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Federal Circuit Sets a High Bar for Article III Standing for Petitioners Not Yet Sued on Patents Under Inter Partes Review

On July 10, 2019, in General Electric Co. v. United Technologies Corp., No. 2017-2497, the Federal Circuit found that General Electric Company (“GE”) had not suffered an injury in fact sufficient for Article III standing to appeal a Patent Trial and Appeal Board (“PTAB”) decision that upheld several claims of United Technologies Corporation’s (“UTC’s”) patent in an inter partes review (“IPR”). The court’s decision highlights just how difficult it is for a patent challenger before the PTAB to obtain Article III standing necessary to appeal to the Federal Circuit absent concurrent district court litigation.

Majority Opinion

GE was not producing and had no definite plans to produce an engine that would infringe UTC’s patent. The Federal Circuit rejected each of the three bases argued by GE for Article III standing to appeal the PTAB’s decision holding UTC’s patent not unpatentable. First, the Federal Circuit found GE’s purported competitive injuries too speculative, highlighting that GE never asserted that it lost bids to customers because it only offered a non-infringing direct-drive engine design or that it only offered a direct-drive engine design because of UTC’s patent. Second, GE presented insufficient details to establish economic loss due to research and development (“R&D”) costs, given that GE provided no details on those costs and did not demonstrate that it had definite plans to develop an engine with the features claimed in UTC’s patent. Third, the Federal Circuit reiterated its prior holding that statutory estoppel under 35 U.S.C. § 315(e) does not amount to an injury in fact for Article III standing. E.g.,AVX Corp. v. Presidio Components, Inc., 923 F.3d 1357 (Fed. Cir. 2019).

Concurring Opinion

In his concurring opinion, Judge Todd M. Hughes agreed that dismissal was appropriate under the Federal Circuit’s current precedent, but expressed his view that the precedent was incorrectly decided. Judge Hughes observed that the risk of a future infringement suit is not the only way that an IPR petitioner can show injury in fact, and critiqued the court’s prior decisions suggesting otherwise, particularly AVX. In Judge Hughes’ view, such “precedent has developed an overly rigid and narrow standard for Article III standing in the context of appeals from inter partes review proceedings.”

But for the Federal Circuit’s prior precedent like AVX, Judge Hughes would have found that GE had competitor standing because “government actions altering the competitive landscape of a market cause competitors probable economic injury sufficient for Article III standing.”  According to Judge Hughes, GE met the requirements for competitive injury because GE and UTC were direct competitors in a three-player market, where the technology at issue took 8-10 years to develop and required high up-front investments. For example, Boeing had requested a geared-fan engine that implicated UTC’s patent, leaving GE unable to meet Boeing’s request without spending resources to design around the patent: a competitive injury.

Issues To Consider

General Electric further solidifies the importance of considering Article III standing for an appeal before a party files an IPR on a patent that has not been asserted against it. An IPR petitioner should take steps early on to increase the chances of proving Article III standing at the appellate stage, including documenting exactly which designs it avoided due to a competitor’s patents, and exactly how much it spent designing around those patents.

Judge Hughes’ concurring opinion provides some hope for IPR petitioners that the law may eventually turn in a more favorable direction on the issue of Article IIII standing. His concurring opinion makes clear that not all Federal Circuit judges are on board with the current, stringent requirements for Article III standing from the PTAB. Although the Supreme Court recently denied two petitions for certiorari that involved parties who lacked Article III standing to appeal from a PTAB decision holding challenged patents not unpatentable, RPX Corp. v. ChanBond LLC, No. 17-1686; JTEKT Corp. v. GKN Auto. Ltd., No. 18-750, this area of law may receive further attention from the en banc Federal Circuit or Supreme Court in the future.

© 2020 Brinks Gilson Lione. All Rights Reserved. National Law Review, Volume IX, Number 205


About this Author

Laura Lydigsen, Brinks Gilson Law Firm, Chicago, Intellectual Property and Litigation Attorney

Laura is the chair of the firm’s appellate practice group. Her practice includes intellectual property litigation at both the district court and appellate level, with a focus on pharmaceuticals, biotechnology, and medical devices.

Laura has extensive experience in representing generic pharmaceutical companies in Hatch-Waxman pharmaceutical litigation. She has appeared in litigations and/or Patent Trial Appeal Board proceedings involving over a dozen different drug products and assisted clients with regulatory and pre-litigation strategy for many...

Joshua James, Brinks Gilson Law Firm, Chicago, Biotech and Intellectual Property Law Attorney

Energetic and committed, Josh James brings a strong background in biomedical and chemical engineering to helping clients strengthen and enforce their intellectual property rights. His practice focuses on patent litigation, particularly Hatch-Waxman pharmaceutical litigations in federal courts and inter partes review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB).

Josh’s scientific knowledge helps him hit the ground running, especially in cases involving highly complex chemical compounds. He easily meets technical experts on their own terms and uses that knowledge to take a key role on joint-defense groups. Thinking forward, Josh is able to use his training to help identify and prepare scientific experts for litigation.

Josh has been involved in multiple bench trials; arguing motions before judges in both federal courts and the PTAB; taking and defending depositions; drafting appellate briefs; drafting IPR and reexamination briefs; drafting pleadings on invalidity, noninfringement and claim construction issues; reviewing and producing documents; and leading coordination and strategy sessions among members of joint defense groups.