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.
Dear All,
I wanted to let you know that on Monday the USSC denied cert in two “competitor” standing cases:
RPX CORPORATION V. CHANBOND LLC, Docket No. 17-1686
cert denied 6/17/2019,
JTEKT CORP. V. GKN AUTOMOTIVE LTD., Docket No. 18-750
cert denied 6/17/2019,
Note: JTEKT is a direct competitor whereas RPX is obviously not a competitor scenario. It is very likely the Court would have granted cert. in the JTEK case if the cert petitioner would have focused only on the historical competitor standing cases (i.e., Western Pacific California R. Co. v. Southern Pacific Co., 284 US 47 (1931) (early finding of competitor standing) and (i.e., Data Processing v. Camp (1970)) and on the more contemporaneous competitor standing cases (i.e., Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. Jacksonville, 508 U.S. 656, 666 (1993) (plaintiffs with an “inability to compete on an equal footing”. It is this loss of the “opportunity to compete,” plaintiffs claim, that establishes an alternative injury sufficient for Article III standing.) and Lexmark v. Static Control Components (2014) and on the leading circuit court cases La. Energy & Power Auth. v. FERC, 141 F.3d 364, 367 (D.C. Cir. 1998) and Sherley v. Sebelius, 610 F.3d 69, 72 (D.C. Cir. 2010) (describing the “competitor standing” doctrine)). Any mentioning of statutory standing in a cert petition would immediately “kill” these grant chances.
The CAFC’s precedential decision in Lone Star today seems at first glance to be … bizarre. And, yes, questions of standing are implicated.
From the decision:
Lone Star Silicon Innovations LLC (“Lone Star”) sued Appellees for infringing various patents. The district court concluded that Lone Star does not own these patents and therefore lacks the ability to assert them. In re Lone Star Silicon Innovations LLC, No. 3:17-cv-03980-WHA, 2018 WL 500258, at *1 (N.D. Cal. Jan. 20, 2018).
We agree with the district court that Lone Star cannot assert these patents on its own. But the district court should not have dismissed this case without considering whether Advanced Micro Devices, Inc. (“AMD”), the relevant patentee, should have been joined. Its failure to address this issue was legally erroneous in view of Federal Rule of Civil Procedure 19 and our case law.
We therefore vacate the district court’s dismissal and remand for further proceedings consistent with this opinion.
What at first glance seems bizarre?
There well may be items that at second glance could be considered bizarre. For example, the special arrangement, why AMD handled this (through Lone Star) in such a ham-fisted manner, or even the holding of this case to be precedential.
I would suggest that if you don’t own any rights in your asserted patents, then dismissal of your patent case is very appropriate and searching for a party to “join” is a waste of resources.
Did you read the decision?
Or did your “first glance” only sniff the headline?
It is not as if there were zero rights owned.
I will take from your lack of reply that your “first glance” was not a glance at all, but merely a “sniff.”
As usual for you, your “sniff” is colored more by your predetermined disposition to be anti-patent holder than by any actual content of the item being sniffed.
That CRP you smell is you, and any “sniff” you engage in is rather meaningless given the level of stench that IS you.
These standing rulings are a total mess, and all of it is attributable to the earlier Federal Circuit holding that the AIA statutory right of appeal and estoppel under Section 315(e) did not create a sufficient injury to confer standing on a challenger who loses an IPR. The Supreme Court should address that threshold ruling first; if they say that any challenger who loses has standing (which in my view was correct), all of these messy and nonsensical decisions go out the window.
This is the subject of the pending certiorari petition in RPX Corp. v. Chanbond. I really hope the Supreme Court takes up this issue, as it’s hard to imagine they’d uphold the Federal Circuit’s reasoning.
“and all of it is attributable to… ”
Pure B$.
Your view is precisely the wrong view and drives a truck through the actual standing rules for an Article III appearance (full bootstrap from a KNOWN duo-forum-rules setup).
LR – the more you post (especially of late), the less credibility you have.
These standing rulings are a total mess… The Supreme Court should… say that any challenger who loses has standing (which in my view was correct), all of these messy and nonsensical decisions go out the window.
