Federal Circuit Makes Wasteful Attempt to Side with Patent Challenger in General Electric v. United Technologies

By Gene Quinn
July 17, 2019

“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.

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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.

 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 43 Comments comments. Join the discussion.

  1. Daniel Hanson July 17, 2019 8:14 pm

    Another case in which the Federal Circuit arguably forgets that it is an appellate court is Merck Sharp & Dohme Corp. v. Hospira, Inc., 874 F.3d 724 (Fed. Cir. 2017). In this case, the district court gave insufficient weight to evidence of commercial success. The Federal Circuit concluded that such evidence should have been given more weight.

    But rather than send the case back to the district court, the Federal Circuit decided on its own to give the evidence of commercial success “its full and proper weight,” and then concluded that the finding of obviousness would have been the same anyway.

    Thus, not only did an appellate court place itself in the business of weighing evidence anew, it found itself rather awkwardly saying that the district court fouled up and yet did not err.

  2. Steve Hoffberg July 18, 2019 12:24 am

    How is standing on appeal relevant in the PTAB? In IPR appeals, there is no lower _court_ to answer the question, and it is arguably improper to remand to the PTAB to answer whether the Fed. Cir. has jurisdiction. This is an Article III issue, and the PTAB is Article I. Can they remand if they have no jurisdiction in the first instance? Would the PTAB determination be appealable?

    I think you analyzed this too quickly, and without full regard for the panoply of issues the Court actually faced.

    There will be many more of these kinds of factual investigations in the first instance on appeal issues in the future. The tip of the iceberg.

  3. TFCFM July 18, 2019 9:31 am

    GQ: 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.

    With respect, it seems to me that the existence of an injury-in-fact (or any other basis for an Article III case-or-controversy) was not at issue before the PTAB. For that reason, the affidavit would not have been “evidence” of *anything* in the PTAB proceeding, and is therefore not “fresh evidence” before the Federal Circuit.

    Indeed, the issue of standing to appeal was not at all before the PTAB and did not become an issue until the appeal was filed. It seems to me entirely appropriate to submit evidence regarding an issue in the court first deciding that issue (here, not the PTAB).

  4. Night Writer July 18, 2019 10:04 am

    @1 Daniel Hanson

    That was very well said. And it is not surprising that this was from Reyna. Despite knowing nothing about STEM Reyna has a habit of going into great detail about inventions and then concluding they are obvious based on his own private analysis and private conclusions.

    He has hired a few law clerks with tech backgrounds and very little experience who know better than those at the district court level because Reyna says so.

  5. JTS July 18, 2019 1:40 pm

    Regardless of the propriety of this case, the Federal Circuit has been acting as a quasi-trial court for years now. They need to be stripped of exclusive patent jurisdiction so that other appellate courts — who understand their job — can start to call out the shortcomings of the CAFC.

  6. TS July 18, 2019 8:49 pm

    In addition to all the reasons already stated, this piece is seriously problematic because the author is guessing the courts’ intentions and motivations. Just because the author does not understand Article III standing does not mean the judges were looking to side with one party over another, that is a very reckless claim to make and should not be made by a serious author or publication.

  7. B July 18, 2019 9:21 pm

    @ Gene,

    Great article. Seriously. However, I suspect that Judge Hughes’ outcome would have been different if the parties were nobodies.

  8. B July 18, 2019 11:59 pm

    @ TS “this piece is seriously problematic because the author is guessing the courts’ intentions and motivations.”

    Respectfully, what is there to guess? The CAFC clearly behaved in a fashion inconsistent with their duties as an appellate court so as to substitute their personal opinion in an issue that is the exclusive purview of the fact-finding body.

    Just because the author does not understand Article III standing does not mean the judges were looking to side with one party over another

    This isn’t an issue of Article III standing. This is about the CAFC overstepping its authority while addressing Article III standing in an improper manner. See the difference?

  9. Anon July 19, 2019 9:38 am

    I find myself in a somewhat unusual position of agreeing fully with TFCFM.

    However, I would castigate Congress for this arrangement.

    Congress knows full well how it could have set up the situation such that getting into the Article III courts was a necessary predicate to even begin the “Phase I” portion in an non-Article III forum of a known Two-Phase system.

    Congress knew full well that they were not doing so.

    Congress knew full well that they were inviting parties into the “Phase I” that could not follow through into “Phase II” even as Congress glibly wrote a “right to appeal” into the post grant review scenario.

