Inter Partes Review Possible Where Patent Found Valid at District Court

In a case that will impact the role of Inter Partes Review and Post Grant Review at the Patent Office, the Federal Circuit issued a precedential order denying a petition for rehearing en banc in the case of In re Baxter, Int’l Inc (Fed. Cir. 2011-1073) (originally reported at 678 F.3d 1357).  The concurring opinion of Judge O’Malley (with which Judges Rader and Linn joined) sought to clarify an issue raised by the dissent (Newman, J.) relating to whether an administrative action can nullify a judicial order.  Specifically, Judge O’Malley wanted to clarify that nothing in the underlying ruling prevents the Patent Office from reviewing the validity of a patent, even if a district court has previously found the patent is not invalid.  “A judgment in favor of a patent holder in the face of an invalidity defense or counterclaim merely means that the patent challenger has failed to carry its burden of establishing invalidity by clear and convincing evidence in that particular case- premised on the evidence presented there.” Id.at 2. It is also instructive to note that the Court found that a later review of a patent before the Patent Office is undertaken based on the particular evidence before the PTO, and with a lower burden of proof (preponderance of the evidence).

Importantly, however, the Federal Circuit clarified, and the PTO conceded, that a later finding of invalidity of a patent by the Patent Office (i.e., in an Inter Partes Review) does nothing to alter a prior judicial decision against a specific patent challenger.  For example, if Defendant is found to infringe a patent, but that patent is later deemed invalid, principles of res judicata prevent that Defendant from removing the burden of its loss in federal court.

While the Baxter case was decided in the context of reexamination, there is nothing in the Federal Circuit’s order that would suggest that the holding does not also apply to Inter Partes Review and/or Post Grant Review.  Merely because a patent was found not invalid at the district court level does not prevent that same patent from being subject to Inter Partes Review or Post Grant Review.  That is not to say, however, that the defendant who loses in that district court case can reverse that federal court determination by prevailing at the PTAB.