PIPLI to Supreme Court: Fix the Federal Circuit’s Standing Law (Again)!
by Alex Moss | December 27, 2021
On Thursday, December 16, Engine Advocacy, the App Association, and the Public Interest Patent Law Institute filed an amicus brief urging the Supreme Court to review—and reverse—the Federal Circuit’s decision in Apple v. Qualcomm. This is one of a growing number of recent decisions that deny patent challengers access to judicial review in ways that defy the Supreme Court and Congressional intent while imperiling U.S. innovation, competition, and economic growth.
Before the Federal Circuit ruled, Apple successfully petitioned the Patent Office to review one of the innumerable patents owned by Qualcomm. Despite initially finding the patent likely invalid—a requirement for post-grant review—a panel of three administrative patent judges rejected Apple’s arguments and upheld the patent. Apple appealed that decision, but not before entering into a time-limited settlement agreement with Qualcomm covering its portfolio of more than 100,000 patents. Even though the patent Apple challenged will still be in effect after that settlement agreement expires, the Federal Circuit held that Apple lacked standing to appeal the Patent Office’s decision. According to the Federal Circuit, Apple could only appeal if it broke the license agreement or challenged all 100,000 patents it covered.
The Federal Circuit’s decision is wrong on the law and bad for everyone—except massive companies with massive patent arsenals like Qualcomm. The decision is wrong on the law because the Supreme Court has repeatedly held that companies have standing to challenge the validity of patents they have licensed. And Congress expressly granted parties in administrative patent reviews the right to appeal final decisions in the America Invents Act. The Federal Circuit’s decision defies Supreme Court precedent and Congress’s intent.
The decision is also bad for innovation, competition, and economic growth. Companies that license patents are often the best-positioned to bring validity challenges because they have the resources, expertise, and motivation to do so. And administrative patent reviews are the most efficient way to challenge wrongly-granted patents. But if petitioners cannot appeal adverse final decisions, the costs of administrative review will start to outweigh its benefits. Importantly, petitioners are estopped (or prohibited) from raising arguments in district court litigation that they raised or could have raised before the Patent Office. If they cannot challenge adverse decisions, they will be barred from raising winning arguments in litigation that emerges later, putting them at a stark disadvantage.
Making administrative patent reviews more costly hurts the public most of all. Small businesses, startups, and consumers often do not have the resources or expertise to challenge invalid patents. They benefit directly when big companies like Apple take on the task of doing so. Invalid patents create barriers to entry, especially for startups that cannot afford to risk a lawsuit, however meritless—especially when the lawsuit involves several (or thousands and thousands) of patents. That gives major patent owners, like Qualcomm, the power to use their massive patent portfolios to deter prospective innovators and competitors. When the patent system deters competition and innovation, it is doing the opposite of what the Constitution says it should do: promote technological and scientific progress.
We hope the Supreme Court grants certiorari and corrects the Federal Circuit’s dangerous deviation from precedent.
We are grateful to the students and faculty from Harvard Law School Cyberlaw Clinic—Falicia Elenberg, Anthony Pericolo, and HLS Clinical Professor Christopher Bavitz—who worked closely with us on the amicus brief. A decision from SCOTUS about whether to address the case on the merits is expected in the new year.