Post-PTO Trials: Party must Prove Injury-in-Fact for Appellate Standing

Phigenix v. ImmunoGen (Fed. Cir. 2017)

In this case, the patentee ImmunoGen won its case before the Patent Trial & Appeal Board (PTAB) with a judgment that the challenged claims are not obvious.  U.S. Patent No. 8,337,856. Phigenix appealed, but the appellate court has dismissed the case for lack of standing – holding that the challenger-appellant failed provide “sufficient proof establishing that it has suffered an injury in fact.”

Article III of the U.S. Constitution provides for federal judicial power over “cases [and] controversies.”  Although not found in the text, the Supreme Court requires existence of an “actual” conflict between the parties — thus prohibiting the courts from issuing advisory opinions.  The doctrine of standing requires that a plaintiff/appellant “have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [defendant/appellee], (3) that is likely to be redressed by a favorable judicial decision.” (quoting Spokeo (2016)).  As a Constitional limit on judicial power, standing must always exist during a lawsuit and may be raised sua sponte by a trial or appellate court.

The case here began with Phigenix’ filing its inter partes review (IPR) petition.  Since the PTO/PTAB is an administrative agency empowered by statute and Article I of the Constitution, its power is not limited by Article III.  Thus, for IPR petitions, the PTO Director need not concern herself with the question of whether the petitioner has standing in the Federal Courts sense.  When the case is appealed, however, the appellant must provide the required proof of injury.

In this case, Phigenix is something of a competitor of the patentee ImmunoGen and, although Phigenix does not plan to use the patented invention itself (at this point the company is only a licensor), the appellant argues that the existence of the patent makes ImmunoGen a stronger market competitor – leading to actual economic injury. In the appeal, the Federal Circuit suggests that the injury might be sufficient – but that Phigenix failed to prove its existence.

The conclusory statements in the Gold Declaration and the [attorney] letter as to the hypothetical licensing injury therefore do not satisfy the requirements of Rule 56(c)(4).

Without providing the evidence of injury, the court could not hear the case.   The court also reiterated its prior position that the right-to-appeal created by 35 U.S.C. 141(c) does not replace the standing requirement. See Lujan and Consumer Watchdog.

 

 

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

20 thoughts on “Post-PTO Trials: Party must Prove Injury-in-Fact for Appellate Standing

  1. If this thwarted IPR appeal gets to the Sup. Ct., that Court would seem to be caught between two conflicting principles expressed in their prior decisions: the encouragement of patent validity challenges as a public policy goal [even by licensees] vis a vis their discouragement of litigation standing by those not directly damaged?

    1. Paul, is there a difference between encouraging “validity challenges” and encouraging the challenge of invalid patents? Further, if validity has historically required proof by clear and convincing evidence, a higher standard that recognizes the property interest of the patent owner, does the policy goal of encouraging the challenge of invalid patents include a system that invalidates them with a lower standard of proof that does not recognize this property interest?

      1. Ah yes, once again Ned leaps to complain about a property issue, while failing to fully recognize exactly when certain sticks in the bundle of property rights have been taken.

        Tell me Ned, when exactly does this lower standard of proof go into effect?

  2. If Standing is judge-made doctrine, is there any weight to the idea that 35 USC 319 statutorily overrides it for this limited case?

    1. The roots of the standing doctrine are Constitutional. There must be an actual case or controversy between the parties for the court to be able to hear the case, and this means that each side has something to gain/lose that directly correlates with the outcome being requested. Although a statute authorizing an appeal is thought to make it easier to find standing, it does not eliminate the case-or-controversy requirement.

      1. …and what if the Court makes up its own “case or controversy” in order to legislate from the bench, particularly on a point that both sides have stipulated to?

        Oh, for example, a point that certain claims pass the statutory category portion of 35 USC 101 and the Court interjects that some (merely) possible harm may (or may not) occur if certain patents remain considered to be “eligible” (even though the actual statutory words have been met)…?

        Methinks the “case or controversy” requirement for the legitimacy of judicial action is not constrained to the standing issue.

      2. “this means that each side has something to gain/lose that directly correlates with the outcome being requested”

        This goes to my comment from a few hours ago. When a public interest group files an IPR petition, and the PTAB invalidates a patent, and then the patent owner appeals that decision to the Federal Circuit, what does that public interest group actually have to lose that directly correlates with the outcome being requested? Sure they want the patent invalidated for public policy reasons or whatever, but that public interest group does not have an injury-in-fact. In fact, when they filed the IPR petition, they didn’t have a injury-in-fact, it’s just that the inquiry to their Article III standing didn’t matter in an Article I proceeding.

        It’s one thing if an entity that is a defendant in litigation concerning that patent files for an IPR, but a public interest group? It seems that such a public interest group, in that scenario, especially under this ruling, would lack standing to even participate in the appeal in the Federal Circuit.

    2. “If Standing is judge-made doctrine, is there any weight to the idea that 35 USC 319 statutorily overrides it for this limited case?”