    That was simply shoddy law writing – and such is simply not the only shoddy law writing associated with the America’s Invents Act.

    As to understanding Article III standing, I am NOT of the mind that Mr. Quinn does not understand how that mechanism works.

    I do think that Mr. Quinn IS in error though, as the portrayal of the question of standing (and its antecedent factors) simply is not a requirement for the first phase of the two phase system, and thus, IF that becomes an issue in trying to obtain “Phase II” relief, then (and quite possibly ONLY then) it IS at the later time (in front of the CAFC tribunal) that such “evidence gathering” becomes pertinent.

    I do NOT see the position that B ascribes to. I do not see any overstepping of authority. I do not see any addressing Article III standing in an improper manner.

    The plain fact of the law at hand (as badly written as that law is), is that Article III standing is simply not at point in order to enter “Phase I” of the ability to instigate an administrative agency review of the fully legal property right that a granted patent presents.

    I have a much larger problem with the Takings that occurs at the institution decision point, at which time — and notably prior to any decision on the merits — the full legal weight of that granted legal property right is rent asunder in the act of placing that property right BACK INTO the administrative agency purview (with the concomitant loss of the existence and level of presumption of validity) and the fact that the fully legal property right IS being exposed to a tribunal in which one of the parties need not have Article III standing.

    I fully “get” that normal administrative agency proceedings need not require Article III standing. That is not a point that I lack understanding of.

    The problem is that once granted, and once cleared OF being in the administrative agency, we are no longer talking about an item that is purely subject TO a lack of Article III protection. Life, liberty and property are the three key items that once obtaining full legal protection, inure the protections of the rest of the Constitution.

    Now some inte11ectual cowards have sniped from the sidelines and have attempted to denigrate the Constitutional angle (mind you, these same folk have refused to engage on the merits in any sense of inte11ectual honesty). It is not all that surprising that for the most part, and as far as I can tell, these same people would prefer to be able to bootstrap patent challengers into HAVING Article III standing just because the AIA provided that (knowingly) lacking Article III standing capability of “Phase I.”

    In this manner, it should be evident that Oil States (while not being discussed directly here) is clearly wrongly decided. That case denigrates the meaning of what a granted patent fully encompasses and does not properly take into account the Takings angle.

    In the lead up to that case, the late Ed (on other blogs, “Ned”) Heller and I would discuss the matter, and while we both agreed that Oil States was wrong, Mr. Heller could not grasp the larger Takings argument – the better argument in my mind. This is not to say that his argument was incorrect. But I thought it a mistake to ONLY pursue that single line of attack (especially given that Lemley had fed the Court a line of bull that the Court only too eagerly took as Gospel).

  10. B July 19, 2019 1:24 pm

    @ anon “I do NOT see the position that B ascribes to. I do not see any overstepping of authority. I do not see any addressing Article III standing in an improper manner.”

    Let me explain. It is the purview of a trial court or administrative tribunal to receive and weigh evidence, then make a decision on such evidence. The CAFC’s duty is to determine whether or not there is some minimal level of evidence to support the court’s / tribunal’s decision. Allowing the appellate review body to make a fact-based decision of first instance without review is folly. Short-circuits due process.

    All that said the message is simple: If you aren’t being sued or credibly threatened with suit, then perhaps you may not wish to run to the PTAB with an IPR on a less than strong case of invalidity. A person or company can’t file for DJ in an Art III court based on speculation alone, riiiight?

    I’ve destroyed more than a few patent claims using ex parte re-exams, which result in no collateral estoppel to the petitioner upon loss, and done right gets rid of every problematic claim. Ex parte re-exams are basically office actions you get to write, and you can still do an IPR later if you lose.
    https://www.finnegan.com/en/insights/ex-parte-re-exams-dont-you-forget-about-me.html

    All that said, there is an unknown in IPRs. Specifically, whether claim or issue preclusion applies when appellate review of an IPR decision is unavailable. Personally I think not for due process reasons, which gives some parties an extra bite at the invalidity apple.

  11. Anon July 19, 2019 3:29 pm

    B,

    I understand the general principle, but you forget that Standing is always a matter for the court to determine — throughout any and all proceedings – appellate courts are NO exception.

    In this case, we have a “jump” between two different forums, and it is simply (and inevitably) proper for the condition AT THE POINT OF JUMP to be determined by the forum into which the matter is being presented.

    This is simply distinguishable from the typical “facts as a matter of first impression” that would not be proper in an appellate court.

