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Article III Standing for an IPR Appeal Despite Patent Expiration and No Pending Litigation

Article III standing has become a contested and often dispositive issue in appeals from the Patent Trial and Appeal Board (PTAB).  For example, as we reported previously, the Federal Circuit has dismissed an inter partes review (IPR) petitioner’s appeal where the petitioner-appellant lost standing by abandoning development of its potentially infringing product.[1]  We also reported that the Federal Circuit dismissed an appeal from an IPR because the petitioner-appellant lacked standing despite its status as a competitor of the patent owner.[2]  Recently, the Federal Circuit addressed the standing requirement for IPR appeals again, this time in regard to a patent owner-appellant, in Sony Corp. v. Iancu, __ F.3d __, 2019 WL 2202968 (Fed. Cir. May 22, 2019).[3]  There, in a relatively straightforward decision, it found a controversy sufficient to satisfy Article III for the patent owner’s appeal despite the fact that the patent at issue had expired.  This decision reinforces the general understanding that patent owners have standing to appeal adverse decisions by the PTAB.

By way of background, Sony is the owner of U.S. Patent No. 6,097,676 (“the ’676 patent”), which expired in August 2017.  The ’676 patent had been challenged before the PTAB in IPR2016-00834 and was also involved in litigation between the petitioners and Sony in the District of Delaware (No. 1:15-cv-00288).  In September 2017, the PTAB entered a Final Written Decision finding the challenged claims unpatentable.  Sony filed a notice of appeal.  Shortly afterwards, the district court litigation was dismissed with prejudice upon stipulation of the parties.  Presumably due to a settlement agreement, the petitioners elected not to participate in the appeal from the PTAB.

The appeal was decided by a majority consisting of Chief Judge Prost and Circuit Judge Dyk.  In a dissenting opinion, Circuit Judge Newman focused solely on the issue of standing.  According to Judge Newman, the appeal should have been dismissed.  The dissent reasoned that there was neither private interest nor public interest in the fate of the ’676 patent because the patent had expired, the IPR petitioners declined to defend the PTAB victory, and the parties had settled the infringement suit in the district court.  Judge Newman acknowledged in her dissent that “a patentee has an indisputable interest in the validity of its patent.”  However, in this case where Sony’s ’676 patent had expired and no relevant litigation was pending, she argued that there was no live case or controversy sufficient to satisfy Article III and that the court’s decision would have no consequence.  According to Judge Newman, “[n]o possibility of present or future case-or-controversy ha[d] been suggested—not by Sony, not by the vanished [petitioners], not by the intervenor Director.”  Notably, neither party had suggested a lack of Article III standing.

The majority summarily dismissed the dissent in a footnote.  It found that the parties to the appeal remained adverse and an Article III controversy was presented because the Director (having intervened) argued that the PTAB’s Final Written Decision should be affirmed, while Sony argued that the PTAB’s decision should be reversed and the claims found patentable.  Regarding the existence of a potential infringement suit, the majority stated that there had been no showing, as required for mootness, that such a controversy did not exist.  The majority noted that its decision “would have a consequence on any infringement that occurred during the life of the ’676 patent,” citing in support to cases that held an expired patent may form the basis of an action for past damages and that an owner can license the rights or transfer title to an expired patent.

The result in this case seems straightforward.  However, the issue of standing in PTAB appeals is certain to come up again in future cases.  It will be interesting to see how standing is addressed in other situations such as those involving exclusive licensees where the issue may not be so clear-cut.

[1] https://www.ptablaw.com/2019/02/28/ipr-petitioner-lost-standing-to-appeal-to-federal-circuit-by-abandoning-development-of-proposed-biosimilar-before-appeal-was-completed/

[2] https://www.ptablaw.com/2019/05/30/competitor-standing-not-sufficient-to-establish-article-iii-standing-for-appeal-of-ptab-decision/

[3] Available at: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1172.Opinion.5-22-2019.pdf