Source: https://www.fenwick.com/Publications/Pages/JTEKT-v-GKN.aspx
Timestamp: 2019-04-23 13:58:10+00:00

Document:
In Consumer Watchdog v. Wisconsin Alumni Research Foundation, the Federal Circuit held that the statutory grant of the ability to appeal a Board decision does not automatically grant standing in the Court of Appeals. It first confronted the issue of standing in appeals from PTAB decisions in IPR in Phigenix v. Immunogen. After recognizing that in the 35 years since the Federal Circuit court’s inception, it had not established the legal standard for demonstrating standing in an appeal from a final agency action, the court found that Phigenix had not met its burden of proving standing to appeal. A declaration submitted by Phigenix stating that the existence of the patent had encumbered licensing efforts and a letter highlighting concerns over the patent’s validity from its own attorney did not in the Federal Circuit’s view constitute sufficient facts to support Phigenix’s claim that it had suffered an actual economic injury due to increased competition between itself and the patent holder.
Since Phigenix, the court has twice found that an appellant claiming harm due to fear of a potential infringement action did have standing to appeal an adverse PTAB decision. In PPG Industries v. Valspar Sourcing the court held that since PPG already had launched a commercial product and had received an inquiry from a customer concerned about Valspar’s patent, PPG did have standing. (The court may have been influenced by the infringement suit filed by Valspar soon after PPG filed its appeal.) In contrast to Phigenix, in May 2018 the court in Altaire Pharmaceuticals v. Paragon Bioteck cited testimony by Altaire’s general counsel concerning the imminence of Paragon’s infringement suit as well as testimony that Altaire intended to file an Abbreviated New Drug Application—or ANDA—if Paragon terminated its joint development agreement with Altaire in support of its decision finding standing for Altaire to appeal.
In JTEKT, the Federal Circuit had another opportunity to consider whether current competitive harm, rather than fear of potential infringement suits, constitutes an injury in fact for the purposes of deciding whether an appellant has standing to appeal a PTAB decision. JTEKT, a Toyota subsidiary, petitioned for IPR of seven claims of GKN’s patent. The PTAB upheld the validity of two of the seven claims, and JTEKT appealed the decision to the Federal Circuit.
While the JTEKT panel relied on Phigenix in concluding that JTEKT did not have standing, its ruling was actually an extension of the Phigenix holding. In Phigenix the panel found that the petitioner had not presented facts to support its claim of an economic injury due to increased competition. However, the decision in JTEKT goes further, stating that economic injury due to increased competition, even if supported by the facts, is not enough to establish standing to appeal a decision of the PTAB. Because of this conclusion, the panel in JTEKT gave no weight to JTEKT’s claim of competitive harm and turned to the question of whether JTEKT had proffered adequate evidence that it had suffered an injury based on potential infringement liability. The court held that where a party is not currently engaging in infringing activity, the 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. The Federal Circuit panel found that because JTEKT’s product was not yet finalized, JTEKT did not have standing to appeal. It further concluded that the estoppel provisions of the AIA regarding post grant proceedings did not create an injury in fact when JTEKT had not to date engaged in any activity that would give rise to a possible infringement suit.
In requiring a petitioner to show concrete plans for future potentially infringing activity, the Federal Circuit seems to be reverting to its “reasonable apprehension of suit” test for Article III standing that was rejected by the Supreme Court in Medimmune v. Genentech. This brewing conflict likely will come to a head in another case currently before the Federal Circuit concerning standing in appeals from PTAB decisions in post grant proceedings. Oral arguments heard on December 5, 2017 in the pending case, Momenta Pharmaceuticals v. Bristol-Myers Squibb, exclusively addressed the issue of standing. Bristol-Myers Squibb argued that Momenta did not have standing until it filed an abbreviated biologics license application to the U.S. Food and Drug Administration for its biosimilar drug. Momenta argued that it was presently harmed because the PTAB’s adverse decision had forced it to make a decision to either continue on its current path and infringe the patent in the future, or to “work around” the claims of the patent. In its argument, Momenta asserted that the hypothetical question of whether Momenta would have Article III standing to bring a declaratory judgment proceeding is not relevant because in an appeal from an agency action there is no question of ripeness. Despite this assertion, Judge Pauline Newman analogized to the Federal Circuit’s recent decision in Sandoz v. Amgen, holding that there was no case or controversy because “the only activity that would create exposure to potential infringement liability was a future activity requiring an FDA approval that had not yet been sought.” Judge Newman continued that the issue of Article III standing applies to both a declaratory judgment action and to an appeal from a PTAB decision and that the Sandoz “precedent is against [Momenta], strongly.” The judges’ questions emphasized that despite Momenta’s concession that the product in trials infringed Bristol-Myers Squibb’s patent, a long chain of contingencies stood between a product in trials and one that would lead to infringement of the patent by Momenta.

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