What exactly is “messy” about these holdings? Standing law in general is “messy” (given that so much of it is not really about giving effect to the Article III “case or controversy” language, and is instead a mechanism by which courts dodge tricky questions that they would rather not have to answer).
I do not see, however, that the cases concerning appeal by a petitioner from a PTAB loss are any “messier” than standing law in general. In fact, if anything, these appeal-from-the-PTAB cases are actually easier to discern and apply the rule than most standing cases (precisely because none of them to date have been standing holdings in the service of question avoidance).
Standing is messy (and that’s the proper word to use) because PTAB appeals present two unique characteristics in civil litigation: (1) AIA estoppel under Section 315(e) lasts forever, and forever binds the challenger and anyone in privity with the challenger, yet (2) standing to appeal must exist when the appeal is taken. It presents a situation where someone who happens to not be constitutionally injured at the precise moment of the appeal may have been injured in the past, and may be injured through later developments. That’s not a standing issue you typically confront in civil litigation, because most tort cases involve discrete episodic events or occurrences that happen only once, whereas accrual of patent infringement claims is continuous and ongoing.
This issue is so messy that the Federal Circuit in this very case awkwardly sidestepped it by directly questioning whether estoppel § 315(e) even applies in a later infringement case to an IPR petitioner who lacked standing to appeal the PTAB’s decision at the time of the appeal. This was not a substantial statutory interpretation question, but was a convenient way for the court to duck the the thorny issue of how a party can be bound to a PTAB decision that they were not allowed to appeal.
You are blaming the wrong party. Blame Congress for purposefully choosing to allow “Part 1” to include those without proper standing (to partake in “Part 2” where such proper standing is essential (based on the higher power than Congress – the Constitution).
A badly written (and badly motivated) law cannot be allowed to bootstrap over the Constitutional basis of warranting Article III attention.
I am still not clear on what is messy about this. So what if there is estoppel? Estoppel brings finality, which is the opposite of messiness.
I do see his point on messiness.
The estoppel occurs regardless of the (necessary) standing requirement.
This is “messy,” because let’s say later after standing is (appropriately) found to not be present for the “Part 2” segment of the process, the party has lost out — for all time — the ability to challenge what it did not like as a result in “Part 1.”
There is no “do over” if after this point in time, the party actually develops PROPER Article III standing at a later time. There is no ability at that later time to address the issue lost to the lack of ability to appeal at the earlier time.
The answer — of course — is NOT to violate the Constitution and “give” standing in cases where it is not appropriate.
I would another point here (related to RPX): this type of messiness is (potentially) VERY messy for the business model of RPX. That’s because RPX has some serious Real Party of Interest issues (directly due to its business model), and this particular type of issue will chase away business due to the entanglement with estoppel. The only way out for RPX is to try to “jump the proverbial Constitutional shark” and enjoy the “free” bootstrap.
…a point in the Government Amicus is that RPX in trying to protect its business model (on the Real Party in Interest angle) has shot itself in the foot for any ability to properly garner standing.
Nothing “messy”. Just know that if you don’t have article III standing, by bringing an IPR instead of waiting to get standing, you may be screwing yourself as far as prior art invalidity arguments go.
Whether you want to call that “messy” or “inherently unfair,” the bottom line is that there are massive attempts being made to bootstrap FROM the “Part 1” (open to those without proper Article III standing) directly into “Part 2” (which still requires Article III standing).
Some of us (like myself) pointed out this flaw of the AIA from the get-go.
Congress could have set up the system better, but certain (captured?) elements within Congress wanted to have “Part 1” open to ALL, explicitly to include those who could NOT carry on into “Part 2.”
Of course, this makes the choice of wording in the AIA that provides for that very path into “Part 2” rather wobbly.
(No one ever said that the AIA was well written)
Nothing “messy”. Just know that… by bringing an IPR instead of waiting to get standing, you may be screwing yourself…
Exactly. This is not “messy.” To my mind, an area of law is “messy” when you have a variety of precedential cases on a subject and it is impossible to abstract a workable rule from that welter of cases. By contrast, what we have here is a situation where we have—in effect—two issues: (1) who has standing; and (2) when does estoppel attach.
