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Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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[PROPOSED] ORDER DENYING BAXTER’S MOTION TO STRIKE

FRESENIUS’ FINAL INVALIDITY CONTENTIONS

Case No. C 03-01431 SBA (EDL)

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION

FRESENIUS MEDICAL CARE HOLDINGS,

INC., a New York corporation; and FRESENIUS

USA, INC., a Massachusetts corporation,

Plaintiffs and Counterdefendants,

v.

BAXTER INTERNATIONAL, INC., a Delaware

corporation; and BAXTER HEALTHCARE

CORPORATION, a Delaware corporation,

Defendants and Counterclaimants.

Case No. C 03-01431 SBA (EDL)

ORDER DENYING

BAXTER’S MOTION TO STRIKE

FRESENIUS’ FINAL INVALIDITY

CONTENTIONS

This matter is before the Court on the motion of Defendants Baxter International, Inc. and

Baxter Healthcare Corporation (collectively, “Baxter”) for an order to strike the Final Invalidity

Contentions filed by Plaintiffs Fresenius Medical Care Holdings, Inc. and Fresenius USA, Inc.

(collectively, “Fresenius”). Having considered all arguments submitted by the parties, the Court

hereby DENIES Baxter’s Motion to Strike Fresenius’ Final Invalidity Contentions.

FACTUAL BACKGROUND

On November 24, 2003, Fresenius served its Preliminary Invalidity Contentions pursuant to

Patent Local Rule 3-3. On February 27, 2004, pursuant to the Order of Magistrate Judge LaPorte,

Baxter served its Fourth Supplemental Patent Local Rule 3-1 Initial Disclosures. On November 22,

2004, this Court issued its Order regarding claim construction. On December 28, 2004, Baxter

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[PROPOSED] ORDER DENYING BAXTER’ S MOTION TO STRIKE

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served its Final Infringement Contentions pursuant to Patent Local Rule 3-6(a). On January 18,

2005, Fresenius served its FICs pursuant to Patent Local Rule 3-6(b).

DISCUSSION

Patent Local Rule 3-6(b) permits the party opposing a claim of patent infringement to serve

Final Invalidity Contentions as of right and without leave of Court under either of two conditions:

Each party’s “ Preliminary Infringement Contentions” and “ Preliminary Invalidity

Contentions” shall be deemed to be that party’s final contentions, except as set forth

below.

. . .

(b) Not later than 50 days after service by the Court of its Claim Construction

Ruling, each party opposing a claim of patent infringement may serve “ Final Invalidity

Contentions” without leave of court that amend its “ Preliminary Invalidity

Contentions” with respect to the information required by Patent L.R. 3-3 if:

(1) a party claiming patent infringement has served “ Final

Infringement Contentions” pursuant to Patent L.R. 3-6(a), or

(2) the party opposing a claim of patent infringement believes in good

faith that the Court’s Claim Construction Ruling so requires.

Patent Local Rule 3-6(b) (emphasis added).

There is no dispute that Baxter served Final Infringement Contentions pursuant to Patent

L.R. 3-6(a) on December 28, 2004. (See Miller Decl., Ex. E). Accordingly, pursuant to Patent

Local Rule 3-6(b)(1), Fresenius was permitted to serve Final Invalidity Contentions that amend its

Preliminary Invalidity Contentions without leave of Court. Fresenius’ complied with the Patent

Local Rules in amending its Preliminary Invalidity Contentions.

Despite the clear language of the Patent Local Rules, Baxter contends that Fresenius’ Final

Invalidity Contentions are improper because they add numerous prior art references and several

theories of invalidity not disclosed in Fresenius’ Preliminary Invalidity Contentions. Baxter appears

to contend that the Patent Local Rules should be read to require that any changes to a party’s Final

Invalidity Contentions must be made in “ good faith” and must be “related to” changes made by the

patentee to its Final Infringement Contentions. No such requirements are expressed by the words of

L.R. 3-6(b) and this Court finds no merit in Baxter’s contention that such requirements should be

read into the Patent Local Rules. Hallstrom v. Tillamook County, 493 U.S. 20, 31 (1989) (quoting

Mohasco Corp. v. Silver, 447 U.S. 807, 826 (1980)) (“ ‘[I]n the long run, experience teaches that

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strict adherence to the procedural requirements specified by the legislature is the best guarantee of

evenhanded administration of the law.’ ”). To read such subjective requirements into the Patent

Local Rules would cause an expansion of the type of motion practice that these Rules were intended

to curtail.

