Federal Circuit says non-profit EFF has standing in IPR appeal

Judge Pauline Newman of the United States Court of Appeals for the Federal Circuit, October 2015 at the AIPLA annual meeting.

Judge Pauline Newman of the United States Court of Appeals for the Federal Circuit, delivered the opinion of the Court.

Personal Audio, LLC v. Electronic Frontier Foundation, 2016-1123, 2017 U.S. App. LEXIS 14485 (Fed. Cir. Aug. 7, 2017) (Before Newman, Clevenger, and O’Malley, J.) (Opinion for the court, Newman, J.).

In an IPR brought by Electronic Frontier Foundation (EFF), Personal Audio appealed a Board determination that invalidated its patent for storing and distributing episodic media files. Personal Audio challenged the Board’s claim construction, but the Court affirmed the Board.

Before reaching the merits, the Court addressed whether EFF had standing to participate in the appeal in view of Consumer Watchdog v. Wisconsin Alumni Research Foundation. In that case, a non-profit organization representing the public interest did not have standing to appeal a PTAB decision, because it did not meet the Article III case-and-controversy requirement. Here, EFF’s non-profit status did not preclude it from participating, because EFF is not the appellant and did not invoke the authority of a federal court. In other words, standing is determined from the perspective of the party bringing the appeal. While EFF would not have had standing to appeal to a federal court under Consumer Watchdog, Personal Audio suffered a distinct and palpable injury (cancellation of its claims) giving it standing to appeal. In these circumstances, EFF can remain in the case and participate in the appeal.

Personal Audio argued that the Board erred in construing the terms “episode” and “updated version of a compilation file.”

Personal Audio construed “episode” to mean “a program represented by one or more media files, that is part of a series.” The Board construed “episode” more broadly to mean “a program segment, represented by one or more media files, which is part of a series of related segments, e.g., a radio show or newscast.” On appeal, Personal Audio argued that the Board’s construction ignores a temporal limitation that the episodes in the series must issue over time—a requirement Personal Audio alleges is supported by the claims. The Court agreed with the Board because its construction accords with the specification, which states that “[a] given program segment may represent an episode in a series.” Additionally, the Board correctly determined that the claims did not require a “temporal limitation” because limitations in the claims such as “become available” or “currently available” did not define timing of episode creation but instead refer to episode availability.

Regarding the term “updated version of a compilation file,” the Court also rejected Personal Audio’s narrow construction that required amending a pre-existing compilation file. The Court noted that while one embodiment in the specification described updating a compilation file from a pre-existing compilation file, the specification did not require such a limitation. Moreover, the claims instead were directed to the content of the compilation file and not how the compilation file was created.

Standing to appeal a Board determination depends on the appellant. A appellee who was an IPR petitioner may remain a party to an appeal brought by a party with standing (e.g. a patentee), although the appellee is a non-profit organized in the interest of the public, and would not have a “case or controversy” for standing to bring an appeal of its own.

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16 comments so far.

  • [Avatar for Anon]
    Anon
    August 12, 2017 05:12 pm

    Mr. Morgan,

    May I call you out for being a coward?

    Your post insinuates that my post is merely how I would want the law to be, and yet you offer neither any (much less a compelling) alternative, nor do you point to any mistake of law in my post.

    Excuse the vernacular, but at least at the balls to do something in a “positive” manner rather than merely slink and insinuate that someone else’s post is merely how they would want the law to be.

  • [Avatar for Edward Heller]
    Edward Heller
    August 12, 2017 03:37 pm

    Anon, I know you apparently were heavily involved in the negotiations involving AIA – at least trying to protest IPRs. But for my recollection of events, people who represented startups and individual inventors were almost excluded from the conversation. Congress apparently listened politely, but really did not care what we had to say.

    All I heard all along was that Congress is trying to please a so-called “stakeholders.” But these were big businesses and the universities. The object of the reform some degree were the so-called trolls and anybody who identify themselves as being against IPRs were labeled as trolls so that their views would be discounted.

    What this shows is the political process is extremely corrupt. The political process includes not only the Congress, but the PTO, who seems to bend over backwards to satisfy its “clients.” We know who they are: The people who are best organized. The people have the most money.

    But thank God there is a court system in the United States. Without it there would be no liberty, and no protection of private property, and no protection of any rights whatsoever. The rich will always get their way. Might makes right. Tyranny.

    There are some now who realize concentrating power in the executive by consciously moving out of the court system one thing or another is essentially undermining liberty and placing into political bodies the disposition of private rights. We are trending back to where we were prior to the Magna Carta, back to the good old days of the Star Chamber.

  • [Avatar for Edward Heller]
    Edward Heller
    August 12, 2017 03:23 pm

    Confused pharmacist, I still do not think that you understand that EFF has nothing whatsoever to lose. The patent owner does. Whether the decision of the PTAB is vacated or not does not harm EFF. The failure to vacate does in fact harm the patent owner.

