By Dennis Crouch
The recent Supreme Court decision in Already v. Nike revolves around the question of when a trademark-challenger has declaratory judgment standing to challenge a mark's validity. That particular case revolved around the impact of a covenant-not-to-sue. However, at oral arguments, Justice Kennedy turned his attention to administrative challenges before the TTAB (the trademark-equivalent of the PTAB) and asked whether a challenger who loses an opposition through that administrative body would have standing to ask the Federal Circuit to review the decision. Now, the statute is clear that any party to an opposition has a right to appeal to the Federal Circuit. 15 U.S.C. §1071. Justice Kennedy's question, however, focused on whether the case and controversy requirements of the constitution allows an Article III court to hear the case absent a stronger showing of conflict between the parties. Nike's counsel (Tom Goldstein) surprisingly answered (seemingly against his interest in this case) that Article III standing for the appellate court would not be satisfied simply by virtue of being involved with the trademark opposition.
JUSTICE KENNEDY: Is the standing burden any less after there is a — an administrative adjudication and you go to court for judicial review?
MR. GOLDSTEIN: … We've looked at the cases. We think that it's a point in their favor, Justice Kennedy, that while you can go to the TTAB, they wouldn't be able to appeal to an Article III court. I think that's a point in their favor.
The point here is that, (1) an administrative agency (such as the PTO) can be empowered (under the Constitution) to decide cases between two parties without any showing of injury or standing by the petitioner. However, (2) if that administrative decision is appealed to an Article III court (such as the Federal Circuit), case must satisfy the ripe controversy requirements of the Constitution. At the Already oral arguments, the attorney for the US Government (Ms. Anders) attempted to cut-through some of this by arguing that, in some circumstances an adverse decision from the PTO would create the injury-in-fact that is sufficient to establish Article III standing for appeal. See Megan La Belle, Summary of Oral Argument in Already, LLC d/b/a Yums v. Nike, Inc. (November 8, 2012).
Although not an intellectual property case, the D.C. Circuit very recently decided a somewhat parallel issue in the case of Americans for Safe Access v. DEA, 706 F.3d 438 (D.C. Cir. 2013). The appellants in that case include Safe Access, is a marijuana legalization advocacy group, and several individuals who petitioned the US Drug Enforcement Administration (DEA) to reschedule marijuana as a Schedule III, IV, or V drug rather than a Schedule I drug. In the subsequent appeal to the D.C. Circuit, the DEA argued that the appellants had no Article III standing. Although the D.C. Circuit found standing, it agreed with the DEA that Article III standing continues to be a requirement and that participating an administrative hearing is not sufficient to create standing. Here, standing was based upon the fact that one of the appellants (Michael Krawitz) was a disabled veteran eligible for medical care through the Department of Veterans Affairs but was denied marijuana treatment and instead had to purchase his own through the Oregon Medical Marijuana Program.
Similarly, in Sierra Club v. EPA, 292 F.3d 895, 899 (D.C. Cir. 2002), the D.C. Circuit wrote:
An administrative agency is not subject to Article III of the Constitution of the United States [and] so the petitioner would have had no need to establish its standing to participate in the proceedings before the agency. When the petitioner later seeks judicial review, the constitutional requirement that it have standing kicks in, and that requirement is the same, of course, as it would be if such review were conduct in the first instance by the district court.
The point here is simply, that standing is a requirement at the appellate level and an adversarial administrative process itself does not necessarily create standing.
Post-Grant and Inter Partes Review: All of this is relevant to the USPTO's new administrative review procedures that allow third-parties to initiate an administrative patentability review without any showing of standing or interest in the outcome of the review. Under the statute, the third-party requester also has a right to appeal an adverse PTO decision directly to the Court of Appeals for the Federal Circuit.
Manufacturing Appellate Standing through Administrative Review: Although the statute provides for a right-to-appeal, the balance of the law (as exemplified above) requires that the parties will also need to satisfy the Constitutional standing requirement. One basic legal question then will focus on whether the government's suggestion in Already is correct – that a case and controversy can be manufactured by the administrative review itself. Of course, following Already, a covenant-not-to-sue given by the patentee to the review requestor would eliminate any possibility of injury-in-fact. And, if the requestor is a public-interest organization (such as PubPat) such a covenant would be essentially cost-free for the patentee.
Manufacturing Declaratory Judgment Standing through Administrative Review: An important twist on this then is that – if the administrative review serves as a bootstrapping mechanism for generating Article III standing for challenging patentability on appeal, then it should also serve to generate Article III standing for challenging patent validity in a district court declaratory judgment action.
Now, the reality is that this issue will only arise in limited circumstances because the high-cost of post-grant reviews serves as a major filter to post grant and inter partes review filings. We can expect that it will be primarily parties with genuine controversies that request the reviews and only a much smaller percentage will be folks without a genuine controversy.
Thanks to James Dabney, Megan Labelle, Michael Burstein, and Erin Hawley for helping me to think through this issue. Of course, as you might expect, these folks don't entirely agree with my perspective.