Independent Justification for Appellate Standing over Administrative Patent Challenges – Part II

By Dennis Crouch

Earlier this week, I suggested that the Federal Circuit should independently be considering whether parties involved in administrative patent challenges (such as an inter partes review) have standing to appeal as required by Article III of the US Constitution. Now, the court has taken the first step and demanded that the public interest group Consumer Watchdog justify its standing to appeal in the inter partes review case against WARF's stem cell patent.

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Consumer Watchdog v. Wisconsin Alumni Research Foundation (WARF) (Fed. Cir. 2013)

Back in 2006 Dan Ravicher filed an inter partes reexamination request of WARF's U.S. Patent No. 7,029,913 on behalf of Consumer Watchdog (then known as the Foundation for Taxpayer and Consumer Rights). The patent contains only three claims and broadly directed toward human embryonic stem cells being grown in vitro. After WARF amended its claims, added one new claim, and worked through several rounds of prosecution and rejection, the Board finally agreed that the claims are patentable.

Now Consumer Watchdog has appealed, arguing that "an in vitro culture of human embryonic stem cells is [not] patent eligible under 35 U.S.C. § 101" and also that the claims are invalid based upon prior art known at the time of filing. Of course, one problem with the § 101 argument is that § 101 is not a cognizable ground for deciding an inter partes reexamination. The challenger here argues that subject matter eligibility is a fundamental and threshold issue that the court can and should address, and "[d]oing so is especially appropriate here given recent developments in the law of patent eligible subject matter."

Standing on Appeal: One issue that neither party raised was whether Consumer Watchdog has standing to appeal. In an essay earlier this week, I noted that this is generally an issue that is ripe for consideration at the Federal Circuit. Although the statute allows for appeals of adverse PTO decisions to the Federal Circuit, the US Constitution separately limits the court's power to hear cases where there is no "case or controversy" between the parties. Although I do not know for sure, it appears that Consumer Watchdog does not have any anything at stake in the case in terms of being directly (or even indirectly) impacted by the outcome of the lawsuit.

In an order issued today, the Federal Circuit ordered that the parties brief this particular issue – "whether Consumer Watchdog has standing to pursue this appeal." Briefs are due by November 25, 2013. Although I don't know, Consumer Watchdog may be able to argue that it has standing based upon the actual facts on the ground. Alternatively, it is possible that a party with standing (such as a stem-cell-researcher being blocked by the patent) may be able to join the case at the 11th hour. Another possibility is that Consumer Watchdog may be able to argue that a patent challenge at the PTO is essentially a public service action akin to a qui tam action. Under this last theory, would really be the general public or government that has standing to challenge a 'bad' patent and Consumer Watchdog is merely acting on behalf of us all.

More here on the case from Antoinette Konski: http://www.personalizedmedicinebulletin.com/2013/09/15/update-on-warf-stem-cell-patent-challenge/

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In recent weeks several non-practicing "patent killers" have filed inter partes review requests including RPX and Unified Patents. It will be interesting to see whether they file amicus briefs here.

17 thoughts on “Independent Justification for Appellate Standing over Administrative Patent Challenges – Part II

  1. PGRs of all types have a constitutional problem under controlling Supreme Court precedent. After issue, only Art. III courts can find them invalid. The simple solution is to create a special Art. III court to handle them.I wonder if this idea was floated and why it was not adopted.? I think I know why it was not seriously considered, if at all: bureaucratic self survival.Another solution for the 9-month PGR is to make it pre-grant.

  2. One needs to note that the US Government itself does not have standing to revoke or amend a US patent based on invalidity. United States v. American Bell Telephone Co., 128 US 315 – Supreme Court 1888; United States v. Glaxo Group Ltd., 410 US 52 – Supreme Court 1973.”But in United States v. Bell Telephone Co., 167 U. S. 224 (1897) (Bell III), the Court characterized the abovequoted language as a “general statement” of the power of the Government to maintain a suit and, again in dictum, limited its effect, saying:”But while there was thus rightfully affirmed the power of the Government to proceed by suit in equity against one who had wrongfully obtained a patent for land or for an invention, there was no attempt to define the character of the fraud, or deceit or mistake, or the extent of the error as to power which must be established before a decree could be entered cancelling the patent. It was not affirmed that proof of any fraud, or deceit, or the existence of any error on the part of the officers as to the extent of their power, or that any mistake in the instrument was sufficient to justify a decree of cancellation. Least of all was it intended to be affirmed that the courts of the United States, sitting as courts of equity, could entertain jurisdiction of a suit by the United States to set aside a patent for an invention on the mere ground of error of judgment on the part of the patent officials. That would be an attempt on the part of the courts in collateral attack to exercise an appellate jurisdiction over the decisions of the Patent Office, although no appellate jurisdiction has been by the statutes conferred. . . .” Id., at 269.The plain import of the Bell cases is that the authority of the Government to bring an independent action to cancel a patent is confined to the traditional equitable grounds of fraud, mistake, and deceit.”Glaxo, at 66-67.

