IPR Petitioners with Significant Research and Commercial Activities May Possess Standing for an Appeal

October 4th, 2018

Summary:  Inter partes review (“IPR”) provides an avenue to challenge the validity of a patent before there is a specific threat of infringement litigation by a patent owner.  While a petitioner dissatisfied with the outcome of an IPR proceeding may appeal to the Federal Circuit, the petitioner must demonstrate an injury-in-fact sufficient to confer Article III standing for the court to have jurisdiction over such an appeal.  IPR petitioners with significant research and commercial activities implicating the patent subject to IPR may possess Article III standing.  However, uncertainty remains as to the extent and significance of any future activity that would be sufficient to demonstrate a controversy of sufficient immediacy and reality to confer Article III standing without a specific threat of infringement litigation.

The United States Court of Appeals for the Federal Circuit (“Federal Circuit”) recently clarified that “a petitioner who appeals from an IPR decision need not face ‘a specific threat of infringement litigation by the patentee’ to establish [Article III standing].” E.I. du Pont de Nemours & Co. v. Synvina C.V., No. 2017-1977, 2018 U.S. App. LEXIS 26194, at *14 (Fed. Cir. Sept. 17, 2018) (quoting ABB Inc. v. Cooper Indus., LLC, 635 F.3d 1345, 1348 (Fed. Cir. 2011)).  However, “the petitioner must generally show a controversy ‘of sufficient immediacy and reality’ to warrant the requested judicial relief.” Id. at *14-15 (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007)).

E. I. du Pont de Nemours and Company and Archer-Daniels-Midland Company (collectively, “DuPont”) and Synvina C.V. (“Synvina”) are competitors in the production of 2,5-furan dicarboxylic acid (“FDCA”). Id. at *1-2. FDCA is a chemical “building block” produced from sugars and thus has gained recognition by the U.S. Department of Energy while also “attracting commercial interest because of its potential in the ‘green’ chemical industry.” Id. at *2 (citation omitted). U.S. Patent No. 8,865,921 (“the ’921 patent”), which is owned by Synvina, is directed to a method of forming FDCA by oxidizing 5-hydroxymethylfurfural (“HMF”) or an HMF derivative. Id. at *1-2 (citations omitted).  Generally, “the oxidation of HMF and its derivatives to yield FDCA was known at the time of the claimed invention.” Id. at *2.  However, the method in the ’921 patent sought to improve prior art yields by controlling the reaction conditions. See id. at *5-6 (citation omitted).

DuPont petitioned the United States Patent Trial and Appeal Board (“Board”) for IPR of the ’921 patent, asserting several grounds of obviousness. Id. at *7.  The Board instituted review of certain claims of the ’921 patent but concluded that “the instituted claims [were] not unpatentable as obvious.” Id. at *8, 10 (citation omitted).  As a result, “DuPont appealed, challenging the Board’s conclusion of nonobviousness.” Id. at *12.  In response, Synvina contended DuPont lacked standing to appeal, alleging that “DuPont “ha[d] not suffered an actual or imminent injury in fact” and “[could] posit only speculative future harm” because “no action for infringement of the ’921 patent ha[d] been brought against DuPont.” Id. at *12-13.

Congress has granted a statutory right for a party dissatisfied with a final written decision of the Board in an IPR proceeding to appeal the decision to the Federal Circuit. 35 U.S.C. §§ 319, 329 (2012).  However, legal precedent requires the party to demonstrate an injury-in-fact sufficient to confer Article III standing for the court to have jurisdiction over such an appeal. See JTEKT Corp. v. GKN Auto. Ltd., 898 F.3d 1217, 1219-20 (Fed. Cir. 2018) (citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143-44 (2016); Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168, 1172-76 (Fed. Cir. 2017); Consumer Watchdog v. Wisc. Alumni Research Found., 753 F.3d 1258, 1260-61 (Fed. Cir. 2014)).  To establish injury-in-fact, a plaintiff must show “‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).

In du Pont, the Federal Circuit concluded that DuPont had standing to appeal the Board’s decision because the facts demonstrated “a controversy ‘of sufficient immediacy and reality’ to warrant the requested judicial relief.” 2018 U.S. App. LEXIS 26194, at *14-15 (citing MedImmune, 549 U.S. at 127).  In particular, the court held that “[s]uch a controversy exists [] because DuPont currently operates a plant capable of infringing the ’921 patent.” Id. at *15.  For example, the record showed DuPont had built and opened a plant that “uses the same reactants to generate the same products using the same solvent and same catalysts as the ’921 patent.” Id. at *15-16 (citation omitted).  Further, the plant operates at the same temperature and pressure as recited in the ’921 patent. Id. at *16.

The Federal Circuit found that, “[t]aken together, these facts demonstrate that DuPont, an avowed competitor of patent owner Synvina, has taken and ‘plans to take . . . action that would implicate’ the ’921 patent.” Id. at *15-16 (quoting Phigenix, 845 F.3d at 1173-74).  In particular, DuPont’s actions “includ[ed] significant ‘involvement in research [and] commercial activities involving’ the claimed subject matter of the ’921 patent.” Id. at *16 (second alteration in original) (quoting Consumer Watchdog, 753 F.3d at 1260).  As a result, the Federal Circuit concluded that, “[a]t the very least, [these facts] indicate[] that DuPont ‘is engaged or will likely engage “in an[] activity that would give rise to a possible infringement suit.”’” Id. (fourth alteration in original) (quoting JTEKT, 898 F.3d at 1220).  Moreover, the court found Synvina’s allegations before the Board that DuPont copied the ’921 patent and “its refusal to grant DuPont a covenant not to sue further confirm[ed] that DuPont’s risk of liability is not ‘conjectural’ or ‘hypothetical.’” Id.

In contrast with the present case, the Federal Circuit in JTEKT recently found an IPR petitioner’s evolving product development activities insufficient to confer Article III standing. See 898 F.3d at 1220-21.  More specifically, in JTEKT the Federal Circuit held that when relying on potential infringement liability to establish standing, a party “must establish that it has concrete plans for future activity that create[] a substantial risk of future infringement or [would] likely cause the patentee to assert a claim of infringement.” Id. at 1221.  The court concluded that “JTEKT [had] not established at this stage of the development that its product create[d] a concrete and substantial risk of infringement or [would] likely lead to claims of infringement.” Id.  In particular, the court noted that “JTEKT expressly conceded that ‘no product is yet finalized’” and that JTEKT’s risk of infringement pertained to “future development.” Id. (citations omitted).  A more thorough analysis of the Federal Court’s decision in JTEKT is provided here.

The Federal Circuit’s decisions in du Pont and JTEKT illustrate that IPR petitioners relying on potential infringement liability may be more likely to possess Article III standing when the petitioner has significant research and commercial activities involving a patent subject to IPR.  Nevertheless, uncertainty remains as to the extent and significance of any future activity that would be sufficient to demonstrate a controversy of sufficient immediacy and reality to support Article III standing without a specific threat of infringement litigation by a patent owner.  Indeed, the court’s conclusion that DuPont had demonstrated standing relied at least in part on events that occurred after the petition for IPR was filed. See du Pont, 2018 U.S. App. LEXIS 26194, at *15.  Consequently, would-be IPR petitioners should consider the likelihood, timing, and extent to which plans for future activities such as research and commercialization come to fruition so as to support Article III standing in time for a potential appeal.