fresenius argued that a new trial on pre-verdict
damages was warranted because the jury returned a
single, generalized verdict covering asserted claims on
three patents, two of which were subsequently invalidated
by this court. Id. In denying the motion, the district
court noted that Fresenius did not argue at trial or on
appeal that the past damages award depended on the
number of patents infringed, all of which covered the
same technology and shared a common specification. Id.In fact, Fresenius and its experts contended throughout
the litigation that damages should be calculated based on
the value of the technology, not the number of patents or
claims infringed. See id. at ECF No. 447, Ex. 1 (N.D. Cal.
May 5, 2011) (Fresenius’ damages expert report demon-
strating that its damages theory was based on the key
claimed feature, not the number of patents). As the
district court understood, we knew that only one of the
three asserted patents remained after our decision in
2009, and we did not vacate the past damages award or
direct the court on remand to conduct a new damages
trial. See id., at ECF 1095 (“Plainly, the Federal Circuit
knows how to vacate a damages award and remand for a
new trial on damages.”). The district court was correct to
note that “[t]he mandate rule requires that the district
court follow an appellate decree as the law of the case.”
Id. (quoting Cardiac Pacemakers, Inc. v. St. Jude Med.,
Inc., 576 F.3d 1348, 1356 (Fed. Cir. 2009)). 7
7 The panel majority points to the trial court’s re-
fusal to let Baxter execute on the earlier judgment until
after the court’s resolution of the issues sent to it via our
remand in support of its view that the earlier judgment
must not have been truly final. The panel majority’s
attempt to place any weight on that fact suffers from
three flaws. First, our court did not vacate the original
final judgment in Fresenius I. Had we intended to do so,
16 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
III. BOSCH
The panel majority rightly anticipated—and attempt-
ed to forestall—criticism from those who would find the
concepts of finality employed here wildly divergent from
those employed by our court in Bosch. 719 F.3d 1305. In
Bosch, this court held, en banc, that liability determina-
tions in patent cases are final for purposes of immediate
appeal under 28 U.S.C. § 1292(c), even when a jury trial
on both damages and willfulness remains. See id. at
1316, 1319–20. There, we concluded that damages and
willfulness determinations are sufficiently “ministerial” to
constitute no more than an “accounting” within the mean-
ing of § 1292(c), thus rendering the liability determination
a “final” judgment for purposes of appeal.
Despite the very liberal view of finality we employed
in that context, the panel majority declares that we must
employ the stingiest view of that concept when deciding at
what point parties may rely on litigated determinations of
their rights. Specifically, as long as any act, even the
post-verdict recalculation which we asked the trial court
to consider on remand in this case, remains, no aspect of
the litigation can be “final” for preclusion purposes.
we would have. Second, even if the trial court thought
our order had the effect of vacating all aspects of its
original judgment, the court would have been wrong. It
would be unheard of for this court to defer to a trial
court’s incorrect view of the legal effect of our own order.
Third, the reluctance to allow Baxter to execute on the
earlier judgment has no bearing on whether that judg-
ment was final for preclusion purposes. Given its unwill-
ingness to revisit the damages award, it appears that the
district court considered those aspects of its multi-year
dealings with the litigation unchallengeable by Fresenius
and not open to unraveling by any collateral activity by
the PTO.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 17
The panel majority purports to justify this chasm be-
tween the sweeping rule it lays down here and the one the
court established in Bosch by stating that “[d]efinitions of
finality cannot be automatically carried over from appeals
to preclusion problems,” citing to Wright, Miller, and
Cooper. See Fresenius II, 721 F.3d at 1340–41. While
this principle is true today, however, it was not “tradi-
tionally” true. See 18A Charles A. Wright, Arthur R.
Miller, & Edward H. Cooper, Federal Practice and Proce-
dure § 4432 (2d ed. 2002) (“Traditionally, finality was
identified for purposes of preclusion in much the same
way as it was identified for purposes of appeal.”) (empha-
sis added). Yet it is “traditional” and outdated principles
of finality to which the panel majority asserts we must
cling. And, more importantly, while it is true today that
notions of finality for purposes of appeal and preclusion
will sometimes differ, that is because finality often may
be applied less strictly for preclusion purposes than for
purposes of appeal, not more so. See Miller Brewing Co. v.
