Federal Circuit Says Intel Can Appeal Qualcomm IPRs Despite Lack of Infringement Suit

Although Qualcomm didn’t sue Intel for infringement, Qualcomm has not disputed that it mapped the ’043 patent claims to an Intel product (and only an Intel product) in a prior suit against Apple… It is of no moment that the suit wasn’t against Intel, as Intel ‘need not face a specific threat of infringement.’” – Circuit Judge Sharon Prost

Intel - https://depositphotos.com/42165711/stock-photo-intel-sign-at-corporate-headquarters.htmlOn December 28, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a pair of precedential decisions in appeals raised by chipmaker Intel. These appeals came from final written decisions in several inter partes review (IPR) proceedings challenging the validity of patent claims owned by rival firm Qualcomm. In both decisions, the Federal Circuit found that Intel satisfied Article III standing requirements for appealing from the Patent Trial and Appeal Board (PTAB).

Standing has become a thorny issue that has plagued the Federal Circuit and PTAB. There is no standing requirement to bring an IPR challenge, but the fact that one without an injury-in-fact may bring an administrative challenge against a patent before the PTAB at the United States Patent and Trademark Office (USPTO) does not change the need for constitutional standing for an appeal to be taken from the administrative tribunal to an Article III court, such as the Federal Circuit. That, at least until last week, was the state of the law. Confirmed repeatedly by the Federal Circuit, in cases such as JTEKT, and even in allowing the Electronic Frontier Foundation to participate to remain in an appeal despite no injury-in-fact because there was another appellant who did satisfied the constitutional standing requirement. For an appeal to be appropriate there must be constitutional standing.

Now, the rule requiring constitutional standing for an IPR appeal to be entertained by the Federal Circuit has shifted. Intel was found to have standing despite there being no specific threat of infringement.

Intel ‘Need Not Face a Specific Threat of Infringement’ for Article III Standing

The Article III standing issue is given longer treatment in case 20-1664, an appeal of a single IPR proceeding challenging Qualcomm’s patent covering a stepped gain mixer for use in radio frequency communication systems. Although the PTAB determined that Intel had prevailed in demonstrating the obviousness of claims 1 through 3 and 7 of U.S. Patent No. 8229043, several claims were held as nonobvious over the prior art and the PTAB granted Qualcomm’s motion to amend claims 2, 3 and 7. Qualcomm had moved to dismiss the appeal for lack of standing as the ‘043 patent was not asserted against Intel but rather against Apple, a real-party-in-interest (RPI) during the underlying IPR proceeding but not a party to Intel’s appeal.

Reciting the standard from the U.S. Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins, the Federal Circuit acknowledged that, to satisfy Article III standing, a party bringing suit must demonstrate (1) an “injury in fact” that must be concrete and particularized, which is (2) “fairly traceable” to the defendant’s challenged conduct and (3) “likely to be redressed by a favorable judicial decision.” Applying this standard to the context of IPRs, which under 35 U.S.C. § 311 can be generally petitioned by anyone other than the patent owner, the Federal Circuit noted that the first element of the Spokeo standard is satisfied by an IPR petitioner who has engaged in, is engaging in or will likely engage in activity giving rise to an infringement claim.

“Although Qualcomm didn’t sue Intel for infringement, Qualcomm has not disputed that it mapped the ’043 patent claims to an Intel product (and only an Intel product) in a prior suit against Apple… It is of no moment that the suit wasn’t against Intel, as Intel ‘need not face a specific threat of infringement.’”

The Federal Circuit found Intel’s appeal analogous to the facts at issue in the appellate court’s 2020 decision in Grit Energy Solutions, LLC v. Oren Technologies. In Grit Energy, the Federal Circuit found Article III standing because the appellant had previously been sued on patent claims challenged in the appealed IPR proceedings and the previously infringement suit had been dismissed without prejudice, giving Oren the possibility of reasserting those patent claims against Grit Energy in the future. The court found Article III standing over Oren’s arguments that it had no pending cases against Grit Energy and that Grit Energy had transferred away ownership of the products giving rise to the previous infringement suit without identifying any future business plans that could have created an infringement claim.

