No Standing and No Vacatur for Patent Licensee Seeking Review of IPR Decisions
| December 28, 2021
Apple Inc. v. Qualcomm Incorporated
Decided on November 10, 2021
Newman, Prost, and Stoll. Opinion by Prost. Dissent by Newman.
Summary
For a second time involving the same parties who had entered a license agreement as part of settlement of global patent litigation, the Federal Circuit denied standing to appeal from the Patent Trial and Appeal Board (PTAB) where the underlying facts were identical to those in the previous case, except for the identity of patents at issue. The Federal Circuit also rejected the licensee’s request to vacate the PTAB decision which was found unappealable for lack of standing. The dissent argued that the mere existence of a license should not negate the licensee’s right to challenge the patent validity in Article III court.
Details
“Flashback” to Apple I
The Opinion begins by referring to Apple Inc. v. Qualcomm Inc., 992 F.3d 1378, 1385 (Fed. Cir. 2021) (“Apple I”), where Qualcomm sued Apple in a district court for infringement of patents; Apple sought an inter partes review (“IPR”) of those patents; the two companies settled all their litigation and entered a license agreement, leading to dismissal of the infringement action with prejudice; thereafter, Apple appealed a final decision of the IPR issued in favor of Qualcomm.
At issue in Apple I was Apple’s standing before the Article III court. There, Apple was found to lack standing because:
- No sufficient evidence or argument was presented that invalidity of any specific patent would change any aspect of the contractual relationship or royalty imposed on Apple.
- Apple’s evidence failed to identify any particular patent or potentially infringing activity that is tied to a risk of litigation after the license has expired.
- Apple’s invocation of the estoppel provision was insufficient to warrant standing.
Rehearing was denied en banc in Apple I.
No Standing in Deference to Apple I
The Federal Circuit dismissed for lack of standing following the precedent. Since “the operative facts are the same,” the difference in the patents between the two cases was “irrelevant.” Further, the court rejected Apple’s assertion that the previous case did not articulate the reason why a threat of litigation that would potentially result from Apple’s failure to pay the license fee and termination of the agreement does not suffice to establish standing.
Vacatur Denied
Apple asserted that if it lacks standing, the PTAB decisions should be vacated, which would otherwise frustrate future litigation involving the same patents. In so doing, Apple relied on the principle in United States v. Munsingwear, Inc., which allows vacatur of a judgement below where the case has become moot on appeal.
The Federal Circuit disagreed. First, Munsignwear was distinguished because it concerns mootness, rather than standing. The difference between the two doctrines resides in the timing: Standing relates to existence of controversy “at the outset” of the appeal whereas mootness considers existence of controversy “throughout the proceedings.” To the extent the dispute between the parties had disappeared before the appeal was filed, the case cannot “become moot.” Second, even if the mootness doctrine were applicable, the court stated that vacatur would still not be appropriate. Because the alleged mootness was caused by Apple’s own voluntary action (i.e., settlement), it could not claim the equitable remedy of vacatur.
Dissent
The dissenting opinion noted that continuing controversy existed where Apple, although agreeing to settlement and license, still disputed the validity of the licensed patents, and the potentially infringing products will likely remain on the market after the termination of the contract, which does not cover the entire life of the patents as a result of Qualcomm’s refusal of Apple’s request otherwise. The dissent also argued that denial of the standing is contrary to the statutory purposes of estoppel and right of appeal provisions under the AIA. Furthermore, citing United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021) (see Cindy Chen’s previous report), which required vacatur of PTAB decisions that are unreviewable by a principle agency officer, the dissent argued that the IPR decisions in the present case should be vacated if Apple is denied the constitutional right of judicial review.
Takeaway
- In addition to confirming that the patent licensee seeking appeal from the IPR lacks Article III standing in the circumstances of the case, the Federal Circuit found that such a party also forfeited its right to vacatur of the underlying IPR decision.
- Potential consequences of settlement and license where an IPR is pending could be grave; not only could it limit the party’s ability to prove a requisite injury for standing to appeal, but also it could foreclose the remedy of vacatur, thereby affecting future re-litigation.
Lets’ B. Cereus, No Reasonable Fact Finder Could Find an Expectation of Success Based on the Teachings of a Prior Art Reference That Failed to Achieve That Which The Inventor Succeeds
| December 6, 2021
University of Strathclyde vs., Clear-Vu Lighting LLC
Circuit Judges Reyna, Clevenger and Stoll (author).
Summary:
Here, the University of Strathclyde (Strathclyde herein after) appeals from a final written decision of the Patent Trail and Appeal Board holding claims 1 to 4 of U.S. Patent No. 9,839,706 unpatentable as obvious.
The patent relates to effective sterilization methods for environmental decontamination of air and surfaces of, amongst other antibiotic resistant Gram-positive bacteria, Methicillin-resistant Staphylococcus aureus (MRSA). Specifically, sterilization is performed via photoinactivation without the need for a photosensitizing agent.
Claim 1[1] is as follows:
1. A method for disinfecting air, contact surfaces or materials by inactivating one or more pathogenic Gram-positive bacteria in the air, on the contact surfaces or on the materials, said method comprising exposing the one or more pathogenic Gram-positive bacteria to visible light without using a photosensitizer, wherein the one or more pathogenic Gram-positive bacteria are selected from the group consisting of Methicillin-resistant Staphylococcus aureus (MRSA), Coagulase-Negative Staphylococcus (CONS), Streptococcus, Enterococcus, and Clostridium species, and wherein a portion of the visible light that inactivates the one or more pathogenic Gram-positive bacteria consists of wavelengths in the range 400-420 nm, and wherein the method is performed outside of the human body and the contact surfaces or the materials are non-living.
