Federal Circuit Dismisses IPR Appeal For Lack Of Standing
On Friday, August 3, 2018, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion dismissing the patent challenger’s appeal in an inter partes review (IPR) proceeding. JTEKT Corp. v. GKN Automotive Ltd., —F.3d—, (Fed. Cir. August 3, 2018). The CAFC determined that the unsuccessful patent challenger lacked standing to pursue the appeal and so dismissed it, leaving the unsuccessful patent challenger subject to the estoppel attached to an unsuccessful IPR under the America Invents Act, without any review by an Article III court.
An IPR is an administrative procedure by which one can challenge the validity of an issued patent. The challenger files a petition in the Patent Office, the patent owner responds, and ultimately the Patent Trial and Appeal Board issues a written decision finding the challenged claims either patentable or unpatentable. If the claims are found to be patentable, the challenger is estopped from challenging the validity of the claims on certain bases in later litigation.
There is no Article III standing requirement for an IPR petition; any person or entity may file one. In this case, although the challenger was preparing to make a product possibly subject to the patent, the design was not yet finalized, and the patent challenger had not been accused of infringing the patent. But because there is no standing requirement to file an IPR, the PTAB correctly considered the challenger’s IPR petition, and issued a final written decision finding some of the claims to be patentable.
The patent challenger appealed the patentability decision to the CAFC. However, it still had not released its product, and there still had been no accusation of infringement. The patent owner therefore moved to dismiss the appeal for lack of standing.
The CAFC observed that while Article III standing is not required for an IPR, it is required for an appeal of an IPR decision. That is, in order to invoke the jurisdiction of the CAFC, a would-be appellant must establish that it has suffered “an injury in fact.” The CAFC held, however, that the estoppel arising from an unsuccessful IPR is not such an injury. “Our cases establish that typically in order to demonstrate the requisite injury in an IPR appeal, the appellant/petitioner must show that it is engaged or will likely engage in an activity that would give rise to a possible infringement case.”
In this case, the patent challenger submitted two declarations in support of its contention that it had standing to appeal. But the declarations acknowledged that the final product design had not been established, and so “there is nothing that can be analyzed for infringement.” The CAFC found that those declarations did not show “that its planned product would create a substantial risk of infringing …” and therefore dismissed the appeal for lack of standing.
The IPR system was designed to encourage patent challenges. But this decision illustrates a risk of such a challenge: if one requests an IPR preemptively, before going to the effort and expense of preparing to release a product, it is possible to lose in the Patent Office and thus be estopped from later challenging validity, without any review by an Article III court.