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    August 12, 2017 02:41 pm

    Anon,

    Appreciate your post. Definitely learned something about the legal intricacies on who can participate in different forums and when. It is strange indeed. Perhaps my concern is the reason why the Federal Circuit allowed EFF to be a party. Maybe they asked the same question, i.e. “Wouldn’t it be strange for the other table to be empty?”

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    August 12, 2017 02:34 pm

    But if there is no party (i.e. appellee) at the circuit level, would it just be a single-party hearing? Should it be the DOJ that steps in for EFF in that hypothetical? Or the PTO as the other party?

    To Edward’s point, if it was a default judgment every time, then the appeal wouldn’t mean anything, and neither would the PTAB decision. If a home baseball team loses and then challenges the away team for a rematch, but the other team isn’t allowed to play, wouldn’t that mean that home team would win every time? That doesn’t really seem like a “rematch” at all.

    I’m just asking from a practical point of view considering the system already in place. Seems to me that there must be someone at the other table in the courtroom, whether that be the PTAB defending their decision or the party that prevailed at the IPR.

  • [Avatar for Edward Heller]
    Edward Heller
    August 12, 2017 02:05 pm

    anon, excellent post there.

    I would add that everyone has a right to petition their government (executive, congress) as a matter of the first amendment. However, with disputes over private rights, two interested parties are always required — otherwise people could never have security against harassment. Having a legitimate interest in the outcome is not only required for justiciability, but for due process.

    In the future, organizations like EFF will have to name as a nominal party a member that has standing — just like organizations like the ACLU does when it wants to champion a cause.

  • [Avatar for Edward Heller]
    Edward Heller
    August 12, 2017 01:51 pm

    Confused Pharmacist, consider the default judgment.

  • [Avatar for Paul F. Morgan]
    Paul F. Morgan
    August 12, 2017 01:10 pm

    Confused Pharmacist, when you ask questions on a blog like this from other commentators I hope you realize you are not often going to get valid legal advice, you are mostly going to get the strong personal views of some folks as to what they think the law ought to be.

  • [Avatar for Anon]
    Anon
    August 12, 2017 08:58 am

    Confused Pharmacist,

    First, one must understand the nature of our government is of a strictly minimalist nature.

    This actually may be a very difficult concept to appreciate, given how the modern state has evolved into a nearly ubiquitous government presence.

    Once that context is put into mind, then we look at what it means for an Article III (at the Federal level – as this may not apply strictly with a State level application – something that distinguishes a case being discussed on that other blog) – that Article III being the forum of the judicial branch – what it means to have authority to be involved.

    Not only that, but who else may be also allowed to be involved.

    Your question presumes that some one else simply “has to be” at the appelle’s desk, and THAT is a presumption that need not be so.

    What Congress did with the AIA is create somewhat of a jumbled mess with a “joint” two part process that involves two different forums, each forum being differently restricted by just who may appear in that forum.

    Another concept to keep in mind here is that the Article III forum question (standing, as derived from case or controversy), being derived from the Constitutional nature of limited authority, is not something that can be abrogated by another branch. This is a view that Mr.Heller advanced: Congress may not manufacture a required standing by mere passage of legislation. True and actual case or controversy (as that legal term of art means***) must be present.

    The two part system written by Congress in the AIA suffers an incompatibility problem in that the first part is held in a forum that has no standing requirement. Thus, what are legally termed “disinterested” parties (and this maybe where some confusion is generated, because of the heightened meaning of “interested” is in play****), those “disinterested” parties are allowed at the table in the forum of the first part.

    But the forum of the second part is different. That forum of the second part DOES have a standing requirement. This means that NOT just anyone is permitted to be at the different table in that different forum.

    And this is where the *** and **** collide.

    A party invited by Congress to the table in the forum of the first part may not have the necessary standing to come to the table in the forum of the second part, and Congress lacks Constitutinal authority to write a law that artificially creates the legal case or controversy portion to make a (legally) disinterested party INTO a (legally) interested party.

    Now take the present situation.

    Legally, EFF is a disinterested party (and one must remember that the legal terms of art apply).

    Being a disinterested party, and per the AIA, EFF is welcome to the Article I forum of the PTAB, since the PTAB does not have a standing requirement (limitation) on its authority.

    That much is fine with how our law works.

    But the critical point now being tested is what happens when the case moves from the first forum to the second – and different – forum?

    Your question does not critically evaluate what that means, and merely presumes the very point (legally) that is at the crux of the issue.

    You presume that EFF simply must be allowed to be at the table, when such is just not so.

    The point of the matter of the Article III forum being of limited authority indicates that there will be NO ONE at the other side of the table.

    The better legal question then becomes what happens to the case and the single party who CAN be at that different table in that different forum, and how should the court treat the matter.

