By Kevin Laurence ‑ August 25, 2017
In this guest blog, Kevin Laurence discusses recent cases on appellate standing for parties at the Federal Circuit. Parties with standing at the PTAB may not have standing at the Federal Circuit. This evolving area will, for some parties, frustrate an important impetus for the America Invents Act (AIA), avoidance of expensive litigation to resolve patent validity. Find out more on Kevin’s Post-Grant Patent Practice course, or for an overview, visit the PRG website.
Federal judicial authority is limited to resolving “Cases” and “Controversies” by Article III of the Constitution. Unlike a plaintiff in district court, administrative petitioners in an inter partes review (IPR) or a post-grant review need not have Article III case-or-controversy standing, as the right to challenge a patent before the Patent Trial and Appeal Board (PTAB) is a statutory right. However, an appeal from an adverse final written decision (FWD) by the PTAB is statutorily sent to the Federal Circuit, which is an Article III court.
An appellant from an unfavourable FWD whose standing is not self-evident must produce evidence to support standing. Phigenix, Inc. v. ImmunoGen, Inc., 845 F.3d 1168 (Fed. Cir. 2017). In contrast, the Federal Circuit held in Personal Audio, LLC v. Electronic Frontier Foundation, No. 2016-1123, slip op. (Fed. Cir. Aug. 7, 2017) that the appellee need not establish standing if the federal standing principles are met by the appellant to an unfavourable FWD. The Federal Circuit has not yet squarely addressed whether a cross-appellant seeking relief from a mixed outcome in a FWD must establish standing.
Appellants must have Article III case-or-controversy standing
Phigenix unsuccessfully challenged a subset of the claims of U.S. Patent No. 8,080,534 in an IPR. The ’534 Patent, which protects a targeted breast cancer therapy, is owned by ImmunoGen, Inc. and is licensed to Genentech Inc. Phigenix does not manufacture any products but is developing a patent portfolio. Phigenix asserted one of its patents against Genentech after unsuccessful licensing negotiations.
Prior to Phigenix, the Federal Circuit had not established its legal standard for demonstrating standing in an appeal from a final agency action. The Federal Circuit followed the D.C. Circuit’s standard (as influenced by other Circuit’s holdings) and identified the burden of production, the evidence an appellant must produce to meet that burden, and when an appellant must produce that evidence. An appellant’s burden of production is the same as that of a plaintiff moving for summary judgment in district court. When an appellant’s standing to seek review of administrative action is self-evident, no evidence is needed. But scant guidance is given of what is self-evident. For example, will a well-known manufacturer that lost an IPR without concurrent litigation related to the challenged patent be required to produce evidence of standing? An appellant outside of the self-evident category must supplement the record to substantiate its entitlement to judicial review. Declarations and other evidence may be used to demonstrate standing. If no evidence is in the record then the appellant must produce evidence at the earliest possible opportunity during the appeal. Indeed, the D.C. Circuit has local rules on submitting standing-related evidence on appeal.
In Phigenix, the Federal Circuit summarized the three elements standing requires, as established by the Supreme Court in Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992): An appellant “must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.” The Federal Circuit focused on the first element, “the injury-in-fact requirement,” which requires an appellant to allege an injury that is both concrete and particularized. To constitute a concrete injury, the harm must actually exist or appear imminent. The Federal Circuit rejected Phigenix’s argument it was being harmed because the ’534 Patent encumbered its licensing efforts. The Federal Circuit also rejected Phigenix’s assertions of an injury in fact based on its statutory right to an appeal from a FWD and based on the estoppel effect of the FWD. Applying the newly identified standards to Phigenix’s evidence, the Federal Circuit concluded that declarations presented during the appeal by Phigenix were insufficient evidence to establish standing.
Appellees not required to establish standing
Electronic Frontier Foundation (EFF), a non-profit organization that advocates in the interest of consumers of digital technology, filed a petition for an IPR of claims of Personal Audio’s U.S. Patent No. 8,112,504. The challenged claims were held unpatentable in a FWD. After the parties filed their appeal briefs, the Federal Circuit ordered the parties to address whether EFF had standing to participate in the appeal in light of Consumer Watchdog v. Wisconsin Alumni Research Found., 753 F.3d 1258 (Fed. Cir. 2014).
To recap, in Consumer Watchdog, the Federal Circuit held that an appellant of an adverse decision after an inter partes reexamination lacks standing to appeal the decision if it lacks a particularized, concrete interest in the patentability of the challenged claims or any injury in fact flowing from the decision. EFF argued that Consumer Watchdog was distinguishable because Personal Audio, the appellant, had been injured as the owner of the patent by the PTAB’s cancellation of some claims. EFF further argued that the injury gives the Federal Circuit jurisdiction pursuant to Article III and that EFF’s standing is immaterial because it is not the party invoking federal jurisdiction.
More than a year after the conclusion of oral arguments, the Federal Circuit agreed with EFF and concluded that the appellee is not constitutionally excluded from appearing in court to defend the favorable FWD if the appellant satisfies the Article III case-or-controversy standing requirement.
If an appellant meets the federal standing principles, what is required of a cross-appellant to invoke the federal judicial power? Neither Phigenix or Personal Audio squarely address the scenario of a cross-appellant. However, in Personal Audio, the Federal Circuit relied on ASARCO Inc. v. Kadish, 490 U.S. 605 (1989) to conclude that “standing to appeal is measured for the party ‘seek[ing] entry to the federal courts for the first time in the lawsuit.” Thus, if the appellant meets the standing requirement, the analysis may be complete and the cross-appellant’s standing need not be ascertained too. On the other hand, a cross-appeal is like a separate appeal, and it may be that a cross-appellant will be required to have Article III standing for the cross-appeal portion of the case, in which the cross-appellant is attacking aspects of the FWD, while not having any similar requirement to defend the aspects of the PTAB’s decision that are the subject of the appeal portion of the case.
Impact of Phigenix and Personal Audio
In light of Phigenix and Personal Audio, some appellants will need to be prepared to establish standing, while appellees will not be burdened with such a requirement. Because this area is rapidly evolving, the impact on cross-appellants may be clarified soon.
Kevin Laurence has 25 years of experience in patent law. Best Lawyers in America named him their 2016 “Lawyer of the Year” in Patent Law for Washington, D.C. He teaches a course as an adjunct professor at the George Washington University Law School on USPTO post-grant proceedings. He served on the Interim Board of Directors for the PTAB Bar Association during 2016–17. He also served as vice chair of Intellectual Property Owners Association’s U.S. Post-Grant Patent Office Practice committee during 2012–15.