Court Opinion

ID: 4675204
Source: CourtListenerOpinion
Date Created: 2021-04-07 15:01:49.841826+00
Date Added: 2024-06-11T08:03:24.873573
License: Public Domain

Case: 20-1561    Document: 59           Page: 1       Filed: 04/07/2021

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                         APPLE INC.,
                          Appellant

                                  v.

           QUALCOMM INCORPORATED,
                     Appellee
              ______________________

                        2020-1561
                  ______________________

     Appeal from the United States Patent and Trademark
 Office, Patent Trial and Appeal Board in No. IPR2018-
 01279.

           -------------------------------------------------

                         APPLE INC.,
                          Appellant

                                  v.

           QUALCOMM INCORPORATED,
                     Appellee
              ______________________

                        2020-1642
                  ______________________
Case: 20-1561    Document: 59      Page: 2   Filed: 04/07/2021

 2                    APPLE INC.   v. QUALCOMM INCORPORATED

     Appeal from the United States Patent and Trademark
 Office, Patent Trial and Appeal Board in No. IPR2018-
 01252.
                  ______________________

                   Decided: April 7, 2021
                  ______________________

     LAUREN ANN DEGNAN, Fish & Richardson P.C., Wash-
 ington, DC, argued for appellant. Also represented in
 2020-1561 by ROBERT COURTNEY, Minneapolis, MN;
 OLIVER RICHARDS, San Diego, CA. Also represented in
 2020-1642 by CHRISTOPHER DRYER, Washington, DC;
 NITIKA GUPTA FIORELLA, Wilmington, DE.

    MICHAEL HAWES, Baker Botts, LLP, Houston, TX, ar-
 gued for appellee. Also represented in 2020-1561 by BRIAN
 W. OAKS, PUNEET KOHLI, Austin, TX. Also represented in
 2020-1642 by CHAD C. WALTERS, Dallas, TX.
                  ______________________

     Before MOORE, REYNA, and HUGHES, Circuit Judges.
 MOORE, Circuit Judge.
     Apple Inc. appeals an inter partes review final written
 decision of the Patent Trial and Appeal Board holding Ap-
 ple did not prove claims 1–14 and 16–18 of U.S. Patent No.
 7,844,037 would have been obvious. Apple also appeals an-
 other final written decision of the Board holding Apple did
 not prove claims 1–6 and 8–20 of U.S. Patent No. 8,683,362
 would have been obvious. Because Apple lacks standing to
 maintain either appeal, we dismiss.
                       BACKGROUND
      Qualcomm Inc. sued Apple in the United States Dis-
 trict Court for the Southern District of California for in-
 fringing claims of the ’037 patent and the ’362 patent.
 Apple sought inter partes review of claims 1–14, 16–18, and
Case: 20-1561      Document: 59    Page: 3    Filed: 04/07/2021

 APPLE INC.   v. QUALCOMM INCORPORATED                       3

 19–25 of the ’037 patent and claims 1–6 and 8–20 of the
 ’362 patent. The Board issued final written decisions hold-
 ing Apple did not prove the challenged claims in either pa-
 tent would have been obvious. 1 Before the filing of these
 appeals, Apple and Qualcomm settled all litigation be-
 tween the two companies worldwide. Based on that settle-
 ment, the parties jointly moved to dismiss Qualcomm’s
 district court action with prejudice, which the district court
 granted. J.A. 2928. 2 Apple, nevertheless, appeals the
 Board’s final written decisions.
                         DISCUSSION
      “Standing to sue is a doctrine rooted in the traditional
 understanding of a case or controversy” required by Article
 III. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
 “[T]he irreducible constitutional minimum of standing”
 consists of “three elements.” Lujan v. Defs. of Wildlife, 504
 U.S. 555, 560 (1992). An appellant “must have (1) suffered
 an injury in fact, (2) that is fairly traceable to the chal-
 lenged conduct of the [appellee], and (3) that is likely to be
 redressed by a favorable judicial decision.” Spokeo, 136
 S. Ct. at 1547 (citations omitted). To establish injury in
 fact, the alleged harm must be “‘concrete and particular-
 ized’ and ‘actual or imminent, not conjectural or hypothet-
 ical.’” Id. at 1548 (quoting Lujan, 504 U.S. at 560).
     “Article III standing is not necessarily a requirement
 to appear before an administrative agency.” Consumer
 Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258,
 1261 (Fed. Cir. 2014) (citing Sierra Club v. E.P.A., 292 F.3d

