Can any petitioner appeal a Board's final written decision from an inter partes review or post grant review proceeding? Contrary to the language of 35 U.S.C. § 141(c) which permits any party "who is dissatisfied with" the Board's decision to appeal the case to the Federal Circuit, most practitioners believed that the Federal Circuit's decision in Consumer Watchdog v. Wisconsin Alumni Research dictated that Article III standing was still a requirement for IPRs and PGRs. However, the Court left a potential loophole in the Consumer Watchdog case when it acknowledged that it was not deciding "whether, under other circumstances, the preclusive effect of the estoppel provisions could constitute an injury in fact." In the IPR context, 35 U.S.C. § 315(e) prevents a petitioner from requesting or maintaining any proceeding before the Office or asserting in a civil action or before the ITC the invalidity of any claim on a ground that the petitioner "raised or reasonably could have raised," if the claim was subject to a final written decision (subject, of course, to the interpretation of this statute by the Federal Circuit). Nevertheless, the Federal Circuit earlier today decided that standing is still required for a petitioner to appeal an adverse final written decision from the Board. Moreover, in Phigenix, Inc. v. ImmunoGen, Inc., the Court did not find any distinction in the estoppel effects of the two different proceedings, because the petitioner/appellant was "not engaged in any activity that would give rise to a possible infringement suit."
The Federal Circuit recognized in the Phigenix opinion that since its inception nearly thirty-five years ago, it has never "established the legal standard for demonstrating standing in an appeal from a final agency action." The three elements that make up the standing requirement are "(1) [that the party has] suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [party], (3) that is likely to be redressed by a favorable judicial decision." Phigenix (citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)). However, when Congress provides a party with a procedural right to appeal an administrative decision, the immediacy and redressability requirements may be relaxed. See Phigenix, FN 2 and Consumer Watchdog. Nevertheless, the obligation to establish an injury in fact remains firm. See id.
In order to demonstrate standing to appeal a decision from final agency action, the Federal Circuit addressed three considerations. First, the appellant has the burden of production to establish standing, not unlike a party that moves for summary judgement in district court. Second, the appellant must use evidence "to the extent necessary to explain and substantiate its entitlement to judicial review." Sometimes standing can be self-evident, such as when the appellant is an object of the action. Otherwise, it must submit "'arguments and any affidavits or other evidence," which can be record evidence from the agency action or any additional evidence submitted to the Court. Finally, an appellant must produce this evidence at the first appropriate time, which can either by "in response to a motion to dismiss or in the opening brief."
In the present case, the patent holder was ImmunoGen, Inc., and the patent at issue was U.S. Patent No. 8,337,856, which relates generally to huMab4D5 ANTI-ErbB2 antibody-maytansinoid conjugates. ImmunoGen had licensed the '856 patent to Genentech Inc. because it purportedly covers the use of the drug Kadcyla®. Phigenix is a third-party for-profit "research company that focuses 'on the use of novel molecular therapeutics' designed to fight cancer." It had developed a patent portfolio that included U.S. Patent No. 8,080,534, which Phigenix alleged covers Genentech's activities related to Kadcyla. In fact, a case is currently pending in the Northern District of California in which Phigenix has asserted the '534 patent against Genentech. Phigenix claimed that it filed the current IPR petition "[t]o further its commercialization efforts with respect to its patent portfolio." The PTAB subsequently found the claims nonobvious, thereby prompting this appeal.
The Court first applied the operative standards that it had identified to the question of Phigenix's standing. In doing so, the Federal Circuit noted that Phigenix was not asserting that it faced a risk of infringing the patent, that it was a potential licensee of the patent, or that it would otherwise take any action that implicated the patent. Instead, Phigenix was contending that it had suffered "actual economic injury" because the mere existence of the patent increased competition between itself and ImmunoGen, which Phigenix alleged was a cognizable Article III injury. Specifically, it alleged that at least of portion of the licensing revenue that ImmunoGen was enjoying would inure to Phigenix if the patent were invalidated.
Nevertheless, the Federal Circuit found that Phigenix had failed to substantiate these assertions with evidence. These arguments were not developed at the PTAB, so there was no record evidence that Phigenix could cite. Instead, it resorted to submitting at least one declaration and a "non-record" document. The problem was that the declaration did not set out the requisite supporting facts, but instead included conclusions of law. In addition, the other document, an attorney letter sent to ImmunoGen, merely stated that Phigenix "believed" that it had a strong portfolio, and that it "believed" the '856 patent was invalid. The conclusory statements found in the declaration and the letter regarding a hypothetical licensing injury were insufficient to establish injury in fact. "However, there is simply no allegation here that Phigenix has ever licensed the '534 patent anyone, much less that it licensed the '534 patent to entities that have obtained licenses to the ImmunoGen '856 patent."
So what can practitioners take away from this case? First, if you are a third-party petitioner that unsuccessfully challenged a patent before the PTAB, and you intend to rely on economic injury in fact to establish standing, you will need to present concrete evidence providing facts of that harm. Fortunately for such a petitioner, it's clear that you don't need to establish the necessary record during the IPR itself. Even though the presented evidence didn't succeed in this case, the Federal Circuit sanctioned the use of declarations and other evidence presented for the first time before the Court. This is good news, of course, because the ability to establish a record before the Board is severally limited, especially with the page and word count limits. Moreover, such evidence would unlikely be relevant to the assertions made in the petition.
Finally, from a policy point of view, this case could severally undermine the participation of parties unrelated to the challenged patents in IPR proceedings. Of course, biotech and pharmaceutical interest groups would like to see a "standing" requirement added to the IPR petitions themselves. But, without a change to the statute, anybody is still able to file a petition against any patent (provided they are not subject to the one-year time bar). Nevertheless, public interest groups, hedge funds, and operating companies without a cognizable injury will be unable to appeal an adverse decision. This is perhaps sufficient to deter at least some petitioners. With the prospect of no redress from a Board's decision, these parties may simply find that it is not worth the expense. On the other hand, this concern is only realized when the petitioner loses. With the levels of claim invalidation at the PTAB still high, this case probably won't deter as many petitioners as patent owners would like.
Phigenix, Inc. v. ImmunoGen, Inc. (Fed. Cir. 2016)
Panel: Circuit Judges Dyk, Wallcah, and Hughes
Opinion by Circuit Judge Wallach