CAFC Dismisses Appeal as Moot, Prost Dissents in Part

On January 7, the United States Court of Appeals for the Federal Circuit (CAFC) dismissed ABS Global’s appeal from the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) as moot. Cytonome/st, LLC had disavowed its ability to challenge a district court’s summary judgment that ABS did not infringe claims of the patent in suit and ABS did not establish that it engaged in or had “sufficiently concrete plans to engage in activities not covered by” Cytonome’s disavowal (ABS Global, Inc. v. Cytonome/st, LLC), said the court. The majority denied ABS’s request for vacatur and Chief Judge Prost wrote separately to dissent on the issue of vacatur.

Parallel Proceedings

In 2017, Cytonome filed a suit against ABS, alleging infringement of several patents, including U.S. Patent No. 8,529,161 (the ‘061 patent), which was directed to microfluidic devices and methods of configuring microfluidic systems. ABS then filed a petition for inter partes review of all claims of the ’161 patent and the PTAB ultimately issued a final written decision invalidating certain claims of the ‘161 patent and holding that ABS failed to demonstrate that the remaining claims were unpatentable. Shortly after the PTAB issued its opinion, the district court granted ABS’s motion for summary judgment and concluded that ABS’s accused products did not infringe any of the ’161 patent claims. ABS then appealed the PTAB’s final decision to the CAFC. In connection with a jury trial for the remaining asserted patents, Cytonome filed an affidavit stating that it had “elected not to pursue an appeal of the district court’s finding of non-infringement as to the ’161 patent and hereby disclaims such an appeal.” Cytonome then argued that its disavowal resulted in ABS lacking the requisite injury in fact required for standing to appeal the PTAB’s decision regarding the validity of the ‘161 patent claims.

Voluntary Cessation

The CAFC initially noted that the voluntary cessation doctrine, rather than standing, governed the mootness inquiry in this case. Noting that Cytonome demonstrated that it cannot reasonably be expected to resume its enforcement efforts against ABS, the CAFC explained that Cytonome shifted the burden to ABS to offer “evidence of current activity or plans to engage in activity that would subject ABS to infringement liability under the ’161 patent.” Cytonome alleged that ABS’s only injury in fact was the threat of an infringement finding in the parallel district court proceeding and “nothing on the record suggest[ed] the ABS is substantially at risk of infringement” with respect to future products. The CAFC noted that Cytonome’s disavowal of its right to appeal the summary judgment of noninfringement “estops Cytonome from asserting liability against ABS for infringement of the ’161 patent claims in connection with the accused products, thereby allowing ABS to make, use, and sell those products freely” and is “coextensive with the asserted injury in fact.”

The CAFC noted that Cytonome demonstrated that its disavowal “encompass[ed] all of its allegedly unlawful conduct,” thus, the burden shifted to ABS to show “that it engages in or has sufficiently concrete plans to engage in activities not covered by the [disavowal].” The CAFC pointed out that ABS acknowledged that there was no “specific threat” of infringement of the ‘161 patent, but ABS maintained that “at least conceivable that Cytonome would sue [ABS] on the ’161 patent with respect to the aspects of the case that sort of post-date the judgment.”  The CAFC noted that ABS’s assertion that Cytonome’s behavior will “conceivably” recur was not enough to establish that the appeal was not moot under the voluntary cessation doctrine and ABS’s evidence “essentially amount[ed] to the existence of a nonzero risk of future litigation based on its litigation history with Cytonome.” Thus, the CAFC concluded that ABS did not establish that it “engages in or has sufficiently concrete plans to engage in activities not covered by” Cytonome’s disavowal; therefore, ABS did not rebut Cytonome’s showing that it cannot reasonably be expected to resume its enforcement efforts against ABS.

Exception Under Fort James

The CAFC rejected ABS’s primary argument that its IPR appeal is not moot based on an exception to mootness derived from Fort James Corp. v. Solo Cup Co. “that arises in the context of patent law: a patent owner who strategically waits until after the resolution of its claim for patent infringement to offer a covenant not to sue (and not to appeal) does not moot a challenge to the patent’s validity.” The CAFC noted that Fort James assessed whether resolution of infringement claims mooted unenforceability counterclaims within the same proceeding, rather than assessing the mootness of claims in a second proceeding caused by resolution of other claims in a first, separate, proceeding, as in the present case. Thus, the CAFC disagreed with ABS that Fort James compelled the conclusion that its IPR appeal was not moot.

Vacatur and Dissent

The majority concluded that ABS did not timely request vacatur and failed to preserve its argument. Thus, the majority found the argument was forfeited and denied ABS’s request for vacatur.

In a dissenting opinion, Chief Judge Prost said that the majority departed from the proper course of action established by the Supreme Court, i.e. “vacatur is in order when the prevailing party below unilaterally moots an appeal.” Citing Arizonans for Off. Eng. v. Arizona, Prost explained that vacatur avoids this unfairness and “clears the path for future relitigation” by “eliminating a judgment the loser was stopped from opposing on direct review.” Prost noted that the case required vacatur and it should not have made a difference that ABA’s request was untimely. Prost explained that the case for vacatur was strong in this case because the “appeal was not mooted by mere happenstance but by the unilateral act of an adversary to cement its victories below” and the rationale for vacating “is especially pronounced when actions of winning litigants serve to deny their adversaries the opportunity to appeal.” Noting that the majority’s dismissal without vacatur “deprives ABS of appellate review through no fault of its own,” Prost dissented from the majority’s opinion with respect to vacatur.