United States: JTEKT v. GKN: Federal Circuit Finds Competitor Lacks Standing To Appeal PTAB's Final Written Decision

Last Updated: September 11 2018
Article by Lisa M. Mandrusiak

Background

After determining that its competitor GKN's patent raised a potential risk of infringement for a product under development, JTEKT1 challenged the patentability of claims 1–7 of U.S. Patent No. 8,215,440 via inter partes review (IPR2016-00046). When claims 2 and 3 were confirmed as patentable in the final written decision—and thus the risk of infringement remained—JTEKT appealed, and GKN moved to dismiss the appeal based on lack of standing.

To establish standing, a party must show that they have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct, and (3) that is likely to be redressed by a favorable judicial decision. Phigenix, Inc. v. ImmunoGen, Inc., 845 F.3d 1168, 1171 (Fed. Cir. 2017) (citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)).

In its briefing, JTEKT asserted it had (i) injury based on the potential risk of infringement, (ii) economic injury, and (iii) injury based on the IPR estoppel provisions. But, the panel found that JTEKT failed to establish an actual injury sufficient to confer Article III standing and dismissed the appeal. Specifically, the panel found that because there is no final product, JTEKT cannot definitively say whether it will infringe the '440 patent and that the potential risk of infringement is impossible to quantify at this time. As such, the panel said there is insufficient proof of an injury in fact.

Request for Rehearing

On September 4, 2018 JTEKT filed a combined petition for panel rehearing and rehearing en banc. In JTEKT's petition, it asserts that the panel overlooked and/or misapprehended facts and evidence demonstrating JTEKT's potential risk for infringement and that the panel did not address JTEKT's economic injury at all.

JTEKT also argued that rehearing en banc is necessary because the issue has consequences beyond JTEKT and GKN's dispute. By limiting standing to definitive patent-inflicted injury associated with an infringement suit, the panel's decision risks creating overly-narrow, patent-specific standing jurisprudence that does not consider the broader law necessary to address standing in appeals from all agency actions. And even for patent cases, this unnecessarily narrow view of standing undercuts the effectiveness of the IPR scheme and works to discourage these types of administrative proceedings because petitioners faced with invalid competitor patents during the product design process may have no recourse following an adverse FWD. Denying appeal access to direct competitors such as JTEKT is inconsistent with congressional intent and has the potential to affect thousands of companies who want to do their due diligence before finalizing development or entering commercial production.

JTEKT requested rehearing en banc to answer two questions:

  1. Whether the estoppel provisions of the IPR statute independently constitute a real and substantial injury sufficient to establish standing between competitors; and
  2. Whether the panel's decision erroneously limits an injury in fact sufficient to establish standing to definitive patent-inflicted injury when this determination is contrary to both the statutes establishing standing and case law establishing standing based on other types of injury such as economic injury.

Appellant standing from IPR final written decisions is currently a hot-button issue, and several panels appear to have invited the en banc court to weigh in at least on the estoppel issue. In Consumer Watchdog, the Court noted that it "leaves it to future panels to decide whether, under other circumstances, the preclusive effect of the estoppel provisions could constitute an injury in fact." Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258, 1263 (Fed. Cir. 2014). And in Altaire, the panel said "we do not decide whether this potential estoppel effect is sufficient independently to establish standing." Altaire Pharms., Inc. v. Paragon Bioteck, Inc. 889 F.3d 1274, 1283 (Fed. Cir. 2018).

Moreover, the issue of standing to appeal from final written decisions has been presented to the Supreme Court in RPX Corp. v. ChanBond LLC.

RPX v. Chanbond

In RPX, the PTO determined that RPX had not shown that the claims were unpatentable. RPX appealed to the Federal Circuit and Chanbond filed a motion to dismiss RPX's appeal for lack of standing. Chanbond argued that, while it was asserting the patent in litigation, RPX was not a party to that litigation and could not show an injury sufficient for standing. RPX responded, emphasizing that Congress granted RPX the statutory right to challenge patents, and failure to follow through (i.e., dismissing the appeal and allowing the final written decision to stand) constitutes an injury. RPX also alleged that the PTO's decision tarnished its reputation, constituting economic injuries. But the Federal Circuit agreed with Chanbond, and dismissed the appeal for lack of standing. In short, the Federal Circuit held that the statute guaranteed RPX the right to file an IPR, not the right to win, and thus there was no injury. The Court also concluded that the evidence submitted did not sufficiently prove that RPX would face increased competition or had tarnished its reputation because the declarant conceded that he was "unable to quantify the reputational and economic harm" suffered by RPX.

In its petition for writ of certiorari, RPX argues that the Federal Circuit's opinion is contrary to the IPR statutes, specifically when Congress has (i) statutorily created the right to have the PTO cancel patent claims when the petitioner has met its burden; (ii) statutorily created the right for parties dissatisfied with a decision to appeal to the Federal Circuit; and (iii) statutorily created an estoppel prohibiting the petitioner from challenging the patent claims again. In short, RPX alleges that the Federal Circuit has limited standing to discount any injury not inflicted by the patent itself (i.e., infringement). RPX also asserted that this is a good candidate for certiorari because the Federal Circuit has issued multiple decisions on the issue and has exclusive jurisdiction over appeals from the Board.

Several parties filed briefs in support of the writ of certiorari, Askeladden LLC, The Initiative for Medicines Access & Knowledge, Patients for Affordable Drugs, Inc., and the New York Intellectual Property Law Association.

The Supreme Court is scheduled to consider the petition at its September 24 conference and should issue a decision soon after.

The Federal Circuit has yet to respond to JTEKT's petition for rehearing.

Footnote

1 JTEKT is represented by Oblon.

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