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Standing Required for an Appeal of a PTAB Final Written Decision

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On August 3, 2018, the Federal Circuit issued a precedential opinion in JTEKT Corporation v. GKN Automotive Ltd.  The Federal Circuit found that the appellant JTEKT did not prove an injury sufficient to establish standing to bring an action in an Article III court.  Therefore, the Federal Circuit dismissed JTEKT’s appeal to the Federal Circuit of the Patent Trial and Appeal Board’s final written decision regarding claims 2 and 3 of U.S. Patent No. 8,215,440 in IPR2016-00046.

In this matter, JTEKT had filed a petition for inter partes review (“IPR”) of a GKN patent (U.S.P.N. 8,215,440, hereinafter “the ‘440 patent”).  JTEKT did not have a product on the market that competed with any GKN product covered by the ‘440 patent, but JTEKT was developing a product that may have in the future conflicted with claims of the ‘440 patent.  Therefore, it appears that JTEKT’s strategy was to invalidate potentially troublesome claims of the ‘440 patent prior to launching its proposed product.

Any party may bring an IPR before the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office.  As legislated by Congress in the America Invents Act of 2011, a person who is not the owner of a patent may petition the PTAB for the institution of an IPR of that patent.  35 U.S.C. 311(a).  The statute also provides that “[a] party dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) may appeal the decision pursuant to sections 141 through 144.”  35 U.S.C. 319.  Section 141 prescribes that “[a] party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) or 328(a) (as the case may be) may appeal the Board’s decision only to the United States Court of Appeals for the Federal Circuit.”  35 U.S.C. 141(c).  Also, Section 144 states: “The United States Court of Appeals for the Federal Circuit shall review the decision from which an appeal is taken on the record before the Patent and Trademark Office. Upon its determination the court shall issue to the Director its mandate and opinion, which shall be entered of record in the Patent and Trademark Office and shall govern the further proceedings in the case.”  35 U.S.C. 144.

JTEKT, not being an owner of the GKN ‘440 patent, was of course eligible to petition for institution of an IPR of the ‘440 patent, which was filed as IPR2016-00046.  The PTAB granted the petition as to all of the challenged claims (1-7) of the ‘440 patent.  GKN subsequently disclaimed claims 1, 4, and 5.  At the end of the IPR proceeding, the PTAB issued a final written decision finding claims 6 and 7 invalid as being obvious over the cited prior art, while finding that petitioner JTEKT had not met its burden of proving that claims 2 and 3 would have been obvious.  JTEKT disagreed and was dissatisfied with the PTAB’s decision regarding claims 2 and 3, and therefore appealed to the Federal Circuit pursuant to Section 319 of the statute.

In issuing its decision dismissing the appeal for lack of standing, the Federal Circuit relied on its precedence in Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168 (Fed. Cir. 2017) and Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258 (Fed. Cir. 2014).  In Phigenix, the Federal Circuit found that petitioner/appellant Phigenix must establish an Article III injury in fact to have standing to appeal an IPR decision, even when the statute provides a right to appeal.  The Federal Circuit held that Phigenix lacked the requisite standing because it only asserted an “economic injury” due to an increase in competition caused by the patent at issue, rather than asserting an actual injury such as a risk of infringing the patent, that it was an actual or prospective licensee of the patent, or that it plans to take action that would implicate the patent.  Phigenix, 845 F.3d at 1172-76.  In Consumer Watchdog, the Federal Circuit similarly held that petitioner/appellant Consumer Watchdog lacked standing to appeal an IPR decision because it did not allege that it had any involvement in research or commercial activities related to the patent at issue or that it was an actual or prospective competitor or licensee of the patent.  Therefore, Consumer Watchdog had not established an injury in fact sufficient for Article III standing.  Consumer Watchdog, 753 F.3d at 1260.

The Federal Circuit also noted that previous cases have found that Article III standing is not required to bring the IPR before the PTAB, and have opined that some IPR petitioners may in fact lack Article III standing.  See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143-44 (2016); Consumer Watchdog, 753 F.3d at 1261.  Therefore, presumably an IPR petitioner could inconsequentially lack Article III standing during the IPR proceeding.  However, the Federal Circuit finds that this lack of Article III standing can prohibit any appeal of the IPR decision to an Article III court such as the Federal Circuit.

A fine distinction exists between the facts of the JTEKT case and the precedence set forth by the Federal Circuit.  The Federal Circuit noted that the fact JTEKT currently has no product on the market does not preclude a finding of standing under Article III.  The Federal Circuit also pointed out that a likelihood of engaging in activity that may infringe a patent may be enough for standing.  However, the Federal Circuit arrived at its decision by finding that JTEKT’s activities set forth in their evidence were not concrete or certain enough.  The plans for their product were not finalized and the product could continue to evolve during development.  Therefore, while JTEKT was engaged in actual activities that could have possibly led to a claim of infringement in the future, the fact that the evidence showed the plans could have changed by the time a product was actually released meant that there was not a certain, definite likelihood that JTEKT’s activities may infringe the ‘440 patent.  It appears that if JTEKT had merely alleged that the design of their product was finished, the result may have been different.

Thus, even though the IPR provisions of the America Invents Act codified in 35 U.S.C. 311-19 plainly grant parties a right to appeal a final written decision of the PTAB to the Federal Circuit, the question becomes, can Congress legislate a right to appeal even if no Article III standing exists?  As noted above, the statute provides both that a party may appeal to the Federal Circuit, and that the Federal Circuit shall review the decision from which the appeal is taken and issue its mandate and opinion.  However, according to the Federal Circuit, the answer to this question is no.  Alternatively, can the “dissatisfaction” of a party with the final written decision as codified in the statute amount to an injury in fact that is enough to show an actual case or controversy sufficient to satisfy Article III of the Constitution?  It would seem that receiving an unfavorable decision in itself could be characterized as a particular, concrete injury.

In a related case not mentioned by the Federal Circuit in the JTEKT decision, appellant RPX Corporation’s appeal of an IPR decision was also dismissed for lack of standing, in this case pursuant to a motion to dismiss filed by the opposing party, ChanBond LLC.  See RPX Corporation v. ChanBond LLC (Federal Circuit Docket No. 2017-02346).  (In the present case, GKN also filed a motion to dismiss; however, the Federal Circuit denied the motion so that the issue could be fully briefed by the parties and decided on the merits).  RPX Corporation has recently petitioned the Supreme Court for writ of certiorari (Supreme Court Docket No. 17-1686).  Therefore, the standing issue for IPR appeals may be another patent case that is soon taken up by the Supreme Court.  Given the Supreme Court’s recent propensity for overturning Federal Circuit patent decisions, it is possible that if the Supreme Court grants certiorari, the Federal Circuit’s position on this issue could be reversed.

As a practical matter, based on current Federal Circuit precedent, to have standing to appeal an IPR decision an appellant must show a concrete and particularized injury that is not conjectural or hypothetical.  Some examples of a sufficient injury in fact include being engaged or likely to be engaged in activity that would lead to possible infringement, or to have contractual rights (e.g. a license) that would be affected by a determination of validity.  However, as seen in the JTEKT decision, engaging in the development of a product (which isn’t finalized) that may infringe a patent is not enough.  Therefore, parties that are not engaged in finalized activities that may infringe a patent or who do not have contractual rights to a patent may want to consider the lack of ability to appeal an IPR decision prior to filing an IPR petition.  Some parties may be prevented from appealing an unfavorable decision of the PTAB.

A copy of the JTEKT decision may be accessed at