On the first question, it is very easy to abstract the rule. Really, none of the cases on this point so far have contradicted any of the others. On the second question, we do not have any precedential decisions (the panels that have encountered the question have explicitly reserved it for a situation in which it is more squarely presented).
In other words, on the first issue, we have legal clarity, and on the second we have an issue of first impression awaiting a case to set the precedent. Neither of these states of affairs are fairly termed “messy.” Rather, what they are is unfavorable to IPR petitioners. What of that? The U.S. patent system is not built around the goal of maximizing IPR petitioner satisfaction. Congress built a system that is favorable to IPR petitioners in some respects and unfavorable in others.
So far, all I see is a CAFC giving effect to that statutory scheme, and that in a manner that is actually fair and equitable to all sides. This is the opposite of anything that can be fairly termed “messy”
Dennis, I disagree with you that the Court implicitly overruled Data Proceeding.
First, the majority cites Data Proceeding in Akins in 1998; also interesting, in the Akins case the Court cites to Sanders Brothers (1940) – an extremely important and influential early statutory standing Court opinion. When the majority opinion in Federal Election Comm’n v. Akins (1998) relies on Sanders Brothers and its progeny to read the special statutory review provision at issue there as one that, because it uses the “party aggrieved” language, “casts the standing net broadly—beyond the common‐law interests and substantive statutory rights upon which ‘prudential’ standing traditionally rested.” 524 U.S. 11, 19 (1998). Federal Election Commission v. Akins, 524 U.S. 11 (1998) (6:3) (Breyer, J. joined by Rehnquist, C.J. Stevens, Kennedy, Souter, Ginsburg, JJ. Dissent: Scalia, J. joined by O’Connor and Thomas, JJ.) (Court held that Congress has, by statute, allowed “any party aggrieved by an order of the Commission” to file a suit, which is a broad grant; not getting the requested information is an “injury in fact” just like the denial of any other information which is statutorily required to be provided to citizens by the government.) (finding standing).
Second, and as you know, a long line of Court precedent, cited approvingly in Spokeo, supports the conclusion that Spokeo did NOT mean to disturb the Court’s prior opinions recognizing that a direct violation of a specific statutory interest recognized by Congress, standing alone, may constitute a concrete injury without the need to allege any additional harm. See Spokeo, 136 S. Ct. at 1549 (“Congress may `elevate to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.'” quoting Lujan, 504 U.S. at 578)); id. (“`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.'” (quoting Lujan, 504 U.S. at 580 (Kennedy, J., concurring)); id. (“The violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need NOT allege any additional harm beyond the one Congress has identified.” (citing Fed. Election Comm’n v. Akins, 524 U.S. 11, 20-25 (1998); Pub. Citizen v. Dep’t of Justice, 491 U.S. 440, 449 (1989))). But the injury must be “both concrete and particularized.” Id. at 1548 citing Summers v. Earth Island Institute, 555 U.S. 488, 493 (2009). Note: the Second Circuit recognized in Strubel v. Comenity Bank, 842 F.3d 181 (2d Cir. 2016), the Spokeo Court’s citation to Lujan and Summers is “instructive” because “these cases indicate that, to determine whether a procedural violation manifests injury in fact, a court properly considers whether Congress conferred the procedural right in order to protect an individual’s concrete interests.” Id. at 189. Thus, according to Strubel v. Comenity Bank, Spokeo does NOT “categorically . . . preclude[] violations of statutorily mandated procedures from qualifying as concrete injuries”; rather, where Congress confers a procedural right in order to protect a concrete interest, a violation of the procedure may demonstrate a sufficient “risk of real harm” to the underlying interest to establish concrete injury without “need [to] allege any additional harm beyond the one Congress has identified.” Id. (citing Spokeo, 136 S. Ct. at 1549). However, “in the absence of a connection between a procedural violation and a concrete interest, a bare violation of the former does not manifest injury in fact.” Id. This reasoning seems to support the interpretation that post -Lujan and post-Spokeo, Data Processing is still good law.
I have not done any research on this point, and I am just throwing this out for discussion.