Joseph Schlitz Brewing Co., 605 F.2d 990, 996 (7th Cir.
1979) (“To be ‘final’ for purposes of collateral estoppel the
decision need only be immune, as a practical matter, to
reversal or amendment. ‘Finality’ in the sense of 28
U.S.C. § 1291 is not required.”); see also Zdanok, 327 F.2d
at 955; Henglein v. Colt Indus. Operating Corp., 260 F.3d
201, 209–10 (3d Cir. 2001) (“[W]e commented that finality
for purposes of issue preclusion is a more ‘pliant’ concept
than it would be in other contexts.”); Swentek v. USAIR,
Inc., 830 F.2d 552, 561 (4th Cir. 1987) abrogated on other
grounds, Mikels v. City of Durham, N.C., 183 F.3d 323(4th Cir. 1999) (“Finality for purposes of collateral estop-
pel is a flexible concept . . . .”); Pye v. Dep’t of Transp. of
Georgia, 513 F.2d 290, 292 (5th Cir. 1975) (“To be final a
judgment does not have to dispose of all matters involved
in a proceeding.”); Syverson v. Int’l Bus. Mach. Corp., 472
F.3d 1072, 1079 (9th Cir. 2007) (same). Thus, while the
principle the panel majority cites—that finality for pre-
clusion purposes sometimes differs from finality for
18 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
purposes of appeal—is correct, in these circumstances
that principle mandates a conclusion which is the direct
opposite of that which the panel majority draws. 8
The question we must decide is at what point a court
judgment may be deemed binding on the parties to that
judgment. For preclusion purposes, that question turns
on the questions decided, the firmness of those decisions,
and whether they are open to revision. See Lummus, 297
F.2d at 89 (“Whether a judgment, not ‘final’ in the sense
of 28 U.S.C. § 1291, ought nevertheless be considered
‘final’ in the sense of precluding further litigation of the
same issue, turns upon such factors as the nature of the
decision (i.e., that it was not avowedly tentative), the
8 In its criticism of the panel dissent’s finality anal-
ysis, the panel majority cites the Restatement of Judg-
ments for the proposition that, when two final court
judgments conflict, the later judgment, not the earlier
one, has preclusive effect going forward. See Fresenius II,
721 F.3d at 1347 n.14 (citing Restatement (Second) of
Judgments § 15 (1982)). With this citation, the panel
majority implies that the Restatement would command
that the decision in In re Baxter controls over that in
Fresenius I because it came later in time. But the scenar-
io envisioned by the section of the Restatement upon
which the panel majority relies is wholly inapplicable to
the situation here. The Restatement section the panel
majority cites actually explains that “[w]hen in two ac-
tions inconsistent final judgments are rendered,” because
the party who could have relied on the res judicata effect
of the first judgment failed to assert it, “it is the later, not
the earlier, judgment that is accorded conclusive effect in
a third action under the rules of res judicata.” Restate-
ment (Second) of Judgments § 15 (1982) (emphasis add-
ed). Baxter consistently has relied on the preclusive effect
of the first judgment here, and there is no third action.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 19
adequacy of the hearing, and the opportunity for re-
view.”). None of the critical questions regarding Frese-
nius’ liability for its past infringement of Baxter’s patents
remained undecided or open to debate when the PTO
cancelled the ’434 patent. While Baxter lost its right to
bring an infringement action against anyone else once the
PTO acted and we affirmed that decision, its right to
enforce its judgment in Fresenius I was inviolate.
