United States: The Federal Circuit Affirms Invalidity On Claims That It Previously Held Were Not Proved Invalid

V&E IP Insights E-communication, May 18, 2012

On May 17, 2012, in In re Baxter International, Inc., the Federal Circuit affirmed the decision by the Board of Patent Appeals and Interferences (in an ex parte reexamination context) that certain claims of Baxter's '434 patent were obvious under 35 U.S.C. § 103(a), finding that the board had not erred in determining that the claims would have been obvious to one of skill in the art. The Federal Circuit, however, had previously affirmed a trial court's reversal of a jury's determination that the very same claims were obvious. The trial court determined that the patent challenger had failed to prove obviousness by clear and convincing evidence, and the Federal Circuit affirmed the district court's grant of judgment as a matter of law for different reasons than those given by the district court.

The majority reconciles these two seemingly contradictory decisions by pointing out that "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, the patent challenger in litigation must prove invalidity by clear and convincing evidence. If that burden is not met, the patent is not necessarily "valid," but merely has not been proven invalid. In contrast, in reexamination proceedings there is no presumption of validity and the preponderance of the evidence standard is applied. The district court and PTO also relied on different factual records. Moreover, although the majority opinion cautions that when a losing litigant provokes a reexamination proceeding relying on the same prior art and arguments the PTO should ideally reach the same conclusion as the district court, the majority opinion actually affirmed the invalidity of claims that were identical to claims found valid in the prior litigation.

What This Means for You

This opinion gives patent challengers additional bargaining power during litigation negotiations because they can continue to threaten to pursue invalidity post-trial. Moreover, if a patent challenger does not succeed at trial in proving invalidity, that challenger may consider whether it is advantageous to pursue invalidity through reexamination proceedings if new prior art can be asserted in the reexamination.

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