Written by NITA guest bloggers Kerry S. Taylor, Ph.D., and Nathanael R. Luman, Ph.D., at the firm Knobbe Martens Olson & Bear LLP
The America Invents Act (“AIA”) introduced inter partes review (“IPR”) as a new trial proceeding in 2012 for challenging the novelty or obviousness of a patent at the U.S. Patent Office. Since then, IPR trials have become very popular with parties seeking to cancel patents. There are several reasons for the popularity of IPRs. They are usually faster and less expensive than traditional district court litigation. IPRs have proved to be an effective tool for cancelling patent claims: sixty-five percent (65%) of IPR final written decisions held all the patent claims in trial unpatentable, an additional 17% of final decisions held at least one of the trial claims unpatentable, while just 18% of final decisions upheld patentability for all claims. Moreover, the Federal Circuit has largely upheld these decisions, affirming 86% (53% were summary affirmances), and vacating, reversing, or remanding 14%.
If you are considering filing an IPR petition, you should be aware that the eligibility for filing an IPR does not require a case-or-controversy between the petitioner and patent owner. However, the ability to appeal a Patent Office decision on patentability is more limited—only a party with Article III standing can appeal a decision on patentability to the Federal Circuit. This article examines the differences in eligibility for filing an IPR versus participating in an appeal of an IPR. The authors hope that this article will allow parties to make informed decisions on the likely availability of appellate review when considering filing IPR petitions.
Eligibility for filing an IPR is broad
The eligibility requirement for parties to file an IPR petition is perhaps best understood by examining the relatively narrow class of parties that are excluded from filing a petition. An IPR petitioner must not be the patent owner, and the petitioner or real party in interest must not have challenged the patent’s validity in a civil action. 35 U.S.C. §§ 311(a), 315(a)(1). The prohibition against a prior challenge to the patent’s validity in a civil action does not extend to invalidity challenges presented in a counterclaim. 35 U.S.C. § 315(a)(3). Also, a party may not file an IPR petition if more than 1 year has passed after the party, its real party in interest, or privy of the party, was served with a complaint for infringement of the patent. 35 U.S.C. § 315(b). For newer patents issued under the first-inventor-to-file provisions under the AIA, an IPR petition cannot be filed until after the latter of nine months after the patent’s issuance or re issuance, or the date of termination of any post-grant review involving the patent. 35 U.S.C. § 311(c).
Notably, Article III standing is not required to file an IPR petition. Thus, there need not be a case-or-controversy between the petitioner and patent owner to participate in an IPR trial. IPRs are therefore broadly available to many parties that might want to file an IPR petition.
A party must have Article III standing to appeal an IPR decision
In contrast to the broad availability of IPRs at the Patent Office, a party seeking judicial review of an IPR decision may only appeal to the Federal Circuit if the party possesses Article III standing. As a result, even if the Patent Office issues a final written decision adverse to the IPR petitioner, the petitioner will not be able to appeal that decision if it lacks standing. Standing can be self-evident, such as when an IPR petitioner has been sued for infringement of the patent in district court. In other situations, the IPR petitioner-appellant must more fully address standing by showing they have (1) suffered an injury in fact, (2) that is fairly traceable to the appellee, (3) that is likely to be redressed by a favorable judicial decision. The Federal Circuit has held that an IPR petitioner does not suffer an injury in fact merely by receiving a decision from the Patent Office upholding patentability of the challenged patent claims. See Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1173-76 (Fed. Cir. 2017). The Federal Circuit, in Phigenix, held that the IPR petitioner lacked standing because they had not suffered a concrete and particularized injury in fact. The IPR petitioner had not been sued for infringement, was not an actual or prospective licensee of the patent in the IPR, and had never licensed its own patent to competitors having licenses to the patent in the IPR. The Federal circuit therefore dismissed the appeal because the appellant lacked standing. Therefore, we recommend that you consider whether you are likely to have standing to appeal a decision from the Patent Office as part of your initial decision to pursue an IPR.
Although standing is required to be the appellant in an IPR appeal to the Federal Circuit, standing is not required to participate in the appeal as an appellee. For example, if the Patent Office issues a final written decision in favor of the IPR petitioner holding the patent claims are unpatentable, then the patent owner’s loss of patent rights is a sufficient alteration of legal rights to confer standing on the patent owner. In an appeal of an IPR decision in which the appellant is the patent owner, the Federal Circuit has determined that an IPR petitioner may participate as an appellee because standing in an appeal is measured for the appellant, not the appellee. See Personal Audio, LLC v. Electronic Frontier Foundation, Case No. 2016-1123 (Fed. Cir. August 7, 2017).
Sometimes the Patent Office issues an IPR final written decision upholding the patentability of some claims, and holding other claims unpatentable. In response to such a decision, the IPR petitioner will likely not be able to appeal the portion of the decision upholding the patentability of claims unless it has standing. If the patent owner appeals the claims held unpatentable, the IPR petitioner may participate in the appeal as the appellee under Personal Audio. However, there is a significant risk that the IPR petitioner will not be eligible to file a cross-appeal on the claims held unpatentable unless the petitioner can demonstrate that it possesses standing. See Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1322 (Fed. Cir. 2008) (“[A] party lacks standing to cross-appeal unless it is adversely affected by the judgment it seeks to challenge.”).
IPR provides a desirable option for many parties seeking to cancel patent claims. Determining whether an IPR provides the best option for you should involve the careful evaluation of many factors, including whether you are likely to have standing to appeal an adverse decision from the Patent Office. The authors encourage you to seek counsel from a practitioner experienced in IPR trials and appeals to develop a strategy that is tailored to your unique circumstances.
About The Authors:
Kerry S. Taylor, Ph.D., and Nathanael R. Luman, Ph.D., are partners in Knobbe Marten’s San Diego office. Dr. Taylor leads the firm’s IPR efforts in the life sciences and biotechnology industries. Dr. Taylor and Dr. Luman have represented biotechnology and chemical companies in IPRs and appeals of IPRs.
 If you are considering filing an IPR petition, you should be aware that the Supreme Court has granted certiorari to decide whether IPRs are unconstitutional. The Supreme Court’s decision on the constitutionality of IPRs is expected by June of 2018. See Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, Case No. 16-712 (U.S. 2017). The authors have provided some guidance for IPR participants here while we wait for the Supreme Court to issue its decision.