    You cannot be blind as to WHAT the evidence is for, and that “what for” is in fact perfectly reasonable at the appellate level for the very question of settling standing.

    There simply is NO short-circuiting of due process in this circumstance.

    Your questions as to what may or may not be done in an Article III court are not pertinent to THIS fact situation in which Congress knowingly set up a system that crosses multiple forums in which in the first forum standing is NOT a requirement, but in the second forum standing IS a requirement.

    Again – Congress here is to blame.

    As to your last point, well, THAT is an interesting question, and I would disagree with you on the merits. I disagree in part because while standing is NOT required for “Phase I,” there is nothing stating that a party must be without standing. IF a party happens to have standing, and elects on its own for the avowed (per Congress) OPTIONAL path of the Post Grant mechanism, then it is fully fair and just that estoppel applies. For those entities lacking standing, the application of estoppel is a “no harm” mechanism, because they would lack standing anyway in which to have the estoppel applied.

  12. B July 19, 2019 9:22 pm

    @ Anon “I understand the general principle, but you forget that Standing is always a matter for the court to determine — throughout any and all proceedings – appellate courts are NO exception.”

    Respectfully, you’re thinking jurisdiction, not standing, and what happens when there are facts in contention? Will the CAFC call witnesses, take testimony, allow cross-examination, issue subpoenas, and weigh evidence? The CAFC has no discovery procedures available to it other than judicial notice.

    Per your disagreement re estoppel, well, that’s an issue that has not been settled for IPRs, but AVX v. Presidio gives a persuasive argument to the contrary — although Judge Taranto (imo) is on shaky grounds in his citation of Penda Corp.

    http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1106.Opinion.5-13-2019.pdf

    https://law.justia.com/cases/federal/appellate-courts/F3/44/967/512980/

    I don’t care to argue an issue of law that has not yet been addressed. There is a problem with resolving 35 USC 319 and traditional Art III standing with estoppel under 35 USC 315(e)(2) being problematic as it should be read in concert with 319.

  13. B July 19, 2019 9:26 pm

    @ anon “IF a party happens to have standing, and elects on its own for the avowed (per Congress) OPTIONAL path of the Post Grant mechanism, then it is fully fair and just that estoppel applies.”

    Read 35 USC 319. Appeal is assumed as a right. I think Congress screwed the pooch on this.

  14. Anon July 20, 2019 9:26 am

    B,

    35 USC 319 is precisely the point that Congress screwed the pooch on this.

    Well, at least ONE OF the points of screwing the pooch.

    That being said, ALL of my points vis a vis the Two Phase system and the fact of the matter that Congress messed up with a Phase One that does not require standing and a Phase Two that independently DOES require standing (with — and this is a point I have provided many times now — there NOT being allowed a mere “bootstrap” from merely being present in Phase I TO BE the “injury in fact” to get into Phase II).

    Congress may not dispatch the Separation of Powers and provide a direct path into Article III merely by inviting any and all into a first forum that does not have the Article III limitation and then “inviting” all INTO the Article III forum. That is the essence of the improper bootstrapping. That is ultra vires.

    All of this though is a bit of a tangent to the quoted item that you post at 12. That quote is to the distinct (albeit related) notion of estoppel. But as I post at 11, the reasoning present FOR all parties (with and without ACTUAL standing) still applies and prevents any notion of due process violation.

    I stand on the positions that I have provided.

  15. B July 20, 2019 3:05 pm

    @ anon “I stand on the positions that I have provided.”

    And I respectfully differ on some. First, standing is not always a matter for a court to determine – you’re thinking of jurisdiction. Second, how is an appellate court going to determine “case or controversy” if there is an issue of fact in contest? The CAFC has no subpoena power, can’t call witnesses, etc. The only thing they can do is take judicial notice in limited circumstances. It is improper for an appellate body to usurp fact-finding.

    The appropriate step would be to send the case back down to the PTAB for the additional fact-finding.

    As to whether estoppel applies in a case where there is no right to appeal, that is an issue that has not been decided. Taranto hints “no” in AVX Corp. v. Presidio, but then again he misrepresents Penda Corp. v. U.S. in his typical lame analyses. I think “no” for due process reasons.

    One thing I think we agree on: don’t advise your client to pursue an IPR unless the client is actively taking steps to infringe or has been threatened with an infringement suit.

  16. Anon July 20, 2019 4:05 pm

    First, standing is not always a matter for a court to determine – you’re thinking of jurisdiction.

    No. I am thinking of standing. And I am correct.

