By Dennis Crouch
Consumer Watchdog v. WARF, Reexam No. 95/000,154 (Fed. Cir. 2014)
Several years ago Consumer Watchdog (previously known as the Foundation for Taxpayer and Consumer Rights) filed an inter partes reexamination proceeding against a human-stem-cell patent owned by the Wisconsin quasi-government entity WARF. CW does not work with the technology, but filed the reexamination request as part of its public service mission.
In the reexamination, the USPTO confirmed that the patent was properly issued and CW subsequently asserted its statutory right to appeal. See 35 U.S.C. § 141.
Before delving into the appeal’s substance, the Federal Circuit halted progress on the case to particularly probe the question of whether the court has jurisdiction over the dispute – i.e., whether there exists a constitutionally sufficient “case or controversy” between the parties. At base, the question is whether any CW can claim the “injury in fact” that serves as a “hard floor of Article III jurisdiction.” See Summers v. Earth Island Institute, 555 U.S. 488, 497 (2009).
The Federal Circuit requested briefing from the parties as well as the USPTO and those have now been filed. Most importantly, the US Government (USPTO/DOJ joint brief) has sided with WARF with a conclusion that it would be unconstitutional for the Federal Circuit to fulfill the statutory promise (of a right to appeal) by hearing CWs appeal.
Potential Impact: Although the case is focused on CW as a non-profit, the potential outcome here is important for several reasons. Obviously, the ruling would disenfranchise public interest groups, not-for-profits, and industry organizations and instead provide full litigation rights primarily to parties with substantial likelihood of reaching collusive settlements that leaves would-be invalid patents intact. In an email to me, Dan Ravicher (CWs counsel) wrote:
Without a full and fair right to challenge patents at the PTO, including an equal right to appeal, the public interest community will have no avenue to rid the system of bogus patents, and we will be 100% reliant on commercial entities, which often do not have the same incentive to prove patents are invalid, as they, too, have bogus patents themselves.
Although somewhat hyperbolic, Ravicher’s comment raises real policy concerns.
At a more general level, the issue here represents an important shot in the battle for power and authority in the setting of patent law policy that is ongoing between the Patent Office and the Judiciary. The USPTO is newly emboldened with unreviewable authorities granted by the AIA; likely generous Chevron deference for those decisions that are reviewable; and has pushed for a statutory amendment that would eliminate the ability of a patent seeker to file a civil action to receive a patent. Adding to that list, this case appears to be headed in the direction of yet another non-appealable agency activity.
Mid-Level Injury: Although the US Government argues that CW lacks injury-in-fact, it also argues that the injury requirement in this situation is categorically less than what would be required for a declaratory judgment action in Federal Court. The US Government writes:
Organizations such as Consumer Watchdog, who cannot claim any concrete and particularized interest in the validity of the challenged patent, will normally lack standing to appeal. [H]owever, it does not necessarily follow that the same Article III inquiry that governs declaratory judgment relief in the district courts — under which judicial relief is normally available unless the declaratory plaintiff can show that the patentee has asserted infringement, threatened litigation, or otherwise affirmatively acted to impair the declaratory plaintiff’s freedom in the marketplace, see, e.g., Prasco LLC v. Medicis Pharmaceutical Corp., 537 F.3d 1329 (Fed. Cir. 2008) — will also govern appeals from PTO decisions in post-grant proceedings. . . .
Indeed, Congress enacted the AIA’s expanded procedures for post-grant patentability challenges partly in response to concerns that, under prior law, it was not reasonably possible for a company weighing whether to enter a particular market to test the validity of a potential competitor’s patent without first incurring the substantial costs and risks of developing a suitable — and potentially infringing — product.
. . . . Although such an interest would normally lack the immediacy required for declaratory judgment jurisdiction, the Supreme Court has explained that, in some circumstances, “[t]he person who has been accorded a procedural right to protect his concrete interests can assert that right without meeting all the normal standards for redressability and immediacy.” Lujan; Massachusetts v. EPA. Similarly, while a prospective interest in invalidating a competitor’s patent might normally implicate prudential considerations of fitness for judicial review, an explicit congressional authorization to appeal a particular category of legal determinations “eliminates any prudential standing limitations.” Raines. For these reasons, the Court could conclude in an appropriate case that the Article III inquiry governing direct appeals from the PTO differs from the inquiry that governs declaratory judgment actions in district court.
In the prior arguments, Dan Ravicher (for CW) raised an analogy to FOIA where the Supreme Court has allowed a seemingly noninterested third party to bring court challenges. The US Government brief argues that those cases as well as related fair housing cases are different and distinguishable because Congress created “substantive legal rights that entitle a party to receive concrete and individualized benefits — access to specific government records, for example, or freedom from racial discrimination in housing. A wrongful denial of those rights thus inflicts on the plaintiff a concrete and particularized injury-in-fact.”
In its responsive brief, CW argues that the statute creating the right of judicial review to requesters of agency action provides standing even if the requesters lack “statute-independent injury.” On that point, CW writes: “The government does not reference a single case in which a denied requester who cited a statute granting judicial review to such denied requesters needed to prove injury to show standing.” For its side, CW references FOIA cases as well as FEC and prior inter partes review cases that all fit this model.
Public interest groups such as PubPat, EFF, and others have shown their strength in the intellectual property law sphere and this is an important case from that regard. The importance is such that if the Federal Circuit sides against CW here to deny standing, I suspect that the Supreme Court will be ready to hear the case.