MedImmune Licensee Standing Does not Apply to Portfolio License

by Dennis Crouch

The Federal Circuit’s new decision in Apple Inc. v. Qualcomm Inc. (Fed. Cir. 2021) offers an interesting standing puzzle.

After some heated litigation, Apple licensed 20,000+ Qualcomm patents as part of a six-year covenant-not-to-sue which resulted in the litigation being dismissed with prejudice.  Meanwhile, the parallel inter partes reexaminations (IPRs) moved forward with regard to two particular Qualcom patents within the package of 20,000+.

Although the PTAB granted Apple’s IPR petitions, the Board eventually sided with Qualcomm — holding that Apple had not proven that the claims were invalid.  Apple then appealed to the Federal Circuit.  The PTAB does not worry about Article III standing — because the PTAB is not an Article III court.  However, standing comes into play once the case moves from the administrative agency into the appellate court.

In MedImmune, Inc. v. Genentech, Inc., 529 U.S. 118 (2007), the Supreme Court  held that a patent licensee has standing to challenge a patent’s validity even without stopping the royalty payments.  Here, Apple argued that it likewise has standing. The problem, according to the court, is that cancelling of the two Qualcomm patents would not actually impact Apple’s obligations under the license.  This contrasts with MedImmune where an invalidity finding would dramatically impact the royalty owed.

In Apple’s view, a licensee’s obligations to pay royalties for a license to 100,000 patents would provide standing to challenge the validity of any single licensed patent, even if the validity of any one patent would not affect the licensee’s payment obligations. We do not read MedImmune so broadly.

Slip Op.  The basic outcome here is that a broad portfolio license does not, on its own, create MedImmune-style standing for the licensee to sue to challenge the patent rights.

The court also rejected Apple’s argument that it has an interest in invalidating the patents because it might be sued again once the patent expires.  On appeal, the Federal Circuit found that argument too speculative and unsupported by any evidence.

Apple offers the sparsest of declarations in  support of standing, which are devoid of any of the specificity necessary to establish an injury in fact. Without more, we are left to speculate about what activity Apple may engage in after the expiration of the license agreement that would give rise to a potential suit from Qualcomm. This is insufficient to show injury in fact. . . . What products and product features Apple may be selling at the expiration of the license agreement years from now are not the kind of undisputed facts we may take judicial notice of because they may be reasonably questioned. . . . We are not fortune-tellers. Accordingly, we must decline Apple’s invitation to take judicial notice.

Slip Op.

In the end, I expect that Apple could have established standing, but chose instead to withhold details from the license and it upcoming product line that could have changed the outcome.