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“Competitor Standing” Not Sufficient to Establish Article III Standing for Appeal of PTAB Decision

Recently, in AVX Corp. v. Presidio Components, Inc., the Federal Circuit dismissed AVX Corp.’s (“AVX”) appeal of the PTAB’s inter partes review decision for lack of standing. AVX petitioned the PTAB for an inter partes review of the 21 claims of U.S. Patent No. 6,661,639 (“the ’639 patent”). Presidio Components Inc. (“Presidio”) owns the ’639 patent which is directed towards single-layer ceramic capacitors comprising specific features. AVX, a competitor of Presidio, manufactures and sells a range of electronic components, some of which include capacitors. The PTAB issued a final written decision finding claims 13-16 and 18 unpatentable while upholding the remaining claims. AVX appealed the PTAB decision with respect to the claims that were upheld. On appeal, Presidio argued that AVX lacked standing as required by Article III of the Constitution. The Federal Circuit agreed.

Citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 559–60 (1992), the Federal Circuit noted that to have standing under Article III, a party must show an injury-in-fact, a causal connection between the conduct alleged and the injury, and a likelihood that the injury would be redressed by a favorable decision. A party need not have Article III standing to file a petition for inter partes review. While 35 U.S.C. § 319 grants a party a statutory right to appeal a final written decision of the PTAB, that does not necessarily mean that the party will have Article III standing to appeal the decision to the Federal Circuit. The Federal Circuit noted that it has previously rejected the contention that a statutory right to appeal establishes Article III standing. See Op. at 6-7 (citing Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1175 (Fed. Cir. 2017)).

AVX argued that the PTAB’s decision to uphold certain claims injures AVX because the statutory estoppel provision would prevent it from asserting the same invalidity challenges against Presidio if Presidio were to bring claims against AVX in the future. To AVX, the estoppel provision (35 U.S.C. § 315(e)) means that it “is now forever barred from asserting in district court, either in a declaratory judgment action or as a defense or counterclaim in an infringement action, that the upheld claims are invalid for obviousness on the same grounds on which the present IPR was instituted.” See Op. at 8. The Federal Circuit rejected this argument. The Federal Circuit stated that it already rejected the contention that the estoppel provision provides a sufficient basis to establish Article III standing in Phigenix, Inc. v. Immunogen, Inc. The court then declined to decide issues relating to the specific language of § 315(e) as the parties had not briefed the issues. The court declined to decide whether the estoppel provision would have effect even where a petitioner lacked constitutional standing to appeal a PTAB decision and whether the estoppel provision should be interpreted to include preclusion principles.

AVX also made an argument for “competitor standing”, stating that it is injured by the PTAB decision because the decision decreases AVX’s ability to compete against Presidio. Relying on non-patent cases, AVX argued that courts have found “competitor standing” sufficient to challenge certain government actions or decisions. The Federal Circuit rejected this argument, finding that “the rationale for finding standing in those cases does not carry over to support standing in the present context, where AVX has no present or non-speculative interest in engaging in conduct even arguably covered by the patent claims at issue.” See Op. at 9. The Federal Circuit explained that in those cited cases, the government actions threatened economic injury to the challenger through “the ordinary operation of economic forces” such as when the action causes a decrease in prices for competitor goods or causes the market to be opened to additional competitors. Id. at 11. By contrast, the Federal Circuit concluded that the action here is different because it “is the upholding of specific patent claims, which do not address prices or introduce new competitors, but rather give exclusivity rights over precisely defined product features.” Id. at 11.

The Federal Circuit noted that a patent claim could have a harmful competitive effect on a competitor if the competitor was using features claimed by the patent or was planning to do so. However, under the present facts, the Federal Circuit concluded that that is not the case here. The Federal Circuit concluded that AVX has not shown any plans to develop a product or engage in any conduct covered by the ’639 patent. AVX also failed to show that it faces any risk of infringing the claims upheld by the PTAB or that an infringement lawsuit was inevitable. In light of these conclusions, the Federal Circuit dismissed the appeal for lack of standing.

The Federal Circuit’s decision demonstrates that in general being a mere competitor is insufficient to establish Article III standing. A petitioner must provide non-speculative evidence of an injury-in-fact tied to the patent claims at issue. As demonstrated by the cases cited in the opinion, such evidence can potentially include the patent hindering a challenger’s licensing opportunities or a challenger engaging in or having concrete plans to engage in conduct covered by the patent. Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 1339 (Fed. Cir. 2008). Importantly, if the injury has not actually occurred, a petitioner must show that the injury is real and imminent. Id. This may be satisfied in various ways. For example, a petitioner may show that the injury is inevitable. In Altaire Pharm., Inc. v. Paragon Bioteck, Inc., 889 F.3d 1274, 1281–84 (Fed. Cir. 2018), the Federal Circuit found the injury (filing of an infringement lawsuit) to be inevitable because a declaratory judgment action had been filed to terminate an agreement between the patentee and competitor, the competitor intended to file an ANDA (which would constitute an act of infringement) and the patent owner refused to stipulate that it would not file an infringement suit against the competitor. See Op. at 14. Under those facts, the Federal Circuit found the injury-in-fact requirement satisfied.

As this case demonstrates, when petitioning the PTAB for inter partes review (and other post-issuance reviews), petitioners should be mindful of the requirements for Article III standing.. If petitioners are not able to identify an actual or imminent injury-in-fact, one must consider the ramifications of the estoppel provisions in the event the petition is granted but one or more claims are ultimately found to be patentable. That is, the appealability or lack thereof of the PTAB’s final written decision is a factor that should be part of the calculus behind a petitioner’s decision to pursue a post-issuance challenge. Petitioners should also be mindful when weighing these considerations that while appellants require Article III standing, an appellee simply defending the PTAB’s judgment is not necessarily subject to the same requirements. See Personal Audio, LLC v. Electronic Frontier Foundation, 867 F.3d 1246 (Fed. Cir. 2017).