Case Dismissed: No Standing When Deal Fell Through

Momenta Pharma v. Bristol-Myers Squibb Co. (Fed. Cir. 2019)

In this recent decision, the Federal Circuit dismissed Momenta’s appeal — finding that the company lacks standing to appeal its loss before the PTAB.  The decision stands on fairly controversial grounds and in some tension with Supreme Court jurisprudence on appellate jurisdiction requirements.  Still, I suspect it will be cabined-in by its facts and not have a large precedential impact.

In 2015, Momenta petitioned for inter partes review of US Patent 8,476,239 owned by BMS. The patent covers a particular immunosuppressive formulation sold as ORENCIA .  At the time, Momenta was exploring an ORENCIA biosimilar as part of a partnership with Mylan.  And, over the years, Momenta has apparently conducted clinical trials on aspects of the product.  According to Momenta, during that time the ‘239 patent has been a clear obstacle to the project’s success.

Back to the administrative action: In the IPR, the PTAB sided with the patentee BMS — finding that the claims were not proven invalid (i.e., confirming the claims). Momenta appealed.

The Patent Act allows for any “person” to file IPR petitions and also indicates that the losing party of an IPR (here the patent challenger) has a right to appeal the decision to the Federal Circuit.  Although the statute provides a right to appeal, the U.S. Constitution has a further standing requirement before the courts are allowed to step in and pass judgment.  In particular, the Case and Controversy clause of Article III requires a genuine material dispute between the parties that can be resolved by the litigation.

By the time the appeal rolled around, Momenta’s clinical trials turned out to be a failure and BMS filed for dismissal — arguing that Momenta was no longer planning to use the invention and thus had no stake in the validity/invalidity of the patent. Momenta first responded that it was still intent on producing an ORENCIA biosimilar, but later the court was updated with information showing that Momenta was exiting its partnership with Mylan and was no longer developing the biosimilar.  Momenta did not provide any further explanation as to whether it had standing — and the Federal Circuit ultimately determined that Momenta no longer had standing. Thus, the appeal was dismissed for absence of standing/jurisdiction and for mootness.

A party filing an appeal must have a “concrete and particularized” interest at stake in order for a court to have Constitutional jurisdiction over the case (“Article III Jurisdiction”).  This interest required during all parts of the litigation.  Here, the court ruled that Momenta may have once had an interest at stake, but that interest “has now been eliminated by Momenta.”

Although momenta still has a potential of receiving royalties on a future biosimilar impacted by the patente, the court agreed with the patentee that interest was “too speculative to support standing.”

= = = =

There are a long line of Supreme Court and DC Circuit cases that involve situations parallel to this that begin with a statutory right to an administrative action.  In those cases, the standing issue arises when the party attempts to appeal a negative administrative decision.  The basic rule in these cases is that a concrete and particularized interest needs to exist before the court will get involved. That said, the courts have allowed for a reduced standing requirement in these appeal cases as compared with what is required for a new district court action.

My concern with this case is the basic notion that Momenta’s standing to challenge the patent completely disappeared based solely on a mid-appeal SEC filing stating that a particular deal had fallen-through.  From that front, this appears to be a rash decision by the Federal Circuit.  On the other hand, I think that the better frame for seeing this case is to recognize that Momenta could have (but did not) update and explain its standing argument based upon its withdrawal from the Mylan-biosimilar project.  In Federal Court each party is expected to affirmatively make its case, and Momenta simply did not make its case.

Perhaps Momenta did not provide any explanation because it no longer cared about the case — providing a precise primary justification for the standing rule in the first place.

22 thoughts on “Case Dismissed: No Standing When Deal Fell Through

  1. 7

    Anyone wanting a reply from me on the further up thread from this one can’t have one as I’m at my 10 post limit apparently.

    1. 7.1

      That count limit su c ks.

      It does nothing for the number one blight on these boards (Malcolm and his drive-by monologue style) and only actually punishes those that engage in conversations.

      That some whine that the conversations “don’t go their way” is better met with a response of “get better arguments” than the apparent coddling that goes on is a bit silly.

    2. 7.2

      Maybe the good Prof will open a new thread specifically on the new POPA (and even obtain or publish a link to the actual document – I heard that there is this thing called Freedom of Information Act, if it comes to that).

  2. 6

    I think the opinions is wrong for two reason (i) because there is no mootness (Momenta can not meet the stringent requirements of the voluntary cessation doctrine) and second, because Momenta is adversely affected by the agency adjudication; see Investment Company Institute v. Camp, 401 U. S. 617, 620 (1971) (By depriving plaintiffs of their statutory bargaining chip, the cancellation inflicted a sufficient likelihood of economic injury to establish Art. III standing.) and reaffirmed in Bryant v. Yellen, 447 U.S. 352 (1980) (finding standing) (future liability and removal of bargain chip) (Court held, that a denial of a benefit in the bargaining process can itself create an Article III injury, irrespective of the end result).

    1. 6.1

      Jonathan, I think that you are taking an incorrect tact and putting too much power into the hands of Congress (by way of “legislating” an Article III injury).