Baxter’s reliance on IXYS Corp. v. Advanced Power Tech., 2004 WL 1368860 (N.D. Cal.

2004) is unavailing. Notably, in that case the Court permitted the defendant to amend its Final

Invalidity Contentions, pursuant to Patent L.R. 3-7, during expert discovery and just three weeks

before the patentee’s rebuttal expert report regarding invalidity was due. Patent L.R. 3-7 is not at

issue in this case. Moreover, even if prejudice to Baxter were a valid consideration under Patent

Local Rule 3-6(b), and it is not, Baxter has not demonstrated that it will suffer any prejudice as a

result of Fresenius’ amendment of its Preliminary Invalidity Contentions. Unlike the disputed

amendments in IXYS, the amendments here do not come at the “ eleventh hour,” but come in plenty

of time to permit Baxter to conduct both fact and expert discovery.

The Court also rejects Baxter’s invitation to use the Patent Local Rules to preclude the fact

finder from hearing of the prior art Fresenius contends invalidates the asserted claims of Baxter’s

patents. The Patent Local Rules recognize and enforce the truism that patentees who seek broad

claim constructions to argue for infringement may see their claims invalidated in view of the prior

art. See Mobil Oil Corp. v. Filtrol Corp., 501 F.2d 282, 284 (9th Cir. 1974) (It is a “ well-known

principle of patent law that where claims are close to the prior art, often they cannot be construed

broadly enough to be infringed without also being so broad as to be invalid.”). Here, Fresenius

argues: (1) that the Court’s claim construction Order by itself necessitated the service Final

Invalidity Contentions under PLR 3-6(b)(2) because it made additional prior art relevant to the

invalidity of the asserted claims, and (2) that Baxter, in arguing for summary judgment of

infringement, has taken a view of the scope of its asserted claims that is broader than that supported

by the Court’s claim construction, thereby further expanding the pool of relevant prior art.

Fresenius, in accord with the strong public interest in eliminating invalid patents, was well within its

rights to continue to search for additional prior art before serving its Final Invalidity Contentions.

Nestier Corp. v. Menasha Corp.-Lewisystems Div., 739 F.2d 1576, 1581 (Fed.Cir.1984) (“ There is a

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stronger public interest in the elimination of invalid patents than in the affirmation of a patent as

valid.”). Counsel for Fresenius has represented to the Court that “ the vast majority of the ‘newly’

cited references were identified by Fresenius’ counsel during the period from December 2004 to

mid-January 2005. (Miller Decl., ¶ 4). Thus, this is not “ litigation by ambush” as Baxter contends,

but instead is the conduct contemplated by the Patent Local Rules. The Court therefore DENIES

Baxter’s motion to strike Fresenius’ Final Invalidity Contentions.

Dated:

Hon. Saundra Armstrong

United States District Court Judge

Submitted by:

/s/

Todd G. Miller - #163200, miller@fr.com

Fish & Richardson P.C.

12390 El Camino Real

San Diego, CA 92130

Telephone: (858) 678-5070

Facsimile: (858) 678-5099

Robert A. Van Nest - #84065, rav@kvn.com

Stuart L. Gasner - #164675, slg@kvn.com

David J. Silbert - #173128, djs@kvn.com

Keker & Van Nest, LLP

710 Sansome Street

San Francisco, CA 94111-1704

Telephone: (415) 391-5400

Facsimile: (415) 397-7188

Roger S. Borovoy, SBN 31209, borovoy@fr.com

Kameron Parvin, SNB 232349, parvin@fr.com

Fish & Richardson P.C.

500 Arguello Street, Suite 500

Redwood City, CA 94053

Telephone: (650) 839-5070

Facsimile: (650) 839-5071

Mathias W. Samuel (appearing pro hac vice), samuel@fr.com

Fish & Richardson P.C., P.A.

3300 Dain Rauscher Plaza

60 South Sixth Street

Minneapolis, MN 55402

Telephone: (612) 335-5070

Facsimile: (612) 288-9696

Attorneys for Plaintiffs and Counterdefendants

FRESENIUS MEDICAL CARE HOLDINGS, INC., and

FRESENIUS USA, INC.

10488785.doc

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