    Second, how is an appellate court going to determine “case or controversy” if there is an issue of fact in contest?

    Yet again, B, you cannot be blind as to what facts are being used for what issue. See my post at 11, paragraphs 2 and 3. You are trying TOO hard to have “fact-finding” of a different kind.

    The appropriate step would be to send the case back down to the PTAB for the additional fact-finding.

    Absolutely wrong. You are not paying attention here. The “Phase I” portion has NOTHING TO DO with whether or not the party is proper for the standing in Phase II. This of course is the fault of Congress, but your suggestion here has no legal sense to it whatsoever.

    I will leave the estoppel question aside – as I do see room for reasonable minds to disagree there.

    As to advice to clients on pursuing IPR’s, well there too we will differ. My advice would of course depend on the client’s situation, but the reality of the matter is that Congress DID open Phase I to those lacking standing, and whether I like it or not, there WILL BE clients without proper Article III standing for whom engaging in the Phase I portion (no matter the outcome, whether a need to appeal arises or not) WOULD be good advice.

  17. B July 20, 2019 11:49 pm

    @ Anon “No. I am thinking of standing. And I am correct.”

    Go ahead. Name a case where an appellate court conducted discovery on standing. Typically, standing is established in a complaint, and if there’s discovery needed to contest a factual issue, that happens in a trial court. See, e.g., FRCP 17. The only time I’m aware of when an appellate court addresses standing is under FRAP 15 when someone attempts to intervene after an agency action.

    However, if you know of a case that supports your assertion, please cite it.

  18. Anon July 21, 2019 7:58 am

    Name a case where an appellate court conducted discovery on standing

    This one.

    That was easy.

    Typically, standing is established in a complaint

    Again, you are not paying attention. THIS may well not be a typical set-up because THIS set-up is a screw-up by Congress in knowingly setting up a Two Phase system with Phase One not requiring Article III standing while Phase Two does require Article III standing.

    You keep on trying to not recognize the underlying action at hand, which of course is critical to see why your complaint of due process violation is baseless, This is what, the third time that I am mentioning the exact same thing?

    As to citing another case, do YOU have any cites for the propositions that you want to hold? That facts do not matter for the forum at hand? that an administrative agency is the place to develop facts pertaining to an Article III standing question (where such question is immaterial for that Phase I forum)? That any such development of facts NOT present create a due process violation when the second forum is being sought to be entered?

    Your position appears to rest entirely on a view of facts typical to an issue that is actually pertinent to the lower court being entertained on first impression in the reviewing court, but that is expressly not the situation here. Do you have anything that is actually on point to THIS situation?

  19. B July 21, 2019 2:33 pm

    @ Anon

    This one? Not any one before? I think you just proved my point

  20. Anon July 21, 2019 7:28 pm

    B,

    Respectfully, you proved nothing.

    How about a cite (even this case 😉 ) to support your view?

    I will take 1-0 over you every day.

  21. David Boundy July 22, 2019 5:14 pm

    Dear Gene and B —

    I agree with Steve Hoffberg (and god help us — Anon) — you’re oversimplifying the law. B, you’re really far off base.

    The PTAB is not an Article III court. This is exactly one of the points of difference between appellate review of an Article III lower court vs appellate review of an agency. An Article III court, on judicial review of agency action, can ask for an “interlocutory remand” for additional factfinding, additional explanation. It happens all the time with other agencies and other courts of appeals, especially the D.C. Circuit.

    What’s weird here is asking a party for new evidence. I don’t know what other circuits do about this, because this scenario doesn’t arise elsewhere. The PGR statute is weird, in granting standing at the agency to a party that won’t have Article III standing to appeal from the agency. So I don’t know of analogous cases from other circuits.

    It’s common that a court of first instance allows evidence on standing. In this scenario, the Federal Circuit is a tribunal of first instance on Article III standing. Standing is irrelevant to the PTAB, and becomes relevant for the first time when the appeal commences. So I don’t find this as out of place as you do.

    I know you’ll disagree with me, and your statement of disagreement will reflect that you didn’t read this post or think about the fine gradations carefully. You’ll stand on a black and white rule about courts that have “Appeals” in their name, a rule that just doesn’t exist. But go ahead and attack me and tell me I don’t know what I’m talking about, just because you can’t bother to look at the fine fact splits that might affect this case.

    David

  22. Gene Quinn July 23, 2019 10:45 am

    TS @ 6-

    You say I don’t understand constitutional standing.

