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IP Alert: Federal Circuit Clarifies Standing Requirement

August 9, 2017

On August 7, 2017, in Personal Audio, LLC v. Electronic Frontier Foundation, the Federal Circuit clarified that parties that are not invoking the authority of federal courts do not need to meet the constitutional standing requirements to participate as respondents in federal court proceedings.

Respondent Electronic Frontier Foundation (“EFF”), a nonprofit organization that advocates on behalf of consumers of digital technology, filed a petition for inter partes review (IPR) regarding a patent assigned to petitioner Personal Audio. The Patent Trial and Appeal Board (PTAB) held that certain claims of Personal Audio’s patent were invalid. Personal Audio appealed the PTAB’s decision to the Federal Circuit.

During the briefing period, the Federal Circuit asked the parties to address whether respondent EFF had standing to participate in the appeal proceeding in view of the Federal Circuit’s holding in Consumer Watchdog v. Wisconsin Alumni Research Foundation. That case held that “a PTAB petitioner that does not meet the Article III case-or-controversy requirement does not have standing to invoke judicial power, and thus does not have standing to appeal to this court from a PTAB decision on inter partes reexamination.” The court in Consumer Watchdog stated that “although Article III standing is not necessarily a requirement to appear before an administrative agency, once a party seeks review in a federal court, ‘the constitutional requirement that it have standing kicks in’” (quoting the D.C. Circuit case Sierra Club v. E.P.A.). Thus, the Federal Circuit held that “Consumer Watchdog, a non-profit organization described as representing the public interest, did not have standing to appeal to the Federal Circuit from the PTAB decision that sustained the validity of the patent Consumer Watchdog had challenged.”

In the Personal Audio case, the Federal Circuit determined that Consumer Watchdog was inapplicable because “EFF is not the appellant.” In making this determination, the court relied on the earlier U.S. Supreme Court case ASARCO Inc. v. Kadish, which held that “standing to appeal is measured for the party ‘seek[ing] entry to the federal courts for the first time in the lawsuit”:

Although respondents would not have had standing to commence suit in federal court based on the allegations in the complaint, they are not the party attempting to invoke the federal judicial power. Instead it is petitioners, the defendants in the case and the losing parties below, who bring the case here and thus seek entry to the federal courts for the first time in the lawsuit.

In addition, the Federal Circuit referred to U.S. Department of Labor v. Triplett, where the Supreme Court stated, “Because respondent has not invoked the authority of any federal court, then, federal standing principles are simply inapplicable to him.”

Accordingly, the Federal Circuit determined that the party invoking the authority of the Federal Circuit was Personal Audio, which had proper standing under Article III. “With Article III satisfied as to the appellant,” the court held, “EFF is not constitutionally excluded from appearing in court to defend the PTAB decision in its favor.”

The case confirms that successful PTAB petitioners may participate in the patent owner’s appeal from any adverse PTAB decision.

For more information, please contact Fitch Even partner Eric L. Broxterman, author of this alert.

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