Article III of the Constitution grants the federal judiciary the power to decide “cases and controversies.”[1] “Standing,” the legal concept ensuring that federal courts review only cases and controversies, focuses on the party bringing suit to analyze the appropriateness and constitutionality of judicial review. The court-limiting effects of standing help ensure that the separation of powers is maintained and that the courts refrain from issuing advisory opinions. In turn, this ensures that well-defined law develops from well-defined and thoroughly argued issues.

Standing is the determination of “whether a litigant is entitled to have the court decide the merits of a dispute or of particular issues,”[2] and the inquiry analyzes the sufficiency of a party’s concern regarding the issues to be litigated, rather than whether the legal issues are fit for litigation.[3] The standing doctrine helps conserve judicial resources, ensure zealous litigation, guard against unconstitutional advisory opinions, and promote fairness by ensuring that parties raise only their own rights in court.[4] To have constitutional standing, a plaintiff must have suffered a concrete injury-in-fact that is traceable to or caused by the defendant and is of such a nature that the courts are able to properly redress the issue.[5] Other so-called prudential considerations, which need not be satisfied but which courts often follow to help ensure the constitutionality of a court decision, are that (1) the plaintiff should generally assert his own legal rights rather than the rights of third parties, (2) the political branches – not federal courts – should adjudicate abstract questions that amount to generalized grievances, and (3) the plaintiff’s complaint should fall within the zone of interests to be protected or regulated by the statute or constitutional provision at issue.[6] The requirements of standing “must be met by persons seeking appellate review, just as [they] must be met by persons appearing in courts of first instance.”[7]

Inter partes review (IPR), a proceeding now familiar to patent litigants, allows any “person who is not the owner of a patent” to petition for cancellation of patent claims.[8] The Patent Trial and Appeal Board (PTAB), a tribunal of administrative patent judges who are “persons of competent legal knowledge and scientific ability,” hear IPRs.[9] Congress provided that appeals are heard by the Federal Circuit and that “any party to the inter partes review shall have the right to be a party to the appeal.”[10] Yet statutes cannot supersede the Constitution, so litigants considering IPR should consider the availability and importance of judicial review in the event of an adverse decision. Recent Federal Circuit decisions highlight the importance of standing.

In 2014, the Federal Circuit dismissed an appeal of an inter partes reexamination (a predecessor to IPR). Consumer Watchdog, a consumer-rights organization that, among other things, litigates perceived corporate and governmental fraud, filed for reexamination of an embryonic stem cell patent that it perceived to be asserted too aggressively. It did not engage in any stem-cell-related activities, nor did it intend to license the challenged patent. Consumer Watchdog was unsuccessful during reexamination and appealed. Two weeks before oral argument, the Federal Circuit panel questioned, sua sponte, whether Consumer Watchdog had standing to bring its appeal.

The Federal Circuit held that Consumer Watchdog lacked standing, as it was not engaged in any stem-cell activities and did not intend to begin stem-cell activities, and so could not be subject to an infringement suit.[11] While the panel recognized that Congress could create legal rights, the statute allowing appeal was purely procedural; it created no injury-in-fact, and Consumer Watchdog was unable to show that it had “a particularized, concrete stake in the outcome of the reexamination.”[12]

This year, the Federal Circuit dismissed an appeal of an IPR decision brought by General Electric (GE).[13] GE challenged a United Technologies Corp. (UTC) patent directed to an aircraft engine design. GE and UTC directly compete in the aircraft engine market. Evidence suggested that a GE customer requested design information for engines, including the type of engine allegedly covered by the challenged patent. GE submitted a declaration attesting to the long development cycle of aircraft engines, its fear in making the necessary investments to develop an engine that might infringe its competitor’s patent, and higher research and development costs triggered by designing around the patent. However, GE did not provide specific dollar amounts and made only generalized claims of injury.

