 United States Court of Appeals for the Federal Circuit

                                    2008-1306, -1331

                            FRESENIUS USA, INC.
                 and FRESENIUS MEDICAL CARE HOLDINGS, INC.,

                                                       Plaintiffs-Appellants,

                                            v.

                           BAXTER INTERNATIONAL, INC.
                     and BAXTER HEALTHCARE CORPORATION,

                                                       Defendants-Cross Appellants.


        Juanita R. Brooks, Fish & Richardson P.C., of San Diego, California, argued for
plaintiffs-appellants. With her on the brief were Michael E. Florey, Mathias W. Samuel
and Deanna J. Reichel, of Minneapolis, Minnesota, and Robert E. Hillman, of Boston,
Massachusetts.

      William F. Lee, Wilmer Cutler Pickering Hale and Door LLP, of Boston,
Massachusetts, argued for defendants-cross appellants. With him on the brief were
Bharat R. Ramamurti; William G. McElwain and Jonathan G. Cedarbaum, of
Washington, DC. Of counsel on the brief were Michael J. Abernathy and Sanjay K.
Murthy, Bell, Boyd & Lloyd LLP, of Chicago, Illinois.

Appealed from: United States District Court for the Northern District of California

Judge Saundra Brown Armstrong
 United States Court of Appeals for the Federal Circuit


                                    2008-1306, -1331

                            FRESENIUS USA, INC.
                 and FRESENIUS MEDICAL CARE HOLDINGS, INC.,

                                                         Plaintiffs-Appellants,

                                            v.

                           BAXTER INTERNATIONAL, INC.
                     and BAXTER HEALTHCARE CORPORATION,

                                                         Defendants-Cross Appellants.



       Appeals from the United States District Court for the Northern District of
       California in case no. 03-CV-1431, Judge Saundra Brown Armstrong.

                             _________________________

                             DECIDED: September 10, 2009
                             _________________________


Before NEWMAN, GAJARSA, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge GAJARSA. Concurring opinions filed by
Circuit Judge NEWMAN and Circuit Judge DYK.

GAJARSA, Circuit Judge.

       In this patent infringement case, Plaintiffs Fresenius USA, Inc. and Fresenius

Medical Care Holdings, Inc. (collectively “Fresenius”) appeal and Defendants Baxter

International, Inc. and Baxter Healthcare Corporation (collectively “Baxter”) cross appeal

from the final judgment of the United States District Court for the District of California,

which was based on findings that Fresenius infringed claims of three patents asserted
by Baxter—U.S. Patent Nos. 5,247,434 (“the ’434 patent”), 5,744,027 (“the

’027 patent”), and 6,284,131 (“the ’131 patent”)—all of which disclose and claim a

hemodialysis machine integrated with a touch screen user interface. Fresenius Med.

Care Holdings, Inc. v. Baxter Int’l, Inc., No. 03-CV-1431 (N.D. Cal. Feb. 12, 2007)

(“JMOL Opinion”). We affirm in part, reverse in part, vacate in part, and remand for

further proceedings consistent with this opinion.

                                     BACKGROUND

                             I. The Technology and Patents

       When a person’s kidneys fail to function properly, a hemodialysis machine can

function in place of the kidneys to cleanse the blood of toxins. During hemodialysis, the

person’s blood is pumped through a hemodialysis machine, which contains a

dialysate—a solution formulated to draw toxins out of the blood. Inside the machine,

the blood is separated from the dialysate by a semi-permeable membrane that allows

toxins to pass from the blood into the dialysate. Because it is important to ensure that

toxins are removed without inadvertently filtering essential nutrients out of the blood, the

hemodialysis machine must facilitate the monitoring and control of numerous

parameters.

       All of the patents at issue derived from a parent patent application filed in 1991,

and all of the relevant claims are directed to a hemodialysis machine integrated with a

touch screen user interface. At the time the parent application was filed, touch screens

were known and had been used on other medical devices, such as a heart-lung

machine, but a touch screen had not been integrated with a hemodialysis machine. The

System 1000, which embodies the patents at issue, was introduced in 1991 and was a




2008-1306, -1331                             2
commercial success. 1 In 1998, Fresenius introduced the alleged infringing device, a

hemodialysis machine with a touch screen interface called the 2008K machine.

                                     A. The ’027 Patent

       The only ’027 patent claim at issue in this appeal is claim 11, which is dependent

on claim 10, which is in turn dependent on claim 7. Claim 7 reads:

              A kidney dialysis machine, comprising:

              (a) a dialysate pump for circulating dialysate at a dialysate
              conductivity through a dialysate circuit including a dialysate
              compartment for a dialyzer; and

              (b) a controller operable to receive non-conductivity data
              concerning a particular selection of dialysate to be circulated
              and to calculate from the data an expected conductivity
              reading of the dialysate.

’027 Patent col.36 ll.14–21. Dependent claim 11 additionally requires only a “data input

device” that “comprises a touch screen.” Id. at col.36 l.32–33. The additional limitation

of claim 10 is not at issue in this appeal.

                                     B. The ’131 Patent

       Regarding the ’131 patent, independent claim 1 and claims 2, 3, and 13–16,

which are dependent on claim 1, are at issue in this appeal. Claim 1 reads:

              A hemodialysis apparatus, comprising:

              (a) a dialysate-delivery system for supplying dialysate to a
              hemodialyzer, the dialysate-delivery system comprising at
              least one unit selected from the group consisting of (i) a
              dialysate-preparation unit, (ii) a dialysate-circulation unit, (iii)
              an ultrafiltrate-removal unit, and (iv) a dialysate-monitoring
              unit; and

              (b) a user/machine interface operably connected to the
              dialysate-delivery system, the user/machine interface

       1
            Althin filed the relevant patent applications and introduced the System
1000. Baxter purchased Althin and the patents at issue in March 2000.


2008-1306, -1331                               3
              comprising a touch screen that displays information
              corresponding to a setting of a parameter pertinent to
              operation of the hemodialysis apparatus, the touch screen
              being operable to display an indicium permitting the user to
              perform, using the touch screen, at least one step of a
              procedure for changing the setting of the parameter, and to
              display a time-variable profile of the operational parameter,
              the profile being representable as a plot of coordinates, the
              plot being with respect to an ordinate of values of the
              operational parameter and a time-based abscissa.

