By Dennis Crouch
Consumer Watchdog v. WARF and USPTO (Fed. Cir. 2014)
The Patent Act provides for a variety of administrative review proceedings that can be filed by any third party wanting to challenge the validity of an issued patent. The statute also provides the third-party requester with a right to appeal any adverse judgment to the Court of Appeal for the Federal Circuit. Following these statutory guidelines, Consumer Watchdog requested review (inter partes reexamination) of WARF’s patents covering human embryonic stem cells. When the USPTO sided with WARF, Consumer Watchdog appealed. But Consumer Watchdog has a major problem with its appeal – standing. Consumer Watchdog is a public interest group who is not being directly impacted by WARFs patents other than the general indignity felt by all of us.
As the appeal was pending, the Supreme Court decided Already v. Nike and reminded courts that, under the Constitution, they only have power over actual cases and controversies. At Patently-O, we used that case as a springboard for questioning whether the statutory appellate authority was sufficient to satisfy the demands of the Constitution, and the Court immediately called for Consumer Watchdog and WARF to brief the question of standing.
- Independent Justification for Appellate Standing over Inter Partes Reviews – Part I
- Independent Justification for Appellate Standing over Administrative Patent Challenges – Part II
- Constitutional Challenge to Administrative Patent Challenges – Part III
- Constitutional Challenge to Administrative Patent Review – Part IV
- Power Grab?: USPTO Says No Appeal (CW v. WARF Part V)
Now, the Federal Circuit has dismissed the appeal – holding that Consumer Watchdog’s appeal cannot stand because the non-profit “has not established an injury in fact sufficient to confer Article III standing.” In essence, the court rules that the right of appeal granted by statute is unconstitutionally broad and the cure is to narrow the right in order to conform with Constitutional requirements of standing.
Regarding injury-in-fact, all parties agreed that the standing requirements mandate such injury. [T]he “requirement of injury in fact is a hard floor of Article III jurisdiction that cannot be removed by statute.” Summers v. Earth Island Inst., 555 U.S. 488 (2009). Consumer Watchdog argued that its injury was cemented and particularized after it filed for inter partes reexamination and had its case rejected by the USPTO. However, the Federal Circuit has rejected that argument:
Here, the Board’s disagreement with Consumer Watchdog did not invade any legal right conferred by the inter partes reexamination statute. The statute at issue here allowed any third party to request reexamination, and, where granted, allowed the third party to participate. The statute did not guarantee a particular outcome favorable to the requester. Consequently, the Board’s denial of Consumer Watchdog’s request did not invade any legal right conferred upon Consumer Watchdog.
For this reason, Consumer Watchdog’s analogy to the Freedom of Information Act (FOIA) and the Federal Election Campaign Act (FECA) are unpersuasive. These acts create substantive legal rights – access to certain government records – the denial of which inflicts a concrete and particularized injury in fact. . . [Here,] Consumer Watchdog was not denied anything to which it was entitled.
One result here is another set of USPTO actions for which there is no appeal.
Dan Ravicher is the key individual behind the Consumer Watchdog case. It was Ravicher who also pushed forward the Myriad case. In similar fashion, it appears to me that he has a good shot at having this case now heard by the Supreme Court.
FYI –
link to law360.com
[…] Federal Circuit: In Order To Appeal USPTO Post-Grant Decision, Third Party Requestor Must Show “In… by Dennis Crouch, Patently-O Blog […]
I think that the comments below miss something quite important. NWPA has touched on it some, but here’s how I see it.
The comparison to Lujan is not on all fours as some below have insinuated. The procedural postures are different. In Lujan the SCOTUS denied standing for a district court action requesting redress for a right arising out of a regulatory scheme. Here, the Fed. Cir. is denying standing to appeal an administrative body’s action. CW’s analogy to FOIA is spot on and the Fed. Cir. is going too far to require some literal physical rights that FOIA brings that an IPX might not. (One can certainly argue that an IPX does confer rights with real physical consequences — like the potential invalidity of a patent, a physical document.)