     1   The Board did not institute on claims 19–25 of the
 ’037 patent because Qualcomm statutorily disclaimed
 them. See 37 C.F.R. § 42.107(e).
     2   Citations to briefs and the joint appendix refer to
 submissions in the Apple Inc. v. Qualcomm Inc., 20-1642
 appeal.
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 4                     APPLE INC.   v. QUALCOMM INCORPORATED

 895, 899 (D.C. Cir. 2002)). And the Patent Act permits any
 person “who is not the owner of the patent” to file a petition
 for inter partes review. 35 U.S.C. § 311(a). While nearly
 any person may seek an inter partes review, 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.” Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168,
 1171–72 (Fed. Cir. 2017). Indeed, the Supreme Court has
 recognized that not every party will have Article III stand-
 ing to appeal a Board final written decision. See Cuozzo
 Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143–44 (2016)
 (Parties that initiate an inter partes review “need not have
 a concrete stake in the outcome; indeed, they may lack con-
 stitutional standing.”).
                               I
     As a preliminary matter, Qualcomm argues Apple
 waived any argument to establish its standing to file this
 appeal by failing to address, or submit evidence support-
 ing, standing in its opening brief. See, e.g., Appellee Br. at
 1–3. In Phigenix, we held “an appellant must identify the
 relevant evidence demonstrating its standing ‘at the first
 appropriate’ time, whether in response to a motion to dis-
 miss or in the opening brief.” 845 F.3d at 1173 (quoting
 Sierra Club, 292 F.3d at 900). Likewise, “if there is no rec-
 ord evidence to support standing, the appellant must pro-
 duce such evidence at the appellate level at the earliest
 possible opportunity.” Id. These rules prevent an appellee
 or respondent from having to “flail at the unknown in an
 attempt to prove the negative.” Sierra Club, 292 F.3d at
 901. Given the global settlement between the parties, Ap-
 ple should have made its standing arguments and prof-
 fered its evidence in support of standing in its opening
 brief.
     Our holding in Phigenix is not, however, an inflexible
 rule. See Am. Library Ass’n v. F.C.C., 401 F.3d 489, 493
 (D.C. Cir. 2005). We have consistently held that waiver is
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 APPLE INC.   v. QUALCOMM INCORPORATED                     5

 a matter of discretion. See, e.g., Harris Corp. v. Ericsson
 Inc., 417 F.3d 1241, 1251 (Fed. Cir. 2005) (“An appellate
 court retains case-by-case discretion over whether to apply
 waiver.”); Becton Dickinson & Co. v. C.R. Bard, Inc., 922
 F.2d 792, 800 (Fed. Cir. 1990) (waiver is “not governed by
 a rigid rule but may as a matter of discretion not be ad-
 hered to where circumstances indicate that it would result
 in basically unfair procedure”). “While there is no general
 rule for when we exercise our discretion to reach waived
 issues, we have done so where, among other factors, ‘the
 issue has been fully briefed by the parties.’” Ericsson Inc.
 v. TCL Commc’n Tech. Holdings Ltd., 955 F.3d 1317, 1322–
 23 (Fed. Cir. 2020) (quotation and citation omitted) (quot-
 ing Automated Merch. Sys., Inc. v. Lee, 782 F.3d 1376,
 1379–80 (Fed. Cir. 2015)).
     We exercise our discretion to reach the issue of stand-
 ing because: (1) the issue of Apple’s standing is fully
 briefed; (2) we see no prejudice to Qualcomm; and (3) the
 question of standing impacts these and other appeals. In
 both appeals, Qualcomm sought leave to file a sur-reply ad-
 dressing Apple’s evidence and arguments on standing.
 Qualcomm agreed that, if we grant its motions, it will not
 suffer any prejudice and that evaluating the evidence may
 resolve standing in other pending cases. Apple Inc. v. Qual-
 comm Inc., Nos. 20-1561, 20-1642, Oral Arg. at 22:19–22:42,
 available at http://oralarguments.cafc.uscourts.gov/de-
 fault.aspx?fl=20-1561_03032021.mp3.        Accordingly, we
 grant Qualcomm’s motions for leave to file a sur-reply and
 exercise our discretion to review Apple’s arguments and ev-
 idence to establish standing. See Ericsson, 955 F.3d at
 1323 (exercising discretion to reach waived issue that was
 fully briefed); cf. Cmtys. Against Runway Expansion, Inc.
 v. F.A.A., 355 F.3d 678, 685 (D.C. Cir. 2004) (excusing be-
 lated submission of standing evidence and arguments be-
 cause appellee would not be prejudiced).
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 6                     APPLE INC.   v. QUALCOMM INCORPORATED