    I say you either didn’t read the article or don’t understand the issues.

    I’m happy to debate you anytime if you like and demonstrate to you and others that I do understand both constitutional standing and the issues, and that you are the one who is out of your depth.

    The issue here about rooting for challengers is simple. The Federal Circuit allowed the challenger to submit a supplementary affidavit on appeal after the first affidavit they filed was insufficient to prove the existence of an injury in fact. This does exactly what I described — it provides the challenger a second bite at the apple to attempt to prove standing. That is inappropriate, period.

    The Federal Circuit acts as if they are overburdened by cases, which is why they have to rely on Rule 36 in over 50% of their cases to issue 1 word decisions without any explanations. Yet here the court is giving the challenger a second opportunity to submit additional evidence to establish standing. That is asinine.

  23. Gene Quinn July 23, 2019 10:49 am

    David @ 21-

    You say: “What’s weird here is asking a party for new evidence.”

    That is the point I made in the article, although I referred to it as “fresh evidence.”

    What happened here is the first affidavit submitted was insufficient. The Federal Circuit then granted the opportunity to file a second affidavit. The entire article and my complaint is related to the “fresh evidence” allowed in the second affidavit, which is why I easily come to the conclusion the panel was rooting for the challenger. Would they ever give a patent owner such a second chance? We all know the answer. No!

  24. Gene Quinn July 23, 2019 10:56 am

    Everyone-

    It seems a number of people are misreading this article. Not sure why. But take a look at this paragraph:

    “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 case should have been dismissed on the motion to dismiss once the CAFC was alerted to the fact that there was no injury in fact and based on the Circuit binding case law. The panel, not following the precedent, decided not to dismiss and ordered briefing. OK, fine. A first affidavit was filed, which the CAFC deemed insufficient to establish standing. That is why the article complains about “the submission of a second affidavit” which constituted fresh evidence that was not submitted in the original briefing at the CAFC, or to the PTAB.

    For those of you who point out that the issue of injury in fact is not relevant in a challenge at the PTAB, bravo. You are correct. It is, however, relevant at the CAFC. Perhaps you guys are just too focused on PTO practice to realize the need for setting up an appeal. There is a cottage industry in the consultation for setting up an appeal properly, and weaving into the PTAB case enough evidence throughout the entire case to establish an injury in fact would not be difficult. It would be easy. If anyone needs to know how to do such a think I’m always available to consult. But just because you don’t understand how to do such things doesn’t mean it can’t be done or that it isn’t a best practice. Look at the case law relating to injury in fact. Coming late to the party is a recipe for failure.

  25. Anon July 23, 2019 12:25 pm

    Gene,

    Thanks for the addendums (you may note that I did indicate that I did NOT think that you did NOT understand standing, so these additional comments of yours are helpful and my post should be modified to reflect the issue as you present).

    As to the notion of whether one MUST do as you suggest (“There is a cottage industry in the consultation for setting up an appeal properly, and weaving into the PTAB case enough evidence throughout the entire case to establish an injury in fact would not be difficult.“), I believe that the point under discussion by several of us is that such NEED not be done during the Phase I action. Sure, it could be done, and likely, is a better practice, but the point being stressed is that Congress really created an odd duck with its Two Phase system.

    As some have attempted to provide (separately from the present discussion), the mere fact that Congress DID set up a Two Phase system is oft attempted as a bootstrap for those who do NOT have proper Article III standing to simply be “swept in” to Phase II, just because anyone can get into Phase I.

    My points were to stress BOTH that such a bootstrap view is improper, and – as Mr. Boundy so reluctantly notes – that standing in the second phase fully comports with that court taking in evidence OF the proper Article III standing (which, again, is NOT necessary for Phase I activities).

  26. brian buchheit July 23, 2019 12:53 pm

    I’ve been curious about Anon’s argument for a while. I see merit it in and see how the APA with IPRs has effectively shifted a vested right into a non-vested one involuntarily without owner consent (assuming a pre-AIA patent is IPR’d for the sake of argument).

    I see the standing requirement for Appeal tying in. I honestly have not been able to properly frame the issue in my own mind and wanted to see if others could.