’131 Patent col.36 ll.1–21. Claim 14 additionally requires only that “the touch screen is

operable to display a plurality of indicia, each corresponding to a different time-variable

hemodialysis parameter.” Id. at col.36 ll.64–67. Claim 16 additionally requires that “the

user/machine interface is operable to require the user to verify a parameter after a value

of the parameter is selected.” Id. at col.37 ll.4–6. The additional limitations recited in

claims 2, 3, 13, and 15 were not argued on appeal.

                                   C. The ’434 Patent

       Regarding the ’434 patent, independent claim 26 and claims 27–31, which are

dependent on claim 26, are at issue in this appeal. Claim 26 reads:

              A hemodialysis machine comprising:

              (a) means for controlling a dialysate parameter selected from
              a group consisting of dialysate temperature and dialysate
              concentration, and means for delivering the dialysate to a
              dialysate compartment of a hemodialyzer; and

              (b) a user/machine interface operably coupled to said
              dialysate-delivery means, the user/machine interface
              comprising a touch screen adapted to display an indicium
              corresponding to a parameter pertinent to operation of the
              hemodialysis machine for performing hemodialysis and to
              permit the user, by touching the indicium, to cause a change
              in the parameter.

’434 Patent col.40 ll.29–42. Dependent claims 27–31 include additional limitations, but

only the additional limitation in claim 30 is relevant to this appeal.     That limitation


2008-1306, -1331                            4
requires a “means for delivering an anticoagulant to a patient wherein the touch screen

further provides an indicium soliciting input from the user corresponding to a rate of

anticoagulant delivery.” Id. at col.40 ll.61–64.

                                 II. Litigation Background

       Fresenius initially filed suit against Baxter in 2003, seeking a declaratory

judgment that the ’027, ’131, and ’434 patent claims are invalid and not infringed by

Fresenius’s hemodialysis machines. 2 Baxter counterclaimed, alleging that Fresenius

infringes claims 7, 11, and 14–16 of the ’027 patent; claims 1–3 and 13–16 of the

’131patent; and claims 26–31 of the ’434 patent. On Baxter’s motion, the district court

granted partial summary judgment that Fresenius infringes claim 1 of the ’131 patent

and claim 26 of the ’434 patent. Baxter continued to allege that Fresenius infringes the

other asserted claims, and Fresenius continued to allege that all asserted claims are

invalid.   Following claim construction, Fresenius stipulated that it infringes Baxter’s

remaining asserted claims. A jury trial on validity followed, and the jury found claims 7

and 14–16 of the ’027 patent invalid as anticipated and all asserted claims invalid as

obvious.

       The district court determined that substantial evidence does not support the jury’s

obviousness verdict and granted Baxter’s motion for judgment as a matter of law

(“JMOL”) that its asserted patent claims are not invalid as obvious. Namely, the district

court found that Fresenius had not presented evidence that specified limitations of claim

11 of the ’027 patent, claims 1 and 14 of the ’131 patent, and claims 26–31 of the ’434



       2
               The original filings included two additional patents—neither of which is
relevant to this appeal.


2008-1306, -1331                             5
patent were present in the prior art. JMOL Opinion, slip op. at 8–13, 18–19. In addition,

the district court found that Fresenius did not present substantial evidence of a

motivation to combine the elements of the prior art to produce the invention claimed in

the ’131 and ’434 patents. Id. at 13–16. The court did not evaluate the jury’s findings

that claims 7 and 14–16 of the ’027 patent are invalid as anticipated, stating that Baxter

had not challenged the anticipation verdict. Id. at 6 n.1.

       After a jury trial on damages, the jury awarded Baxter a total of $14,266,000 in

damages, $91,000 of which was attributable to unpatented disposable products. The

district court, after considering the four factors articulated in eBay Inc. v. MercExchange,

L.L.C., 547 U.S. 388, 391 (2006), concluded that injunctive relief was appropriate and

permanently enjoined Fresenius. Fresenius Med. Care Holdings, Inc. v. Baxter Int’l,

Inc., No. 03-CV-1431, slip. op. at 8–10 (N.D. Cal. March 21, 2008) (“Injunction Order”).

The district court ordered that the injunction take effect on January 1, 2009, because

Fresenius indicated it could develop a non-infringing machine by that date. Id. at 8–9.

The district court also ordered Fresenius to pay an ongoing royalty of 10% of the sales

price for any infringing machines sold before January 1, 2009, and a royalty of 7% of the

sales price for all disposable products linked to infringing machines that were sold from

November 7, 2002, until the patents expire. Id. at 9–10. The district court imposed the

royalty rates without explaining the bases for its calculations.

       Fresenius appeals the district court’s grant of JMOL, entry of a permanent

injunction, royalty award, and constructions of specified claim terms.         Baxter cross

appeals the jury’s determination that the asserted ’027 patent claims are invalid as

anticipated. This court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).




2008-1306, -1331                             6
                                       DISCUSSION

                                  I. Standard of Review

       Following the procedural law of the Ninth Circuit, we review the district court’s

grant or denial of JMOL de novo. Revolution Eyewear, Inc. v. Aspex Eyewear, Inc.,

563 F.3d 1358, 1370 (Fed. Cir. 2009) (citing Theme Promotions, Inc. v. News Am. Mktg.

FSI, 546 F.3d 991, 999 (9th Cir. 2008)); see also Koito Mfg. Co. v. Turn-Key-Tech, LLC,

381 F.3d 1142, 1149 (Fed. Cir. 2004) (reviewing without deference JMOL decisions of a

district court in the Ninth Circuit). “The party requesting the JMOL . . . must show that

substantial evidence did not support the jury’s findings, where substantial evidence is

‘such relevant evidence from the record taken as a whole as might be accepted by a

reasonable mind as adequate to support the finding under review.’” Koito, 381 F.3d at

1149 (quoting Tex. Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558,

1563 (Fed. Cir. 1996)); see also Revolution Eyewear, 563 F.3d at 1370–71.

       As we have explained, “[t]his court reviews a jury’s conclusions on obviousness,

a question of law, without deference, and the underlying findings of fact, whether explicit

or implicit within the verdict, for substantial evidence.” LNP Eng’g Plastics, Inc. v. Miller

Waste Mills, Inc., 275 F.3d 1347, 1353 (Fed. Cir. 2001). Where, as here, the jury made

no explicit factual findings regarding obviousness, we must determine whether the

implicit findings necessary to support the verdict are supported by substantial evidence.