There could be standing for a Takings challenge. If the USPTO grants a patent for subject matter that is prior art and in the public domain, then this taking of your private right to use subject matter in the public domain would create a cause of action.
That may have been an avenue had the presence and heightened level of presumption of validity been in the opposite direction of the (once personal private) property right.
As is, there is no such recognition of a “general” property right of things in the public domain (as you attempt to mirror the actual legally recognized property right of a granted patent.
Your attempt fails the Lujan evaluation and does NOT lead to an application of Takings law.
What taking?
If the party that perceives an injury by the grant of an ostensibly invalid patent really is adversely affected by the existence of the patent, then that party can (a) wait to get sued and assert invalidity as a counterclaim, (b) bring a DJ motion in an Art. III court if there’s enough of a threat (and the bar to DJ isn’t high thanks to Justice Breyer in Medimmune).
The party here didn’t do that. It chose to avail itself of an adminstrative proceeding, viz. an IPR. It didn’t get the complete victory it sought in that forum. CAFC said a challenger losing at PTAB doesn’t buy the challenger Art. III standing.
The challenger here could still bring bringing the matter to an Art. III court under one of the two rubrics set forth above, provided it has standing to do so. So there’s no taking.
Of course, having first availed itself of IPR at PTAB, some if the challenger’s prior art challenges in court are now foreclosed due to the estoppel provisions of the AIA. But that was the challenger’s choice.
I agree with Atari Man here.
Dennis, Thank you for posting this opinion and pointing-out that Data Processing actually supports standing on appeal in this fact scenario. Data Processing is part of a long line of USSC cases dealing with a competitor’s standing on appeal in a later Art. III proceeding with a prior Art. I agency adjudication. Another instructive and very helpful competitor standing case (again dealing with potential future profit losses in response to a prior agency adjudication) is: National Credit Union Admin. v. First National Bank, 522 U.S. 479 (1998) (5:4) (Thomas, J., delivered an opinion, which was for the Court except as to footnote 6. Rehnquist, C. J., and Kennedy and Ginsburg, JJ., joined that opinion in full, and Scalia, J., joined except as to footnote 6. O’Connor, J., filed a dissenting opinion, in which joining Stevens, Souter, and Breyer, JJ.) (finding competitor standing) (Both parties were competitors of federal credit unions industry) affirming First Nat’l Bank and Trust Co. v. Nat’l Credit Union Admin., 988 F.2d 1272, 1278 (D.C. Cir. 1993). Another way to look at competitor standing and finding standing on appeal is to point to an agency adjudication which leads to a revived or remaining contingent liability. One of the leading case in this long line of USSC cases is: Clinton v. City of New York, 524 U.S. 417, 432-34 (1998) (6:3) (finding standing to challenge veto of a possible future tax benefit enacted to foster ability to purchase processing plants) (“By depriving [the plaintiffs] of their statutory bargaining chip, the cancellation inflicted a sufficient likelihood of economic injury to establish standing under our precedents.”) (Probable economic injury resulting from governmental action that alters competitive conditions will satisfy the injury-in-fact requirement.”) (Court noting a “sufficient likelihood of economic injury” establishes injury in fact for Article III standing) (A contingent or future liability can present a sufficient injury to establish Article III standing. The Court has held that a contingent liability is sufficient to confer Article III standing where it presents a “significant immediate injury.” Id. at 431.).
Ups – I forgot the line-up in Clinton v. City of New York et al. (1998) is as follows: Clinton v. City of New York et al., 524 U.S. 417, 429-31, 432-34 (1998) (6:3) (Majority: Stevens, J. joined by Rehnquist, C.J., Souter, Thomas, Ginsburg, JJ. Concurrence: Kennedy, J. Concurrence/Dissent: Scalia, J. joined by O’Connor; Breyer, JJ. (in part); Dissent: Breyer, J. joined by O’Connor, Scalia (in part), JJ.). Which by itself is very interesting.