GE argued that it possessed an injury-in-fact, including “statutory estoppel, economic loss, future threat of litigation, and competitive harm.”[14] UTC argued GE possessed no injury-in-fact because UTC had not sued or threatened suit on the challenged patent and GE presented no evidence that it developed or was developing an engine embodying the challenged patent.[15]

The Federal Circuit characterized GE’s alleged injuries as “too speculative to support constitutional standing.”[16] In the majority view, GE’s inability to show (1) a lost customer bid due to the challenged patent, (2) specific amounts of time and money lost to design around the challenged patent, or (3) customers requiring a design covered by the challenged patent rendered GE’s alleged injuries “speculative” rather than “concrete and imminent” as required by Article III.[17] The Federal Circuit also rejected arguments that the “competitor standing” doctrine applied and that being subject to estoppel in a possible future infringement suit granted standing.[18]

Yet the panel’s reasoning was not unanimous. Judge Hughes concurred in the judgment solely because he felt constrained by stare decisis. In Judge Hughes’ view, the competitor standing doctrine, which holds that government actions which alter the competitive landscape of a market creates an injury-in-fact based on probable economic injury, applied and GE should have been able to prosecute its appeal.[19] Judge Hughes criticized as overly narrow the Federal Circuit’s precedent as essentially requiring a showing of either a likely, imminent infringement suit or plans to infringe the challenged patent to satisfy the injury-in-fact requirement.[20] Judge Hughes would have held that government action – here, the allegedly incorrect decision finding claims patentable – caused GE competitive harm and granted UTC a competitive benefit sufficient and concrete enough to satisfy the injury-in-fact requirement.[21] Moreover, the concerns underpinning the injury-in-fact requirement, ensuring that the issues are thoroughly defined and litigated, would have been satisfied given GE’s and UTC’s status as fierce competitors in a narrow market where developments require large investments.

These cases should serve to remind patent litigants debating whether to file an IPR to consider whether appeal in the event of an adverse decision is important and, if so, whether they can show an injury-in-fact. This is particularly so for parties in the same position as GE, who had not been sued or threatened suit but presumably felt that the challenged patent restricted freedom in developing new products. Those similarly situated parties seeking to file an IPR should consider documenting as specifically as possible all harms the patent of concern is causing or is likely to cause, including any lost business, the desire to develop a product that might infringe the patent, and the amounts of time and money pursuing an alternative course would cost. Litigants should also balance these concerns with the risk of willfulness, in the event a future infringement suit occurs. Yet, given the panel split in GE, the exact metes and bounds of where an IPR petitioner has appellate standing may still be in flux.

[1] U.S. Const. art. III, § 2, cl. 1 (“The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction;—to Controversies to which the United States shall be a Party;—to Controversies between two or more States;—between a State and Citizens of another State;—between Citizens of different States;—between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.”).
[2] Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts, Inc., 140 F.3d 478, 484 (3d Cir. 1998).
[3] See Flast v. Cohen, 392 U.S. 83, 95 (1968).
[4] Allen v. Wright, 468 U.S. 737, 751 (1984).
[5] E.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). These three elements are often referred to as the (1) injury-in-fact, (2) causation and (3) redressability elements of the standing doctrine.
[6] Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 474-75 (1982).
[7] Arizonans for Official English v. Arizona, 520 U.S. 43, 65 (1997).
[8] 35 U.S.C. § 311.
[9] 35 U.S.C. § 6.
[10] Id. at §§ 141(c), 319.
[11] Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258, 1261 (Fed. Cir. 2014).
[12] Id. at 1262.
[13] General Electric Co. v. United Technologies Corp., 928 F.3d 1349 (Fed. Cir. 2019).
[14] Id. at 1352.
[15] Id.
[16] Id. at 1353.
[17] Id. at 1353-54.
[18] Id. at 1354-55.
[19] Id. at 1355.
[20] Id. at 1356-57.
[21] Id. at 1358-59.