IV. IMPLICATIONS
The majority opinion here, coupled with this court’s
Bosch decision, will interfere with litigants’ ability to
access the courts to redress their grievances in a meaning-
ful way and will drastically limit the case management
options available to district court judges. Bosch created
an incentive for district courts to bifurcate liability de-
terminations from damages and willfulness trials—and
all other remedial determinations. Courts will be tempt-
ed to try to limit the time and resources spent on patent
cases by seeking an interlocutory review of their claim
construction and liability determinations. In all but those
cases where liability determinations in favor of an alleged
infringer are affirmed, however, such bifurcations will
drag out the litigation, causing multiple appeals and
probably multiple remands. Where that occurs, after the
panel opinion in this case, even years of litigated deci-
sions, which may be affirmed piecemeal, could be ren-
dered meaningless by much later PTO decisions. And,
when trial courts come to understand the fragility of their
judgments, stays in the face of reexaminations—which
the PTO grants over 92% of the time—will become inevi-
table. 9
9 While stays might well be appropriate in the face
of a reexamination, those determinations should be made
on a case-by-case basis, not thrust on district courts out of
20 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
We should be striving to make trial courts more ac-
cessible to litigants, not less so; more streamlined and
efficient, not less so; and more fair, not substantially less
so. The panel majority decision in this case is, in my
view, both incorrect and ill-advised.
V. CONCLUSION
For these reasons, I believe that our remand to de-
termine the scope of post-verdict relief does not under-
mine the finality of our determination affirming
infringement, validity, past damages, and the right to
post-verdict relief between Fresenius and Baxter in
Fresenius I. Our mandate issued, and the Supreme Court
denied the petition for certiorari in that case. Those
issues are final. While our decision in In re Baxter elimi-
nated any prospective rights Baxter may have against
third parties, it does not extinguish Baxter’s vested rights
in the final judgment on the merits of this case against
Fresenius.
I respectfully dissent.
fear that the effort they put into the cases before them
will be for naught. The district judges in this case invest-
ed nine years in resolving the dispute between Baxter and
Fresenius, issued multiple thorough and careful opinions,
and conducted two jury trials. Our panel majority ren-
ders that all for naught.
United States Court of Appeals
for the Federal Circuit
______________________
FRESENIUS USA, INC., AND
FRESENIUS MEDICAL CARE HOLDINGS, INC.,
Plaintiffs-Appellants,
v.
BAXTER INTERNATIONAL, INC., AND
BAXTER HEALTHCARE CORPORATION,
Defendants.
______________________
2012-1334, -1335
______________________
Appeal from the United States District Court for the
Northern District of California in No. 03-CV-1431, Judge
Phyllis J. Hamilton.
______________________
NEWMAN, Circuit Judge, dissenting from denial of the
petition for rehearing en banc.
The errors in the court’s ruling that an executive
branch agency can override the judgments of Article III
courts, on the same issue and the same premises between
the same parties, were discussed in my dissent from the
court’s ruling and reported at 721 F.3d 1347–1365.
However, Article III judgments are “final and conclusive
upon the rights of the parties,” Gordon v. United States,
117 U.S. 697, 702 (1864). A system of override by an
administrative agency interferes with the power and
obligation of the courts to “render dispositive judgments.”
2 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 219 (1995).
Instead of finality after full litigation, full trial in the
district court, and full appeal in the Court of Appeals, now
the question of patent validity remains open, vulnerable
to contrary disposition, unconstrained by any form of
estoppel or restraint flowing from the finality of adjudica-
tion.
The court now declines en banc review. I write to
stress the concern that this ruling is not only in violation
of the Constitution, precedent, and the Federal Rules, but
is contrary to the purposes of patent law as embodied in
the statute and the Constitution.
The system of patents is founded on providing an in-
centive for the creation, development, and commercializa-
tion of new technology—“to promote the progress of
science and useful arts”—achieved by providing a period
of exclusivity while requiring disclosure of new tech-
nology. The court has weakened that incentive, by reduc-
ing the reliability of the patent grant, even when the
patent has been sustained in litigation. This loss cannot
be underestimated, especially for technologies that incur
heavy development costs yet are readily copied. Amicus
curiae the Biotechnology Industry Organization describes
the effect of this ruling on biotech products:
Biotechnology products typically require close to a
decade of development work and a fully capitalized
investment that can approach $1.2 billion. Bio-
technology companies rely heavily on patents to
protect such substantial investments of time, re-
sources, and capital. Devaluation of patent assets
leads to a reduced incentive for companies to re-
search, develop, and commercialize new biotechnol-
ogy products that heal, feed, and fuel the world.