The Federal Circuit gives shorter shrift to the Article III issue in case 20-1828, but the succinct statement made in that opinion offers a concise explanation of the court’s reasoning on that point:

“Intel has engaged in activity that has already given rise to an infringement suit by Qualcomm. And Qualcomm has not disputed that, in those proceedings, it identified an Intel product as the ‘secondary processor’ of the ’949 patent. Thus, for the same reasons as in our companion case, ‘Intel’s risks transcend mere conjecture or hypothesis.’ That is so even though Intel has only shown that it manufactures the claimed ‘secondary processor’ of the ’949 patent’s claimed inventions, not all the components required by the claims, given the centrality of that component to the claims, the possibility of direct infringement suits based on product testing, and the possibility of indirect infringement suits based on at least inducement. We therefore find that Intel has standing and proceed to consider the merits of its appeal.” (citations removed)

Of course, citing Grit for a proposition that is clearly erroneous to support another decision that will be (and is) clearly erroneous is par for the course at the Federal Circuit. Standing be damned, the Federal Circuit wanted to allow Intel to appeal because Qualcomm didn’t lose all the claims challenged at the PTAB!

Furthermore, the Federal Circuit obviously is unfamiliar with Qualcomm’s business model (which is astonishing). Qualcomm licenses its portfolio. So, as long as Intel would reasonably engage in licensing negotiations in a fair and reasonable manner there would be no reason for them to anticipate Qualcomm would resort to the judicial process. Qualcomm does not sue first and ask questions later, that is not their model. Of course, with those that are recalcitrant and who engage in predatory infringement, they do find it necessary to sue from time to time to enforce their rights. But a crystal ball is not one of the essential tools for a judge or court when determining the existence of constitutional standing, so the Federal Circuit decision to allow Intel to appeal is clearly erroneous.

Apple Petitions SCOTUS to Review Federal Circuit’s Article III Dismissal

There is a wrinkle in all of this, since at the end of the day any fight between Qualcomm and Intel is a proxy war between Qualcomm and Apple.

In ruling that Intel had Article III standing to pursue its IPR appeals, the Federal Circuit noted that Intel is not a party to the licensing agreement between Apple and Qualcomm that settled the infringement claims between those parties as to the patents-at-issue. Twice this past year, the Federal Circuit had ruled that Apple’s licensing agreement with Qualcomm extinguished Article III standing for Apple to pursue its own appeals of IPR proceedings challenging the validity of Qualcomm’s patents. On November 17, Apple filed a petition for writ of certiorari with the Supreme Court asking the Court to find that a licensee entering an agreement to license multiple patents has Article III standing to challenge the validity of patents covered by that agreement. We await a decision from the Supreme Court on whether they will take the case.

In the second Federal Circuit decision dismissing Apple’s appeal for lack of Article III standing, Circuit Judge Pauline Newman penned a lengthy dissent which indicates that Apple’s petition for cert could pique some interest at the Supreme Court. Judge Newman argued that the AIA did not extinguish the Supreme Court’s ruling in Lear v. Adkins (1969), which overturned the doctrine of licensee estoppel, nor did it condition the appealability of PTAB decisions based on licensee status. Cases cited in the majority opinion to support the court’s dismissal of Apple’s appeal on Article III grounds, including Consumer Watchdog v. Wisconsin Alumni Research Foundation (2014), involved public interest entities that didn’t have the same potential for infringement liability, as Apple’s license agreement with Qualcomm will expire before the patent claims reach their expiration date. Judge Newman found that the AIA’s estoppel provisions alone provide Apple with Article III standing as they prevent Apple from pursuing invalidity grounds raised at the PTAB in district court litigation.

While there are other areas of patent law where Supreme Court review would be much more helpful, including the Section 101 issues on which the Court continues to pass, one could see SCOTUS fielding this question simply because it’s easier to grasp than judicial exceptions to patent eligibility. The Federal Circuit’s decision to find Article III standing for Intel, which hadn’t been sued on the challenged Qualcomm patent claims, makes the CAFC’s own rulings on the subject seem inconsistent.

 

Image Source: Deposit Photos
Author: wolterke
Image ID: 42165711

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