The Federal Circuit has provided additional guidance about an appellant’s standing to appeal IPR decisions after settling the related litigations and entering into patent license agreements. In its second decision between the parties on this topic, the court has dismissed the appeal for lack of Article III standing in Apple Inc. v. Qualcomm Inc., No 20-1683 (Fed. Cir. Nov. 10, 2021) (“Apple II”).
The saga began with Qualcomm accusing Apple of infringing several patents in district court. In response, Apple petitioned the Patent Trial and Appeal Board (“Board”) for inter partes review (“IPR”) of U.S. patents 7,844,037 and 8,683,362. Then, the parties settled all their patent-infringement litigation worldwide and entered into a six-year global patent license agreement with a two-year extension option. The ongoing district court litigation was dismissed with prejudice. Afterward, the Board determined that Apple failed to prove the asserted patent claims were unpatentable. Apple appealed and the Federal Circuit dismissed the appeal for lack of standing in Apple Inc. v. Qualcomm Inc., 992 F.3d 1378, 1385 (Fed. Cir. 2021) (“Apple I”).
In the first appeal, Apple presented three theories to support its claim of standing to appeal. First, it argued that the ongoing payment obligations under the license created certain rights in the license. The court rejected this because Apple neither showed that the validity of any single patent would affect those payments, nor that there was any contract dispute resolved by validity of the patents. Second, Apple raised the risk of being sued for infringement after the expiration of the license agreement. Third, Apple noted that it would likely be estopped from challenging these patents in the future under 35 U.S.C. § 315(e). The court rejected the latter two theories, noting that Apple had provided insufficient evidence that it would continue the accused infringing behavior after the termination of the license. Furthermore, under existing case law, the estoppel provision was insufficient as a basis for standing.
The court found the underlying facts of Apple II to be very similar to those in Apple I. Again, Qualcomm accused Apple of infringing several patents in district court. And, like Apple I, Apple submitted several IPR petitions seeking review of those patents (U.S. Patent Nos. 9,024,418; 8,768,865; and 8,971,861). At this point, the settlement and license occurred and the district court litigation was dismissed with prejudice. Like the IPR decisions of Apple I, the Board determined Apple had not proven the claims unpatentable. Apple appealed, leading to the decision in Apple II.
The Federal Circuit Decision in Apple II
The Federal Circuit noted the difference in standing requirements to appear before administrative agencies and federal court. While a party may lack constitutional standing before an administrative agency if it meets the statutory requirements, Article III standing requirements before a federal court cannot be removed by statute. Once a party appeals from the administrative agency to the federal court, it must be able to demonstrate it has a concrete and particularized injury that is actual or imminent, and not conjectural or hypothetical.
The Federal Circuit’s ability to rule differently in Apple II than it did in Apple I was further limited. Unless the court was sitting en banc, the panel was bound by the earlier decision in Apple I. Furthermore, Apple admitted during oral arguments that the operative facts in the case were the same as those in Apple I. The court rejected Apple’s attempts to reframe the issue as one of mootness instead of standing, noting that mootness created by a party voluntarily entering into a settlement does not justify vacatur of a judgment under review. Ultimately, the Federal Circuit followed its decision in Apple I and dismissed the appeal in Apple II for lack of standing.
Judge Newman dissented from the decision, disagreeing that the settlement and license between the parties had eliminated the controversy between Qualcomm and Apple. She noted that case law supports finding a licensee has standing to challenge some patents even if other patents would still bar commercialization. Furthermore, the statutory structure permitting appeals of IPRs does not negate a licensee’s ability to appeal. Finally, Judge Newman said the court should vacate the Board’s decisions if there is no standing to appeal. To do otherwise, would force Apple to acquiesce in judgments it could no longer challenge.