Fresenius USA, Inc. et al v. Baxter International Inc. et al

Filing 1095

ORDER by Judge Hamilton denying 1042 Motion for New Trial; denying 1044 Motion to Stay; deferring ruling on 1048 Motion for Decision on Limited Remand Issues (pjhlc1, COURT STAFF) (Filed on 5/26/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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FRESENIUS USA, INC., et al.,
Plaintiffs,

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v.

ORDER

BAXTER INTERNATIONAL, INC., et al.,

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For the Northern District of California

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United States District Court

No. C 03-1431 PJH

Defendants.
_______________________________/

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Before the court are the motions of plaintiffs Fresenius Medical Care Holdings, Inc.

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and Fresenius USA, Inc. (“Fresenius”) for an order staying remand proceedings (Docket

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No. 1044), and for a new trial to determine damages (Docket No. 1042); and the motion of

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defendants Baxter International, Inc., and Baxter Healthcare Corporation (“Baxter”) for

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decision on limited remand issues (Docket No. 1048). All three motions were fully briefed

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before this case was reassigned to the undersigned judge.

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Having read the parties’ papers and carefully considered their arguments, the court

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hereby DENIES the motion to stay remand proceedings and DENIES the motion for a new

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trial. In addition, while the court has not reviewed all the papers filed in connection with the

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motion for decision on remand issues, it DEFERS ruling on the motion pending further

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clarification from the parties.

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1.

Motion for Order Staying Remand Proceedings

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Fresenius seeks an order staying remand proceedings pending resolution of a re-

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examination proceeding covering the asserted claims of U.S. Patent No. 5,247,434 (“the

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‘434 patent”) – the only remaining patent-in-suit. A stay for purposes of reexamination is

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within the district court’s discretion, and the court is not required to stay judicial resolution in

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light of reexaminations. Viskase Corp. v. American Nat’l Can Co., 261 F.3d 1316, 1328

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(Fed. Cir. 2001).

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In exercising its discretion to deny or grant a stay pending reexamination, a
district court should consider the effect of delay upon a patentee. With
respect to inter partes reexamination, 35 U.S.C. § 318 commits the grant of a
stay to the district court's discretion with special heed to the concerns of the
patentee.

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Fresenius USA, Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1305 n.1 (Fed. Cir. 2009)

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(Newman, J., concurring).

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The motion is DENIED. In view of the length of time the case has been pending

pending the resolution of other litigation on this court’s docket involving the same parties);

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For the Northern District of California

(including the pre-trial proceedings, the trial, the appeal, and the stay previously imposed

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United States District Court

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the fact that Fresenius filed this action for declaratory relief more than two and a half years

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before filing the request for reexamination; and the fact that the effect on this litigation of

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any final action on the reexamined ‘434 patent is far from clear, the court finds that a stay is

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not warranted. It is time to move forward and to bring closure to this case.

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2.

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Fresenius seeks a new trial for the purpose of re-determining damages, in light of

Motion for a New Trial to Determine Damages

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the Federal Circuit’s reversal of Judge Armstrong’s order granting judgment as a matter of

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law (“JMOL”). The Ninth Circuit standard governs this post-trial motion. See Revolution

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Eyeware, Inc. v. Aspex Eyeware, Inc., 563 F.3d 1358, 1370 (Fed. Cir. 2009).

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A new trial may be granted where the verdict is contrary to the weight of the

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evidence or is based on false or perjurious evidence, or where it is necessary to prevent a

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miscarriage of justice. Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007). A new

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trial may also be granted if the damages are excessive, or the trial was not fair to the

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moving party for some other reason. Montgomery Ward & Co. v. Duncan, 311 U.S. 243,

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251 (1940); Molski, 481 F.3d at 729.

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Here, following a jury verdict of invalidity on the four patents-in-suit, Baxter moved

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for JMOL that its asserted patent claims in three of the patents were not invalid as obvious.

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Judge Armstrong granted the motion. After a trial on damages, at which the jury awarded
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Baxter a total of $14,266,000 in damages, the court on March 21, 2008 entered a

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permanent injunction (to take effect January 1, 2009) and also ordered Fresenius to pay an

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ongoing royalty for any infringing machines sold before the effective date of the injunction,

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and a royalty for all disposable products linked to infringing machines sold from November

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7, 2002 until the patents expire.

and construction of certain claim terms. The Federal Circuit reversed the grant of JMOL as

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to two of the three patents, but sustained JMOL as to claims 26-31 of the ‘434 patent.