Congress conferred the right for third parties to bring requests to challenge the validity of patents. The simple fact that the administrative body denied the challenge provides standing.
A DJ action for invalidity here would not have standing, but the appeal here does not alone allege that the patent is invalid, but that the administrative body came to an incorrect decision in determining whether the patent is invalid. It’s an important distinction. It’s an appeal of a determination, not an original request to determine validity.
If there were no standing, then the IPX action itself would lack due process afforded to the challenging party and should be disallowed. (Usually this due process argument is made to protect the patent owner — I know, kind of odd.) In fact, the SCOTUS has said that Congress must provide an opportunity to appeal to Article III courts for any regulatory decision to maintain due process. That’s what Crowell v. Benson is all about.
Therefore, the implications raised by Crowell v. Benson seem much closer to the point (to me) than the standards set by Lujan.
Another thing to consider is that, as MM has hinted at, validity is a different type of injury than infringement. The question of infringement or non-infringement is always personal, but the question of validity of a patent has other broader implications. For example, a consumer may pay more for a product due to an invalid patent. Such a person with an ancillary grievance would lack standing to challenge the validity of a patent in district court, but Congress provided just such a person a mechanism to challenge the validity in
an administrative action. The outcome of such a challenge must have judicial oversight.
This situation is also different than Hollingsworth. There, some third parties tried to appeal a decision on behalf of those that had declined to appeal. They claimed standing because they were original proponents of the state constitutional amendment. But there, they didn’t have standing because their standing only existed to enforce the amendment – – once it was declared unconstitutional, the enforcement question was eviscerated.
I could sum up my argument crudely by saying that the SCOTUS has established that Congress can (and must) provide standing to appeal a regulatory decision, but Congress cannot manufacture standing to sue under a regulatory scheme. This case is like the former and due process trumps.
One interesting inconsistency in the opinion that sets the question up all wrong:
but then in the next paragraph:
That doesn’t sound like applying as “equal force” to me.
TLG – the focus is on entering an Article III court.
In that sense, your analysis misses.
(the point being that Congress cannot de facto fabricate a pass to the Article III courts)
You are missing that aspect from the separation of powers doctrine. That’s not a small miss.
It seems like you’ve flipped the separation of powers aspect of standing on its head. Standing in that aspect is a limit on the courts to not usurp the other branches of government; it’s not a limit on Congress. You can’t just go to the court to have a law declared unconstitutional or an executive order declared illegal unless you’re personally affected by it.
Here, the question is more on the “case or controversy” test as a limitation on justiciability to prevent the restriction on the courts to offer advisory opinions.
If these two parties were also litigants in a district court case involving the same patent, the appeal for the IPX would be just fine.
Separation of powers is not flipped at all – it applies to all of the branches of the government,
Your “if” assumes the point in contention…
TLG, Crowell was all about legal, private rights where agencies have the primary role in fact finding and adjudication. There must be a right of review by the Art. III court, there a right of trial de novo.
But with a reexamination, the petitioner has no legal right to challenge the patent, just a procedural right ask the government to do so, and to participate. Thus, no legal rights held by the petitioner are involved.
IPRs are different. The government is not involved. There may be a legal right, but the statute itself says no appeal.
TLG In fact, the SCOTUS has said that Congress must provide an opportunity to appeal to Article III courts for any regulatory decision to maintain due process. That’s what Crowell v. Benson is all about.
I’m not familiar with the case (yet) but this seems important. Can the Board, after allowing the third party to proceed, simply state that it doesn’t like the way the third party’s hair looks and decide the case against the third party? End of discussion …. because Article III?
Doesn’t seem right.
If that’s not the case, then who decides when a reasonable decision has been made, if not the Board?
MM,
Crowell v. Benson, 285 U.S. 22, 52 S. Ct. 285, 76 L. Ed. 598 (1932). link to scholar.google.com
The case holds that congress can create new private rights, can assign to administrative agencies fact a fact finding role, but that the fundamental jurisdictional facts and legal correctness of the agency must still be reviewable by an Art. III court.
