Standing to Appeal an Adverse IPR Decision to the CAFC
| August 16, 2018
JTEKT Corp. v. GKN Automotive Ltd.
August 3, 2018
Before Prost, Dyk and O’Malley. Opinion by Dyk.
Summary:
JTEKT Corporation (“JTEKT”) instituted an inter partes review (“IPR”) of the patentability of claims 1-7 of U.S. Patent No. 8,215,440 (“the ‘440 patent”), owned by GKN Automotive (“GKN”). The Patent Trial and Appeal Board (“the Board”) issued an adverse decision regarding claims 2 and 3, holding that JTEKT did not show that claims 2 and 3 would have been obvious over the prior art of Teraoka in view of Watanabe. JTEKT appealed the adverse decision to the CAFC. The CAFC dismissed the appeal, finding that JTEKT lacks standing to appeal.
Details:
GKN owns the ‘440 patent directed to a drive train for a four-wheel drive vehicle. JTEKT Corporation petitioned for inter partes review of claims 1-7 of the ‘440 patent. The Board instituted the IPR on all challenged claims. After institution, GKN disclaimed claims 1, 4 and 5. The Board held that claims 6 and 7 would have been obvious over the prior art of Teraoka in view of Burrows, but that JTEKT did not show that claims 2 and 3 would have been obvious over the prior art of Teraoka in view of Watanabe.
JTEKT appealed to the CAFC the adverse ruling regarding claims 2 and 3. GKN filed a motion to dismiss based on lack of standing. The motion to dismiss was denied by the motions panel of the CAFC, deeming it the better course of action for the parties to address the standing issue in their briefs.
In reviewing the standing issue, the court first explained that the IPR statute[1] itself provides broad eligibility for filing an IPR, and that a petitioner need not have constitutional (Article III) standing to institute an IPR proceeding before the Board. Statute also provides that an unsuccessful petitioner may appeal an adverse final written decision to the CAFC.[2]
However, the court noted that, in a series of decisions[3], it has “held that the statute cannot be read to dispense with the Article III injury in fact requirement for appeal to this court.” Regarding “injury in fact”, the court summarized that Supreme Court cases establish that the injury in fact must be “an injury that is both ‘concrete and particularized.’” Injuries that are “conjectural or hypothetical” will not provide standing.
The court explained “[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”.
JTEKT had no product on the market at the time. Therefore, JTEKT relied on potential infringement liability to demonstrate the requisite injury in fact to warrant standing. The court pointed out that the fact that JTEKT has no product on the market at the present time does not preclude Article III standing in an IPR. IPRs enable a party to secure a judicial determination in advance of actual, liability-creating injury. But, the court emphasized, where the party relies on potential infringement liability as a basis for injury in fact, but is not currently engaging in infringing activity, it must establish that it has concrete plans for future activity that creates a substantial risk of future infringement or likely cause the patentee to assert a claim of infringement.
JTEKT submitted two declarations in support of its standing.
The declaration of JTEKT’s Chief Engineer admitted, among other things, that “JTEKT is [still] currently validating its design…[t]he concept will continue to evolve and may change until it is completely finalized.”
The declaration of a patent engineer for JTEKT admitted, among other things, that “because the product was not – and is not – yet finalized, JTEKT cannot definitively say whether or not it will infringe the ‘440 patent and the potential risk of infringement… is impossible to quantify at this time.”
However, the court found that these declarations were problematic in that they do not establish that its planned product would create a substantial risk of infringing claims 2 or 3 of GKN’s ’440 patent or likely lead to charges of infringement.
The court concluded that JTEKT has not established at this stage of the development that its product creates a concrete and substantial risk of infringement or will likely lead to claims of infringement. Because JTEKT failed to establish an actual injury sufficient to confer Article III standing, the court dismissed the appeal.
Takeaway
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.
[1] 35 U.S.C. § 311(a)
[2] 35 U.S.C. §141(c) – (c) POST–GRANT AND INTER PARTES REVIEWS — A party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) or 328(a) (as the case may be) may appeal the Board’s decision only to the United States Court of Appeals for the Federal Circuit.
[3] Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1172 (Fed. Cir. 2017); Consumer Watchdog v. Wis Alumni Research Found., 753 F.3d 1258, 1261 (Fed. Cir. 2014)
