In ABS Glob., Inc. v. Cytonome/ST, LLC, No. 2019-2051 (Fed. Cir. Jan. 6, 2021), a panel of the U.S. Court of Appeals for the Federal Circuit (STOLL, Moore) (Prost, dissenting-in-part) dismissed a petitioner's appeal from the Final Written Decision of the U.S. Patent Trial and Appeal Board (PTAB) in IPR2017-02097 as moot based on a judgment of non-infringement in the related district court case and the patentee's statement that it would not appeal such judgment.
On June 7, 2017, Cytonome/ST, LLC ("Cytonome"), with Inguran, LLC and XY, LLC, sued ABS Global Inc. ("ABS") and other defendants in the Western District of Wisconsin district court asserting infringement of claims of six patents, including U.S. Patent. No. 8,529,161 (the '161 patent). ABS Glob. at *2. On October 6, 2017, ABS filed a petition for inter partes review ("IPR") of all twenty claims of the '161 patent (IPR2017-02097). Id. The PTAB granted the petition and issued a Final Written Decision on April 16, 2019 finding ten out of twenty claims of the '161 patent unpatentable. Id. The PTAB concluded that ABS failed to demonstrate that the other ten claims are unpatentable. On April 29, 2019, the district court concluded that ABS's accused products did not infringe any of the '161 patent claims, granting-in-part ABS's motion for summary judgment. Id. On June 17, 2019, ABS appealed the PTAB's Final Written Decision. Id.
In February 2020, Cytonome filed its response brief with the Federal Circuit, including an affidavit by Cytonome's counsel (in both the IPR and the district court litigation) stating that Cytonome "has elected not to pursue an appeal of the district court's finding of non-infringement as to the '161 patent and hereby disclaims such an appeal." Id. at *3.
Accordingly, Cytonome argued that, because Cytonome disavowed its ability to challenge the district court's summary judgment of non-infringement, ABS lacked the requisite injury in fact required for Article III standing to appeal the PTAB's Final Written Decision regarding patentability of the claims of the '161 patent. Id. In June 2020, the district court entered final judgment of noninfringement as to the '161 patent claims. Id.
The below provides the timeline of relevant events:
June 7, 2017: Cytonome filed a patent infringement suit against ABS and other defendants.
October 6, 2017: ABS filed a petition for IPR of all claims of the '161 patent.
April 16, 2019: The PTAB issued a Final Written Decision finding claims 1, 4, 8, 9, 12, and 16-20 of the '161 patent unpatentable. The PTAB concluded ABS had not demonstrated by a preponderance of evidence that claims 2, 3, 5-7, 10, 11, and 13-15 are unpatentable.
April 29, 2019: The district court granted-in-part ABS's motion for summary judgment, concluding that ABS's accused products did not infringe any of the '161 patent claims.
June 17, 2019: ABS appealed the IPR Final Written Decision to the Federal Circuit.
February 21, 2020: Cytonome filed a response brief with the Federal Circuit, including an affidavit by Cytonome's counsel stating that Cytonome "has elected not to pursue an appeal of the district court's finding of non-infringement as to the '161 patent and hereby disclaims such an appeal."
June 8, 2020: The district court entered final judgment of noninfringement as to the '161 patent (amended judgment entered June 24, 2020).
Federal Circuit Dismisses the Appeal
Cytonome argued that ABS lacks Article III standing to pursue its appeal regarding the '161 patent claims' patentability. ABS Glob. at *3. According to Cytonome, ABS could not demonstrate injury in fact sufficient to support Article III standing because Cytonome disclaimed any appeal of the district court's judgment of noninfringement as to the '161 patent. Accordingly, ABS could not show that its activity would place it at substantial risk of an accusation of infringement of the '161 patent claims. Id.
ABS responded that the issue is mootness, not standing. Id. It further argued its appeal was not moot based on a patent-specific exception to the mootness doctrine set forth in Fort James Corp. v. Solo Cup Co., 412 F.3d 1340 (Fed. Cir. 2005). ABS Glob. at *3-4.
The Federal Circuit explained that the case before it presented an issue of mootness based on voluntary cessation, whose resolution is guided by the Supreme Court's framework in Already, LLC v. Nike, Inc., 568 U.S. 85 (2013). ABS Glob. at *4. Describing the case, the Federal Circuit explained that "a defendant claiming that its voluntary compliance moots a case bears the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur." Id. at *5 (citing Already, 568 U.S. at 91). Once the defendant "demonstrat[ed] that the covenant encompasse[d] all of its allegedly unlawful conduct, it was incumbent on [the other party] to indicate that it engages in or has sufficiently concrete plans to engage in activities not covered by the [disavowal]." Id. (citing Already, 568 U.S. at 94).