Crowell was not about the public rights doctrine – which is a doctrine about the government acting in its sovereign capacity. There, the government has sovereign immunity. Cases that fall into this character are military court martials, diplomatic questions, political questions, normal functions of government like the post office, and regulatory functions. A public right at a minimum is a right held by government against others, or by others against the government.
With a pubic right, government can act completely without court review except perhaps for fundamental constitutional rights. See, e.g., Hamdan v. Rumsfeld, 548 US 557 (2006), particularly the discussion of the Yamashita case where the Japanese commanding general was tried, convicted and executed for crimes he did not commit.
TLG: In fact, the SCOTUS has said that Congress must provide an opportunity to appeal to Article III courts for any regulatory decision to maintain due process. That’s what Crowell v. Benson is all about.
That’s a pretty broad reading of Crowell v. Benson. That case involved an administrative proceeding that could impose financial liability on employers. It’s fair to say that the case stands for the proposition that Congress can’t provide for an administrative quasi-judicial process that awards damages from one party to another without also providing for an appeal, but I don’t think it says much about the question of constitutional standing.
I’m not familiar with the case (yet) but this seems important. Can the Board, after allowing the third party to proceed, simply state that it doesn’t like the way the third party’s hair looks and decide the case against the third party? End of discussion …. because Article III?
The concept of standing already allows for the fact that some wrongs might go uncorrected – that’s not unique to the PTO or even to the administrative law context. The “bigger” issue, under the cases and controversy clause, is whether the courts should get involved in cases where one party has no skin in the game. Legal precedent says no.
So, the answer to your question is “yes, the Board can do that,” at least with respect to petitioners that aren’t actually injured by the outcome. Of course, the courts are not the only recourse if the people think an administrative process is being carried out unfairly.
Thanks TLG. I think the SCOTUS may take cert on this one. Can the other side of this argument give an example that is similar to these facts where the petitioner to an administrative agency does not have the right to appeal to an Article III court?
One reason why they may not take cert is that the case pertains factually to an IPX — so applicability is limited.
I’m almost persuaded by Ned’s distinction – “But with a reexamination, the petitioner has no legal right to challenge the patent, just a procedural right ask the government to do so, and to participate. ”
There are two thoughts that prevent me from adopting this view.
First, it’s not so clear (to me) that Congress has not given a “legal right to challenge the patent.” You pay the fee and prepare the papers. You present a substantial new question of patentability. You have a right to participate. Although the process starts before an examiner, you have quasi-judicial oversight before the Board. You have the right to appeal to the Board.
Second, Congress has given a “procedural right” to appeal to an Article III court.
See the quote from above:
So as to the first, the Fed. Cir. disagrees. That’s fine. But as to the second, the Fed. Cir. agrees. It seems to me that given the second may tip in favor of providing standing and that the first provides at least some valid arguments in favor of standing, you would err on the side of redress rather than disenfranchisement. I struggle with why the right of participation would not be bound up with the right to appeal.
It’s a bit of a farce to hold otherwise. At the heart of the standing requirement is that the parties must actually be in opposition. Here, the parties clearly are in opposition and the issue can be decided.
“It’s a bit of a farce to hold otherwise.”
Actually, it is a bit of a farce the way that you have “read into” the law rights that are not there.
You have assumed the conclusion you want, and then turned around and said, “Gee, it’s odd that my conclusion is not reached.”
The heart of standing is not merely “in opposition.” See Lujan. Being in opposition just is not good enough and you need more.
I disagree that it’s like FOIA. In FOIA, Congress has given a substantive right to access and created an injury in fact when that is unlawfully applied. As the Court has said, Congress has some latitude to create an injury in fact. Thus, appeals in FOIA are okay.
The difference here is that Congress hasn’t really created a new injury, it’s created an alternative venue for challenging a patent’s validity at a lower cost than district court litigation. In an IPR, the dispute is between the two parties and the PTO is essentially uninvolved. Thus, it makes sense that the same standing requirements apply to an IPR appeal as an invalidity DJ.
