Standing Reminder for Inter Partes Review Decisions
| October 28, 2024
Case Name: LATINUM OPTICS TECHNOLOGY INC. V. VIAVI SOLUTIONS INC.
Date of Decision: August 16, 2024
Panel: Moore, Taranto and Cecchi (sitting by designation)
Summary
This decision serves as a reminder that standing to appeal a decision of the Patent Trial and Appeal Board (PTAB) can be lost in an inter partes review (IPR). This is because the Federal Circuit’s jurisdiction to review final decisions of the PTAB is limited to cases and controversies under Article III of the U.S. Constitution. If a civil action is dismissed before a final decision in an IPR, it is necessary to show that there is still an injury in fact so that an appeal can be taken to the CAFC.
Background
Viavi owns U.S. patent no. 9,354,369 which relates to optical fibers. Viavi sued Platinum Optics Technology (PTOT) for infringement in two civil suits in the Northern District of California. Thereafter, PTOT filed an IPR of the ‘369 patent. In the civil suits, the patent infringement claims were dismissed with prejudice. The PTAB subsequently issued a final written decision holding that PTOT failed to show the challenged claims in the ‘369 patent were unpatentable. PTOT appealed the decision to the Federal Circuit.
Discussion
A party does not need to establish Article III standing to appear before an administrative agency (such as the PTAB), as set forth in Cuozzo Speed Techs., LLC v. Lee, 579 U.S. 261, 279 (2016). However, standing is required when the party seeks review of an agency’s final decision in a federal court (Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1171–72 (Fed. Cir. 2017)). The party seeking judicial review bears the burden of proving standing (JTEKT Corp. v. GKN Auto. LTD., 898 F.3d 1217, 1220 (Fed. Cir. 2018)). As set forth in JTEKT “[o]ur cases establish that typically in order to demonstrate the requisite injury in an IPR appeal, the appellant/petitioner must show that it is engaged or will likely engage ‘in an activity that would give rise to a possible infringement suit,’…or has contractual rights that are affected by a determination of patent validity”.
PTOT asserts that it has standing based on potential infringement liability stemming from supplying its bandpass filters accused in one of the civil suits to parts integrators overseas and due to developing new models of bandpass filters. A declaration from the Deputy Director of Operations Management of PTOT was submitted to support the argument of injury in fact based on development of new bandpass filters.
Although Viavi dismissed the patent infringement suits, PTOT maintains that it has suffered an injury in fact based on its continued distribution of bandpass filters. In support of this argument, PTOT relies on a letter sent by Viavi sent prior to the first and second civil suits being filed, and PTOT’s expectation that Viavi would sue a third time. The CAFC pointed out that mere speculation about the possibility of another suit, without more, is insufficient to confer standing, particularly since the letters were sent prior to the first two civil actions which were subsequently dismissed.
Regarding the declaration submitted to the record, there was no explanation regarding detailed plans for development of new filters, nor any details regarding the particulars of the new filters or how they might relate to the ‘369 patent. The CAFC acknowledged that IPR petitioners do not need to concede infringement but need to at least establish that its development activities “will cause a substantial risk of infringement or will likely cause Viavi to assert a claim of infringement.” As such, PTOT has failed to establish an injury in fact to confer standing.
Takeaways
Although 35 U.S.C. §141(c)) statutorily authorizes appeal of an adverse IPR decision to the Court of Appeals for the Federal Circuit, the court requires Article III injury in fact to establish standing.
If the civil suit(s) are dismissed, an injury in fact needs to be established to appeal a PTAB decision to the CAFC.
A declaration can be sufficient to establish standing if it identifies specific, concrete plans to develop a product which may implicate a patent in suit.
Liberal construction for pro se litigants does not mean ignoring the pleading requirements under the FRCP
| October 28, 2024
Case Name: MASSOUD HEIDARY v. AMAZON.COM, INC., RING, LLC.
Decided: October 15, 2024
Panel: LOURIE, PROST, and STARK, Circuit Judges.