Upjohn Co. v. Mova Pharm. Corp., 225 F.3d 1306, 1310 (Fed. Cir. 2000). “[T]he verdict

of obviousness must be supported by facts of (1) the scope and content of the prior art,

(2) the level of ordinary skill in the art, (3) the differences between the claimed invention




2008-1306, -1331                             7
and the prior art, and (4) any objective indicia such as commercial success or long-felt

need.” Id.

      Each patent claim is presumed valid, and as the party contending that the

asserted claims are invalid, Fresenius was required to prove invalidity of each claim by

clear and convincing evidence. See 35 U.S.C. § 282; Lisle Corp. v. A.J. Mfg. Co.,

398 F.3d 1306, 1316 (Fed. Cir. 2005). Thus, in reviewing the jury’s verdict, “we must

determine whether the jury had substantial evidence upon which to conclude that [the

party alleging invalidity] met its burden of showing invalidity by clear and convincing

evidence.” Koito, 381 F.3d at 1149.

      In this appeal, we also consider the district court’s entry of a permanent

injunction and royalty award.    We review the district court’s grant of a permanent

injunction for abuse of discretion. Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363,

1379 (Fed. Cir. 2008); see also eBay, 547 U.S. at 391. Regarding the district court’s

royalty award, “we review the trial court’s determinations for erroneous conclusions of

law, clearly erroneous factual findings, and clear errors of judgment amounting to an

abuse of discretion.” Mitutoyo Corp. v. Cent. Purchasing, LLC, 499 F.3d 1284, 1292

(Fed. Cir. 2007).

     II. Baxter’s Cross Appeal Regarding Anticipation of Claim 7 of the ’027 Patent

      As the sole issue in its cross appeal, Baxter asserts that substantial evidence

does not support the jury’s finding that claim 7 of the ’027 patent is invalid as

anticipated. By failing to properly raise that argument before the district court, Baxter

has waived it, and we decline to consider it. See Golden Bridge Tech., Inc. v. Nokia,

Inc., 527 F.3d 1318, 1323 (Fed. Cir. 2008) (declining to consider a new argument the




2008-1306, -1331                           8
party could have raised before the district court); Sw. Software, Inc. v. Harlequin Inc.,

226 F.3d 1280, 1290 (Fed. Cir. 2000) (“Failing to properly move for JMOL at the close

of the evidence precludes a challenge to the sufficiency of the evidence underlying fact

findings.”); Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1426 (Fed. Cir.

1997) (declining to consider a novel infringement argument raised on appeal).

       In Baxter’s Rule 50(a) motion for JMOL and Rule 50(b) renewed motion for

JMOL, Baxter only briefly mentioned the jury’s anticipation verdict, and in each motion,

Baxter relegated its discussion of that verdict to a single footnote. In its Rule 50(a)

motion, Baxter merely stated that “[t]o preserve its rights, Baxter also moves for JMOL

on Fresenius’ defense that the Seratron System anticipates the asserted claims of the

’027 patent because Fresenius has failed to prove that System is prior art with sufficient

corroborating evidence.” J.A. at 21588. Baxter provided no further explanation in the

Rule 50(a) motion and did little to develop the anticipation argument in its Rule 50(b)

motion. In that motion, also in a footnote, Baxter stated that it “renews its JMOL on

Fresenius’ defense that the Seratron System anticipates and/or renders obvious the

remaining asserted claims of the ’027 Patent,” and then provided a minimal explanation

regarding how “Fresenius failed to prove by clear and convincing evidence that that

Seratron System is prior art with sufficient corroborating evidence.”

       On appeal, Baxter argues that the Seratron System lacks two of the required

claim limitations because “it is not operable to receive non-conductivity data concerning

a particular selection of dialysate, and it does not use non-conductivity data to calculate

an expected conductivity reading.” Cross Appellant’s Rep. Br. at 5–6. Baxter asserts

that its limited statements to the district court preserved those arguments for appeal, but




2008-1306, -1331                            9
we disagree. Before the trial court, Baxter argued that it is entitled to JMOL because

Fresenius failed to prove that the Seratron System is prior art—Baxter did not argue that

the Seratron System lacked specified claim limitations. Contrary to Baxter’s assertions,

one specific challenge to an anticipation finding does not preserve all possible

challenges to that finding. If a party fails to raise an argument before the trial court, or

presents only a skeletal or undeveloped argument to the trial court, we may deem that

argument waived on appeal, and we do so here. See CBOCS W., Inc. v. Humphries,

128 S. Ct. 1951, 1963 n.2 (2008) (declining to consider a claim while noting the

appellate court had deemed that claim waived because it was presented as “only a

skeletal argument” to the district court) (citing Humphries v. CBOCS W., Inc., 474 F.3d

387, 407 (7th Cir. 2007)); Golden Bridge Tech., 527 F.3d at 1323 (“This is an appellate

court and as such we abide by the general rule that new arguments will not be decided

in the first instance on appeal.”); SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d

1312, 1320 (Fed. Cir. 2006) (deeming an argument waived because it was not

presented as a developed argument in the opening brief); Sage Prods., 126 F.3d at

1426 (“With a few notable exceptions, such as some jurisdictional matters, appellate

courts do not consider a party’s new theories, lodged first on appeal. If a litigant seeks

to show error in a trial court’s overlooking an argument, it must first present that

argument to the trial court.”).

       Moreover, the new anticipation argument Baxter presents on appeal includes

factual assertions regarding the information contained in the Seratron manual. See

Cross Appellant’s Rep. Br. at 7–15.        Fresenius contests those factual assertions,

arguing that the technical statements in the Seratron manual cannot be interpreted in




2008-1306, -1331                            10
the manner proposed by Baxter. See Appellant’s Rep. Br. at 18–20. Thus, the parties

present a new factual dispute on appeal. Such a factual dispute should have been

presented to the district court for its consideration in the first instance.

       For the foregoing reasons, we conclude that Baxter did not properly present its

argument regarding the claim 7 anticipation verdict to the district court, and thus, Baxter

has waived that argument.

                                       III. Obviousness

       The district court determined that Fresenius failed to present substantial

evidence that various non-touch-screen limitations of the asserted claims were present

in the prior art. The district court also found that Fresenius did not present substantial

evidence of a motivation to combine the elements of the prior art to achieve the

invention claimed in the ’131 and ’434 patents. Fresenius argues that the non-touch-

screen limitations in the asserted claims were standard in prior art hemodialysis

machines and that it presented substantial evidence of such to the jury.            Baxter

contends the asserted claims are nonobvious, or at a minimum, that Fresenius failed to

meet its burden of proving invalidity by clear and convincing evidence. For the following

reasons, we reverse the district court’s grant of Baxter’s JMOL motion, except as to

claims 26–31 of the ’434 patent.