    1. Specifically, pre-IPR, a patent is a vested right and only Federal Circuit posses the power to revoke (by an affirmative defense of clear and convincing evidence per Microsoft … raised by a challenger with standing).
    2. A challenger without standing (to challenge the case in an article 3 court) can bring an IPR challenge. However, this challenger CANNOT have that challenge (if successful) ultimately enforced.
    3. That is, prior to the Federal Circuit upholding an IPR decision, the patent is valid. Since there is no POSSIBILITY of enforcing the IPR’s decision (without standing since an appeal of an adverse decision cannot be refuted by any party involved … ) legally ….
    4. What gives the USPTO (an administrative agency) the power to REQUIRE a patent owner to spend significant resources and money … to refute a potential ruling that cannot be enforced ?
    5. Isn’t there some type of APA rule that prevents “advisory opinions” that an agency lacks an ability to enforce ?
    6. In short, I agree that legally Anon has “something” with the takings … but I don’t know how that case is ever brought or challenged. Constitutional challenge ? Damage ? (Unknown at time of institution – other than fees for the process, which are ‘elective’). If the proceedings go against the patent owner … no damage because ‘patent shouldn’t have been allowed in the first place … and it is just a public franchise anyways (Oil States). This doesn’t seem logical or right (because there is a real world cost … but it seems to be how the courts would rule.

    HOWEVER, with regard to a Petitioner WHO CANNOT APPEAL a ruling that can ONLY be enforced after an appeal … (if true in a specific case), shouldn’t that process before an administrative agency be unconstitutional (no upside for a patent owner; time spend by the USPTO that is futile regardless of outcome; no benefit to anyone as the holding is never enforceable or able to be applied to the patent at issue). So, if a standing challenge is brought up prior to institution (judicial efficiency) with an affidavit that the patent owner WOULD or WILL appeal an adverse ruling (if any) … why does the USPTO have any legal authority to proceed … to a ruling that either confirms the status quo (patent still valid) or that cannot legally un-vest the patent right (no right to appeal decision; as no standing)?

    I’m struggling with this and have been curious of the ‘clean’ legal posture that could be properly argued in court/before the PTAB.

    ANOTHER ASIDE IF ANYONE CARES TO ENGAGE … IPRs as a free way to amend claims of issued patents that are otherwise unamendable ?

    Another problem I see with IPRs is a patent owner could challenge their own claim of their own issued patent (if they wanted to amend; but lacked the legal right through another vehicle). Then amend the claim – and withdraw the IPR petition against the amended claim. Wouldn’t that entitle a patent owner to an amended (and legal) patent, when the patent (granted) is not otherwise able to be amended ? (assume for instance no chain of priority is maintained … and the issued patent ‘dies’ from being too broad in a contested case, yet a narrowing would result in the patent being very valuable.)

    Thoughts ?

  27. David Boundy July 23, 2019 8:06 pm

    Gene at @23 —

    My comment 21 responds to the explanation you gave in the original article.

    Your post 23 shifts entirely — now the complaint is that the Federal Circuit gave the party not one, but TWO opportunities to supplement the record.

    One opportunity (the situation you describe in your original article) is certainly odd, but given the odd statute, not problematic. The problematic sentences in the Federal Circuit opinion are these —

    We subsequently ordered GE to supplement the First Long Declaration and submit any additional declarations that would provide greater specificity regarding the asserted injury GE contends provides sufficient standing to appeal in this matter. … GE filed an additional declaration from Mr. Long on November 28, 2018 (“Second Long Declaration”).

    Even that is not unprecedented — most trial courts will give a party two opportunities to cure this kind of standing or jurisdictional defect. Giving a party a second opportunity is a little odd, verging on troublesome. But NOT because “The Federal Circuit is an appellate court, not a court or tribunal of first instance.” NOT because of “fresh evidence.” Rather, because it’s odd for a court of appeals to give any party a second shot at anything other than ministerial i-dotting caught by the clerk’s office.

    I have no problem with people that correct their mistakes. But it’s better to be candid about it.

  28. Gene Quinn July 23, 2019 8:58 pm

    Anon-

    I think you give Congress too much credit. I don’t know for sure, and I’m happy to be corrected by David who I suspect has read more of the legislative history than I more recently, but did Congress really take constitutional standing into consideration? Did they really know that they were setting a system where a challenger was not going to be able to appeal if they lost? I find that hard to believe given the anti-patent sentiment and purpose of the AIA and PTAB.

    And I know you weren’t the one questioning my understanding 🙂

  29. Gene Quinn July 23, 2019 9:02 pm

    David-

    You say: “Your post 23 shifts entirely — now the complaint is that the Federal Circuit gave the party not one, but TWO opportunities to supplement the record.”

