Constitutional Standing Required to Appeal PTAB Decisions

Last week, the Federal Circuit held in Phigenix, Inc. v. Immunogen, Inc. that a party must be able to prove injury in fact in order to challenge an inter partes review decision in Federal Court.  (Fed. Cir. Jan. 9, 2017).  Specifically, while any party may challenge a patent via IPR regardless of Article III standing, a party must be involved in underlying infringement litigation or some other immediate dispute with a patent-holder in order for the Federal Circuit to have jurisdiction over an appeal of the PTAB’s IPR decision.

Background.  Phigenix had filed an IPR petition challenging a patent held by ImmunoGen, the ’856 patent.  ImmunoGen licensed the ’856 patent to Genentech in relation to its Kadcyla® product, a treatment for metastatic HER2-positive breast cancer.  Phigenix filed this IPR after it was unable to convince Genentech to take a license to one of its own patents in relation to Kadcyla® and Genentech’s practice of the invention of the ’856 patent.  The PTAB issued a final written decision finding the claims of the ’856 patent nonobvious, and Phigenix appealed.

The Parties’ Arguments on Standing.  On appeal, ImmunoGen filed a motion to dismiss on the basis that Phigenix lacked standing to appeal the PTAB’s ruling.  Article III standing requires an appellant to demonstrate that it has suffered an injury in fact, meaning an injury that is both concrete and particularized.

In an effort to prove injury in fact, Phigenix submitted a declaration stating that it suffered an actual economic injury because the ’856 patent increases competition between itself and ImmunoGen, and the existence of the ’856 patent encumbered Phigenix’s licensing efforts.  This increase in competition, Phigenix concluded, represents a cognizable Article III injury.  Phigenix also cited to a letter from its attorney to ImmunoGen asserting that Phigenix believes it has a strong patent portfolio and that the ’856 patent is invalid as evidence of an “actual, concrete controversy.”

Holding.  Writing for the panel, Judge Wallach stated that “[i]n the nearly thirty-five years since the court’s inception, we have not established the legal standard for demonstrating standing in an appeal from a final agency action,” and enumerated the following three-part standard for assessing standing in cases where an appellant seeks review of a final agency action: (1) appellant must meet the summary judgment burden of production (e.g., Federal Rule of Civil Procedure 56(c)(4)); (2) appellant must supplement the record with evidence supporting its standing to seek review; and (3) appellant must identify evidence establishing standing at the appellate level at the earliest possible opportunity.

Applying this test, the court found that Phigenix’s submissions did not include the supporting facts required under the summary judgment standard.  If Phigenix had licensed its own patent to the same parties to which ImmunoGen had licensed the ’856 patent, the invalidation of the ’856 patent might have increased Phigenix’s revenues.  But Phigenix made no such allegations.  Thus, the court found, the “conclusory statements” in the declaration and letter as to hypothetical licensing injury did not satisfy the requirements of Rule 56(c)(4).  Because Phigenix did not substantiate its alleged injury in fact, it lacked standing to appeal the PTAB’s decision upholding the patentability of the ’856 patent.

Important Dicta.  The opinion also noted that the estoppel provisions of 35 U.S.C. § 315, which prohibits an unsuccessful IPR petitioner from bringing a proceeding before the PTO, ITC, or federal district court on any ground that the petitioner raised or could have raised during the IPR, does not constitute an injury in fact when the appellant is not engaged in any activity that would give rise to a possible infringement suit.

Takeaway.  The Phigenix ruling has the practical result of limiting appeals from IPR proceedings.  It makes it difficult for parties like Phigenix, who are neither involved in an underlying infringement action nor commercially compete with a challenged patentee, to challenge PTAB decisions.  Phigenix further has implications for patent challengers acting in the public interest or on behalf of consumers (or in support of their short-sales of stocks) to invalidate patents through IPR, who now may lack any route to appeal an IPR decision.  And the court’s note regarding § 315 may discourage potential petitioners from instigating an IPR prior to engaging in commercial activity that would give rise to an infringement action, as they may be deprived of an appeal, yet also susceptible to the statutory estoppel provisions.