      As the Professor mentioned, this is Constitutional, not common law.

      But even then, the Federal Circuit has held that the requirement of injury in fact is a hard floor of Art. III jurisdiction and cannot be removed by statute. See Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258, 1261 (Fed. Cir. 2014).

      Furthermore, this is backed up by a 2009 Supreme Court decision. Summers v. Earth Island Institute, 555 U. S. 488, 496 (2009) (“[D]eprivation of a procedural right without some concrete interest that is affected by the deprivation—a procedural right in vacuo—is insufficient to create Article III standing.”)

      The appeal right of 35 USC 319 is procedural in nature, and SCOTUS has been clear that for Article III standing purposes, you still need the injury-in-fact, the “concrete interest.”

      1. As the Professor mentioned, this is Constitutional, not common law.

        Just as an aside (and you anony are expressly excluded from the following comment), but I am amazed at how many people do not understand the difference and how many self-professed attorneys do not even recognize that such a difference exists.

  3. This is a very interesting decision. I recall there is a case awaiting ruling from the FC where the FC asked the parties, just prior to oral arg, to brief whether the public interest grp as appellee has standing to even participate in an appeal of an IPR ruling. Pub int grp petitioned for IPR review, review granted, IPR decision invalidated claims, patent owner appealed, USPTO declined to participate in the appeal, but the Pub int grp appeared as appellee. That case had oral arg in late summer, no ruling yet.

    There is no dicta here regarding appellee standing to even participate in an appeal, but given this decision, it appears the FC may very well hold that these third party IPR petitioners don’t have standing to participate in an appeal brought by the patent owner, even if the PTO declines to participate as well. That doesn’t mean an automatic win for the patent owner, of course, but it means that the third party’s briefs and associated arguments would be out and the FC would simply be reviewing the sufficiency of the patent owner’s arguments on appeal.

  4. This is a very unfortunate decision by the FC on the requirement for standing on appeal, here by a competitor.

    In order to have standing on appeal an appellant/petitioner needs to meet two requirements; the constitutional Art. III standing requirement )(Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992): “irreducible constitutional minimum of standing contains three elements: injury in fact, causation, and redressability.”)) and since Lexmark the appellee must be within the zone of interest of the statute.

    Regarding the latter, in Association of Data Processing v. Camp, 397 U.S. 150 (1970), which is generally acknowledged as establishing modern standing doctrine, the Supreme Court recognized competitor standing. See id. at 152. That Supreme Court had “no doubt” that the plaintiff suffered “injury in fact, economic or otherwise” because the alleged increased competition “might entail some future loss of profits.” Id. And in Clarke v. Securities Industries, 479 U.S. 388 (1987) the Supreme Court clearly emphasized that direct competitors are usually within the zone of interests in APA cases to challenge a statute or administrative decision favoring a competitor.

    Based on Supreme Court case law the zone of interest test is the same before the district court, an agency or an appellate court. The only difference is that on appeal the appellant/petitioner as an “aggrieved party” must show how the agency order or ruling “adversely affects” the appellant/ petitioner. Regarding the Art. III requirements, generally demonstrating injury-in-fact as a competitor is easier than showing injury otherwise: such plaintiffs need only show that they are “direct and current competitors” in the market; see a long line of cases starting with KERM, Inc. v. FCC, 353 F.3d 57, 60 (D.C. Cir. 2004); Although the basis for competitor standing before a district court or the appellate court is not entirely clear, the Supreme Court has implied it depends on the existence of a statute protecting a plaintiff’s competitive interests. And if this is so, then the competitor standing inquiry turns on the same substantive question as does the zone of interests test: whether the statute allows the plaintiff to protect his or her competitive interest via the courts. Both elements are present. The decision of the FC is dead wrong.

    1. Jonathan, was not this more about whether Phigenix actually proved harm because of competition? Conclusory statements of harm are not enough; and that was all that was contained in the supporting affidavits supplied by the appellant.

      1. Ned, I think you are referring to the injury-in-fact element in the Art III standing test. The D.C. Court and other circuits have held that injury-in-fact is presumed to a large extent when dealing with a direct competitor situation; an instructive and recent case is Mendoza v. Perez, 754 F.3d 1002 (D.C. Cir. 2014);

  5. This is a very good case. I am surprised this wasn’t discussed before. We really missed this one coming. Pretty obvious in hindsight—notice how that works. Those Google appointed CAFC need to work on their understanding of hindsight.

  6. Are you sure Phigenix “is a competitor” of patentee ImmunoGen? As far as one can tell, ImmunoGen is a brick-and-mortar R&D business that licensed actual working technology to Genentech. Phigenix on the other hand seems to have no business other than to commercialize its patents. It doesn’t look like it’s competing for anything, other than perhaps some of Genentech’s money.

      1. As long as you are making corrections, there is a missing word between “the” and “has” in this sentence from the third paragraph”

        ” Thus, for IPR petitions, the PTO Director need not concern herself with the question of whether the has standing in the Federal Courts sense.”

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