      1. 6.1.1

        Anon, Yes this is correct: Marbury v. Madison, 5 U.S. 137, 162-63 (1803) Chief Justice Marshall confirmed a fundamental expectation of the Founders and Framers that: “If he has a right, and that right has been violated, do the laws of his country afford him a remedy? The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury. . . . Blackstone says, ‘it is a general and indisputable rule, that where there is a legal right, there is also a legal remedy by suit, or action at law, whenever that right is invaded.” And based on this foundational right/remedy relationship, the Court said when the substantive law at issue is statutory the calculus changes entirely. Justice Brennan said in Davis v. Passman, 442 U.S. 228, 241-44 (1979) (5:4 for Davis) (Brennan, J. delivered the opinion of the Court, in which White, Marshall, Blackmun, and Stevens, JJ., joined.) – in the course of recognizing a judicially-created cause of action to remedy constitutional violations) “statutory rights and obligations are established by Congress, and it is entirely appropriate for Congress, in creating these rights and obligations, to determine in addition who may enforce them and in what manner.”. There is a long line of cases, which hold that the Art. III standing analysis re “injury-in fact” has to be different (less demanding) when a court deals with a standing issue related to a statutory violation. Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 US 765, 773 (2000) (Congress can define new legal rights, which in turn will confer standing to vindicate an injury caused to the claimant.) Citing See Warth, 422 U.S. at 500. Warth v. Seldin, 422 U.S. 490, 500 (1975) (“The actual or threatened injury required by Art. III may exist solely by virtue of ‘statutes creating legal rights, the invasion of which creates standing.’”). Thus, where a statute confers legal rights on a person, that person will have Article III standing to sue where the facts establish a concrete, particularized, and personal injury to that person as a result of the violation of the newly created legal statutory rights; injury in fact should not be so demanding.

        1. 6.1.1.1

          Since Lujan was decided, the Court has reaffirmed that an invasion of legal rights created by statute satisfy the requirement of “injury in fact” twice: in Federal Election Commission v. Akins, 524 U.S. 11 (1998) and in Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167 (2000)

          1. 6.1.1.1.1

            Most recently, the Court has affirmed the Akins and Laidlaw line of statutory standing cases in Massachusetts v. EPA, 549 U.S. 497 (2007) (5:4) (finding standing) (“Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.”) because in Summers v. Earth Island Trees Inst., 555 U.S. 488 (2009) (5:4) (finding no standing) the line of cases is in the Dissent written by Breyer, J.; and in Spokeo, the Court avoided taking a clear position on statutory standing.

        2. 6.1.1.2

          Your attempts with cases having no bearing on the matter avail you nothing.

          Marbury? Really? For a Congress cannot broach the Article III necessary requirements?

          Congress simply cannot – by statute – broach that divide.

          injury in fact should not be so demanding.

          Not buying it – for reasons already provided.

    2. 6.2

      Your second position was also evaluated by the court here and with the facts of this case deemed too speculative.

      Both of your swings miss (albeit, they were at least decent swings).

  3. 5

    First, please see Virginia v. Hicks, 539 U.S. 113, 121 (2003) (Scalia, J.) (the standing inquiry is directed at those who invoke the court’s jurisdiction) (Court held that if a party has experienced an alteration of “tangible legal rights . . . [then] that is sufficiently ‘distinct and palpable’ to confer standing under Article III); Second, Art. III standing is more likely found when the injury-in fact is linked to a statute or agency regulation/adjudication that allegedly has been or will soon be violated. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 184-85 (2000) (finding standing where plaintiffs responded to increased risk of health hazards from pollution by “refraining from use of the North Tyger River” based on an agency regulation); Baur v. Veneman, 352 F.3d 625, 634-35 (2d Cir. 2003). Cases in which the present injury is linked to a statute or regulation are easier, in part because the legislature and executive agencies—the branches tasked with evaluating risks and developing safety standards—have already identified the risk as injurious. See, e.g., Laidlaw, 528 U.S. at 181-84 (finding that refraining from using a polluted river constituted injury in fact even though the district court found that the “permit violations at issue … did not result in any health risk or environmental harm”);
    Third, Because patent infringement is a continues tort, Clinton v. City of New York, 524 U.S. 417, 430–31 (1998) (6:3) is on point; (Court holding that the imposition of a “substantial contingent liability” qualifies as an injury for purposes of Article III standing) (A “petitioner who is likely to suffer economic injury as a result of [governmental action] that changes market conditions satisfies the injury-in-fact requirement.” Clinton v. City of New York, 524 U.S. 417, 432-33 (1998) quoting 3 Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise 13-14 (3d ed. 1994). In Clinton v. City of N.Y., 524 U.S. 417, 431 (1998); New York City had standing to challenge the line item veto, even though a pending administrative action could waive the contingent liability; the Court found standing because “the revival of a substantial contingent liability immediately and directly affects the borrowing power, financial strength, and fiscal planning of the potential obligor”). By acknowledging the standing of the New York healthcare providers and New York City, as well as the farmers’ cooperative, the Court established that an injury’s having a contingent/future aspect does not necessarily make that injury INcognizable under Article III. In Clinton v. City of New York the Court recognizes that a tangible disadvantage to the affected parties can lead to Art. III standing.