                               II
      As part of the global settlement between Apple and
 Qualcomm, the parties executed a six-year license agree-
 ment, which included a license to the patents at issue. Ap-
 ple has characterized that license agreement as a
 “covenant-not-to-sue,” at least with respect to the patents
 at issue. See, e.g., Appellant’s Reply Br. at 23. And in ad-
 dition to the six-year license term, there is a possibility of
 a two-year extension. J.A. 2930. Because the parties exe-
 cuted the agreement in 2019, it will expire in either 2025
 or 2027.
     Apple argues it has standing to appeal the final written
 decisions of the Board based on three distinct circum-
 stances: (1) its ongoing payment obligations that are a con-
 dition for certain rights in the license agreement; 3 (2) the
 threat that Apple will be sued for infringing the ’037 patent
 and ’362 patent after the expiration of the license agree-
 ment; and (3) the estoppel effects of 35 U.S.C. § 315 on fu-
 ture challenges to the validity of the ’037 patent and ’362
 patent. We do not agree.
                               A
     Relying upon MedImmune, Inc. v. Genentech, Inc., 529
 U.S. 118, 120 (2007), Apple argues it has standing based
 on its payment obligations under the license agreement.
 See, e.g., Appellant Reply Br. at 20–22. According to Apple,
 MedImmune holds that its ongoing payment obligations as
 a condition for certain rights provides standing, irrespec-
 tive of the other patents in the license agreement. Appel-
 lant’s Reply Br. at 21. In Apple’s view, a licensee’s
 obligations to pay royalties for a license to 100,000 patents
 would provide standing to challenge the validity of any sin-
 gle licensed patent, even if the validity of any one patent

     3   Apple describes these rights in paragraph 4 of a
 declaration it submitted with its replies. See J.A. 2930.
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 APPLE INC.   v. QUALCOMM INCORPORATED                           7

 would not affect the licensee’s payment obligations. Oral
 Arg. at 4:30–5:53. We do not read MedImmune so broadly.
     MedImmune does not require us to find standing here.
 In MedImmune, Genentech asserted that the Cabilly II pa-
 tent it licensed to Medimmune covered MedImmune’s new
 product and demanded royalty payments under the license
 agreement. Id. at 121. Although MedImmune disagreed it
 owed royalties because the patent was invalid and did not
 cover its product, it paid under protest to avoid termination
 of the agreement and a patent infringement action. Id. at
 121–22. MedImmune then sought a declaratory judgment
 that it did not owe any royalties because the sale of its
 product did not infringe any valid claim of the Cabilly II
 patent. Id. at 122–23. The Supreme Court observed there
 was no dispute that the standing requirements “would
 have been satisfied if petitioner had taken the final step of
 refusing to make royalty payments under the [] license
 agreement.” Id. at 128. The Court held that MedImmune
 was not required to break or terminate the license agree-
 ment before seeking a declaratory judgment of noninfringe-
 ment and invalidity. Id. at 137. Put simply, Medimmune
 was not required to cease its contract payments (opening
 itself to a patent suit, treble damages, attorneys’ fees, and
 an injunction) in order to resolve its disputed contract
 rights (limiting the royalties to products that cover a valid
 patent).
      Here, in contrast, Apple has not alleged that the valid-
 ity of the patents at issue will affect its contract rights (i.e.,
 its ongoing royalty obligations). This failure is fatal to es-
 tablishing standing under the reasoning of MedImmune,
 whether we analyze Apple’s evidence for injury in fact or
 redressability. Qualcomm asserts, and Apple does not con-
 test, that the license agreement involves tens of thousands
 of patents. See Appellee’s Sur-Reply Br. at 5. Apple no-
 where argues or provides evidence that the validity of any
 single patent, including the ’037 patent or ’362 patent,
 would affect its ongoing payment obligations. Nor does
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 8                     APPLE INC.   v. QUALCOMM INCORPORATED

