Standing or Guesswork? A Speculative Risk of Patent Cancellation is Insufficient for Standing
In Us Inventor, Inc. v. United States Patent And Trademark Office, Appeal No. 24-1396, the Federal Circuit held that appellants who alleged a speculative risk of patent cancellation failed to establish standing to challenge denial of a USPTO rulemaking petition.
US Inventor, Inc. and National Small Business United (collectively, “appellants”) jointly filed a petition for rulemaking to establish criteria for limiting the discretionary authority of the USPTO to institute IPR and PGR proceedings. The proposed rule allowed a patent owner to prevent institution of an IPR or PGR if, for example, the patent owner qualified as a small business and actually reduced the challenged claims to practice. The USPTO denied appellants’ petition. Appellants filed a complaint against the USPTO, alleging that the USPTO’s denial of their petition violated the Administrative Procedure Act and the America Invents Act. The district court dismissed the appellants’ complaint due to a lack of organizational and associational standing. Appellants appealed to the Federal Circuit.
On Appeal, appellants asserted that the district court erred in dismissing their complaint for lack of associational standing. Appellants argued that, due to the USPTO’s denial of their petition, their members suffered the injury of the risk of cancellation of a patent in the event of institution of an IPR or PGR. The Federal Circuit held that appellants lacked associational standing because they failed to show that at least one of their members would have had standing to sue. Specifically, because an extended chain of future events would have to occur before a member would be harmed, the purported risk of cancellation was “speculative” rather than “actual or immediate.” The Federal Circuit therefore affirmed the district court’s dismissal for lack of standing.
$10 million to $1: Exclusion of Damages Expert Results in Nominal Damages for Surgical Stapler Patent Infringement
In Rex Medical, L.P. v. Intuitive Surgical, Inc. , Appeal No. 24-1072, the Federal Circuit held that Damages testimony was excluded for failing to apportion the value of the patent portfolio to isolate the value of the asserted patent.
Rex sued Intuitive alleging Intuitive’s surgical stapler infringed one of Rex’s patents: the ’650. A jury found the asserted claim in Rex’s patent was valid and infringed and awarded damages of $10 million. Intuitive moved for judgement as a matter of law (JMOL) on infringement, invalidity, and damages. The district court denied the motion as to infringement and invalidity but granted the motion as to damages and reduced the award to $1. Rex appealed.
The Federal Circuit affirmed. It held that the district court properly excluded Rex’s expert. Rex’s expert relied on a comparable lump-sum license agreement covering a portfolio of patents, including the ’650 patent and eight other patents, seven US applications, and nineteen patents or applications from outside the US. But the expert failed to apportion the value attributable to the ’650 patent. The court emphasized that damages experts must reliably allocate value among licensed patents when using portfolio licenses. The court found that the expert’s methodology was “untethered to the facts of this case.” With no other evidence presented, the jury was unable to reasonably infer a royalty for the ’650 patent alone. Thus, the Federal Circuit held that any damages award would be speculative and affirmed the district court’s decision to award only nominal damages.
Nothing Unusual with Recusal Refusal
In Centripetal Networks, LLC, v. Palo Alto Networks, Inc., Appeal No. 23-2027, the Federal Circuit held that despite affirming the denial of Centripetal’s recusal motion as untimely and frivolous and rejecting other arguments, the Federal Circuit vacated and remanded the Board’s final written decision for failing to properly consider evidence of copying.
Palo Alto Networks petitioned for IPR of Centripetal’s patent. A three-judge panel including APJ McNamara instituted inter partes review. Centripetal requested rehearing of the institution, and Cisco later filed its own petition for IPR and sought joinder. Due to Cisco’s request for Joinder, Centripetal became aware that McNamara owned Cisco stock. After the Precedential Opinion Panel declined to take up Centripetal’s rehearing request, Centripetal filed a motion for recusal of the entire panel and vacatur of the institution decision. The panel granted Cisco’s IPR and joinder. Although the panel concluded that the recusal motion was frivolous and untimely, McNamara and one other APJ withdrew from the panel. After two new APJs were assigned, the new panel denied the motion for vacatur and issued a final written decision holding specific claims of the patent obvious without McNamara’s input. Centripetal appealed.
On appeal, the Federal Circuit held that the Board did not abuse its discretion in holding that the recusal motion was untimely because Centripetal knew of the alleged conflict of interest for over three months before raising it close to a deadline. The Federal Circuit also held that Centripetal’s other arguments failed on the merits. In particular, McNamara’s stock fell below the threshold for recusal at the time of empaneling, the Board’s denial of Centripetal’s arguments as frivolous did not deny Centripetal its due process rights, and recusal would not have mandated vacatur.
However, the Federal Circuit held that the Board erred because it did not properly consider evidence of copying in the final written decision. Accordingly, the Federal Circuit vacated and remanded the board’s decision to conduct a proper analysis of copying.
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