  4. 4

    The catch-22 could be read the other way- the loss of a statutory right (to appeal to the CAFC) is all by itself a material loss (of due process). The maintenance of a patent to an invention that rightfully belongs to the public is a loss- to the people.

    I wonder what the Supreme Court would make of it? Maybe the USPTO needs an appellate PTAB.

    1. 4.1

      No, there is no such catch 22 here regarding the nature of an Article III court.

      Please find something else to do with your time, Marty.

  5. 3

    To gain standing, couldn’t Momenta have simply said, since our similar product has failed, we now want to make the exact product claimed in the ‘239 patent, and we believe that patent is invalid?

    1. 3.1

      No, that wouldn’t be enough to confer standing. They’d need to be able to show current and concrete plans to produce the patented product.

      1. 3.1.1

        I’m not sure what that means. Produce a memo that informing staff that’s what they plan to do as soon as the patent is officially invalidated? Produce a memo directing that precursor chemicals be purchased or manufactured? Actually ordering the chemicals?

        How hard is that?

        1. 3.1.1.1

          how hard is that

          If a party wants to have actual (Article III) skin in the game they are fully capable of obtaining that skin.

          What they cannot do is bank solely on a known and chosen Part I forum choice that Congress explicitly opened up to NON-Article III parties.

          Congress knows full well that it set a dual system and cannot change that dual system into a bootstrap round-about the hard floor against advisory opinions.

  6. 2

    Dennis, I do not think there is anything inherently wrong about this decision. It’s a pretty basic application of the mootness doctrine.

    But I agree the outcome is wrong, but that’s because the Federal Circuit should never have rejected the argument that IPR estoppel under the AIA confers standing to appeal. Once the Federal Circuit made that ruling, lack of standing became a self-fulfilling prophesy for many IPR challengers seeking to appeal an adverse PTAB decision, especially in the biosimilars space.

    The reason is straightforward. Under the AIA, estoppel attaches the moment the Final Written Decision issues; it is not suspended simply because the challenger files an appeal. 35 U.S.C. 315(e)(2). So at the time the patent challenger is filing its appeal brief at the Federal Circuit, it is already subject to AIA estoppel.

    And at that moment, the patent challenger is in a terrible position.

    No other company in its space will want to partner or enter into a joint venture to produce the patented product. The IPR challenger is basically the carrier of a loathsome and contagious disease. Any third party company will be very reluctant to partner with the IPR challenger for fear of being “in privity” with the challenger, and thus, also subject to AIA estoppel. There’s no known way to contract around this problem, either (and even attempting to do so may make the “privity” argument even more compelling). I would not be surprised if the proposed third party deal with Motiva “fell-through” in part because of the other party’s fear of being deemed a privy with Motiva for estoppel purposes.

    And as for the IPR challenger itself, it cannot tell the Federal Circuit honestly and in good conscience that it has present plans and is making current investments in building the patented product. Prudent businesses will obviously hold off on making plans or investments until (and unless) they won the appeal. But simply saying, “I’ll invest or build it if I win the appeal,” is too speculative to confer standing under established law.

    And so there you have it — no jurisdiction to appeal! It’s a vicious Catch 22 — you cannot feasibly make current investments or partner with others because of AIA estoppel. But because you cannot make current investments or partner with others, you have no standing to appeal, either.

    The easy solution to this quandary would have been to recognize the obvious, AIA estoppel has profound consequences, and thus, should be sufficient in most cases to confer standing to appeal. Until either the Federal Circuit or the Supreme Court wakes up and understands this obvious truth, you’re going to see more and more bizarre dismissals (especially from appeals by biosimilar companies).

    1. 2.1

      ause the Federal Circuit should never have rejected the argument that IPR estoppel under the AIA confers standing to appeal.

      Absolutely wrong – for the reasons already of record.

      Your view allows a PURE bootstrapping from a NON-Article III forum into an Article III forum and expressly makes advisory opinions a “thing” in direct contradiction to the Constitution.

      Also, your attempt at “freezing time” is not in accord with how the system works vis a vis standing.

      Bottom line is that not even Congress (the appropriate branch under the Constitution to make patent laws) has an unfettered ability to make laws.

  7. 1

    No advisory opinions from an Article III court.

    That hardly seems like a “rash” premise.

    1. 1.1

      But..but…but, it is patents. We all know it must be invalidated.

      1. 1.1.1

        I chuckled at your post, because you hit the nail on the head.

        An easy teaching lesson here is fumbled by the Professor, and instead we all get a convoluted (and uninspiring and frankly not believable) “spin” that this decision “stands on fairly controversial grounds and in some tension with Supreme Court jurisprudence” when the opposite is true.

        Man, would I love to be a student in the Prof.’s classroom if he tried to pass that statement off in class.

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