    I quoted from the original article pointing to the second affidavit as being where the CAFC clearly went beyond the line. I think they should have dismissed the case without requiring briefing, like I said in the article. After all, they give such little thought to 50+ percent of the docket with Rule 36. But it is enormously clear that once they give the challenger a second affidavit that fresh evidence not presented in the appeal, or below, is new evidence that an appeals court cannot under any circumstance accept. So, it should be clear to everyone that the Federal Circuit went too far.

  30. Gene Quinn July 23, 2019 9:05 pm

    David-

    One more thought… You say: “most trial courts will give a party two opportunities to cure…”

    We are dealing with an appeals court, not a trial court. And do you or does anyone else really believe if it were the patent owner who failed at his/her proof the Federal Circuit would have invited a second bite at the apple?

    Like you, I generally have no problem with people correcting their mistakes, but the Federal Circuit is in search of a problem to forward their anti-patent agenda. They cry that they have too much work and need to rely on Rule 36 but then give patent challengers two affidavits to establish standing and refuse to dismiss in the first place despite the great weight of authority directly on point? Clearly this panel was rooting for GE to pull some standing argument out of a hat so they could hear the case and ignore Circuit precedent.

  31. B July 24, 2019 5:53 pm

    @ David Bounty “The PTAB is not an Article III court.”

    I think everyone in the room is aware of that fact.

    “An Article III court, on judicial review of agency action, can ask for an “interlocutory remand” for additional factfinding, additional explanation.”

    I believe that was exactly my point, David. First, you tell me I’m “really far off base.” Then you make my point, i.e., that the CAFC should have sent the case back to the PTAB for additional fact-finding.

  32. B July 24, 2019 6:13 pm

    @ Gene “That is the point I made in the article, although I referred to it as “fresh evidence.”

    David doesn’t pay attention as to what is said, and he doesn’t address rules of procedure. I know how to conduct discovery in a district court or in an IPR. I’d like David to tell me how its done at the CAFC. I don’t think a single clerk there knows how to issue a subpoena.

    “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”

    My point exactly. I would invite Mr. Bounty to describe how discovery is performed at the CAFC. Maybe cite a few pertinent rules.

  33. B July 24, 2019 6:26 pm

    @ Gene “Clearly this panel was rooting for GE to pull some standing argument out of a hat so they could hear the case and ignore Circuit precedent.”

    As the panel was Reyna, Taranto, and Hughes, I have zero doubt that you’re correct. You cannot find a more anti-patent panel at the CAFC.

  34. B July 24, 2019 7:40 pm

    @ Anon “How about a cite (even this case ? ) to support your view?”

    Florida Power v. Lorion, 470 U.S. 729 (1985) “[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.” Id. at 743. “The reviewing court is not generally empowered to conduct a de novo inquiry into the matter being reviewed[.]” Id at 744. “[I]f the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.” Id.

    https://supreme.justia.com/cases/federal/us/470/729/

    Anon, if you have a conflicting holding from a higher court, please feel free to cite it.

  35. Yuan Savvy July 24, 2019 10:18 pm

    The topic says it all. And no surprise that hoard of big tech does not like this article, the author and the publisher.

    Keep the fair and honest articles coming. You are doing a great job and service to Innovation and inventors.

  36. Anon July 25, 2019 12:33 am

    B,

    Your quote is inapposite – your “into the matter being reviewed” misses now for the fourth time what “matter” is being first important in that PHASE II forum.

    We are still at 1-0 (although, perhaps I should start deducting points from you).

  37. brian buchheit July 25, 2019 9:36 am

    All (Re: 26 and Anon’s insistence that structural legal problems occur at IPR institution stage)

    I managed to rephrase/clean-up my ramblings a bit.

    Specifically, the standard used by USPTO at institution stage should be clear-and-convincing and not more likely than not. The regulation to the contrary violates 35 USC 282.

    Argument: USPTO institution decision is Illegal/Non-constitutional as implemented.

    Prior to institution, Patents are presumed valid. (35 USC 282 and the legal standard is “clear and convincing evidence” for determining invalidity; SCOTUS 2011 Microsoft v. 151 Ltd, 131, SCt. 2238 stating “[Section] 282 creates a presumption that a patent is valid and imposes the burden of proving invalidity on the attacker. (I premise that an IPR petitioner is an “attacker” under Microsoft stating “That burden is constant and never changes and is to convince the court of invalidity by clear evidence. 725 F.2d, at 1360. In the nearly 30 years since American Hoist, the Federal Circuit has never wavered in this interpretation of § 282”)).

