Federal Circuit Limits Petitioner Appeal Rights from the Patent Trial and Appeal Board for Inter Partes Reviews
January 11, 2017
On January 9, 2017, the U.S. Court of Appeals for the Federal Circuit issued a decision in Phigenix, Inc. v. Immunogen, Inc.1 dismissing an appeal by a petitioner from the Patent Trial and Appeal Board (PTAB) for lack of standing. The court held that a petitioner must be able to prove a case or controversy in its opening brief to establish its right to be heard on appeal.
In 2011, Congress created new processes for challenging the patentability of patent claims in trials before the PTAB. The legislation created statutory standing requirements and restrictions. For example, a patent owner may not challenge its own claims in these proceedings.2 Petitioners must also satisfy certain statutory requirements; for example, a petitioner generally may not file a petition if it (or a related party) has filed a civil action challenging a claim of the same patent or if more than one year has passed after it (or a related party) has been sued for infringement of the patent.3 While the PTAB enforces these standing requirements, the courts have generally held that they have no authority to review the PTAB's enforcement of them.4
The Inter Partes Review (IPR)
Phigenix, a pharmaceutical and biomedical research company, sought cancellation of eight claims in a patent assigned to ImmunoGen, Inc., and licensed to Genentech, Inc. Genentech produces an anti-cancer biologic agent (Kadcyla) under the license. Phigenix specializes in new molecular therapeutics designed to fight cancer and unsuccessfully sought a license from Genentech for the patented subject matter.5 In 2014, Phigenix filed an IPR petition against the patent and the PTAB instituted a review of whether the claimed subject matter would have been obvious. During the trial, however, the PTAB determined that Phigenix had failed to prove the unpatentability of the claims. In 2015, the PTAB issued a final written decision denying the petition to cancel the claims. By statute, a party "dissatisfied" with the PTAB's final written decision may appeal the decision to the Federal Circuit.6 Phigenix was understandably dissatisfied with the PTAB decision and filed a notice of appeal.
Petitioner Standing to Appeal
Before briefing of the appeal was completed, ImmunoGen filed a motion to dismiss, arguing that Phigenix lacked constitutional standing to appeal. The motion was dismissed in favor of addressing the standing issue in the principal briefs.
Following principal briefing, Judge Wallach, writing for the court, explained that a petitioner must have both statutory standing and constitutional standing to seek relief in the Federal Judicial Branch. While Congress can and did authorize an appeal from a final PTAB trial decision for dissatisfied parties, Congress cannot abrogate the "case or controversy" requirement of Article III in the United States Constitution. Hence, satisfying just the statutory requirement is not sufficient. Because the PTAB is not an Article III court, the issue of constitutional standing under Article III did not arise until Phigenix appealed. Statutory standing was sufficient.
The court announced that an appellant has the burden of production to support its assertion of standing on appeal. Sometimes the appellant's standing will be self-evident (such as when the appellant is the patent owner whose claims have been cancelled), but if not, the appellant must produce evidence equivalent to what must be produced to survive a motion for summary judgment. Moreover, the appellant must produce the evidence at "the first appropriate" time, either in its opening brief or in response to a motion to dismiss.7
The court examined the evidence that Phigenix produced in response to ImmunoGen's motion to dismiss (including declaration testimony) and concluded that Phigenix had not demonstrated "injury in fact." Specifically, Phigenix sought to prove that the ImmunoGen patent interfered with Phigenix's ability to license its own competing technology. The court rejected some of the evidence for evidentiary rule violations and determined that the alleged licensing injury was "hypothetical." Ultimately, the record did not support Phigenix's assertion of injury in fact sufficient to confer constitutional standing.
While some observers have expressed surprise in response to this decision, the court had reached a similar result for inter partes reexaminations, a predecessor to IPRs. In Consumer Watchdog v. Wisconsin Alumni Research Found., the court similarly held that a public-interest group lacked standing to maintain an appeal because it faced no injury in fact from the challenged patent.8 The logic of Phigenix and Consumer Watchdog will likely apply to all of the review proceedings before the PTAB.
Lessons for Petitioner-Appellants and Patent Owners
When considering whether to file a petition for review before the PTAB, a potential petitioner should consider its standing in the event that trial is instituted but the petitioner is dissatisfied with the final result. The constitutional standing issue that barred Phigenix is essentially the same as the constitutional standing issue for declaratory judgment: has the party suffered an injury in fact to create an actual case or controversy? An entity that is part of a group of potential petitioners might consider including on the petition at least one entity with clear standing. Alternatively, a petitioner without constitutional standing might conclude that the benefits of cancellation outweigh the somewhat distant risk of appeal. Conversely, a patent owner might defer actions that would create constitutional standing for a petitioner. The decision also serves as a reminder that—however anti-patent PTAB reviews are perceived to be—considerable challenges face petitioners as well.
Andy Brown contributed to the preparation of this WSGR Alert.