Context: Continuous glucose monitoring (CGM) device makers Abbott and Dexcom entered into a patent cross-license agreement in 2014 that settled any pending litigation. The 2014 agreement distinguished between a license to some patents, which was going to expire in a year from now (December 31, 2025) and all other patents, for which a covenant not to sue was in place until March 31, 2021. Upon expiration of the covenant not to sue, Dexcom filed suit in the Western District of Texas over patents allegedly not covered by it. Abbott countersued under contract law, and the U.S. part of the dispute was consolidated in the District of Delaware. Litigation was also brought in the UK and in German national court. In July 2023, about a month after the Unified Patent Court (UPC) opened its doors, Dexcom sued there as well. In November 2023, Abbott started countersuing in the UPC.
What’s new: On Monday (December 23, 2024), the parties jointly moved for the dismissal with prejudice (meaning that the same claims cannot be pursued again) of their consolidated Delaware litigation. That same day, Abbott issued a press release announcing “an agreement with DexCom, Inc. to settle all outstanding patent disputes between the companies in cases related to continuous glucose monitoring products,” as a result of which they “will not litigate patent, trade dress, and design rights disputes with each other for the next 10 years.” Dexcom confirmed this in a regulatory filing.
Direct impact: Notably, “[t]here are no financial payments associated with the settlement from either Abbott or Dexcom,” a fact that may be part of the reason why Abbott describes the agreement as a “positive development.” The 2014 agreement was also a zero-zero cross-license, but litigation behavior (timing and nature of actions, choice of jurisdiction, parties’ choice of counsel) strongly suggests that Dexcom hoped to become the net licensor this time around. Dexcom has failed to achieve that objective and ultimately contented itself with a deal that does not involve commercial benefits over the previous one. It appears that Dexcom’s reliance on partly very expensive plaintiffs’ firms did not yield a return on investment.
Wider ramifications: Abbott was apparently the reactive party here, but clearly on the enforcing side against a Chinese competitor named SiBio (July 3, 2024 ip fray article). The UPC part of the renewed dispute between Abbott and Dexcom is unlikely to have played a major role in the global scheme of things, given that litigation was already far more advanced (as it had started more than two years earlier) in the U.S. district court. The fact that Abbott shot down two Dexcom patents in the UPC this summer may have helped to make Dexcom give up on any aspirations to receive payments from Abbott. There are other disputes where UPC actions may drive settlements through injunctions.
ip fray previously reported on three developments in the dispute between Abbott and Dexcom:
- The Paris Local Division (LD) invalidated Dexcom’s EP3435866 (“analyte monitoring system”) as Abbott prevailed on its revocation counterclaim (July 4, 2024 ip fray article). Dexcom was asserting the German part of that patent in the Mannheim Regional Court, but the UPC revoked that one as well.
- The same happened in the Munich LD later that month with respect to Dexcom’s EP3797685 (“Systems and methods for display device and sensor electronics unit communication”) (first section of this July 31, 2024 ip fray article).
- On December 11, 2024, the Paris LD threw out Dexcom’s case over EP3831282 (“Remote monitoring of analyte measurements”) because the patent was deemed invalid not only in its granted but also in any proposed amended form (item 2 of our December 15, 2024 UPC Roundup).
In the High Court of Justice for England & Wales (EWHC), Mr Justice James Mellor held two patents per party invalid earlier this year (January 15, 2024 EWHC judgment). Last year, Mr Justice Jonathan Richards found that an Abbott patent was not infringed by Dexcom (October 18, 2023 EWHC judgment), which Mr Justice Mellor also found this summer in another Abbott v. Dexcom case (June 28, 2024 EWHC judgment).
Looking at only the UK part of the dispute, one might be led to think that Abbott was the more aggressive party. But Abbott’s primary objective appeared to be to obtain favorable invalidity decisions in order to dissuade German judges (in whose courts there is no full invalidity defense) from entering injunctions over patents held invalid in a well-respected foreign jurisdiction (August 6, 2021 EWHC judgment). Abbott additionally asserted some of its own patents in the UK.
Dexcom apparently knew that certain patents were at a high risk of being deemed invalid and tried to increase its chances of getting some leverage by suing in various places, even including Spain.
Abbott’s focus on shooting down Dexcom patents could also be observed in the United States, where Dexcom sued first (in the Western District of Texas, presumably hoping to build a threat of a large damages verdict after relatively speedy proceedings) and Abbott got those claims transferred to the District of Delaware. Abbott challenged various Dexcom patents through inter parties review (IPR) petitions filed with the Patent Trial & Appeal Board (PTAB) of the United States Patent & Trademark Office (USPTO). Dexcom alleged that this was a breach of the forum-selection clause in their contract, but the district court and the United States Court of Appeals for the Federal Circuit (which affirmed the denial of what was effectively a motion for an anti-PTAB antisuit injunction) sided with Abbott (January 3, 2024 Fed. Cir. opinion (PDF)).
In the District of Delaware, Abbott prevailed on two of its four asserted patents. First, a jury verdict of March 22, 2024 found Dexcom in infringement of one patent, cleared it of two other patents, and did not resolve the claims regarding one patent as the jury was hung (i.e., could not reach a consensus), meaning that it was partly a mistrial:
The parties brought motions for judgment as a matter of law (JMOL). Circuit Judge Kent Jordan was sitting on his former district court by designation. He had meanwhile been promoted to the United States Court of Appeals for the Third Circuit. Judge Jordan agreed with Dexcom that any infringement was not willful, but eliminated the need for a retrial over the ‘216 patent (the one over which the jury deadlocked) by determining as a matter of law that Dexcom infringed it. Dexcom appealed and Abbott cross-appealed.
In the combination of its defensive and (in the U.S.) offensive victories, Abbott then apparently had the leverage it needed to dissuade Dexcom from its aspirations to impose royalty obligations on its competitor. Apparently, Abbott just wanted to be left alone by Dexcom. The litigation was a waste of time, money and energy on both sides, and presumably could have been avoided if Dexcom had agreed to an extension of the previous zero-zero cross-license.
The parties’ choice of law firms is also telling. In the U.S. and the UPC, Dexcom relied on Quinn Emanuel, while Abbott chose Kirkland & Ellis for the U.S. part. In the UK and the UPC, Abbott chose Taylor Wessing, which is a firm that has a fairly balanced split between offensive and defensive clients, while Dexcom’s UK choice (and for some UPC cases, though mostly the defensive ones) was Bird & Bird, a firm that was, on balance, not responsible for what weakened Dexcom’s position. Abbott’s appointment of Daniel Alexander KC was a typical defendant’s choice.
This is a win for Abbott’s chief IP officer, Gael Tisack, and the in-house counsel in charge of this litigation, Rachel Bach.