    One presumption (and yes, it is a presumption) is that the case must be vacated, as it cannot continue. Such an action effectively nullifies the result acheived in the different forum.

    This actuallly may be the best legal result.

    It most definitely “seems” unfair, but that is NOT the fault of either the court or of the party that would properly be at the table in that second forum. It is the fault of Congress who attempted to manufacture standing and create a system beyond their authority to create.

    Not every law created by Congress is proper. Improper laws may be created, may operate (even for decades) and may falter only later when an unsound facet comes to bear.

    This just happened recently in Trademark law in the Tam case.

    So here and now, the AIA should fall (least in part, THIS part); and the direct answer to your question is that NO ONE stands at the appelle side of the table in the Article III forum because Congress is not permitted to create a law that generates in itself a proxy for standing (the requirement that is a difference in the two different forums).

    A bit long winded, but does that help?

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    August 12, 2017 05:08 am

    Edward,

    I’m just asking from a practical point of view. If you lose at an IPR and appeal to the Federal Circuit, who is on the other side of the court? Literally speaking, you would be at appellant’s desk in the courtroom. Who would, literally speaking, be at the appelle’s desk? That’s why I said that EFF almost has to be at that desk. Who else would be there?

    Anon,

    Would love to see you chime in on this, because Edward may have mistakenly interpreted my question.

  • [Avatar for Anon]
    Anon
    August 11, 2017 10:55 pm

    Mr. Heller,

    You have mistated what Congress has explicitly done by providing an Article I forum that does not require standing, and your emotion clouds your vision of the problem in what Congress did do (interestingly enough, you were the first that I had seen to raise the issue of Congress not being permitted to create standing by statute.

    Given that a first part of the AIA creation permissibly creates an action in “Article I land” is one thing.

    Congress trying to direct any follow-up action to a different forum while trying to create a “proxy” for actual standing in that other forum is quite a different thing.

    If Congress is permitted to create standing in this type of situation, the very meaning of standing (stemming from the Constituitonal limitation of case or constroversy) is effectively wiped away.

    We have so often of late forgotten just how precious the separation of powers is, and that Comstitutional restraints affect every branch (even and especially the judicial branch).

  • [Avatar for Edward Heller]
    Edward Heller
    August 11, 2017 10:40 pm

    In fact, the patent owner should sue EFF for its attorney fees. Had EFF filed in court, they would have been dismissed out and sanctioned, with attorney fees awarded.

  • [Avatar for Edward Heller]
    Edward Heller
    August 11, 2017 10:25 pm

    Confused, defend itself? Really? Think about that for a second. It has no interest in the outcome, nothing at stake at all.

    Reversal of the PTAB does not harm EFF one iota. Not one iota.

    Vacate the decision, Fed. Cir.! Start defending due process. Show some respect for the rights of patent owners.

  • [Avatar for Confused Pharmacist]
    Confused Pharmacist
    August 11, 2017 09:51 pm

    Edward,

    That begs the question then, if you lose an IPR to a third-party (i.e. EFF) and appeal to the Fed. Circuit, who would the appellee be? If not EFF, then who? The PTAB? That wouldn’t make sense. It almost seems EFF had to defend itself at the Federal Circuit.

  • [Avatar for Edward Heller]
    Edward Heller
    August 11, 2017 04:16 pm

    Judge Newman’s ruling relied on a case appealed from the state Supreme Court. State courts do not have standing requirements so the action proceeded in state courts even though the plaintiff would have had no case and controversy standing had they filed in federal court. The state action proceeded all the way to the state Supreme Court, with the no-standing entity prevailing.

    Because the state court action depended upon federal law, the losing party petitioned the Supreme Court. The Supreme Court determined that even though the plaintiff below did not have standing, they would accept the appeal because the defendant below and petitioner at Supreme Court clearly was harmed by the judgment below, and to simply vacate the decision of the state courts based upon federal standing requirements would be to impose federal standing law upon the states in actions involving federal law.

    The Supreme Court noted the oddity that if the respondent on the Supreme Court petition prevailed, they would have achieved something they could not have achieved if they had filed suit in the federal courts.

    But the same considerations do not apply with respect to IPRs. IPRs were intended by Congress to be a low-cost alternative to litigation. They were not intended to allow entities without standing to achieve what they could not have achieved by filing suit in district court.

    I feel confident that the Supreme Court will reverse if the en banc Federal Circuit does not reverse.

    Pauline Newman is a judge that will go down in history, and not in a good way. She also authored Patlex, the case that affirmed the constitutionality of reexaminations, a ruling that defied numbers of contrary Supreme Court authority.

  • [Avatar for Anon]
    Anon
    August 11, 2017 01:48 pm

    I find this article far too short to address the critical elements in play on the standing issue; and contrary to the last paragraph, standing in an Article III court remains a requirement for all parties involved, not just the appellant.

    That the decision here may not reflect that does not change the actual legal requirements.