Guest Post by Megan M. La Belle, Assistant Professor at Catholic University of America, Columbus School of Law.
Last Wednesday was an eventful day for patent cases at the Supreme Court. In addition to oral arguments in Mayo v. Prometheus, the plaintiffs in Ass’n for Molecular Pathology v. USPTO (Myriad Genetics) – another high-profile case concerning patentable subject matter – filed their petition for a writ of certiorari. The petition presents two questions. Predictably, the first question addresses the limits of patentable subject matter and asks the Court to decide whether human genes are patentable. The second and less obvious question focuses on plaintiffs’ standing to sue. Specifically, the petition asks: “Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007)….?” Some might be surprised that plaintiffs are challenging standing, since the Federal Circuit held the Myriad case justiciable and decided it on the merits. Yet, as I argue in Standing to Sue in the Myriad Genetics Case, 2 Cal. L. Rev. Circuit 68 (2011), the Federal Circuit’s decision in Myriad raises compelling questions about standing in patent declaratory judgment actions that warrant the Court’s attention.
In MedImmune, the Supreme Court held that there is standing to bring a patent declaratory judgment action if “the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” In announcing this all the circumstances standard, the Court criticized the Federal Circuit’s longstanding bright line test for standing, which required plaintiffs to show that: (1) the alleged infringer had a reasonable apprehension of suit at the time it filed the action; and (2) the alleged infringer is conducting infringing activity or has made meaningful preparations toward conducting infringing activity.
Initially, the Federal Circuit responded to MedImmune by abandoning its bright line test and announcing that it would use the all the circumstances standard instead. More recently, however, the Federal Circuit has backpedaled. In Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329 (Fed. Cir. 2008), the Federal Circuit held that “proving a reasonable apprehension of suit is one of multiple ways that a declaratory judgment plaintiff can satisfy the more general all-the-circumstances test.” Similarly, in Cat Tech LLC v. Tubemater, Inc., the court concluded that plaintiffs still must satisfy the second prong of the old test – i.e., the “meaningful preparations” prong – to establish standing. And finally, with its decision in Myriad, the Federal Circuit has come full circle and is evaluating standing in patent declaratory judgment actions according to a bright line test that is strikingly similar to the one utilized before MedImmune.
In Myriad, twenty plaintiffs filed a declaratory judgment action asking the court to declare certain gene patents invalid. The trial court held that all twenty plaintiffs had standing. On appeal, the Federal Circuit affirmed there was standing to sue, but only as to one plaintiff – Dr. Harry Ostrer – and on far narrower grounds. The Federal Circuit concluded that Dr. Ostrer was the only plaintiff who had suffered an injury-in-fact, a prerequisite for standing in federal court. In reaching this conclusion, the Federal Circuit claimed to be following MedImmune, yet in reality it had applied a bright line rule:
[T]o establish an injury in fact traceable to the patentee, a declaratory judgment plaintiff must allege both (1) an affirmative act by the patentee related to the enforcement of his patent rights, and (2) meaningful preparation to conduct potentially infringing activity….
Myriad, 653 F.3d at 1344. The Federal Circuit then found that none of the other plaintiffs had standing, either because they failed to allege “affirmative patent enforcement actions directed at them by Myriad,” or because they had not made “meaningful preparation to conduct potentially infringing activity.”
This return to a formalistic test for standing in patent declaratory judgment actions not only violates the letter and spirit of MedImmune, but it is problematic because it makes it more difficult for plaintiffs to challenge potentially bad patents. For years, the Supreme Court has adopted flexible legal standards that facilitate lawsuits brought by parties challenging patent validity, in view of the public benefit created when bad patents are eliminated. More recently, Congress and the President have signaled their intent to encourage patent validity challenges by enacting the America Invents Act, which provides for certain post-grant review proceedings. Yet, despite these strong messages, the Federal Circuit has heightened the standing requirements and created a procedural bar for many alleged patent infringers. Although the Supreme Court addressed this standing question just a few terms ago in MedImmune, it seems the Court needs to remind the Federal Circuit of the purpose of declaratory relief and its essentiality to a well-functioning patent system.