Appeals from PTAB to the Federal Circuit: Injury-In-Fact Standing Requirement

There is a long-awaited clarification with regards to the question of whether a petitioner could appeal an adverse decision in an inter partes review (“IPR”) proceeding in the Patent Trials and Appeals Board (“PTAB”) to the Federal Circuit. There is a pending case at the Supreme Court, RPX Corp. v. ChanBond. The patent community is waiting to see whether the Supreme Court will grant certiorari in RPX Corp, which raises this exact question. In many cases, the Federal Circuit has turned down third party appeals for failing to prove an injury-in-fact standing, even when Congress has statutorily created the right for any dissatisfied parties to appeal to the Federal Circuit. The Supreme Court has yet addressed the question of whether there is Article III standing in an Appeal of the PTAB’s decision in an inter partes review.

The America Invents Act (“AIA”) provides IPR as a powerful tool to combat overly broad competitor patents. Specifically, any party can challenge the validity of one or more patent claims by petitioning with the PTAB at the Patent and Trademark Office (“PTO”). Since the petitioner is not required to show that he/she has suffered actual injury due to the patent in question, anybody can come forward and challenge a patent. In addition, under the AIA, there is broad authority to appeal. Under 35 U.S.C. §141 and §319, Congress has conferred rights to any dissatisfied party to appeal the decision of the Patent Trial and Appeal Board. Under 35 U.S.C. §315, Congress has created an estoppel which precludes the party from requesting or maintaining another proceeding to challenge the patent before the Patent Office.

However, the Federal Circuit has consistently been skeptical of third-party challengers – it has shown that not anybody can appeal an IPR decision to its court. With the Consumer Watchdogand other subsequentdecisions, the Federal Circuit indicated that only parties that prove an injury-in-fact by the infringement of the underlying patent could establish standing to appeal. Under Lujan, a plaintiff “must show that it has suffered an ‘injury in fact’ that is both concrete and particularized, and actual or imminent.

The most recent case where the Federal Circuit dismisses a PTAB Appeal for failing to prove injury-in-fact for standing is JTEKT Corp. v. GKN Automotive. The invention in this case concerns the ‘440 patent owned by GKN Automotive Ltd. The patent improves the traditional drivetrains and makes them more fuel-efficient. JTEKT is developing its own drivetrain technologies. In order to avoid infringement, JTEKT challenges the validity of seven claims in the patent. JTEKT filed a petition for IPR at the PTAB in 2015 and PTAB decided that two out of the seven challenged claims were upheld as not unpatentable. JTEKT appealed the PTAB’s decision upholding the validity of the two claims.

The Court reasoned that even though petitioners can challenge patent claims before the PTAB without showing actual injury, the law “cannot be read to dispense with the Article III injury-in-fact requirement for appeal to this court.” According to the Supreme Court, “injury-in-fact” needs to be “concrete and particularized,” and not merely “conjectural or hypothetical.” Spokeo, Inc. v. Robins, The petitioner must show that “it is engaged or will likely engage in an activity that would give rise to a possible infringement suit or has contractual rights that are affected by a determination of patent validity.” In determining whether there is an injury-in-fact, the Federal Circuit did not require that the petitioner has an already infringing product on the market. The Court said the party can rely on potential infringement liabilities as a basis for injury-in-fact by establishing “concrete plans for future activity that creates a substantial risk or future infringement or likely cause the patentee to assert a claim of infringement.” In this case, JTEKT has yet finalized its product design, which, according to the court, leaves room for future changes which might not necessarily infringe on the ‘440 patent. Therefore, the Court decided that there is no injury-in-fact, and the appellant lacks standing to appeal the PTAB’s decision to the Federal Circuit for review.

Professor Rochelle Dreyfuss pointed out that the Supreme Court’s decision in ASARCO Inc. v. Kadish is more on point when considering the appellate jurisdiction over PTAB decisions. In ASARCO, even though the plaintiffs could not have filed the original action in federal court under Article III, the Court found jurisdiction to review the state court’s judgment because the petitioners seeking review had suffered “a specific injury stemming from the [adverse] state-court decree.” According to the Court, “[I]t is undisputed that the decision to be reviewed poses a serious and immediate threat to the continuing validity of [petitioners’ interests] . . . The state proceedings ended in a declaratory judgment adverse to petitioners, an adjudication of legal rights which constitute the kind of injury cognizable in this Court on review from the state courts.” The Court concluded that requirement for standing was met and therefore there is jurisdiction.

For challengers in the PTAB proceedings, they are estopped by the final written decision and according to the Federal Circuit, there is no federal right to an appeal. Despite the broadening of the scope of people that can bring patent challenges, the finality of the PTAB decisions essentially puts those patents that survive PTAB reviews untouchable. The AIA was designed to encourage patent challenges, and yet with this line of decisions above, once the petitioner loses in the PTO, he/she is estopped from later challenging the validity of the patent, and the decision is without further review by court. As we can see from the line of cases, the standard applied to evaluate whether there is an injury-in-fact is far from clear. There are questions that need to be answered, such as, how to assess whether the risk is concrete and substantial enough to satisfy the infringement requirement, and how to show whether a future product could lead to claims of infringement. The IPR petitioners face a dilemma of either challenging a competitor patent early, which poses the risk of being estopped and having unappealable adverse PTAB decision, or, developing the product further which poses an actual infringement risk but would create standing for appeal. Looking forward, if certiorari is granted in RPX Corp, the Supreme Court can provide us guidance on whether the statutes provide a sufficient constitutional basis for an appeal from PTAB to the Federal Circuit, and the Supreme Court can further flesh out the standard which Federal Circuit should follow when assessing standing for appeal.

Laura Zhu is a J.D. candidate, 2020, at NYU School of Law.