Other technologies are affected by the same principles, to
varying degrees depending on the cost of development and
the ease of copying.
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 3
The panel decision destabilizes issued patents, by ig-
noring the rules of finality. No public purpose is served
by a regime in which commercially valuable innovations
can be tied up in a succession of judicial and administra-
tive proceedings until, as here, the patent expires. The
Baxter patent in this case was immobilized in litigation or
reexamination for eleven years. I emphasize the games-
manship and abuses that are now facilitated, with no
balancing benefit to the public.
Here the District Court for the Northern District of
California rendered a final judgment of patent validity,
infringement, and damages to the date of judgment. The
Federal Circuit affirmed, leaving only the calculation by
the district court of post-judgment damages. After this
affirmation, the PTO issued a contrary reexamination
decision on the question of obviousness—a matter of
law—and the Federal Circuit affirmed the contrary PTO
result, with no attempt to distinguish its prior judgment.
My concern is with the unconstrained free-for-all that
this court has created, for PTO records show pervasive
duplication of litigation and reexamination of the same
patents. 1 The ensuing instability replaces innovation
incentive with litigation cost, along with adverse effect on
the patent based incentive for technological advance.
Such gaming of a system designed to provide investment
incentive through property rights, warrants thoughtful
remediation, not facilitation.
1 The PTO statistical report for the period through
September 30, 2012 states that of 1,919 patents that have
undergone inter partes reexamination since inception of
that system in 1999, at least 1,272 (66%) were also in-
volved in district court litigation. Of 12,569 patents that
have undergone ex parte reexamination since inception in
1981, at least 3,994 (32%) were involved in litigation. See
http://www.uspto.gov/patents/stats/.
4 FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC.
In these post-mortem comments on the relation be-
tween litigation and PTO reexamination, both Judge Dyk
and Judge O’Malley misstate my position on the role of
reexamination. I was one of the initiators of the reexami-
nation system, the product of the Carter Commission on
which I served. My concern is its abuse. I have never
opined that there are no circumstances in which the PTO
may reexamine a patent that has been through litigation,
and I have intentionally avoided discussion of speculative
situations. Here, this court’s final decision followed full
litigation, and no reason is offered for departure from the
law of the case, in favor of subsequent PTO reexamination
on the same issues and evidence, requested by a party
litigant.
Also contrary to Judge Dyk’s assertion, I do not sug-
gest that a court’s final decision is always “immune” from
review, for it is undisputed that Article III courts have the
power to revisit their final judgments in appropriate
circumstances. See Fed. R. Civ. P. 60 (“Relief From a
Judgment or Order”). However, routinely subjecting
Article III judgments to agency override is a different
matter. In Fresenius II this court ruled that the PTO’s
reexamination decision “must be given effect,” 721 F.3d at
1332, even if a contrary decision had previously been
reached in the district and circuit courts and was final for
purposes of preclusion, estoppel, and stare decisis.
In distinction from the procedure here ratified, where
this court holds that neither the PTO nor this court is
bound by this court’s prior decision, the principles of
judicial finality are respected in every other circuit, as
summarized at 721 F.3d 1347 et seq. As the Court stated
in Montana v. United States, 440 U.S. 147, 153 (1979), “a
right, question or fact distinctly put in issue and directly
determined by a court of competent jurisdiction . . . cannot
be disputed in a subsequent suit between the same par-
ties or their privies.” If the law of this court is to differ
from the law of the land, we should confirm en banc the
FRESENIUS USA, INC. v. BAXTER INTERNATIONAL, INC. 5
court’s intention to divest Article III courts of finality in
patent cases. Neither “statute nor common sense” sup-
ports this theory. Nor does the newly enacted America
Invents Act, cited by Judge Dyk as “reaffirming” congres-
sional intent that Article III courts are subject to override
by the PTO. Concurring Op. at 2 (“The result in this case
reflects a choice made by Congress and recently reaf-
firmed in the America Invents Act . . . .”). No such con-
gressional choice can be found, nor any reaffirmation of
the ruling in this case.
I respectfully dissent.