Without a Leg to Stand on: Standing to Seek Federal Circuit Review of PTAB Decisions Requires an Injury in Fact

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Roger Lee is counsel at Buchanan, Ingersoll & Rooney PC in Alexandria, VA.  Roger specializes in post-grant proceedings before the U.S. Patent and Trademark Office and regularly counsels clients on a variety of patent-related matters including patent prosecution and litigation in federal courts.

In a recent case involving a patent for the cancer drug Kadcyla®, the Federal Circuit articulated a standing requirement which may have broad implications for how petitioners and patent owners approach post-grant challenges under the America Invents Act (AIA).

Under the AIA, petitioners can challenge the patentability of issued patents in post-grant proceedings including inter partes reviews (IPRs), post-grant reviews (PGRs), and covered business methods (CBMs).  These cases are heard by the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office.  Post-grant proceedings are relatively expedient and inexpensive in comparison with district court litigation.  More recently, the PTAB has become an increasingly popular forum for challenging pharmaceutical and biotech patents.[i]

While the majority of IPRs have parallel district court litigations, there are a significant number of IPRs which have no corresponding pending civil action.  This is due to the fact that there is no standing requirement to challenge a patent in an IPR.[ii]  An entity need not be accused of infringement to file an IPR petition.  The lack of any standing requirement has opened the door to IPR petitions filed by entities as diverse as public interest groups and investment managers.  One example is hedge fund manager Kyle Bass who has challenged several patents of drug companies using the IPR process.[iii]

While entities can file IPR petitions without regard to standing, the Federal Circuit has recently held that a standing requirement exists for seeking judicial review of final written decisions rendered by the PTAB in IPRs.  In Phigenix, Inc. v. ImmunoGen, Inc., Appeal No. 2016-1544 (Fed. Cir. Jan. 9, 2017), the Federal Circuit held that an appellant must demonstrate standing to seek judicial review of a final written decision in an IPR, and that such standing requires an injury in fact.

In Phigenix, the petitioner of the IPR (Phigenix) challenged a patent owned by ImmunoGen, Inc.  ImmunoGen licenses the patent at issue to Genentech Inc. who in turn produces the cancer drug Kadcyla® under such license.[iv]  In its final written decision, the PTAB determined that Phigenix failed to prove that the claims of such patent are obvious over the cited prior art.[v]  Phigenix sought appellate review of the PTAB’s decision.

The Federal Circuit dismissed Phigenix’s appeal for lack of standing.  Citing Supreme Court precedent, the Federal Circuit stated that the general Article III standing requirements apply to appellate review of PTAB decisions.[vi]  In particular, the Federal Circuit cited the Supreme Court’s decision in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016), noting that “the Supreme Court has recognized that not every party will have Article III standing in an appeal from a PTAB final written decision.”[vii]  The Federal Circuit further noted that “an appellant must . . . supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court.”[viii]

In view of such standing requirement, the court determined that “Phigenix has not offered sufficient proof establishing that it has suffered an injury in fact.”[ix]  The court stated that in cases “[w]hen the [appellant]’s standing is not self-evident, . . . the [appellant] must supplement the record to the extent necessary to explain and substantiate its entitlement to judicial review.”[x]  Phigenix argued that it suffered actual economic injury because the existence of ImmunoGen’s patent increased competition and encumbered Phigenix’s ability to license its own cancer drug patent.[xi]  The court was not persuaded by Phigenix’s arguments and evidence.  A key factor was that Phigenix had not demonstrated that it was successful in licensing its patent:

It is possible that, if Phigenix had licensed the ’534 patent to the same parties to which ImmunoGen had licensed the ’856 patent, the invalidation of the ’856 patent might have increased Phigenix’s revenues.  However, there is simply no allegation here that Phigenix has ever licensed the ’534 patent to anyone, much less that it licensed the ’534 patent to entities that have obtained licenses to the ImmunoGen ’856 patent.[xii]

The court also pointed out that “Phigenix does not contend that it faces risk of infringing the ’856 patent, that it is an actual or prospective licensee of the patent, or that it otherwise plans to take any action that would implicate the patent.”[xiii]  Having failed to demonstrate an injury in fact, the court held that Phigenix lacks standing to bring suit in federal court.

Post-grant proceedings have grown in popularity within the pharmaceutical industry as the industry has recognized the advantages of having patentability challenges heard by the PTAB.  In view of Phigenix, one should consider the evidence and arguments for demonstrating standing to appeal an adverse PTAB decision, as part of the overall strategy for challenging a patent in a post-grant proceeding.

[i] See Patent Trial and Appeal Board Statistics, U.S. Patent and Trademark Office (Nov. 30, 2016) at 5 (https://www.uspto.gov/sites/default/files/documents/aia_statistics_november2016. pdf).

[ii] Patent Office Trial Practice Guide, 77 Fed. Reg. 48756, 48759 (Aug. 14, 2012).

[iii] See, e.g., Coalition for Affordable Drugs II LLC v. NPS Pharmaceuticals, Inc., IPR2015-01093, Paper 67 (PTAB Oct. 21, 2016); Coalition for Affordable Drugs II LLC v. NPS Pharmaceuticals, Inc., IPR2015-00990, Paper 68 (PTAB Oct. 21, 2016).

[iv] Phigenix, slip op. at 2-3.

[v] Id., slip op. at 2.

[vi] Id., slip op. at 4-8.

[vii] Id., slip op. at 5 (citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143–44 (2016)).

[viii] Id., slip op. at 5 (emphasis added).

[ix] Id., slip op. at 2.

[x] Id., slip op. at 8.

[xi] Id., slip op. at 9.

[xii] Id., slip op. at 10.

[xiii] Id., slip op. at 9.

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