 Apple identify any contractual dispute involving its ongo-
 ing royalty obligations (e.g., a disagreement over whether
 certain Apple product sales trigger additional royalty pay-
 ments) that relates to, or could be resolved through a va-
 lidity determination of, the patents at issue. Because the
 validity of the challenged patents would not impact Apple’s
 ongoing payment obligations, the reasoning of MedImmune
 does not apply. Ultimately, Apple’s assertions amount to
 little more than an expression of its displeasure with a li-
 cense provision into which it voluntarily entered. Such al-
 legations do not establish Article III standing. Cf. In re
 Johnson & Johnson Talcum Powder Prod. Mktg., Sales
 Practices & Liab. Litig., 903 F.3d 278, 281 (3d Cir. 2018)
 (“[B]uyer’s remorse, without more, is not a cognizable in-
 jury under Article III of the United States Constitution.”).
 Thus, Apple has failed to establish standing based on its
 ongoing payment obligations. 4
                               B
      Apple next argues it has standing based on the possi-
 bility that Qualcomm may sue Apple for infringing the ’037
 patent or ’362 patent after the license expires. See e.g., Ap-
 pellant Reply Br. at 25–26. But this possibility of suit is
 too speculative to confer standing. Apple provides no evi-
 dence that it intends to engage in any activity that may
 give rise to an infringement suit of the ’037 patent or ’362
 patent when the license expires.            Neither of the

     4   Relatedly, Apple argues the cancellation of the ’362
 patent would redress its ongoing payment obligations be-
 cause it would remove a significant barrier. Appellant’s
 Reply Br. at 22. However, Apple fails to explain why the
 ’362 patent creates a significant barrier, and we see no ev-
 idence that the cancellation of the ’362 patent is likely to
 affect Apple’s ongoing payment obligations. Lujan, 504
 U.S. at 561.
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 APPLE INC.   v. QUALCOMM INCORPORATED                        9

 declarations 5 Apple submitted as evidence of standing even
 mention the patents at issue. See J.A. 2930–31. Nor do
 they set forth any plans to engage in conduct after the ex-
 piration of the license agreement that might lead to an in-
 fringement suit. For example, Apple has not provided any
 evidence that it has plans to make, use, offer to sell, or sell
 any of the products, or features thereof, accused of infringe-
 ment in the district court, such as the iPhone 4, 5, 6, and 7.
 See, e.g., J.A. 2904, 2920. In fact, Apple offers the sparsest
 of declarations in support of standing, which are devoid of
 any of the specificity necessary to establish an injury in
 fact. Without more, we are left to speculate about what
 activity Apple may engage in after the expiration of the li-
 cense agreement that would give rise to a potential suit
 from Qualcomm. This is insufficient to show injury in fact.
 Lujan, 504 U.S. at 560 (harm must be “actual or imminent,
 not conjectural or hypothetical” (citation omitted)); see also
 JTEKT Corp. v. GKN Auto. Ltd., 898 F.3d 1217, 1221 (Fed.
 Cir. 2018) (holding appellant lacked standing because it
 had not established that it had “concrete plans for future
 activity that creates a substantial risk of future infringe-
 ment”).
     To cure the deficiencies in its evidence, Apple sug-
 gested we could take judicial notice that Apple sells and
 will continue to sell its smart phone products. Oral Arg. at
 33:45–34:19. A court may take judicial notice of a fact only
 when it is either “generally known” or “accurately and
 readily [discernible] from sources whose accuracy cannot
 reasonably be questioned.” FED. R. EVID. 201(b); see B.V.D.
 Licensing Corp. v. Body Action Design, Inc., 846 F.2d 727,
 728 (Fed. Cir. 1988) (“Courts may take judicial notice of
 facts of universal notoriety, which need not be proved, and
 of whatever is generally known within their jurisdictions.”)

