After the Patent Trial and Appeal Board found claims of ImmunoGen Inc.'s U.S. Patent No. 8,337,856 nonobvious, non-practicing entity Phigenix, Inc. appealed to the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit dismissed the appeal, finding that Phigenix lacked standing to appeal because it had not established it had suffered an injury in fact.
Prior to filing its inter partes review petition, Phigenix was engaged in litigation with a third company, Genentech, Inc., over a Phigenix patent, U.S. Patent No. 8,080,534. Phigenix asserted that the '534 patent covered Genentech's manufacture and sale of a drug, Kadycla. Genentech produces the drug under a "worldwide exclusive license" from ImmunoGen for the '856 patent. As part of its efforts to commercialize its own patent portfolio, Phigenix filed the petition for inter partes review of the '856 patent, alleging claims 1–8 were invalid as obvious over various prior art references.
After the PTAB issued a final written decision finding the claims nonobvious, Phigenix filed a Notice of Appeal to the Federal Circuit. ImmunoGen filed a motion to dismiss the appeal for lack of standing before Phigenix filed its opening brief. After Phigenix filed its opening brief, Judge Wallach denied the motion to dismiss, ordering ImmunoGen to address the standing issue in its response brief.
In its decision, the court noted that the Federal Circuit did not yet have a legal standard for demonstrating standing in an appeal from a final agency action. In order to establish a standard, the court considered (1) the burden of production; (2) the evidence an appellant must produce to meet that burden; and (3) when the appellant must produce that evidence.
Based on the U.S. Court of Appeals for the District of Columbia Circuit's interpretation of Lujan v. Defenders of Wildlife et al., as well as the Federal Circuit's interpretation of other U.S. Supreme Court decisions, the court concluded that the summary judgment burden of production applies in cases where an appellant seeks review of a final agency action. Regarding what evidence the appellant must produce, the court noted that the D.C. Circuit has held that in cases where the appellant is the object of the agency action, standing will be self-evident. However, where the appellant's standing is not self-evident, the appellant must submit "arguments and any affidavits or other evidence" sufficient to show standing. Finally, the court found that the appellant must produce the evidence at the appellate level at the earliest possible opportunity, whether in opposing a motion to dismiss or in its opening brief.
Having established the standard, the court reviewed Phigenix's evidence and found it lacking. As a non-practicing entity focused on licensing, Phigenix was unable to argue that it could be harmed by a finding of infringement. Instead, Phigenix argued that it had suffered actual economic injury because the '856 patent increased competition between itself and ImmunoGen for licensees and that at least a portion of the licensing revenue received by ImmunoGen would have flowed to Phigenix instead. Phigenix did not rely on any evidence developed in the inter partes review and instead submitted two declarations.
The court found the declarations insufficient. Despite asserting that Phigenix had suffered economic harm due to ImmunoGen's licensing of the '856 patent, neither declaration provided evidence sufficient to show that any company had obtained a license to Phigenix's '534 patent or that any company had licensed both Phigenix's '534 patent and ImmunoGen's '856 patent. Therefore, there was simply no actual evidence of harm.
Phigenix's argument that it suffered an injury because 35 U.S.C. § 141(c) provides a statutory basis for appeal from a PTAB final written decision was also unavailing. The court noted that Phigenix did successfully file for appeal, but because it could not establish standing, the appeal was properly dismissed.
Beyond affirming that 35 U.S.C. § 141(c) does not by itself establish standing, this case demonstrates the challenge for non-practicing entities in appealing adverse PTAB rulings. A party must be able to show actual or imminent injury, for example, by a "lost sale" of a license to a competitor. While the Federal Circuit has provided some guidance here, it remains unclear how much evidence the non-practicing entity would have to marshal in order to establish standing. Lack of ability to appeal an adverse PTAB ruling will no doubt encourage non-practicing entities to more carefully consider whether an inter partes review is worth the time and expense.
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