Summary:
The Federal Circuit affirmed the district court’s decision to dismiss a patent infringement claim for improper venue and failure to state a claim by a pro se litigant against Amazon.com, Inc. and Ring, LLC. The Federal Circuit held that a liberal construction of pleadings by pro se litigants does not mean ignoring the pleading requirements under the FRCP.
Details:
Massoud Heidary (“Heidary”) appeals from a decision of the U.S. District Court for the District of Maryland dismissing his patent infringement claims for improper venue and failure to state a claim.
Heidary owns U.S. Patent No. 10,380,862 (“the ’862 patent”). This patent is directed to a “fire protection system” for suppressing fire spread by shutting of the fan in an HVAC system when a fire is detected by a smoke detector.
Claim 1 of the ’862 patent reads as follows:
1. A system for suppressing fire in a building, the system comprising:
a plurality of smoke detector units,
each smoke detector unit comprising:
a smoke detector,
a power supply,
an auxiliary power supply,
a camera connected to the smoke detector, and
a wireless transmission unit connected to the camera
a normally closed relay,
a fan controller connected to an HVAC unit,
a thermostat,
a display unit,
a micro-controller for display unit,
a wireless receiver for the micro-controller,
a telephone system,
wherein upon detection of a smoke by any one of the smoke detectors, the respective smoke detector passes a signal to a normally closed relay to open and to cut-off the power supply to the thermostat as well as fan controller thereby shutting off the fan unit; and activates the respective camera and the wireless transmission unit to transmit a signal to a wireless receiver connected to the micro-controller so as to display the location of the fire on the display unit connected to the micro-controller.
District Court
Heidary filed a patent infringement suit against Amazon.com, Inc. (“Amazon”) and Ring, LLC (“Ring”) on September 13, 2022. Heidary argued that Amazon sells two products that meet each and every limitation of claim 1 of the ’862 patent.
Ring filed a motion to dismiss Heidary’s complaint for improper venue under Rule 12(b)(3) and both Ring and Amazon filed a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the FRCP.
The District Court granted Amazon and Ring’s motion and dismissed the complaint without prejudice.
CAFC
Heidary appealed the district court’s decision to dismiss the complaint for each of improper venue as to Ring and failure to state a claim.
Improper Venue
Under § 1400(b), “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). It is the plaintiff’s burden to establish proper venue. Westech, 927 F.3d at 1382.
A “domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 262 (2017).
If the defendant does not reside in the relevant district, then venue is only proper if each of the following requirements are met: “(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.” In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017).
The Federal Circuit agreed with the district court decision that Heidary failed to establish that venue is proper for Ring because as a Delaware entity, Ring does not reside in the District of Maryland for patent venue purposes.
In addition, the Federal Circuit found that Heidary pleaded no facts and made no showing that Ring has a physical place of business in the District of Maryland.
Direct Infringement
With regard to pro se litigants, the Federal Circuit held that pleadings must be “construe[d] . . . liberally” for pro se litigants. Bing, 959 F.3d at 618.
However, the Federal Circuit that this liberal construction does not mean “overlooking the pleading requirements under the Federal Rules of Civil Procedure.” Id. (citing Weidman v. Exxon Mobil Corp., 776 F.3d 214, 219 (4th Cir. 2015)).
Therefore, the Federal Circuit held that a pro se litigant still must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
The Federal Circuit held that Heidary’s complaint merely lists what he contends are the limitations of the patent and asserts that Amazon makes, sells, uses, offers to sell, or imports in the U.S. products that meet each and every limitation of claim 1 of his patent.
The Federal Circuit held that a screenshot that merely describes one of the accused products and summarily concludes that the accused products infringe claim 1 is not sufficient.
In addition, the Federal Circuit held that there is an apparent disconnect between the patent and the accused products because while the ’862 patent recites a system with multiple components, the accused products consist of only smoke detector.
Therefore, the Federal Circuit agreed with the district court decision that Heidary failed to state a claim of direct infringement.
Takeaway:
- Plaintiff needs to sufficiently show that if the defendant does not reside in the relevant district, venue is only proper if each of the following requirements are met: “(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.
- Even pro se litigants are not immune to the pleading requirements under the FRCP.