    The enablement statute under AIA sets a minimum threshold (35 USC 314(a)) on the Director to authorize an IPR, but does not define the burden to be used at the institution stage (which the Director established by regulation as permitted by 35 USC 316(a). Note: The burden AFTER institution is established as preponderance of evidence by AIA). The institution decision is decided by the under USPTO regulation by “more likely than not”. (Federal Register / Vol. 77, No. 157 / Tuesday, August 14, 2012 / Rules and Regulations The ‘‘more likely than not’’ standard requires greater than 50% chance of prevailing.)

    Proposed ARGUMENT: an IPR challenge is a challenge of a presumed valid patent; the (Attacker/petitioner) has the burden of proving invalidity by “clear and convincing evidence – per 282 and Microsoft. (I don’t believe this has ever been litigated – as generally the challenge of pre-institution abnormality is waived by not raising it early.) Director/Board at IPR institution stage is not authorized by statute/law to change this black letter standard (282 as defined by Microsoft) to conduct a ‘second look’ at an issued patent, which is a vested right – unless this decision is based on satisfaction of the ‘clear and convincing’ standard. The USPTO’s regulation has changed the standard, which is an unconstitutional violation of Congresses statute 282; as defined by Microsoft.

    IPR’s could legally proceed if the director used the “clear and convincing standard” at the institution stage (to overcome the presumption of validity), but this does not occur. As implemented, IPRs standard used at the institution stage per USPTO regulation is contrary to the law. A USPTO (agency) regulation cannot be implemented in contradiction of a clear statute, which trumps the USPTO regulation.

    Another quirk, because institution decisions once made are not reviewable by any court, the USPTO (agency) could simply lie at the institution stage about the standard used. They could institute EVERY IPR or ZERO IPRs – all without judicial review, as the AIA statute never requires institution under any circumstances but makes institution an elective act taken by the USPTO.) This was discussed in the dissent of Cuozzo, which raises the non-delegation doctrine per Gundy; i.e., the AIA statute gives unfettered power to institute/not-institute to the USPTO based on the subjective whim of the USPTO director).

    As stated by regulation, however, the USPTO and director is violating 282 by instituting IPRs using the “more likely than not” standard established by regulation – instead of the “clear and convincing standard” established by law.

    Thoughts ?

  38. B July 25, 2019 1:00 pm

    @ Anon “Your quote is inapposite – your “into the matter being reviewed” misses . . . “

    I’ll take that as a “no,” you have no case law supporting the idea that an appellate court can conduct discovery.

  39. Anon July 25, 2019 2:19 pm

    You would be mistaken to take that as a no.

    The mistake would be yours in the first instance thinking that somehow I needed to provide a citation different from the one you provided, as the one you provided does not hold the point that you think it to hold.

    I am curious though as to why you seem unable (or unwilling) to recognize that the matter at point in our discussion is a different matter that the Phase I tribunal is looking at.

  40. B July 25, 2019 5:16 pm

    @ anon “I am curious though as to why you seem unable (or unwilling) to recognize that the matter at point in our discussion is a different matter that the Phase I tribunal is looking at”

    Because its not relevant. The CAFC is an appellate tribunal not equipped to handle discovery, and such CAFC-based discovery short-circuit’s due process. Between your theories and the existing statutes, rules, and case law I’ll side with the existing statutes, rules, and case law. Hope this explains things to you.

    That said, if Judges Taranto, Hughes, and Reyna came to a common legal conclusion, I can confidently say the a priori probability of the conclusion being wrong is greater than 51%

  41. Anon July 25, 2019 7:05 pm

    Because its not relevant.

    All that I can say is: wow.

    You then good sir have been having some other conversation, as THE relevant point is standing in the the Phase II section of the two phase mechanism.

    Between your theories and the existing statutes, rules, and case law I’ll side with the existing statutes, rules, and case law

    Your only problem is that you are NOT siding with what you think that you are siding with because you maintain that the most critical point OF the discussion is irrelevant to the discussion. You are STILL at a deficit to me on the case law on the issue I identified (whether or not you think that issue to be relevant).

    This explains things alright. Just not how you may realize.

  42. B July 25, 2019 7:28 pm

    @ anon “All that I can say is: wow.”

    And yet you follow up with an additional four paragraphs of your opinions that have no legal bases.

  43. Anon July 25, 2019 10:09 pm

    says the one that has yet to grasp the legal basis at point here…

    It might be difficult for you to grasp that which you have dismissed as not relevant.

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