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IP Alert
IP Alert: You Can Lose an IPR and Be Unable to Appeal

August 6, 2018

On August 3, in JTEKT Corp. v. GKN Automotive LTD., the Federal Circuit ruled that the appellant, JTEKT, lacked standing to appeal an inter partes review (IPR) decision because “JTEKT has not established at this stage of the development that its product creates a concrete and substantial risk of infringement or will likely lead to claims of infringement.” JTEKT, the challenger, is left in the unenviable position of facing estoppel against any future court challenge of the patent, but lacking Article III standing to appeal the adverse decision of the Patent Trial and Appeal Board (PTAB).

JTEKT initiated an IPR against a GKN patent in which a subset of claims survived. JTEKT then sought to challenge the surviving claims on appeal to the federal circuit court. At the time of the decision, GKN had not alleged infringement and JTEKT’s product was not yet finalized. The record reflected that JTEKT’s product will continue to evolve before it is ready for sale.

Under 35 U.S.C. § 311(a), any person or entity may petition the Patent Office to institute an IPR. There is no requirement that the petitioner has Article III standing. However, Article III injury-in-fact requirement remains for appealing IPR decisions to district courts. Citing Customer Watchdog v. Wis. Alumni Research Fund, the court stated that “typically in order to demonstrate the requisite injury in an IPR appeal, the appellant/petitioner must show that it is engaged or will likely engage ‘in an activity that would give rise to a possible infringement suit’. . . or has contractual rights that are affected by a determination of patent validity.”

The court noted that having no product on the market does not preclude Article III standing and “IPR petitioners need not concede infringement to establish standing to appeal.” But before appealing from an adverse PTAB decision to an Article III court, the losing petitioner “must establish that it has concrete plans for future activity that creates a substantial risk of future infringement or likely cause the patentee to assert a claim of infringement.” JTEKT argued that there is potential risk of infringement, but because the product has not been finalized, there is nothing that can be analyzed for infringement. The court concluded that in this case, there is no concrete and substantial risk of infringement or likelihood of claims of infringement.

JTEKT also argued that the creation of estoppel based on its participation in the IPR constitutes a separate and independent injury in fact. The court ruled that estoppel does not constitute injury in fact when the appellant is not engaged in any activity that would give rise to a possible infringement suit in the first place.

This decision is notable in that JTEKT’s preemptive challenge to GKN’s patent actually resulted in the creation of estoppel before any infringement is alleged. Petitioners should carefully consider the timing of their IPR filings in view of this ruling.

If you have any questions regarding this decision, please contact Fitch Even partner Karen J. Wang, author of this alert.

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