                               A. Claim 11 of the ’027 Patent

       Because claim 11 is dependent on claim 7, it includes all limitations recited in

claim 7. The district court determined that Fresenius had not presented any testimony

regarding the obviousness of claim 7, and thus concluded that Fresenius necessarily

failed to demonstrate that all limitations of claim 11 were in the prior art. JMOL Opinion,




2008-1306, -1331                              11
slip op. at 19. Specifically, the district court determined that because Mr. Causey—

Fresenius’s only expert witness to testify that claim 11 is obvious—did not discuss the

claim 7 limitations, Fresenius had failed to meet its burden of proving by clear and

convincing evidence that claim 11 is obvious. Id. We disagree.

      As Fresenius notes, although Mr. Causey did not discuss the claim 7 limitations,

Mr. Ragsdale, another expert witness for Fresenius, had previously discussed those

limitations when he testified that claim 7 is invalid as anticipated.      In determining

whether Fresenius presented substantial evidence to support the jury’s verdict that

claim 11 is obvious, we must consider all evidence that was before the jury and draw all

reasonable inferences from that evidence in the light most favorable to Fresenius. See

Koito, 381 F.3d at 1149.     From Mr. Ragsdale’s testimony, a reasonable jury could

conclude that all limitations of claim 7 were present in the prior art. Claim 7 is divided

into elements (a) and (b), and Mr. Ragsdale separately testified about each element,

explaining how each was present in the prior art Seratron machine. J.A. at 14342–43.

Fresenius also offered the Seratron’s operating manual.        Thus, when the jury was

assessing the obviousness of dependent claim 11, it could reasonably conclude that all

limitations of claim 7 were in the prior art based on Mr. Ragsdale’s testimony.

      Baxter argues that Fresenius failed to carry its burden because it did not properly

connect all of the evidence regarding the obviousness of claim 11, namely because Mr.

Causey never referred to Mr. Ragsdale’s testimony. Cross Appellant’s Br. at 40. That

argument fails. Although it would have been advisable for Fresenius to ensure that Mr.

Causey discussed all limitations of claim 11 when he testified regarding the

obviousness of that claim, Fresenius was not required to do so. When, as here, the




2008-1306, -1331                           12
question of obviousness is submitted to the jury, we must review the jury’s implicit

factual findings for substantial evidence. Upjohn Co., 225 F.3d at 1310. Here, the jury

implicitly found that all limitations of claim 7 were present in the prior art, and as

explained above, substantial evidence supports that finding. Thus, a reasonable jury

could conclude that the non-touch-screen limitations of claim 11 were in the prior art by

considering Mr. Causey’s testimony in combination with Mr. Ragsdale’s testimony and

the Seratron manual. Because substantial evidence supports the jury’s implicit finding,

JMOL was inappropriate.

                       B. Claims 1–3 and 13–16 of the ’131 Patent

       On appeal, the parties limit their arguments to element (a) of claim 1 and

specified additional limitations of claims 14 and 16.

                                 1. Element (a) of Claim 1

       Element (a) of claim 1 requires:

              a dialysate-delivery system for supplying dialysate to a
              hemodialyzer, the dialysate-delivery system comprising at
              least one unit selected from the group consisting of (i) a
              dialysate-preparation unit, (ii) a dialysate-circulation unit, (iii)
              an ultrafiltrate-removal unit, and (iv) a dialysate-monitoring
              unit.

’131 Patent col.36 ll.1–8. The district court concluded that substantial evidence does

not support the jury’s verdict because Mr. Causey, Fresenius’s expert who testified that

claim 1 is obvious, did not specifically analyze element (a). Because Mr. Causey’s

“testimony did not analyze and explain the claim language and which components of the

prior art embodied each element of the asserted claim,” the district court determined

that Fresenius had not met its burden of proving that claim 1 is invalid. JMOL Opinion,

slip op. at 13. Because all the asserted claims of the ’131 patent contain the element



2008-1306, -1331                              13
(a) limitation, the district court granted JMOL for all of the asserted claims. We disagree

with the district court.

        Element (a) is written in Markush form, such that the entire element is disclosed

by the prior art if one alternative in the Markush group is in the prior art. See Schering

Corp. v. Geneva Pharms., Inc., 339 F.3d 1373, 1380 (Fed. Cir. 2003) (holding a claim

invalid as anticipated when it claimed compounds in Markush form and a prior art

reference disclosed one of the claimed compounds); In re Skoll, 523 F.2d 1392, 1397

(CCPA 1975); see also Titanium Metals Corp. v. Banner, 778 F.2d 775, 782 (Fed. Cir.

1985) (“It is also an elementary principle of patent law that when, as by a recitation of

ranges or otherwise, a claim covers several compositions, the claim is ‘anticipated’ if

one of them is in the prior art.”). Thus, a prior art device discloses element (a) if it

contains a dialysate-delivery system for supplying dialysate to a hemodialyzer

comprising only a dialysate-circulation unit (or any one of the other three listed

alternatives).

        It is clear that the prior art disclosed a hemodialysis machine containing a

dialysate-circulation unit.   Mr. Kelly, Baxter’s witness, admitted and agreed that all

hemodialysis machines—which the jury could reasonably presume would include those

in the prior art—must have “some way of circulating the dialysate through a dialysate

circuit.”   J.A. at 14399. In addition, Mr. Ragsdale testified that in his opinion, “the

Seratron system includes a dialysate pump for circulating dialysate . . . through a circuit

including a dialysate compartment for a dialyzer.” J.A. at 14342. Finally, Mr. Causey

testified that the limitations of element (a) of the ’131 patent are present in the CMS 08

prior art hemodialysis machine.




2008-1306, -1331                            14
       Based on the totality of the testimony presented by Messrs. Kelly, Ragsdale, and

Causey, the jury could reasonably conclude that the limitations of element (a) were

known in the prior art. Specifically, the jury could conclude that the prior art contained a

hemodialysis machine with a dialysate-delivery system that supplies dialysate to a

hemodialyzer and comprises a dialysate-circulation unit. Because substantial evidence

supports the jury’s finding, JMOL was inappropriate.

