Federal Circuit Finds Competitor Lacks Article III Standing To Appeal Adverse IPR Decision
05/23/2019On May 13, 2019, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion on an appeal from a Final Written Decision in an inter partes review (IPR) proceeding before the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office. AVX Corp. v. Presidio Components, Inc., __ F.3d__ (Fed. Cir. May 13, 2019). The CAFC held that the appellant, AVX, lacked standing to appeal the decision and therefore dismissed the appeal.
35 U.S.C. § 311(a) provides that any person or entity may petition the PTAB to institute any IPR proceeding. As the Supreme Court and Federal Circuit have held, there is no requirement that the petitioner have Article III constitutional standing to do so. See Cuozzo Speed Techs., LLC v. Lee, 136 S.Ct. 2131, 2143-44 (2016) (“Parties that initiate [IPRs] need not have a concrete stake in the outcome; indeed, they may lack constitutional standing.”); Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258, 1261 (Fed. Cir. 2014) (“Article III standing is not necessarily a requirement to appear before an administrative agency.”).
In contrast, to appeal an unfavorable IPR outcome, the petitioner/appellant must possess Article III standing. See, e.g., JTEKT Corp. v. GKN Automotive Ltd., 898 F.3d 1217, 1220 (Fed. Cir. 2018) (“[I]n IPR appeals, ‘an appellant must … supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court,’ by creating a necessary record in this court, if the record before the Board does not establish standing.”) (quoting Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1171-72 (Fed. Cir. 2017)).
This Article III requirement dictates that the appellant show (1) an “injury in fact,” (2) “a causal connection between the injury and the conduct complained of,” and (3) a likelihood that “the injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotation marks omitted).
Here, although Presidio had not sued AVX, or otherwise threatened a lawsuit, over the patent-at-issue, AVX filed a preemptive IPR petition challenging 21 claims of Presidio’s patent. The PTAB in its Final Written Decision found unpatentable five of those claims. As to the remaining 16 claims, the PTAB found that AVX failed to establish their unpatentability. AVX appealed.
On appeal, Presidio argued that, although AVX had a statutory right to appeal (per 35 U.S.C. §§ 141 and 319), AVX lacked the standing required by Article III of the Constitution to appeal the PTAB’s decision.
AVX countered with two arguments. First, it asserted that it is injured by the PTAB’s rejection of its challenges to the upheld claims because the estoppel provision of 35 U.S.C. § 315(e) prevents it from asserting the same challenges—the merits of which have not been decided by an Article III court—if Presidio asserts those claims in the future. Second, AVX argued that it had standing based on its status as a competitor of Presidio, and that the PTAB’s adverse decision negatively impacts AVX’s ability to compete in the marketplace against Presidio.
With respect to the former argument, the CAFC noted that it had already rejected the invocation of the estoppel provision as a sufficient basis for standing in Phigenix, which the court followed in JTEKT. In those cases, the CAFC held that Section 315(e) “do[es] not constitute an injury in fact when, as here, the appellant is not engaged in any activity that would give rise to a possible infringement suit.” Phigenix, 845 F.3d at 1175-76 (internal quotation omitted).
With respect to the latter argument, the CAFC rejected AVX’s “competitor standing” theory, as “AVX has no present or nonspeculative interest in engaging in conduct even arguably covered by the patent claims at issue.” According to the CAFC, AVX did not show that it is engaging in, or has non-speculative plans to engage in, conduct even arguably covered by the upheld claims of the patent. Among other things, AVX did not assert that it is developing a new product that Presidio would likely argue falls within the scope of the upheld claims, or that it has set aside resources to develop such a product but cannot move forward because the upheld claims stand in the way.
However, it is noteworthy that the CAFC did not entirely foreclose an appeal based on the theory of “competitor standing.” Although it rejected AVX’s claim, the CAFC nonetheless noted that “[a] patent claim could have a harmful competitive effect on a would-be challenger if the challenger was currently using the claimed features or nonspeculatively planning to do so in competition, i.e., if the claim would block the challenger’s own current or nonspeculative actions in the rivalry for sales.” AVX, slip op. at 12 (emphasis in original). This guidance appears to provide a roadmap for future competitor-standing-based appeals.