A purely procedural question:
Since the IPR statute providing for appeals to the Fed. Cir. for all parties has been declared unconstitutional here by the Fed. Cir. for any party not having a personal injury, can this Fed. Cir. decision trigger a direct appeal to the Sup. Ct. (28 U.S.C. § 1252) rather than only by cert petition?
Never mind, I see that statute was repealed.
“However, the ‘requirement of injury in fact is a
hard floor of Article III jurisdiction that cannot be removed
by statute.’”
Hmm, sounds like exactly what I stated.
Another court that has no problem understanding what I post.
This is about administrative law not patents. The question is whether or not one has the right to appeal what the administrative agency has done in response to a right granted by the statute. I am not sure what the administrative law says about this or even which are the closest cases, but the only answer for justice is yes you should be able to appeal. Your injury in fact is not getting what the statute said you would get and you lost money and time.
Again, under this holding the PTO can simply write: “You don’t have the right to appeal, so we are not granting your petition, but thanks for the money. So long sucker.”
Yes, you are correct in so far as this is a question of administrative law (hence the taking aspect that I have posted upon previously comes into play).
But you still seemed confused as to what the law provides and what the law does not provide. You seem confused as to what the statute actually gives you, and that is the right to ask for a hearing – not the right to have the hearing go your way. Under administrative law, you cannot manufacture injury in fact (gener@11y) by pure legislative writing. You need to have injury in fact from some other avenue.
Yes, you are correct in so far as this is a question of administrative law (hence the taking aspect that I have posted upon previously comes into play).
But you still seemed confused as to what the law provides and what the law does not provide. You seem confused as to what the statute actually gives you, and that is the right to ask for a hearing – not the right to have the hearing go your way. Under administrative law, you cannot manufacture injury in fact typically by pure legislative writing. You need to have injury in fact from some other avenue.
(the moderation filter needs to be moderated as to which words trigger the filter)
This is about administrative law not patents. The question is whether or not one has the right to appeal what the administrative agency has done in response to a right granted by the statute. I am not sure what the administrative law says about this or even which are the closest cases, but the only answer for justice is yes you should be able to appeal. Your injury in fact is not getting what the statute said you would get and you lost money and time.
Again, under this holding the PTO can simply write: “You don’t have the right to appeal, so we are not granting your petition, but thanks for the money. So long $ucker.”
Not even close. This is a “generalized grievance” with the PTO – you’re angry that they granted a patent and say it’s against the public interest. One of the clearest standing rules is that you can’t sue the government for a generalized grievance. Allowing this run-around through the post-grant review process/reexam process would eviscerate those Article III rules.
Guest makes a good point: this is an Article III proceeding we are talking about.
I can see it all now. Consumer Watchdog filing suit against the Government for allowing patents on otherwise patentable subject matter because it believes patents in that area inhibit free access to stuff they like.
Now, just why should we allow such a thing?
Think of Grokster for a moment. Could they have standing to object to copyright protection just because they like to download music?
They are simply saying that Congress created a right for them to pay an administrative agency to do something and the administrative agency did not do what they were paid to do.
Ned’s post makes me chuckle: ‘on otherwise patentable subject matter because it believes patents in that area inhibit free access to stuff they like.”
Compare that to all of the protests and QQ and curse-sades against business methods and software – and otherwise patentable subject matter because [those with agendas] believe patents in those areas inhibit free access to stuff they like.
The irony is fantastic.
anon, There is a distinction:
I would hardly favor a bunch of banks filing suit against the government for issuing patents on business methods, but they just might have standing to do so.
Stuff they like is not the same thing, IMHO.
LOL – of course Ned, your distinction is backed up with nothing but your say-so and IMHO.
That is part of the irony my friend.
It isn’t a generalized grievance. It is that you didn’t get what you paid for.
You paid to have the PTO consider whether or not you’ve raised sufficient grounds for an IPR (or PRG, when the time comes). The PTO says, you haven’t. You got what you paid for. CAFC just said, you don’t necessarily have a right to appeal. If you’re actually adversely affected by the patent, you still have other routes to take (including re-submitting a request for IPR, or submitting a request for IPR on different grounds).
