by Dennis Crouch
AVX Corp. v. Presidio Components, Inc. (Fed. Cir. 2019)
In this case, the Federal Circuit dismissed AVX’s appeal — holding that the patent challenger lacked standing to appeal after losing on the merits in the Inter Partes Review (IPR).
AVX (its subsidiary ATC) and Presidio are competitors in the electronic components market, including sales of capacitors — the subject of Presidio’s patent here. See U.S. Patent No. 6,661,639. These companies have repeatedly battled in court over capacitor patent rights — albeit different patents. In one case, Presidio won a $3.3 million judgment and permanent injunction against ATC/AVX for its 545L capacitor; Later, Presidio sued again on ATC/AVX’s redesigned 545L capacitor (550 series) — that lawsuit is still pending. Despite their ongoing competition, AVX apparently has no concrete plans to make a product covered by the patent.
The case here formally began with an inter partes review (IPR) proceeding before the Patent Office’s Patent Trial & Appeal Board (PTAB). The PTAB instituted review and found some claims unpatentably obvious, while upholding the validity of the remaining claims.
The patent challenger AVX appealed – as is its statutory right.
A party dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) may appeal the decision pursuant to sections 141 through 144. Any party to the inter partes review shall have the right to be a party to the appeal.
35 U.S.C. § 319.
Rather than deciding the case, the Federal Circuit has dismissed AVX’s appeal for lack of standing and lack of appellate jurisdiction — holding that the U.S. Constitution prevents the case from being heard on appeal.
Article III of the U.S. Constitution creates the Judicial Branch and authorizes the Supreme Supreme (and its inferiors) to to hear “cases” and “controversies.” Article III, Section 2, Clause 1. The Supreme Court has read the clause as barring the courts from rendering advisory opinions about the law. Rather:
For a party to have standing, it must show (1) an “injury in fact,” (2) “a causal connection between the injury and the conduct complained of,” and (3) a likelihood that “the injury will be redressed by a favorable decision.”
Quoting Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). If a party lacks standing, the Courts also lack jurisdiction to hear the case.
Agency to Appellate Court: Article III limitations do not directly apply to IPR proceedings themselves because the PTAB is an Article I administrative adjudicator rather than an Article III court. Thus, the PTAB does not consider whether the patent challenger has been “injured” by the patent. Article III standing does kick-in once appealed, and the appellant will need to show an actual controversy, including injury-in-fact between the parties.
On appeal AVX argued for “competitor standing” to challenge government actions. However, the Federal Circuit refused to follow non-patent cases and instead ruled that that AVX lacks any “nonspeculative stake in cancelling” the claims. “[T]he rationale for finding standing in those cases does not carry over to support standing in the present context, where AVX has no present or nonspeculative interest in engaging in conduct even arguably covered by the patent claims at issue.”
Here, there is a good argument that the Federal Circuit failed to properly consider on-point Supreme Court precedent in cases such as Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 (1970). In Data Processing, the Supreme Court held that data processing service providers had standing to challenge a governmental action allowing new sellers into the market. The basis for standing was the potential lost profits due to increased competition. It seems to me that AVX has alleged enough to show that PTO’s action on the patent similarly shifts the competitive marketplace. The Federal Circuit, however disagreed with my analysis:
The government action is the upholding of specific patent claims, which do not address prices or introduce new competitors, but rather give exclusivity rights over precisely defined product features. That sort of feature-specific exclusivity right does not, by the operation of ordinary economic forces, naturally harm a firm just because it is a competitor in the same market as the beneficiary of the government action (the patentee).
One way to read the Federal Circuit’s analysis here is as an implicit statement that the more recent case of Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) created a more stringent test and implicitly overruled Data Processing.
Still, I think that AVX could make a strong case on petition for certiorari.