                                       2. Claim 14

       Claim 14 of the ’131 patent depends from claim 1 and adds one additional

limitation: “wherein the touch screen is operable to display a plurality of indicia, each

corresponding to a different time-variable hemodialysis parameter.” ’131 Patent col.36

ll.64–67. Although the district court noted that the manual for the Cobe C3 prior art

machine—which was in evidence and had been submitted to the jury—disclosed “an

indicium corresponding to a time-variable hemodialysis parameter,” the district court

concluded that Fresenius failed to present any evidence that the “plurality of indicia”

limitation of claim 14 was present in the prior art. JMOL Opinion, slip op. at 8–9. We

disagree.

       Mr. Causey testified, using an explanatory demonstrative, that the inventors of

the prior art Cobe C3 machine had provided for more than one time-variable parameter.

The demonstrative indicated that the prior art machine allowed for multiple indicia, each

corresponding to a different time-variable hemodialysis parameter. The jury could have

reasonably credited Mr. Causey’s testimony and concluded that the relevant limitation

was present in the prior art Cobe C3 machine. Because substantial evidence supports




2008-1306, -1331                            15
the jury’s implicit finding that the plurality of indicia limitation existed in the prior art,

JMOL was inappropriate.

                                         3. Claim 16

       Baxter additionally asserts that Fresenius failed to demonstrate that the following

limitation of claim 16 existed in the prior art: “the user/machine interface is operable to

require the user to verify a parameter after a value of the parameter is selected.”

’131 Patent col.37 ll.4–6. That argument is unpersuasive. Fresenius’s expert testified

that the CMS 08 prior art machine contains the limitation described in the claim,

referring specifically to a page of the CMS 08 manual that supports the testimony. J.A.

at 14455, 19935. Thus, substantial evidence supports the jury’s implicit finding that the

claim limitation at issue existed in the prior art.

                             C. Claims 26–31 of the ’434 Patent

        Claims 26–31 contain means-plus-function limitations, and all require a “means

for delivering the dialysate to a dialysate compartment of a hemodialyzer.” ’434 Patent

col.40 ll.33–35. The district court granted Baxter’s motion for JMOL of no invalidity

based in part on its conclusion that Fresenius failed to prove that the means for

delivering dialysate limitation was present in the prior art.        We agree, though for

somewhat different reasons than those articulated by the district court.             Namely,

Fresenius failed to present any evidence—let alone substantial evidence—that the

structure corresponding to the means for delivering dialysate limitation, or an equivalent

thereof, existed in the prior art.

       It is firmly established in our precedent that a structural analysis is required when

means-plus-function limitations are at issue; a functional analysis alone will not suffice.




2008-1306, -1331                               16
See, e.g., CytoLogix Corp. v. Ventana Med. Sys., 424 F.3d 1168, 1178 (Fed. Cir. 2005)

(“To establish infringement under § 112, ¶ 6, it is insufficient for the patent holder to

present testimony ‘based only on a functional, not a structural, analysis.’” (quoting Alpex

Computer Corp. v. Nintendo Co., 102 F.3d 1214, 1222 (Fed. Cir. 1996))). Just as a

patentee who seeks to prove infringement must provide a structural analysis by

demonstrating that the accused device has the identified corresponding structure or an

equivalent structure, a challenger who seeks to demonstrate that a means-plus-function

limitation was present in the prior art must prove that the corresponding structure—or an

equivalent—was present in the prior art. See In re Donaldson Co., 16 F.3d 1189, 1193

(Fed. Cir. 1994) (en banc) (“[W]e hold that paragraph six applies regardless of the

context in which the interpretation of means-plus-function language arises, i.e., whether

as part of a patentability determination in the PTO or as part of a validity or infringement

determination in a court.”); see also McGinley v. Franklin Sports, Inc., 262 F.3d 1339,

1361 (Fed. Cir. 2001) (Michel, J., dissenting) (“Of course, in the context of a means-

plus-function claim, the invalidating prior art must disclose not simply a means for

achieving the desired function, but rather the particular structure recited in the written

description corresponding to that function, or an equivalent thereof.”).

       Here, Fresenius neither identified the structure in the specification that

corresponds to the means for delivering dialysate nor compared it to the structures

present in the prior art. See CytoLogix, 424 F.3d at 1178 (“Here, CytoLogix failed to

identify the structure in the specification that is the ‘temperature controller means’ and

compare it to the structure of the accused device. Accordingly, because CytoLogix

failed to present substantial evidence of infringement of claim 13 of the ’693 patent, the




2008-1306, -1331                            17
jury verdict of infringement of claim 13 must be reversed.”). At most, the evidence of

record supports a finding that some structures that could perform the claimed function

existed in the prior art. Under our precedent, it is clear that such a finding is insufficient.

Thus, as in CytoLogix, the jury’s verdict as to claims 26–31 cannot stand.

       We note also that there is an additional reason for affirming the district court’s

grant of JMOL regarding dependent claim 30, which requires a “means for delivering an

anticoagulant to a patient.” The district court instructed the jury that the corresponding

structure is a microprocessor and stepper motor. Fresenius USA, Inc. v. Baxter Int’l,

Inc., No. 03-1431, at 21 (N.D. Cal. July 5, 2006) (Dkt. No. 825) (“Jury Instructions”).

Because Fresenius failed to present any evidence that the required stepper motor

structure existed in the prior art, the district court correctly granted JMOL. Fresenius

has cited no testimony wherein any witness discussed a “stepper motor.” Fresenius

contends that the Cobe C3 manual, which was submitted to the jury, discloses the

necessary structure, but notably, Fresenius has cited no manual pages that reference a

“stepper motor.” After independently reviewing the record, this court notes that the

CMS 08 manual briefly mentions a “stepper motor” but does not discuss that structure in

the context of the claimed function—delivering an anticoagulant. Moreover, even if the

CMS 08 manual disclosed a stepper motor for delivering an anticoagulant, it was

Fresenius’s burden to clearly disclose, discuss, and identify for the jury the supporting

evidence upon which it was relying to prove that the claim limitation was present in the

prior art. See Koito, 381 F.3d at 1151 (holding that a challenger failed to meet its

burden of proving a prior art reference anticipated the patent claims when it “failed to

provide any testimony or other evidence that would demonstrate to the jury how that




2008-1306, -1331                              18
reference met the limitations of the claims”). Here, as with the means for delivering

dialysate limitation discussed above, the evidentiary burden of proof cannot be carried

without clearly identifying the corresponding structure in the prior art. Thus, substantial

evidence does not support the jury’s implicit finding that the prior art contained a stepper

motor means for delivering an anticoagulant, and the district court correctly granted

JMOL.

