ALE Responds and Baxter Weighs in on Chrimar Bid for High Court to Consider ‘Soundness’ of Fresenius/ Simmons Principle

In March, Chrimar Systems, Inc. filed a petition for certiorari asking the U.S. Supreme Court to decide: 1) whether the Federal Circuit may apply a finality standard for patent cases that conflicts with the standard applied by the Supreme Court and all other circuit courts in non-patent cases, and 2) whether a final judgment of liability and damages that has been affirmed on appeal may be reversed based on the decision of an administrative agency.

On April 23, the Court requested a response from ALE USA, Inc., which had waived its right to respond earlier that month. As a result, the deadline for amicus briefs was reset and one more amicus, Baxter International, submitted its brief in support of Chrimar on May 22, followed by ALE’s brief in opposition to the petition on May 26.

Citing Fish on Fresenius

Baxter International’s brief is the fourth filed in support of Chrimar. Notably, Baxter was on the losing end of the Fresenius case, which is at the heart of Chrimar’s petition. Baxter has also been a petitioner at the Patent Trial and Appeal Board (PTAB) at least ten times, and argues in its brief that, as “a Fortune 500 healthcare company that is a leading innovator in critical care products,” the company “often relies on the interplay between Article III courts and various federal agencies, including the United States Patent and Trademark Office and the Food and Drug Administration, in conducting its business.”

Like the other amici, Baxter in its brief urges the High Court to reject the so-called Fresenius/Simmons preclusion principle. This principle derives from Fresenius v. Baxter International, Inc. , in which the Federal Circuit held that it was bound by John Simmons Co. v. Grier Bros. Co., 258 U.S. 82 (1922). The Simmons decision reasoned that a “district court must apply intervening legal developments affecting the asserted patent’s validity, even if the court of appeals already decided the validity issue the other way.” However, in Chrimar’s Supreme Court petition it noted that Simmons involved an interlocutory decision where no measure of damages had been established, rather than an appeal from a final judgment and complete accounting.

But instead of spending all of its time reiterating the arguments about the intra and inter-circuit splits the Fresenius decision has created, which have been well documented via dissenting opinions of Federal Circuit judges and the other amici, Baxter cited an article authored by Fish & Richardson, counsel to Fresenius in the Federal Circuit case, to illustrate the broader impact of the appellate court’s holding there:

In an article entitled The Case of the Decade: Fresenius v. Baxter, Fish & Richardson P.C. recounts the history of the Fresenius matter, including the Federal Circuit’s decision that “Fresenius had failed to present evidence of prior art that would justify a finding of invalidity.” Undaunted, “Fish did not let this ruling stop them.” Id. In light of the second appeal that vacated the earlier judgment in light of ex parte reexamination, Fish touts that the Fresenius case “demonstrated the importance of using all available avenues–including the jury trial, appeal to the Federal Circuit, and post-grant review in the USPTO–when a defendant is facing potentially large patent infringement claims, and set an important precedent for IP law that will dramatically change the strategies companies use in future patent disputes.”

In its own experience, Baxter says the Fresenius/ Simmons principle has incentivized infringers to drag out cases for up to nearly a decade “in the hopes of preserving any token issue between the parties, and thus the possibility of a collateral attack on such judgments in parallel races to non-appealable judgment via one of the purported ‘available avenues’ Fish encourages litigants to utilize.”

In summary, Baxter called on the Court to “offer much needed clarity” in an area “where the constitutional issue renders the finality of Article III judgments meaningless so long as an adversely affected party is able to keep some small aspect [of] a case alive.”

ALE: The Petition is Not Attractive Enough for Supremes

For its part, ALE argues in its brief in opposition that Chrimar’s petition should be denied for four reasons:

1. The claims at issue have all been canceled by the USPTO, so Chrimar therefore has no legally protectable interest and lacks standing to appeal.
2. There is no circuit split – as argued by the amici – regarding preclusion principles “applicable to this case.” The brief adds: “Chrimar has not shown any case in which another court of appeals would have reached a different result than that reached here. Instead, Chrimar twists preclusion principles to argue in the abstract for a novel preclusion rule in which a judgment in a case pending on direct appeal trumps a final judgment in another case in order to allow a plaintiff to recover on patent claims that no longer exist.”
3. The case is not “an attractive vehicle” for analyzing the questions presented as it includes a particularly unique set of facts.
4. The petition’s argument for a new preclusion principle would undermine the intention of patent policy, as articulated in Oil States Energy Servs., LLC v. Greene’s Energy Grp, LLC. In that case, the Supreme Court found that “inter partes review protects the public’s paramount interest in seeing that patent monopolies are kept within their legitimate scope.” Chrimar’s argument for a rule that seeks to avoid the consequences of inter partes review proceedings would therefore ultimately be counter to the intent of patent policy.

As to point two, ALE argues in part that there is no inter-circuit split because other circuits do not hear patent cases. “In other words, no other court of appeals has needed to address how preclusion principles should be applied to these patent case-specific circumstances because the other courts do not hear patent appeals,” said ALE’s brief.  And as for an intra-circuit split, that doesn’t exist either, claims the brief:

Chrimar has not cited any Federal Circuit case that failed to follow the preclusion principles outlined in Fresenius. While Chrimar cites Versata Computer Indus. Sol’ns, Inc. v. SAP AG, there was no final judgment of invalidity from the Board to have an issue-preclusive effect in that appeal…. Instead, Chrimar cites pre-Oil States dissents from a minority of Federal Circuit judges.

Chrimar’s reply to the brief in opposition is due in two weeks.