Heebie – you really need to review those cases again. The denials of institution in every case was not based on insufficient grounds, but upon 315 in its various flavors, including that the petitioner was served more than a year prior with a complaint for infringement.
Now think about that for a moment. The PTO applies an incorrect legal standard in its denial under 315 and the petitioner cannot appeal?
The injury in fact is that the PTO did not consider the petition properly and thus you lost your money and time.
Again, under this holding the PTO could write: “Thanks for the bucks. Petition denied. So long.”
Are you trying to make a distinction between result and abuse of process…?
You would do better then to NOT focus on the result in your arguments.
Is that any different from having to pay to file a suit where you don’t have Article III standing/there isn’t a “case or controversy”? I don’t see the difference. In each case, you file, and you lose – losing your money doesn’t create an injury for standing purposes.
“losing your money doesn’t create an injury.”
Huh?
I should add: Can I have all your money? It won’t injure you after all.
well stated
NWPA: What I mean is that losing the filing fee does not create an injury for Article III purposes.
The injury Guest is with the PTO not the underlying patent. I am not sure why you think this is not an Article III injury in fact. Your injury is that you didn’t get what you paid for.
“Your injury is that you didn’t get what you paid for.”
Repeating it over and over isn’t going to make it true. They paid for a review of the patent, and they got a review. So they got what they paid for. The fact that the review didn’t turn out the way they wanted the review to turn out doesn’t change that.
The filing fee cannot be an injury in fact for Article III purposes – if it were, it would eviscerate any meaningful limits on justiciability that Article III imposes.
You’re saying there should be different tests for justiciability for the two alternate pathways to challenge a patent (IPR is the administrative remedy that bars you from suing the USPTO in district court under the APA’s jurisdictional grant). In a DJ action, you have to show an injury in fact. Likewise, in an appeal from an IPR, you have to show injury in fact. It’s pretty clear that Consumer Watchdog would fail to prove that there is a “case or controversy” if they filed a DJ action in district court. So why should they have standing from the alternative path to a DJ that has the same effect? The answer is simple – they shouldn’t. The same rules apply to both kinds of actions.
“The injury Guest is with the PTO not the underlying patent. I am not sure why you think this is not an Article III injury in fact. Your injury is that you didn’t get what you paid for.”
If they think the PTO violated upon the APA or whatev then they should bring an action agin the PTO, not try to appeal.
“Consumer Watchdog is a public interest group who is not being directly impacted by WARFs patents other than the general indignity felt by all of us.”
Speak for yourself. I for one am not indignant that WARF got a patent. I save my indignation for real PTO boners, like granting a TM registration on the letter pi.
I thought that was a bit of sarcasm on Dennis’ part (also probably an accurate description of how Consumer Watchdog perceives its role … or wishes it was perceived to be by “all of us”).
As John Cage might have said, Oh puh-leez! CW has plenty of other remedies left, if it ever gets sued (or is threatened with a suit): it can raise an invalidity defense at trial; it can try to IPR again and if it loses, appeal, this time with standing b/c it’s being sued; it can bring a DJ action under the lowered standard of Medimmune. I don’t see cert being granted on this one.
Yes, but what about the right to fair trial? The injury is at least the money you paid. What if the PTO wrote, “the party filing the request for review doesn’t have an injury in fact from the patent, and we are rather busy this week so we are just going to take their money. All claims affirmed.”
The money you voluntarily paid is the same whether you receive an adverse decision or not. That’s not an injury caused by the patent or by the administrative action.
So if I purchase a t.v. and it turns out it is really just a cardboard box, I am not injured?
I think you are injured if you did not receive what the statute says you are going to get.
It is ludicrous to say that you are not injured if you do not receive a fair decision. You put your labor and money into filing the petition. The statute says you will get a trial. The presumption must be that the trial will be a fair trial—the converse of this is simply ludicrous. To contemplate that any old trial is fine is silly. And, I’d have to brush up on my administrative law, but I cannot imagine that you would pay for a trial and then have no recourse no matter what the administrative agency does. That is simply bad law to have no policing of the government. And again your injury is your time and money and the promise of a fair trial granted by the statute.