    1. So, where does this leave us. The SC has held that the government cannot administratively revoke a patent. McCormick Harvesting. It has held and affirmed as of 1973 that the government does not have standing to sue based on invalidity. The SC has recently affirmed that the “public rights” doctrine does not extend to cases tried in Westminster prior to 1789 (law, equity or Admiralty). Stern v. Marshall, 131 S. Ct. 2594 – Supreme Court 2011.How are reexaminations of any kind valid?

    2. When you say “based on invalidity,” do you mean “based on supposed invalidity, not verified by an Article III court?”

      1. anon, until the district court judge “sings,” there is no invalidity per the Supreme Court.I find it interesting that Patlex never cited the very recent Supreme Court cases on lack of government standing to even bring up invalidity in court when the the Federal Circuit essentially said that the government could conduct administrative trials to void a patent based on unpatentability.

    3. Need we add that since the government does not have standing to challenge the validity of a patent, there can be no qui tam standing as well.

  3. Quick question: what other qui-tam like general public ability to help the government was recently eviscerated?

  4. On qui tam, where the government has decided the claims are patentable, I simply cannot see how one can argue that one is representing the government on appeal as a basis for standing.On the collateral estoppel issue I raised in the earlier thread, I am not sure how they would apply to bar the petitioner in court when a dissatisfied petitioner cannot appeal. But I further think that one cannot simply assume they apply to bootstrap harm by the final written decision of the Board. Whether they apply absent an appeal is still open to question. Moreover, due the nature of the petitioner, there is little or no chance they would ever infringe, so collateral estoppel is really not an issue except to bar a second IPR.Finally, I find fault in the assumption that anyone has a right to bring an IPR regardless of standing. If there is no right to appeal because there is no standing, this implies there is no standing to bring the petition in the first place.

      1. Agency reviews?I think congress can allow the PTO an advisory role in finding facts per Crowell, provided that the ultimate decision is made by a district court de novo — exactly as provided by Section 145 (that does not apply to reexaminations). The real power remains in the District Court. Now, because the real power is in the District Court, the form of action is a DJ for patent invalidity. Now, that requires standing.

        1. Hmm,Let’s think of a hypothetical for a moment for any of the Post Grant Review mechanisms that are not voluntarily entered into by the patent holder… The agency that grants the post grant mechanism decides on its own to revoke the presumption of validity. A presumption there under law. Do you think that accords with your notion of “an advisory role in finding facts”?And this is before the examiner takes another crack at the patent!

          1. anon, my view is that McCormick is good law. The only way the PTO can “examine” an issued patent and cancel claims is under aegis of district court, just as a special magistrate would, or a bankruptcy judge would.I was just re-reading Patlex. The Feds (Newman) simply “announced” that a patent was a “public right.” No analysis at all. Just declared the result, and insto-presto, reexaminations were constitutional.

            1. I agree with you, hence my very first post in this recent set of threads pointed out the shaky due process aspect of the USPTO treading on a granted patent (and as I also noted in the comments regarding the presumption of validity – at law – that seemingly vanishes just because an executive agency decides to take a peek at the patent.

              1. anon, then let’s agree that reexaminations as structured today are blatantly unconstitutional. We have also agree that the “reformers” are behind this, and the AIA. In a recent case, we learned from Newman herself that she was behind the original reexamination statute and somehow was the judge selected to write on its constitutionality in Patlex. Wow, is all one can say.Given the complete lack of analysis in PatLex under the law, the whole edifice of reexaminations is built on the sandiest of foundations and is about to fall.

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