One more note: In Clinton v. City of New York et al., 524 U.S. 417 (1998) (6:3) the Court found standing of the New York healthcare providers and New York City, as well as the farmers’ cooperative, and in effect the Court established in Clinton v. City of New York that an injury’s having a contingent aspect does not necessarily make that injury incognizable under Article III. The Court in Clinton v. City of New York et al., 524 U.S. 417 (1998) recognizes (and acknowledges) that a tangible disadvantage to the affected party can lead to standing. Thus, the possible future plan’s adverse effects on Hartford and Century are not too speculative to be recognized as a basis for Art. III injury-in fact standing. Based on this case alone standing on appeal should have been found.
Jonathan,
Is not the nature of the patent right distinguishing from those cases on its face?
That is, since a patent — by law — has a presence (and heightened degree) of a presumption of validity), and what we are talking about by way of federal agency action concerns a post-grant scenario, the background “status quo” upon which to gauge any “pure” competitor harm (that is, harm outside of a more direct and uncontested Article III standing situation) must be gauged under that presumption of validity.
It then IS speculative as to “damage” that may be ONLY if the nature that may exist outside of there being direct Article III standing being present. And for the issue to overcome the speculative level, the presence and degree of that presumption of validity must be properly overcome. Further, since the only manner of properly overcoming that presence and degree is by way of Article III adjudication (or a successful Agency action), any challenge by a non-Article III party is faced with the “NO-bootstrap scenario” which rules any “mixed” scenario.
In other words, any attempt at establishing “Competitor Standing” must be established by the facts of the particular case as applied to a pure Article III standing issue and there can be NO carryover from this particular agency action (being post-grant with the presence and level of presumption of validity).
Do any other cases of agency action involve a presence and heightened level of presumption of validity?
Anon, good question; as far as I know there is no similar Art. III competitor standing case dealing with an presumption of validity; however, I would recommend that you look at Clinton v. City of New York, 524 U.S. 417 (1998) and its predecessor cases. Remember the finding of competitor standing is based on a fact patters in which one entity is financially injured in the near future by a competitor’s potentiality illegally gained competitive advantage through a agency adjudication (Art. I); in such scenario the competitor would face little challenge to its claim of an injury in fact. See Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 64 n.6 (1963). (“Appellants’ standing has not been, nor could it be, successfully questioned. The appellants have in fact suffered a palpable injury as a result of the acts alleged to violate federal law, and at the same time their injury has been a legal injury.”) ; The Court in Data Processing just expressed it in more precise way.
I do not understand why you have responded as you have, Jonathan.
You almost want the mere fact of “competitor” to be sufficient in and of itself. Without bothering to note that the cases distinguish on their facts, the mere presence of “competitor” does not get you close to any of the cases that you present.
Having said that, and given your obvious leanings towards standing to be more lenient if “competitor,” I am curious about your view of the RPX attempts at cert.
See link to scotusblog.com
Anon, there are too many strategic errors in the cert petition – I believe the Court will deny cert. The cert. petition’s focus on statutory standing for a basis for a finding of standing on appeal is not likely to get the necessary 3 votes; the Court appears to be evenly divided on that question. If, however, the cert petition would have focused on the long line of USSC competitor standing cases, the Court would have granted cert. because (i) there is strong and clear circuit split on what constitute competitors standing; (ii) the USSC has never directly stated a test for competitor standing; and (iii) there is a certain degree of inconsistency in the existing USSC cases when the Court finds/denies competitor standing.
I have to agree Jonathan that THIS vehicle will be denied Cert.
RPX (itself) was VERY messy here – the “strategic errors” you mention not only impugn this case, but (I daresay) also impugn its position on Real Party in Interest (or privy) – “RPI”.
In an apparent attempt to inoculate its business model, RPX tried to distance itself as NOT being associated with any of its members on an RPI basis.
Not only did doing so impale itself here in standing, but the attempt is still born as RPX cannot distance itself from its members (due to the impact of agency theory of law, and the fact that “party benefit” IS the very reason for the business model of RPX).
They (strategically) will get the worst of both worlds.
The bigger problem (the elephant in the room) is that Congress knowingly and deliberately created a duo-forum mechanism and had the first part of that duo knowingly open to those that could not get into the second part of the duo.
You cannot bootstrap like that.
The particular angle here then should be seen as to whether or not actual Article III standing exists – absolutely distinct from the status of the parties in the administrative agency portion of the duo-forum setup.
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