I think this may be taken up by the SCOTUS.
Are you really paying for a TV, or are you paying for a chance at a TV…?
You pay (or get) the right to a petition, and not a certain result of that petition, right?
You get the right to a fair consideration of your petition. Your injury is not getting a fair consideration, which is your right under the statute. That is the key. Again, under your reasoning the PTO could say, “we see you have no right to appeal and–ha ha–we are therefore going to deny your petition for ’cause we are busy.”
Again NWPA you are conflating result with process.
The two are distinct.
I don’t think so anon. I am clearly saying they did not get their process. They are saying legally the result is wrong so they did not get the process.
Pay attention to your own words:
“result is wrong so they did not get”
Your emphasis on “result” is where you go astray.
I think this may be taken up by the SCOTUS.
I doubt it. But let’s say it does – do you think the present court is going to vote to give consumer watchdog groups increased access to the courts?
It is a good point DanH.
“That is simply bad law to have no policing of the government.”
That’s your opinion. Not the government’s.
Not necessarily so 6.
Then again, you have shown little appreciation of any legal concept that may actually be brought to bear, and your own “opinion” is of no consequence.
But you do have both a right to have an opinion and the ability to express your opinion, no matter how banal that opinion is.
“It is ludicrous to say that you are not injured if you do not receive a fair decision”
Maybe bring a due process claim agin the PTO?
It is an injury if the administrative action taken is wrong….as in making final rules without following proper procedure, such as having a required comment period and the like….
Les,
See my post at 8.2.1.2.1.3 (9:35 am).
For this reason, Consumer Watchdog’s analogy to the Freedom of Information Act (FOIA) and the Federal Election Campaign Act (FECA) are unpersuasive. These acts create substantive legal rights – access to certain government records – the denial of which inflicts a concrete and particularized injury in fact. . .
Interesting.
A couple questions. Is it necessary for standing when filing an appeal of a denial under the FOIA or FECA for the requesting party to actually want or need the documents for its own purposes? Does the requesting party need to show that it itself will sustain a “concrete and particularized injury” if the information isn’t produced?
As for this:
These acts create substantive legal rights
The reexam statute created the right to challenge a patent which was unlawfully granted without facing the added burdens and costs presented by the presumption of validity. Why isn’t that a “substantive legal right”?
The reexam statute created the right to challenge a patent which was unlawfully granted without facing the added burdens and costs presented by the presumption of validity. Why isn’t that a “substantive legal right”?
They were given the right to participate in a challenge the patent. The Board ruled contrary to how they would have liked, but they were given all the rights accorded to them by the statute.
DanH The Board ruled contrary to how they would have liked, but they were given all the rights accorded to them by the statute.
Fair enough … but how does that differ from the situation where a “public interest” group is denied an FECA or FOIA request?
Fair enough … but how does that differ from the situation where a “public interest” group is denied an FECA or FOIA request?
The FECA and FOIA statutes grant the requester access to certain documents, not just a right to have an administrative body deliberate about whether you should receive the documents. If your request is improperly denied, the injury-in-fact is that you don’t have the documents. In the present case, Consumer Watchdog got exactly what the statute promised – participation in the reexam process.
DanH In the present case, Consumer Watchdog got exactly what the statute promised – participation in the reexam process.
You make a good argument, DanH.
Would the analysis change if victorious third party re-exam requesters were given a piece of paper that said “The government of the United States has determined that the following subject matter is not worthy of a patent”? That seems like valuable information …
The statue gives you the right to challenge the validity of a patent. The injury is that the administrative body did not arrive at the right decision. The took your money and did not provide the promised service.
Their argument is that the decision to affirm the claims is faulty. This business of that it only gives you the right to participate is nonsense. It gives you the right to participate in a fair trial. If the trial is not fair–which is essentially what they argued–then you have been injured for at least your money.
As above the promised service is not a decision one way or another, but the mere promise of going through the motions and making a decision.
Buyer beware…