IPR Petitioner Lacked Standing to Appeal Adverse Decision

February 2017

Phigenix, Inc. v. ImmunoGen, Inc., No. 2016-1544 (Fed. Cir. Jan. 9, 2017)

In Phigenix, the Federal Circuit held that a party that has standing to challenge a patent before the Patent Trial and Appeal Board does not necessarily have standing to appeal the Board’s adverse decision.

ImmunoGen was the owner of a patent directed to antibody-based methods of treating cancer. Phigenix described itself as a for-profit discovery stage biotechnology, pharmaceutical, and biomedical research company. Phigenix did not manufacture any products, but alleged it was developing an intellectual property portfolio that included a patent it believed covered the same subject matter as ImmunoGen’s patent.

Phigenix petitioned for inter partes review of ImmunoGen’s patent. The Board instituted review, but found the challenged claims to be nonobvious.  Phigenix appealed the Board’s adverse decision to the Federal Circuit.  ImmunoGen defended on the basis that Phigenix lacked standing.

Federal courts are governed by Article III of the U.S. Constitution and their jurisdiction is limited to cases or controversies. For an individual to have standing under the “case or controversy” requirement, they must have suffered an injury in fact that is fairly traceable to the challenged conduct of the appellee, and that is likely to be redressed by a favorable judicial decision.

Federal agencies, such as the PTAB, are governed by Article I of the U.S. Constitution, and their jurisdiction is governed by statute. A person need not establish Article III standing to appear before an agency. While statute may extend a person the right to appeal an adverse agency decision, that right is not is not equivalent to or a substitute for Article III standing.  Until now, the Federal Circuit had never been confronted with the question of whether an appellant from an agency action had standing.

The court held that Sections 141(c) of the Patent Act, which grants a party the right to appeal an adverse IPR decision, does not erase the constitutional requirement for standing, and that Phigenix did not have standing because it had not suffered an injury in fact. Phigenix offered evidence of alleged injury claiming that the existence of ImmunoGen’s patents encumbered Phygenix licensing efforts. The Court speculated that Phigegenix might have standing if it faced the risk of infringing ImmunoGen’s patent, or if it was an active or prospective licensee of the patent, or if it otherwise planned to take any action that would implicate the patent.  But it found Phigenix’s evidence amounted to only hypothetical and conclusory concerns, and not injuries in fact.

Key takeaway: The AIA gave third parties broad rights to petition for inter partes review, even if those parties would not have been able to challenge a patent in district court.  The Federal Circuit’s ruling significantly limits the rights of those uninterested third parties to appeal adverse Board decisions.