        For the foregoing reasons, we affirm the district court’s grant of JMOL as to

claims 26–31 of the ’434 patent.

                                D. Motivation to Combine

        All of the claims on appeal are directed to a hemodialysis machine integrated

with a touch screen user interface, which Baxter contends was novel and nonobvious at

the time the relevant patent applications were filed. Fresenius contends that touch

screens were well-known in the prior art and had been widely employed—even on other

medical devices—such that Baxter’s addition of a touch screen interface to an otherwise

conventional hemodialysis machine would have been obvious and thus unpatentable.

        The district court conducted the trial and issued its JMOL opinion before the

Supreme Court decided KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007).

Thus, the district court applied the teaching-suggestion-motivation test for obviousness

as it existed before it was modified by KSR. The district court granted JMOL and

overturned the jury’s verdict that all asserted claims of the ’131 and ’434 patents are

invalid as obvious because it determined that Fresenius had failed to demonstrate the

required motivation to combine.




2008-1306, -1331                            19
       We first note that it remains appropriate for a post-KSR court considering

obviousness “to determine whether there was an apparent reason to combine the

known elements in the fashion claimed by the patent at issue.” KSR, 550 U.S. at 418.

Thus, the jury’s obviousness verdict remains relevant to our review because we will not

overturn the implicit factual findings underlying the jury’s verdict so long as they are

supported by substantial evidence. See LNP Eng’g Plastics, 275 F.3d at 1353. As

explained below, Fresenius presented substantial evidence to support the jury’s implicit

factual finding that the prior art suggested the combination of a touch screen user

interface with known elements of prior art hemodialysis machines. 3 Thus, we reverse

the district court’s grant of JMOL as to the asserted claims in the ’131 patent.

       Baxter concedes that Fresenius presented a prior art publication that disclosed

the use of a touch screen interface on a medical device—specifically an anesthesia-

delivery system. That publication noted hemodialysis as one rapidly advancing area of

medicine, stated that complex technologies have fueled such rapid advances, and then

disclosed that the equipment necessary to practice those complex technologies could

benefit from an improved user interface.         J.A. at 18048.     The publication then

specifically described the integration of a touch screen interface with an anesthesia-

delivery system. Dr. Rau, the author of the publication, explained to the jury where his

publication mentioned hemodialysis and pointed to other sections of the publication that,

in his opinion, suggested the addition of a touch screen to a hemodialysis machine.

J.A. at 14373–75. Specifically, Dr. Rau testified that his publication “gave numerous


       3
                 The jury was instructed that “[t]he claimed invention is not obvious unless
there was something in the prior art or within the understanding of a person of ordinary
skill in the field that would suggest the claimed invention.” Jury Instructions at 26.


2008-1306, -1331                            20
examples of where you can use [touch screen technology] beneficially” and stated that

“one of the examples which I mentioned was hemodialysis and a hemodialysis

machine.” J.A. at 14373–75. Dr. Phares, another Fresenius witness, described the

ease and prevalence of “integrating a touch screen into some kind of a computer-

controlled machine” and opined that as of the relevant filing date, it would not have been

difficult for one to integrate a touch screen interface into a hemodialysis machine. J.A.

at 14321–22.

       Under KSR, “if a technique has been used to improve one device, and a person

of ordinary skill in the art would recognize that it would improve similar devices in the

same way, using the technique is obvious unless its actual application is beyond his or

her skill.”   550 U.S. at 417.    In addition, “[t]he combination of familiar elements

according to known methods is likely to be obvious when it does no more than yield

predictable results.”   Id. at 416.   Here, the jury implicitly found that the prior art

suggested combining a touch screen with known elements of a hemodialysis machine.

That finding is supported by substantial evidence because a reasonable jury could

conclude that Dr. Rau’s publication contained an explicit suggestion to combine the

disclosed benefits of a touch screen interface with a hemodialysis machine. In addition,

the jury could reasonably conclude, based on Dr. Phares’s testimony, that an ordinarily

skilled artisan would have known how to make that combination. Thus, substantial

evidence supports the jury’s findings that the limitations of the ’131 patent claims were

known in the prior art, that the prior art suggested combining those elements to arrive at

the claimed invention, and that the ordinarily skilled artisan would have known how to

make that combination. Therefore, JMOL is inappropriate under KSR, and we reverse




2008-1306, -1331                           21
the district court’s grant of JMOL regarding all asserted claims of the ’131 patent.

However, as discussed above, Fresenius failed to present evidence that all limitations

present in claims 26–31 of the ’434 patent were present in the prior art—thus, we affirm

the district court’s grant of JMOL as to those claims.

       Baxter argues it presented objective evidence sufficient to demonstrate that its

invention was not obvious. However, it was the proper role of the jury to assess the

credibility and weight of Baxter’s evidence regarding the difficulties of integrating a

hemodialysis machine with a touch screen interface and the commercial success of an

embodiment of the patents. The jury was instructed that it must consider that evidence.

Jury Instructions at 26–27. Therefore, to render its verdict on obviousness, the jury

necessarily determined that Baxter’s evidence was insufficient to overcome Fresenius’s

showing that the claims are invalid as obvious. We will not disturb that implicit factual

finding because it is supported by substantial evidence.

                    IV. The Permanent Injunction and Royalty Award

       Fresenius argues that the district court abused its discretion when it permanently

enjoined Fresenius and awarded Baxter a royalty on hemodialysis machines sold before

January 1, 2009, and disposables linked to those machines. Although we hold that the

district court did not err when it determined that injunctive relief is appropriate, we

vacate the injunction and remand for the district court to revise or reconsider the

injunction in light of our reversal of JMOL. We likewise vacate the royalty award and

remand for the district court to reconsider that award in view of this opinion.

                              A. The Permanent Injunction

       To obtain a permanent injunction, the prevailing patentee must demonstrate:




2008-1306, -1331                             22
              (1) that it has suffered an irreparable injury; (2) that remedies
              available at law, such as monetary damages, are inadequate
              to compensate for that injury; (3) that, considering the
              balance of hardships between the plaintiff and defendant, a
              remedy in equity is warranted; and (4) that the public interest
              would not be disserved by a permanent injunction.

eBay, 547 U.S. at 391.