     5   Apple submitted identical declarations as evidence
 of standing in both appeals.
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 10                     APPLE INC.   v. QUALCOMM INCORPORATED

 What products and product features Apple may be selling
 at the expiration of the license agreement years from now
 are not the kind of undisputed facts we may take judicial
 notice of because they may be reasonably questioned. See,
 e.g., In re Kahn, 441 F.3d 977, 990 (Fed. Cir. 2006) (declin-
 ing to take judicial notice of a “long-felt but unresolved
 need for a device that will help the blind read”). We are not
 fortune-tellers. Accordingly, we must decline Apple’s invi-
 tation to take judicial notice.
     Apple also argues Qualcomm’s previous suit for in-
 fringement of the ’037 patent and ’362 patent provides
 standing, citing Grit Energy Sols., LLC v. Oren Techs.,
 LLC, 957 F.3d 1309, 1320 (Fed. Cir. 2020). See, e.g., Ap-
 pellant Reply Br. at 23. But Grit Energy involved a dismis-
 sal without prejudice, unlike the dismissal with prejudice
 here. See J.A. 2928.
      Lastly, Apple argues Qualcomm’s refusal to grant Ap-
 ple an irrevocable license or other permanent rights in the
 ’037 patent or ’362 patent and Qualcomm’s history of as-
 serting patents against Apple after certain royalty agree-
 ments expired provide standing. See, e.g., Appellant Reply
 Br. at 24. Apple relies on these facts to speculate a future
 infringement suit might occur. But that is not enough.
 “The lack of any evidence that the defendants believe or
 plan to assert that the plaintiff’s product infringes their pa-
 tents creates a high barrier to proving that the plaintiff
 faces an imminent risk of injury.” Prasco LLC v. Medicis
 Pharm. Corp. 537 F.3d 1329, 1340 (Fed. Cir. 2008); see also
 Lujan, 504 U.S. at 561. At best, Apple’s allegations are
 speculation and conjecture about Qualcomm’s proclivity to
 assert its patent rights generally. But they are devoid of
 the specificity necessary to show that Qualcomm is likely
 to assert these particular patents against any particular
 products which would be sold after the license agreement
 expires in 2025 or 2027. As such, Apple has failed to show
 an injury in fact based on potential future allegations that
 its products infringe the ’037 patent or the ’362 patent.
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 APPLE INC.   v. QUALCOMM INCORPORATED                      11

                               C
     Finally, Apple argues that its injury is compounded by
 the likelihood that 35 U.S.C. § 315(e) would estop it from
 arguing that the ’037 patent and ’362 patent would have
 been obvious in future disputes. See, e.g., Appellant Reply
 Br. at 24–25. To the extent Apple argues this provides an
 independent basis for standing, we do not agree. “We have
 already rejected invocation of the estoppel provision as a
 sufficient basis for standing.” AVX Corp. v. Presidio Com-
 ponents, Inc., 923 F.3d 1357, 1362–63 (Fed. Cir. 2019) (cit-
 ing Phigenix, 845 F.3d at 1175–76). Apple’s harm is
 particularly suspect because it has failed to show it will
 likely be engaging in activities that could give rise to a po-
 tential suit based on the ’037 and ’362 patents after the ex-
 piration of the license agreement. See Gen. Elec. Co. v.
 United Techs. Corp., 928 F.3d 1349, 1355 (Fed. Cir. 2019)
 (“Where, as here, the appellant does not currently practice
 the patent claims and the injury is speculative, we have
 held that the estoppel provision does not amount to an in-
 jury in fact.”). Thus, the harm Apple may face from estop-
 pel is insufficient to provide standing.
                         CONCLUSION
    Because we hold Apple has failed to establish standing,
 we dismiss.
                        DISMISSED
                            COSTS
 Costs to Qualcomm.