Federal Circuit Panel Establishes a Standard for Appellants to Show Standing in Appeals from Federal Agency Final Actions

February 2017

By: Sheri L. Gordon

Company A petitions for Inter Partes Review (IPR) of a competitor’s patent, the IPR is instituted and proceeds to a final written decision in which patentability of the challenged claims is confirmed. Does Company A have standing to appeal the final written decision to the CAFC? A Federal Circuit panel tackled this question in Phigenix, Inc. v. ImmunoGen, Inc., Appeal No. 2016-1544 (Fed. Cir. Jan. 9, 2017).

Phigenix does not make any product, but has, or is developing, a patent portfolio for licensing. Phigenix petitioned for IPR of an ImmunoGen patent, because that patent is licensed to Genentech, and Phigenix believes that Genentech’s activities pursuant to that license are covered by one of Phigenix’s patents. In fact, Phigenix had attempted to license its patent to Genentech. Those efforts were not successful, however, and Phigenix began pursuing various legal strategies, including IPR of the licensed ImmunoGen patent. Phigenix reasoned that if its own patent covered Genentech’s activities, that patent would also cover subject matter claimed in the ImmunoGen patent. Thus, in Phigenix’s estimation, Genentech would license the Phigenix patent (and pay fees/royalties to Phigenix) if the ImmunoGen patent were invalidated. In the final written decision, though, the validity of the challenged claims of ImmunoGen’s patent was confirmed. Phigenix appealed the decision.

Before the Federal Circuit, ImmunoGen moved to dismiss the appeal on grounds that Phigenix lacked standing to appeal the decision. In its opinion, the Federal Circuit panel observed that an appellant must satisfy Article III (constitutional) standing requirements in order to pursue an appeal of a final decision, noting that the minimal constitutional requirements are that an appellant have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.” Slip op. at 4. The panel particularly noted that not every party appearing before a federal agency in a matter will have Article III standing to appeal the agency’s final decision.

The panel next observed that the Court, since its inception, has not established a standard for appellants to demonstrate standing in cases where standing is placed in issue, and set out to define a standard. The panel recognized that the standard adopted would have to identify the appellant’s burden of production, the evidence it must produce in order to satisfy that burden, and the time when such evidence must be produced to the court. Slip op. at 6. The panel then determined that, to establish Article III standing if challenged, the appellant’s burden of production is the same as that of a plaintiff moving for summary judgment in the district court. Id. at 6-7. The panel also determined that the appellant must identify evidence from the administrative record below sufficient to support its standing; or, if record evidence does not exist because standing was not an issue before the agency, submit affidavits and/or other evidence to support its standing, and that such evidence must be produced at the appellate level at the earliest possible opportunity. Id. at 8.

Applying this standard to the question of Phigenix’s standing, the panel concluded that Phigenix failed to demonstrate that it suffered an injury in fact. Phigenix did not contend that it risks a claim that it infringes ImmunoGen’s patent, that it has a license to the patent, that it is a prospective licensee of the patent, or that it otherwise intends to undertake some action that would implicate the patent. Instead, Phigenix claimed an actual economic injury based on increased competition between itself and ImmunoGen as a result of the ImmuGen patent. Phigenix asserted that the existence of the ImmunoGen patent impacted Phigenix’s ability to license its own patents to others, and that Phigenix would obtain a portion of the millions in licensing revenues that ImmunoGen receives if the ImmunoGen patent were invalidated. Phigenix relied largely on declarations submitted with its response to the motion to dismiss to support its claimed economic injury. Upon review, however, the panel found that the declarations failed to satisfy the standard for declarations supporting summary judgment and particularly were lacking in supporting facts that would be admissible as evidence. Slip op. at 9-10. The panel noted, for instance, that Phigenix neither alleged nor submitted facts to show that a licensee of the ImmunoGen patent also licensed the Phigenix patent. Other arguments that Phigenix made to show that it suffered an injury in fact were rejected by the panel.