Federal Circuit Further Clarifies Article III Standing in Appeals from USPTO
In a recent article (http://www.msba.org/Bar_Bulletin/2017/03_-_March/Federal_Circuit_Narrows_Right_to_Appeal_from_Certain_Patent_Office_Proceedings.aspx) we reviewed decisions from the Federal Circuit on the issue of whether a litigant has standing under Article III of the United States Constitution to appeal from adverse decisions of the United States Patent and Trademark Office in inter partes reviews or inter partes reexaminations. In Personal Audio, LLC v. Electronic Frontier Foundation (No. 2016-1123; August 7, 2017) the Federal Circuit again addressed the standing issue, this time holding that the standing requirement in such appeals only applies to appellants, and not appellees.
By way of background, in 2014 the court decided Consumer Watchdog v. WARF (753 F.3d 1258). There, Consumer Watchdog (“CW”) requested inter partes reexamination of a patent owned by WARF relating to human embryonic stem cell cultures. It was unsuccessful, and CW appealed the PTAB’s adverse determination. The Federal Circuit dismissed, holding that CW had not established an injury in fact sufficient to confer Article III standing. The Court noted that CW had no involvement in research or commercial activities involving human embryonic stem cells, and was not an actual or prospective competitor of WARF or licensee of its patent; CW in effect had only a general grievance against the WARF patent. The Court stated that although Article III standing is not necessarily a requirement to appear before an administrative agency, once a party seeks review in a federal court, "the constitutional requirement that it have standing kicks in." (753 F.3d at 1261).
More recently, the Court decided Phigenix v. Immunogen, 845 F.3d 1168 (January 9, 2017), which applied the Consumer Watchdog analysis to an appeal of an unsuccessful IPR petitioner. After a discussion of the procedure for demonstrating standing, the Court determined that Phigenix had not established an injury in fact. Although Phigenix was a for-profit company, it did not manufacture any products, although it purportedly had developed an extensive patent portfolio that would cover activity relating to the subject matter of Immunogen’s patent. Phigenix did not argue that it faced the risk of infringing the patent at issue, that it was an actual or prospective licensee of the patent, or that it otherwise planned to take any action that would implicate the patent. Rather, it attempted to show standing by alleging that the continued existence of the Immunogen patent prevented others from licensing its own patents. The Court rejected those arguments as unsubstantiated.
In PPG v. Valspar, Nos. 2016-1406 and 2016-1409 (February 9, 2017) the Federal Circuit further clarified when a losing Petitioner has standing under Article III of the Constitution to appeal to the Federal Courts from an adverse decision by the PTO Patent Trial and Appeal Board. There, PPG sought inter partes reexamination of two patents owned by Valspar relating to polymeric compositions for coating the interior of e.g., beverage cans. The USPTO granted PPG’s petition, and the Examiner rejected all of the applicable claims (PPG’s petition was filed by the present author when he was a partner at the firm representing PPG). The PTAB reversed, and PPG appealed to the Federal Circuit. The Court found that PPG had standing to bring the appeal. The parties were competitors in the interior can coating business; in the past PPG had made can coatings within the scope of the Valspar patent claims; and Valspar had recently sued PPG for infringing two patents closely related to the patents on appeal.
Finally, in the most recent case, Electronic Frontier Foundation (“EFF”) successfully petitioned the PTO to institute an IPR with respect to a patent owned by Personal Audio. The PTO held that several claims of the patent were unpatentable, and Personal Audio appealed to the Federal Circuit. On appeal, the Court asked the parties to brief the issue of whether EFF had standing to participate in the appeal, given its status as a non-profit organization that advocates in the public interest of consumers of digital technology. Despite that EFF’s status seemed to place it closer to Consumer Watchdog and Phigenix (suggesting a lack of standing), the Court nevertheless held that EFF was not constitutionally excluded from participating on appeal, because the standing requirement only applies to the party seeking entry to the federal courts for the first time. Appellant Personal Audio clearly had standing to appeal, so the Consumer Watchdog requirement was fully met. This decision is good news for non-practicing groups that file IPR petitions—if they lose they might not be able to appeal, but if they win they will be able to defend the judgment on appeal.
A link to the Federal Circuit’s decision can be found here: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/16-1123.Opinion.8-3-2017.1.PDF
Glenn E. Karta is a shareholder at Shores & Oliver, P.C.
More information about our firm can be found at www.shoresoliver.com