Federal Circuit Finds Consumer Watchdog Lacks Standing to Appeal Reexamination Decision Upholding WARF Stem Cell Patent

In Consumer Watchdog v. Wisconsin Alumni Research Foundation, the Federal Circuit held that an inter partes reexamination requester must establish an injury in fact sufficient to confer Article III standing in order to appeal a decision of the Patent Trial and Appeal Board to the Federal Circuit. This decision may discourage some parties from instituting inter partes review or post-grant review proceedings, since they may not be able to appeal a decision upholding the challenged patent.

The Patent at Issue

The Patent at issue was WARF’s U.S. Patent 7,029,913, directed to human embryonic stem cell cultures. Consumer Watchdog (then known as the Foundation for Taxpayer and Consumer Rights) requested inter partes reexamination of the patent, which was ordered under Control No. 95/000,154. The USPTO Examiner upheld the patentability of the claims (with some amendments) and the Board affirmed. Consumer Watchdog appealed to the Federal Circuit under 35 USC § 141.

The Problem of Standing

Although the statute provides for appeals to the Federal Circuit by “a third-party requester … dissatisfied with the final decision in an appeal to the Board,” the court’s authority to hear appeals is limited by Article III of the U.S. Constitution. As explained by the Federal Circuit, “a hard floor of Article III jurisdiction” is the requirement that the party seeking review “must show that it has suffered an ‘injury in fact.’”

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Prost and joined by Judge Rader and Judge Hughes.

The Federal Circuit considered whether Consumer Watchdog had alleged any injury in fact related to the WARF stem cell patent, and found that it had not.

• Consumer Watchdog does not allege that it is engaged in any activity involving human embryonic stem cells that could form the basis for an infringement claim.
• [Consumer Watchdog] does not allege that it intends to engage in such activity.
• [Consumer Watchdog does not] allege that it is an actual or prospective licensee, or that it has any other connection to the ’913 patent or the claimed subject matter.

The court found that the only “injury” alleged was the Board’s decision upholding the patent. The court explained that was “insufficient to confer standing” because the decision ”did not invade any legal right conferred by the inter partes reexamination statute.” While the statute ”allowed any third party to request reexamination, and, where granted, allowed the third party to participate,” it “did not guarantee a particular outcome favorable to the requester.” Thus, Consumer Watchdog received all it was entitled to under the statute by the conduct of the reexamination proceeding, regardless of the outcome.

The court acknowledged the impact of 35 USC § 141, but explained that while that statute “may relax the [standing] requirements of immediacy and redressability, and eliminate any prudential limitations, …. [it] does not eliminate the requirement that Consumer Watchdog have a particularized, concrete stake in the outcome of the reexamination.”

The court also determined that the estoppel provisions of the reexamination statute do not give rise to an injury in fact sufficient to confer standing, at least in this particular case, because there was no indication that Consumer Watchdog would be involved in litigation or another proceeding challenging the patent where reexamination estoppel might apply.

Consumer Watchdog has only alleged a general grievance concerning the ’913 patent. It states that it is a nonprofit consumer rights organization that is concerned about the potential preemptive reach of the ’913 patent and the alleged burden it places on taxpayer-funded research in the State of California. …. While Consumer Watchdog is sharply opposed to the Board’s decision and the existence of the ’913 patent, that is not enough to make this dispute justiciable.

The Impact on AIA Patent Trials

While this case arose from an inter partes reexamination proceeding, the decision is likely to apply to appeals in the new AIA patent trial proceedings (inter partes review,  post-grant review, and covered business method patent review). Indeed, the AIA amended the same statute (35 USC § 141) to provide for appeals by “[a] party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board.” This decision may discourage parties who cannot establish an injury in fact related to the target patent from instituting such proceedings.