       The district court performed the appropriate analysis required by eBay.                It

weighed all of the factors and explained why it ultimately determined that injunctive

relief is appropriate.    Injunction Order, slip op. at 3–8.        Contrary to Fresenius’s

assertion, the district court did not consider the permanent injunction to be “all but

inevitable” following the infringement determination. 4          Fresenius asserts several

additional challenges to the district court’s analysis, but it cites no legal error and fails to

demonstrate that the district court made any clearly erroneous factual determinations.

For example, Fresenius asserts that the district court “ignored” evidence, see

Appellant’s Br. at 50–52, but there is no requirement that the district court’s opinion

discuss every single fact alleged by Fresenius. In addition, the record contains support

for the district court’s factual determinations; the district court did not clearly err. Thus,


       4
                The district court did discuss an injunction as “all but inevitable,” but it did
so in the context of balancing the relative hardships to the parties and did not commit
legal error. The district court noted that it was “somewhat bewildering that, having
admitted to infringing the patents nearly two years ago and having known for at least a
year that an injunction was all but inevitable, Fresenius has apparently done nothing to
implement any alternative to the [accused infringing device].” Injunction Order, slip op.
at 7 (emphasis added). The district court then found that the balance of hardships
favored Baxter because “[i]t is Fresenius’s burden, and not Baxter’s, to taste the bitter
fruit of its own inaction.” Id. Read in context, the “all but inevitable” statement does not
amount to legal error, particularly in light of the fact that the district court applied the
correct four-factor test and explained its analysis. The district court was likely merely
acknowledging, as did Chief Justice Roberts in eBay, that “courts have granted
injunctive relief upon a finding of infringement in the vast majority of patent cases.”
eBay, 547 U.S. at 395 (Roberts, C.J., concurring).


2008-1306, -1331                              23
we conclude that the district court did not abuse its discretion when it granted

permanent injunctive relief. Nonetheless, we vacate the injunction and remand for the

district court to revise or reconsider the injunction in light of our reversal of the district

court’s grant of JMOL regarding the ’027 and ’131 patents.

                                   B. The Royalty Award

       The district court ordered Fresenius to pay an ongoing royalty of 10% of the

sales price for any infringing machines sold before January 1, 2009, and a royalty of 7%

of the sales price for all disposable products linked to infringing machines that were sold

from November 7, 2002, until the patents expire. Injunction Order, slip op. at 9–10.

Fresenius argues the district court abused its discretion by imposing the ongoing royalty

without explaining the bases for its royalty rate determinations.        See Paice LLC v.

Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007) (remanding because, absent

an explanation of the selection of the royalty rate, this court cannot determine whether

the district court abused its discretion) (citing Hensley v. Eckerhart, 461 U.S. 424, 437

(1983) (“It [is] important . . . for the district court to provide a concise but clear

explanation of its reasons for the fee award.”)).

       We do not decide today whether the district court’s royalty award was proper.

Instead, we vacate the royalty award and remand for the district court to consider

whether the previous award is proper in light of this court’s modification of the district

court’s judgment. In particular, 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. That analysis is influenced by the Georgia

Pacific factors, see Minks v. Polaris Indus., 546 F.3d 1364, 1372 (Fed. Cir. 2008), and




2008-1306, -1331                             24
our decision here may affect how the district court weighs one of more of those factors,

see Georgia-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y.

1970).

         Fresenius also argues that the district court erred by imposing a royalty on post-

verdict sales of disposables linked to machines that were sold pre-verdict. According to

Fresenius, that portion of the royalty is inappropriate because the jury had already

awarded Baxter damages based on machines sold pre-verdict. We disagree because

the district court acted within its discretion. A damages award for pre-verdict sales of

the infringing product does not fully compensate the patentee because it fails to account

for post-verdict sales of repair parts. See Carborundum Co. v. Molten Metal Equip.

Innovations, Inc., 72 F.3d 872, 881–82 (Fed. Cir. 1995). Although the jury had awarded

damages for Fresenius’s pre-verdict sales of machines and disposable products,

Fresenius cites no evidence indicating that the jury also considered post-verdict sales of

disposable products linked to machines sold pre-verdict. The district court was within its

discretion to impose a royalty on those sales of disposable products in order to fully

compensate Baxter for the infringement.

                                    V. Other Arguments

         We have considered the parties’ other arguments and find them unpersuasive.

For example, Fresenius asserts that the district court erred in construing two claim

terms: the “means for controlling a dialysate parameter” term in claim 26 of the

’434 patent and the “time variable profile” term in all asserted claims of the ’131 patent.

We decline to consider those arguments. First, Fresenius failed to clearly explain what

result would occur if this court adopted Fresenius’s proposed claim constructions.




2008-1306, -1331                             25
Fresenius gave this court little guidance and cited no record support regarding why a

modified claim construction would affect the infringement judgment, the validity

judgment, or both. For that reason alone, we may decline to consider Fresenius’s claim

construction arguments. See Jang v. Boston Sci. Corp., 532 F.3d 1330, 1336 (Fed. Cir.

2008) (“The Supreme Court has explicitly held that Article III does not permit the courts

to resolve issues when it is not clear that the resolution of the question will resolve a

concrete controversy between interested parties.” (citing Coffman v. Breeze, 323 U.S.

316, 322–24 (1945))). In addition, to the extent Fresenius contends a modified claim

construction may affect the infringement judgment, we disagree.                Fresenius

unconditionally stipulated that its accused infringing device contains each and every

element of the claims, J.A. at 13721, and then proceeded to argue invalidity at trial.

That stipulation in no way stated or indicated that it was conditioned upon the district

court’s claim construction, and thus, the infringement judgment cannot be altered by a

modified claim construction.       Finally, to the extent Fresenius’s proffered claim

constructions would support its invalidity arguments, we note that we have not relied on

the contested claim terms for any holdings adverse to Fresenius, and thus, the claim

construction arguments are moot as to the issue of validity.

       Baxter asserts that it is entitled to a new trial if this court determines that the

district court’s grant of JMOL was erroneous. We disagree. We have decided the

invalidity issues as a matter of law, and no new trial is warranted.