Following the Supreme Court's Already framework, the Federal Circuit first concluded that "Cytonome has demonstrated that it cannot reasonably be expected to resume its enforcement efforts against ABS." Id. at *6. "Cytonome's disavowal here is 'coextensive with the asserted injury' in fact." Id. at *7.
The Federal Circuit pointed out that ABS did not meaningfully dispute Cytonome's assertions that "nothing in the record suggests ABS [was] substantially at risk of infringement." Id. "And absent reversal or vacatur on appeal, the district court's summary judgment of noninfringement therefore remove[d] ABS's alleged injury in fact." Id. at *7-8. Cytonome's disavowal effectively eliminated from the possibility of Cytotome asserting infringement of the '161 patent claims a second time. Id. at *8.
Then the Federal Circuit moved to the second part of the Already framework to assess whether ABS engaged in or had sufficiently concrete plans to engage in activities not covered by the disavowal. Id at *9. During oral argument, ABS merely stated that it had "shifted to a new design" that was the subject of "another infringement suit" in which Cytonome asserted "different patents," without arguing whether its new design would arguably infringe the '161 patent claims. Id. at *10.
To address ABS's argument that Cytonome's behavior might "conceivably recur," the Federal Circuit looked to its recent Article III standing cases, which explain that to show injury in fact, an appellant "must establish that it has concrete plans for future activity that creates a substantial risk of future infringement or [will] likely cause the patentee to assert a claim of infringement." Id. at *11. Because ABS has not established such plans for future activity, the Federal Circuit concluded that ABS did not rebut Cytonome's showing that Cytonome's conduct was not reasonably expected to recur. Id. at *14.
Without any risk of injury to ABS, the Federal Circuit concluded that "the evidence in the record fails to establish that ABS had a 'particularized, concrete stake in the outcome' of its IPR appeal[,]" "ABS's IPR appeal is moot because there is no injury sufficient to support an ongoing case or controversy." Id. at *13.
The Federal Circuit also addressed ABS's primary argument that its appeal is not moot based on a patent-specific exception to mootness in Fort James. Id. at *14-15. According to ABS, Fort James describes an exception to mootness "that arises in the context of patent law: a patent owner who strategically waits until after the resolution of its claim for patent infringement to offer a covenant not to sue (and not to appeal) does not moot a challenge to the patent's validity." Id. at *15 (emphasis in original). The Federal Circuit declined to apply the exception, stating that "[w]e do not read Fort James so broadly." Id. The Federal Circuit distinguished Fort James, "which was decided in the context of a single proceeding" assessing different grounds, from the case before it, "which involves parallel IPR and district court proceedings." Therefore, the Federal Circuit concluded that ABS's appeal was moot. Id. at *17.
Finally, the Federal Circuit addressed whether the case should be vacated or dismissed. Id. at *17. Pointing out that ABS requested vacatur for the first time during oral argument, the Federal Circuit determined that the request was not timely made and accordingly, it discretionarily denied its request. Id. The Federal Circuit, therefore, dismissed ABS's appeal as moot. Id. at *18.
Chief Judge Prost dissented in part
While agreeing that ABS's appeal was moot, Judge Prost stated that dismissal was not the proper course. Judge Prost opined that under the Supreme Court's Munsingwear [United States v. Munsingwear, Inc., 340 U.S. 36 (1950)] line of cases, vacatur was the proper and established practice to avoid potential unfairness as "Cytonome took unilateral action to moot this appeal by disclaiming its district court appeal." Dissent at *3. "[V]acatur is in order when mootness occurs through happenstance—circumstances not attributable to the parties—or, relevant here, the 'unilateral action of the party who prevailed in the lower court.'" Id. at *3, quoting Arizonans for Off. Eng. v. Arizona, 520 U.S. 43, 71–72 (internal citation omitted). Judge Prost explained that ABS could not be faulted for raising vacatur for the first time at oral argument, as "Cytonome's theory was a moving target throughout [the] appeal." Id. at *6.
This case supplements the Federal Circuit's Article III line of cases coming from PTAB appeals. This decision presents an interesting fact pattern wherein a non-infringement decision in a co-pending district court case, followed by the patentee's disavowal of its right to appeal that decision, mooted the defendant (petitioner's) related IPR appeal to the Federal Circuit. Anyone who filed or plans to file an IPR should be mindful that while any person may file an IPR petition, an appeal of an IPR Final Written Decision to the Federal Circuit is governed by additional requirements.
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