Dexcom, Inc. v. Abbott Diabetes Care, Inc., Appeal No. 2023-1795 (Fed. Cir. Jan. 3, 2024)
In our Case of the Week, the Court of Appeals for the Federal Circuit affirmed a district court’s denial of DexCom’s motion to preliminarily enjoin Abbott from proceeding with its inter partes review challenges to DexCom’s patents, based on a “no challenge” provision in a prior settlement agreement between the parties.
After previous patent litigation between the parties, DexCom and Abbott had entered into a settlement agreement that included, among other things, a mutual covenant not to “Challenge” each other’s patents for a certain period of time—with “Challenge” defined to include IPR proceedings before the Patent Trial and Appeal Board (“PTAB”). A forum selection clause specified the U.S. District Court for the District of Delaware as the exclusive jurisdiction for disputes.
After the no-challenge period expired, but before the settlement agreement expired, DexCom sued Abbott for patent infringement in Texas. Abbott responded by moving to transfer the infringement suit to Delaware based on the settlement agreement’s forum selection clause, and also filed a breach-of-contract complaint in Delaware claiming, among other things, that DexCom’s suit in Texas breached the forum selection clause. The patent infringement suit was transferred to Delaware and consolidated with Abbott’s breach-of-contract suit. Ten months after DexCom filed the patent suit, Abbott filed eight petitions for inter partes review of DexCom’s asserted patents at the PTAB. DexCom filed preliminary patent owner responses urging the PTAB not to institute the IPRs, and also filed its own breach-of-contract claim alleging that Abbott’s IPR petitions breached the forum selection clause.
About six months after Abbott filed its IPR petitions, DexCom moved for a preliminary injunction to prevent Abbott from proceeding with them. In reviewing DexCom’s motion, the district court assumed that DexCom met the first preliminary injunction factor—likelihood of success on the merits—but denied the preliminary injunction anyway. The court observed that DexCom had participated in the IPRs for six months before moving for injunctive relief, which tended to negate its contentions of irreparable harm. The court also found that the balance of hardships favored denial because DexCom had taken contradictory legal positions at different times during the dispute. In addition, the district court found that the public interest favored denial of DexCom’s motion because it was not yet clear whether Abbott’s IPRs violated the settlement agreement, and the goal of weeding out invalid patents prevailed over any harm alleged by DexCom. DexCom appealed.
Regarding likelihood of success, which the district court had assumed favored DexCom, the Federal Circuit disagreed, and found that DexCom was not likely to succeed on the merits. One exception to the no-challenge clause said that each party reserved its right to “Challenge” any of the other party’s patents “if there is a statute, regulation, or rule that sets a deadline to make the Challenge.” And the definition of “Challenge” included IPRs. Thus, an exception to the no-challenge period allowed either party to petition for IPRs, which implied that the forum selection clause was not intended to preclude the parties from filing IPRs. Because—despite DexCom’s suggestions to the contrary—the forum selection clause governed disputes both during and after the no-challenge period, the Federal Circuit held that “the clause cannot operate to prohibit the filing of IPRs after the [no-challenge period] if it allowed them during the [no-challenge period].” Thus, the Federal Circuit ruled the district court had committed an error by assuming DexCom was likely to succeed on the merits. It was a harmless error, however, because the Federal Circuit’s finding that DexCom was not likely to succeed on the merits favored the district court’s ultimate denial of DexCom’s preliminary injunction; and since DexCom failed the first preliminary injunction factor, there was no need for the Federal Circuit to interrogate the other three.
The opinion can be found here.
By Tyler Hall