The Board determined that claim 1 above would have been obvious over Ashkenazi in view of Nitzan. Ashkenazi is an article that discusses photoeradication of a Gram-positive bacterium, stating that “In the case of P. acnes (leading cause of acne) or other bacterial cells that produce porphyrins…. Blue light may photoinactivate the intact bacterial cells.” However, as noted by the CAFC, the methods of Ashkenazi always contained a photosensitive agent. Ashkenazi taught that increasing the light doses, the number of illuminations, and the length of time the bacteria are cultured resulted in greater inactivation.
The Nitzan article studied the effects of ALA (photosensitive agent) on Gram-positive bacteria, including MRSA. In Nitzan, for all the non-ALA MRSA cultures, it was reported therein that a 1.0 survival fraction was observed, meaning there was “no decrease in viability…after illumination” with blue light.
The Board ultimately held that Ashkenazi and Nitzan taught or suggested all the limitations of claim 1, and that a person of ordinary skill in the art would have been motivated to combine these two references, and “would have had a reasonable expectation of successfully doing so.”
Although neither of the references achieved inactivation of any bacteria without using a photosensitizer, the Board nonetheless found that a skilled artisan would have reasonably expected “some” amount of inactivation because the claims “do not require any specific amount of inactivation.”
Ultimately, the CAFC disagreed with the Boards’ findings.
Initially, the CAFC emphasized that “[T]he substantial evidence standard asks ‘whether a reasonable fact finder could have arrived at the agency’s decision,’ and ‘involves examination of the record as a whole, taking into account evidence that both justifies and detracts from an agency’s decision.’” OSI Pharms., LLC v. Apotex Inc., 939 F.3d 1375, 1381–82 (Fed. Cir. 2019) (quoting In re Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000)).
That, “An obviousness determination generally requires a finding that “all claimed limitations are disclosed in the prior art,” PAR Pharm., Inc. v. TWI Pharms., Inc., 773 F.3d 1186, 1194 (Fed. Cir. 2014); cf. Koninklijke Philips N.V. v. Google LLC, 948 F.3d 1330, 1337–38 (Fed. Cir. 2020).
“Whether the prior art discloses a claim limitation, whether a skilled artisan would have been motivated to modify or combine teachings in the prior art, and whether she would have had a reasonable expectation of success in doing so are questions of fact. Tech. Consumer Prods., Inc. v. Lighting Sci. Grp. Corp., 955 F.3d 16, 22 (Fed. Cir. 2020); OSI Pharm., 939 F.3d at 1382.
Here, “the only dispute is whether these references teach inactivating one of the claimed Gram-positive bacteria without using a photosensitizer.” The CAFC stated that the “Board’s finding that this was taught by the combination of Ashkenazi and Nitzan is not supported by substantial evidence.”
Claim 1 requires both (i) exposing the bacterial to 400 to 420 nm blue light without using a photosensitizers and (ii) that the bacteria are inactivated as a result. Here, Ashkenazi achieves inactivation after exposure to 407 to 420 nm blue light but with a photosensitizer. On the other hand, Nitzan provides an example in which MRSA is exposed to 407 to 420 nm blue light without a photosensitizer, but there is no evidence that Nitzan successfully achieved inactivation under the conditions.
The Board agreed with Clear-Vu’s argument that a skilled artisan would have prepared a MRSA culture according to the method described in Nitzan and applied Ashkenazi’s teaching that increasing the light energy, number of illuminations, and length of time the bacteria are cultured, and so arrived at the Patented claims.
However, the CAFC held that “given neither Ashkenazi nor Nitzan teaches or suggests inactivation of any bacteria without using a photosensitizer” they failed “to see why a skilled artisan would opt to entirely omit a photosensitizer when combining these references.” The CAFC stressed that Nitzan itself disclosed that a photosensitizer-free embodiment was “wholly unsuccessful in achieving inactivation.”
Again, the CAFC emphasized that claim 1 requires both (i) exposing the bacterial to 400 to 420 nm blue light without using a photosensitizers and (ii) that the bacteria are inactivated as a result, and declined Clear-Vu’s invitation to read the inactivation limitation in isolation divorced from the claim as a whole concluding that “Obviousness cannot be based on the hindsight combination of components selectively culled from the prior art to fit the parameters of the patented invention.”
Next, the CAFC analyzed the Board’s finding on reasonable expectation of success and again, declined to agree.
The Board had relied upon (i) both parties agreeing that MRSA naturally produces at least some amount of endogenous porphyrins and (ii) Ashkenazi’s teaching that “blue light may” inactivate “other bacterial cells that produce porphyrins.
Here, the CAFC focused on Nitzan, as evidence on record showing the opposite. The CAFC reaffirmed that “absolute predictability of success is not required, only a reasonable expectation.” In this case, where the prior art reference fails to “achieve that at which the inventors succeeded, no reasonable fact finder could find an expectation of success based on the teachings of that same prior art.”
Thus, the CAFC concluded that the Board’s finding was not supported by substantial evidence, and so reversed its obviousness determination.
Take-away:
- The substantial evidence standard asks ‘whether a reasonable fact finder could have arrived at the agency’s decision,’ and ‘involves examination of the record as a whole, taking into account evidence that both justifies and detracts from an agency’s decision.
- If a prior art reference fails to achieve that which the inventor succeeds, it can be argued that no reasonable fact finder could find an expectation of success based thereon.
[1] Claim 2 depends on claim 1. Claim 3 is independent, but contains the same contested features highlighted above in claim 1. Claim 4 is dependent on claim 3.
