So Kyle Bass and his Coalition for Affordable Drugs
have been handed a defeat in their first PTAB final
written decision. See
Coalition for Affordable Drugs II LLC v. Cosmo Techs Ltd.
(IPR2015-00988, Paper 55). The merits of the case aside,
the biggest question in my mind is: can the Coalition appeal?
On the face of things, the answer appears to be yes. 35 U.S.C.
§ 319 confers on any party to a final written decision the
right to appeal to the Federal Circuit.
But a mere statutory right might not be enough.
In order to get into federal court a party must have Article III
standing. That is, there must be a case or controversy
between the parties. Can it be said that a case or
controversy exists between the Coalition and Cosmo?
Again, on the face of things, the answer appears to be
yes. The Coalition challenged the patent in question (No. 6,773,720,
which is Orange Book listed for Shire's
LIALDA® mesalamine tablets for ulcerative colitis), and the
Patent Owner defended its patent vigorously in an adversarial trial
proceeding. Certainly there was a controversy between the
But let's reconsider. There is no question that the
Coalition may petition the USPTO for review of the patent
and participate in the trial proceeding before the PTAB.
There is no constitutional standing requirement to appear before an
administrative agency. But once a dissatisfied party seeks
judicial review of an agency decision in a federal court, even a
federal appeals court, "'the constitutional requirement
that it have standing kicks in.'" Consumer Watchdog v. WARF, 753 F.3d 1258,
1261 (Fed. Cir. 2014) (quoting Sierra Club v. E.P.A., 292
F.3d 895, 899 (D.C.Cir.2002)), cert. denied, 135 S.Ct.
And there's the rub. The Coalition cannot identify any
harm that it has suffered by losing the IPR other than failing to
obtain its desired outcome. It's not trying to market a
LIALDA knockoff, nor has it been sent a cease-and-desist letter or
been sued for infringement of the '720 patent (as far as I
know). If the Coalition fails in the IPR, all it and its real
parties-in-interest stand to lose is money that they chose to put
at risk in short-selling Shire stock.
That was exactly the kind of problem that led the Federal
Circuit to hold in Consumer Watchdog that a public
interest group that unsuccessfully challenged a patent via
inter partes reexamination ("IPX") lacked
standing to pursue an appeal in federal court, despite statutory
authorization to do so. Id.
An IPR petitioner who is not answerable to the patent owner for
infringement would appear to lack Article III standing just like an
IPX requester, in accordance with the holding of Consumer
Watchdog. The Supreme Court appears also to have signaled its
view that parties perfectly eligible to challenge patents through
IPR or CBM may nevertheless lack standing to appeal in the absence
of recompensable injury. Cuozzo Speed Techs, LLC v. Lee, 136
S. Ct. 2131, 2143-44 (2016). Probably the only way out of
this problem would be for the no-standing petitioner to
achieve joinder with a party having standing and then to
backseat-drive the joint appeal.
The road for a petitioner who lacks Article III standing begins
and ends at the PTAB. There may be no rescue from the
Death Valley petitioners face in IPR by way of a federal court
appeal. All the more reason IPR is not to be trifled
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