                                    VI. CONCLUSION

       Because Fresenius failed to demonstrate that the structures corresponding to

certain means-plus-function claim limitations were present in the prior art, we affirm the




2008-1306, -1331                            26
district court’s judgment that Fresenius failed to prove that claims 26–31 of the

’434 patent are invalid. We reverse the district court’s grant of JMOL as to all other

asserted claims. In addition, although we hold that the district court did not abuse its

discretion when it permanently enjoined Fresenius, we vacate the injunction and

remand so that the court may revise or reconsider the injunction in light of the fact that

only claims 26–31 of the ’434 patent remain valid and infringed. Finally, we vacate the

royalty award entered by the district court and remand for further proceedings

consistent with this opinion.

 AFFIRMED-IN-PART, REVERSED-IN-PART, VACATED-IN-PART, and REMANDED

                                         COSTS

       No costs.




2008-1306, -1331                           27
 United States Court of Appeals for the Federal Circuit


                                      2008-1306, -1331




                             FRESENIUS USA, INC.
                  and FRESENIUS MEDICAL CARE HOLDINGS, INC.,
                                                Plaintiffs-Appellants,

                                               v.

                            BAXTER INTERNATIONAL, INC.
                      and BAXTER HEALTHCARE CORPORATION,
                                                 Defendants-Cross Appellants.




Appeals from the United States District Court for the Northern District of California in
Case no. 03-CV-1431, Judge Saundra Brown Armstrong.


NEWMAN, Circuit Judge, concurring.

       I join the court’s opinion, but I write separately to respond to Judge Dyk’s

separate opinion, in which he proposes that the district court should stay completion of

this litigation, in view of the pending reexamination proceeding. Although this proposal

is not adopted it warrants response, for at this stage in this protracted litigation, after full

trial and decision in the district court, after full appeal and ruling of the appellate court

and with only a modified remedy remaining on remand, such an action would be

inappropriate. Further, this question has been neither briefed nor debated. Its sua

sponte presentment as available at this stage is irregular.
       This litigation began in 2003. Only an issue of adjustment of damages and a

modification of the permanent injunction to reflect our reversal of JMOL remain on

remand. Meanwhile, the reexamination has yet to be finally decided at the PTO, and

remains subject to judicial review, on the same issues of validity as have been litigated.

The proposal would entail several years’ additional delay, if the court were now to stay

the action at this final stage. 1

       The relationship between reexamination and litigation is not new to the courts,

and precedent reflects the variety of responses in particular situations, as summarized

in Slip Track Systems, Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1341 (Fed. Cir. 1998) with

respect to concurrent proceedings including PTO reexamination and PTO interference

proceedings. It is established that a “court is not required to stay judicial resolution in

view of the reexaminations.”        Viskase Corp. v. American Nat’l Can Co., 261 F.3d

1316,1328 (Fed. Cir. 2001). The corollary rule is that the PTO has no authority to stay

reexamination pending the outcome of district court litigation. Ethicon, Inc. v. Quigg,



       1
              Our colleague in concurrence appears to believe that a PTO decision on
reexamination will override a judicial decision reached after trial and appeal. That is
incorrect. All that can be accomplished is delay. 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:

       Once an order for inter partes reexamination of a patent has been issued
       under section 313, the patent owner may obtain a stay of any pending
       litigation which involves an issue of patentability of any claims of the
       patent which are the subject of the inter partes reexamination order,
       unless the court before which such litigation is pending determines that a
       stay would not serve the interests of justice.

(emphasis added).



2008-1306,-1331                              2
849 F.2d 1422 (Fed. Cir. 1988).        A stay of finality, after the issues of validity and

infringement have been litigated and decided by the district court and appealed to the

Federal Circuit, is a distortion of the role of reexamination.

       I remain a strong supporter of the principle of reexamination. It can be a useful

and powerful tool for the benefit of both patentees and those interested in restricting or

eliminating adversely held patents. However, if routinely available to delay the judicial

resolution of disputes, the procedure is subject to inequity, if not manipulation and

abuse, through the delays that are inherent in PTO activity. The statistical data of the

Patent and Trademark Office place this aspect in sharp relief, for the number of

reexamination requests is increasing, as is the time for completion of reexamination and

appeal in the PTO, as well as the right of judicial review.         In its recent statistical

summaries, the PTO reports a 54% increase in filing of ex parte reexaminations since

2004 (from 441 in 2004 to 680 in 2008, and with 481 filings through June 2009). See

USPTO, Reexamination Operational Statistics (June 30, 2009), available at

http://www.uspto.gov/web/patents/documents/reexam_operations_06-09.pdf. Of these

filings 31% were reported to be in litigation.       Id.   Inter partes reexaminations are

increasing rapidly, from 168 in 2008 to 195 filings through June of 2009, with 66%

reported to be in litigation. Id. The PTO also reports that as of the third quarter of 2009,

the average pendency for ex parte reexamination is 36.1 months, an increase from the

34.6 months at December 2008. Id. The pendency of inter partes reexamination is

reported to average 41.7 months. Id.

       Decisions on reexamination can be appealed to the Board and are subject to

judicial review. The PTO reports that the Board is still experiencing a heavy increase in




2008-1306,-1331                               3
appeals and the backlog of appeals. In contrast, the present case is over but for review

of the remedy on remand. The suggestion that the district court should now stay the

proceedings, at this final stage, is contrary to the precepts of expeditious and just

resolution of disputes.




2008-1306,-1331                            4
United States Court of Appeals for the Federal Circuit

                                    2008-1306, -1331

                             FRESENIUS USA, INC.
                  and FRESENIUS MEDICAL CARE HOLDINGS, INC.,

                                                          Plaintiffs-Appellants,

                                             v.

                           BAXTER INTERNATIONAL, INC.
                     and BAXTER HEALTHCARE CORPORATION,

                                                          Defendants-Cross Appellants.



Appeals from the United States District Court for the Northern District of California in
case no. 03-CV-1431, Judge Saundra Brown Armstrong.

DYK, Circuit Judge, concurring.

       I join the majority opinion on the understanding that it does not foreclose the

district court in its discretion from staying further proceedings pending the outcome of

the reexamination before the U.S. Patent and Trademark Office. While Fresenius did

not establish the invalidity of claims 26–31 of the ’434 patent in the district court

proceeding, those claims on their face are of dubious validity in light of our holding that

claims 1–3 and 13–16 of the ’131 patent and claim 11 of the ’027 patent are invalid. It is

entirely possible that the U.S. Patent and Trademark Office will finally conclude that

claims 26–31 of the ’434 patent are also invalid.