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Baxter argued that it was entitled to a new trial if the Federal Circuit determined that this

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court’s grant of JMOL was erroneous. The Federal Circuit disagreed, finding that no new

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For the Northern District of California

Fresenius appealed the court’s ruling on JMOL, injunctive relief, post-verdict royalty,

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United States District Court

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trial was warranted because it had decided the invalidity issues as a matter of law.

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The Federal Circuit vacated the injunction that had been imposed by Judge

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Armstrong, and remanded “for the district court to revise or reconsider the injunction in light

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of our reversal of the district court’s grant of JMOL regarding the ‘027 and ‘131 patents[,]”

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Fresenius, 582 F.3d at 1303, and “in light of the fact that only claims 26-31 of the ‘434

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patent remain valid and infringed,” id. at 1304. The Federal Circuit also vacated the post-

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verdict royalty award and remanded “for the district court to consider whether the previous

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award is proper in light of this court’s modification of the district court’s judgment[,]“ noting

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in particular that “our reversal of JMOL may affect the district court’s consideration of the

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putative royalty rate that would result from a hypothetical negotiation between Baxter and

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Fresenius.” Id. at 1303 (citing to analysis in Georgia-Pac. Corp. v. U.S. Plywood Corp., 318

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F.Supp. 1116, 1120 (S.D.N.Y. 1970)).

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In the present motion, Fresenius argues that a new trial on pre-verdict damages is

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warranted because the jury returned a single, generalized verdict covering all asserted

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claims from three Baxter patents, and did not specify damages on a claim-by-claim basis,

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or even a patent-by patent basis.

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The court finds no basis for a new trial. Accordingly, the motion is DENIED.
Fresenius did not argue at trial or on appeal that the calculation of past damages depended
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on the number of patents infringed. The Federal Circuit vacated only the injunction and the

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royalty award, but did not vacate the damages award; and remanded with instructions to

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consider whether the prior royalty award was proper in light of the reversal of JMOL as to

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two of the three patents.

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The Federal Circuit clearly understood that only one of the three asserted patents

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remained following its reversal, but did not remand for purpose of a new trial on damages.

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Plainly, the Federal Circuit knows how to vacate a damages award and remand for a new

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trial on damages. See, e.g., Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1340

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(Fed. Cir. 2009). “The mandate rule requires that the district court follow an appellate
decree as the law of the case.” Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 576 F.3d

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For the Northern District of California

United States District Court

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1348, 1356 (Fed. Cir. 2009) (citation omitted); see also In re Sanford Fork & Tool Co., 160

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U.S. 247, 255-56 (1895). Nothing in the mandate in this case indicates that damages for

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infringement was an issue for remand, and nothing suggests that this court should consider

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new evidence.

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3.

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Baxter seeks a ruling on the issues that remain in light of the remand from the

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Federal Circuit – specifically, a revised permanent injunction and the ongoing royalty

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award. Fresenius opposes the motion, arguing that the injunction is a non-issue, as it

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removed all infringing features from its 2008K machine as of January 1, 2009, and is now

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selling only non-infringing hemodialysis machines. Fresenius also opposes the amount of

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the royalty sought by Baxter, on the basis that it is unreasonable.

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Baxter’s Motion for Decision on Limited Remand Issues

Before ruling on this motion, the court requires clarification from the parties, and

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possible re-briefing. Specifically, no later than June 1, 2011, Baxter shall advise whether

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this motion is intended to resolve all outstanding issues to permit the court to comply with

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the mandate – that is, whether the motion provides argument and evidence sufficient for

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the court to resolve the two issues that were remanded (the injunction and the ongoing

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royalty). Similarly, Fresenius shall advise whether its opposition includes the entirety of

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argument and evidence that it intends the court to rely on in effectuating the mandate.
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As indicated above, no new trial will be held, and the court anticipates that a single

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proceeding will be sufficient to complete the work needed on remand. Accordingly, if the

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parties conclude that the motion in its present format will not suffice to resolve the issues

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that were remanded, Baxter shall withdraw the motion in favor of another motion filed per a

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stipulated briefing schedule.

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In addition, no later than June 8, 2011, the parties shall submit a stipulation either

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specifying a hearing date (July 20, 2011 or later) for the present motion, or setting forth a

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briefing schedule for a revised motion.

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IT IS SO ORDERED.

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For the Northern District of California

United States District Court

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Dated: May 26, 2011
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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