“It would be a welcome change for the Federal Circuit to openly root for patent owners the way they root for those challenging the validity of patents.”
Last week, the United States Court of Appeals for the Federal Circuit issued a decision in General Electric Co. v. United Technologies Corp., which continued the trend that a losing inter partes review petitioner who has not been sued by the patent owner will not have standing to appeal to the Federal Circuit. Still, the case is noteworthy for several reasons.
In this case, United Technologies Corporation (UTC) was the assignee of U.S. Patent No. 8,511,605 (“the ’605 patent). The ’605 patent is generally directed to a gas turbine engine. On January 29, 2016, without having been used or having had a lawsuit threatened, General Electric Company (GE) filed an IPR petition challenging claims 1 and 2 of the ’605 patent on grounds of anticipation and claims 7–11 of the ’605 patent on grounds of obviousness. After institution, UTC disclaimed claims 1 and 2, leaving only claims 7–11 at issue. On June 26, 2017, the Patent Trial and Appeal Board (PTAB) issued a Final Written Decision concluding GE had not shown by a preponderance of the evidence that claims 7–11 of the ’605 patent were unpatentable for obviousness. GE then appealed to Federal Circuit.
On December 29, 2017, UTC moved to dismiss GE’s appeal for lack of standing, since GE failed to demonstrate an injury in fact that created a case or controversy. Notwithstanding, the Federal Circuit refused to dismiss the case, ordered the parties to brief the matter, and also went on to subsequently give GE further opportunity to submit an additional affidavit to provide further factual information about the injury in fact. Of course, the Federal Circuit gave UTC the opportunity to respond to this late submitted affidavit requested by the Federal Circuit.
Rooting Against Patents
This case should have been dismissed without UTC being required to brief the standing question based on the weight of Federal Circuit precedent on the issue. But even if the Court were to want the issue briefed and argued, it is entirely inappropriate for an appellate court such as the Federal Circuit to accept fresh evidence in a case, which is precisely what the submission of a second affidavit on the question of injury in fact is – fresh evidence that was not timely submitted in the underlying case to the originating tribunal.
The Federal Circuit is an appellate court, not a court or tribunal of first instance. The judges were looking for a reason to side with GE and find standing, but even after inviting GE to submit additional evidence to supplement the original PTAB record, the Federal Circuit had no other choice but to find that GE lacked standing to appeal. Judge Hughes admits as much in his opinion concurring in the result, where he says he would rule that GE has standing except for the binding precedent of the Circuit.
If you are a patent owner how do you suppose it would feel when the allegedly unbiased and neutral Federal Circuit panel hearing your case allows the challenger to your patent to supplement the record? It is as if this Federal Circuit panel was openly rooting for the challenger and looking for an excuse to allow GE to proceed to appeal despite having no constitutional standing to warrant Federal Circuit consideration. Given the Federal Circuit summarily disposes of 50% of its docket with one sentence decisions that merely say “Affirmed”, it is unconscionable that the Court would look for an excuse to allow a challenger to appeal where they have clearly failed to make a record demonstrating anything approximating constitutional standing. It is beyond unconscionable that they were given the opportunity to submit additional evidence on appeal.
It would be a welcome change for the Federal Circuit to openly root for patent owners the way they root for those challenging the validity of patents.
A Costly Path to the Right Decision
At least Judge Hughes ultimately did the right thing insofar as the result is concerned, but why force the unnecessary expenditure by the patent owner to achieve the proper ruling? Why require the patent owner to litigate both at the PTAB and then again at the Federal Circuit? If the Federal Circuit wants to accept evidence and weigh that newly submitted evidence the judges should resign and seek appointment as Administrative Patent Judges on the PTAB.
Ultimately, the right decision was reached, but at what cost? We already knew that not every party to an IPR will have Article III standing to appeal a final written decision of the PTAB. And here, GE had multiple bites at the apple and was still unable to demonstrate it had suffered an injury in fact sufficient to confer Article III standing to appeal. Statements about GE needing to know whether the patent claims were valid or invalid because lead time for making airplanes is many years were just “too speculative to support constitutional standing,” said the decision.
It is black-letter law that speculative injury does not create constitutional standing. So, what we have here is yet another harassed patent owner. This is getting tiresome.