Article III Review of Agency Action May Once Again Interest SCOTUS

A perceived lack of Article III standing in appeals from the Patent Trial & Appeal Board (PTAB) to the Federal Circuit can doom an appeal. More recently, the Court has had an opportunity to explore “competitor standing” as a potential avenue for standing of close competitors. But, the Court has applied a patent-specific view to distinguish from controlling precedent on the impact of the “government action” of competitor standing.

A few weeks back in Gen. Elec. Co. v. United Techs. Corp., (hereinafter “GE”) the court made clear that for the competitor standing doctrine to apply, the government action must change the competitive landscape by, for example, creating new benefits to competitors. Building on its earlier decision in AVX Corp. v. Presidio Components, Inc., the Court found that the government action with respect to a unique property right like a patent, militates in favor of a narrower application of the precedent, drawing competing views from the Court.

This debate seems destined for cert petition.

The Court’s explanation of competitor standing in GE, like AVX, explained that (here):

" Not every party to an IPR will have Article III standing to appeal a final written decision of the Board. To establish standing, an appellant must have suffered an injury in fact that has a nexus to the challenged conduct and that can be ameliorated by the court. The injury in fact must be “concrete and particularized,” not merely “conjectural or hypothetical.” . . . .

For the competitor standing doctrine to apply, the government action must change the competitive landscape by, for example, creating new benefits to competitors. Put another way, the government action must alter the status quo of the field of competition. Here, the Board’s upholding of claims 7–11 of the ’605 patent did not change the competitive landscape for commercial airplane engines. Therefore, we see no competitive harm to GE sufficient to establish standing to appeal.

That is, the Court found a necessary patent-specific impact to satisfy “government action,” seemingly looking for some indication of planned or existing infringement.

Judge Hughes offered a contrary view in a concurrence (bound by precedent), explaining a broader view of government action:

" I write separately because I believe that precedent [AVX] has developed an overly rigid and narrow standard for Article III standing in the context of appeals from inter partes review proceedings. [¶] . . . The Court has repeatedly held that government actions altering the competitive landscape of a market cause competitors probable economic injury sufficient for Article III standing. And I do not believe that a Board decision erroneously upholding a competitor’s patent in an IPR is meaningfully different from the type of government actions held to invoke competitor standing in those cases. . . .

Our patent-specific treatment of competitor standing is out of step with its application in other areas. The Supreme Court has repeatedly found standing where government action subjects the plaintiff to increased competition because of the probable economic injury that accompanies it. In Data Processing, for example, the petitioners – organizations who sold data processing services to businesses – challenged a ruling by the Comptroller of Currency that allowed national banks to provide data processing services to other banks and bank customers. The Supreme Court held that the Comptroller’s ruling caused petitioners an injury-in-fact because the resulting increase in competition would likely cause petitioners future economic harm. Similarly, in Clinton the Supreme Court held that a farmers’ cooperative suffered a concrete injury when the president cancelled a tax benefit enacted to facilitate the purchase of processing plants by such cooperatives. The Court found that by depriving the co-operative of their statutory bargaining chip, the cancellation inflicted a sufficient likelihood of economic injury to establish standing under our precedents.

Like an action that increases competition, government action that excludes an appellant from effectively competing in a market, such as erroneously upholding its competitor’s patent, provides a benefit to the competitor and causes competitive harm to the appellant that presumptively leads to economic injury. Thus, I do not believe there is any sound basis for AVX Corp.’s patent-specific treatment of the competitor standing doctrine.

(internal quotations and citations omitted)

The concurrence also pointed the case law’s acknowledgement that aspects of Article III standing may be relaxed where a statutory right to appeal is provided (as in the AIA). Indeed, it may be argued that the AIA cannot serve its purpose as an alternative to litigation without appellate review.

Given the Court’s recent interest in appellate review issues in Dex Media, this issue could find an audience as well.

Stay tuned.