US Inventor v. Vidal

CourtCourt of Appeals for the Fifth Circuit
DecidedSeptember 30, 2022
Docket21-40601
StatusUnpublished

This text of US Inventor v. Vidal (US Inventor v. Vidal) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
US Inventor v. Vidal, (5th Cir. 2022).

Opinion

Case: 21-40601 Document: 00516492204 Page: 1 Date Filed: 09/30/2022

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED September 30, 2022 No. 21-40601 Lyle W. Cayce Clerk

US Inventor Incorporated; Tinnus Enterprises, L.L.C.; 360 Heros, Incorporated; Ramzi Maalouf; Larry Golden; World Source Enterprises, L.L.C.; E-Watch, Incorporated,

Plaintiffs—Appellants,

versus

Katherine K. Vidal, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office,

Defendant—Appellee.

Appeal from the United States District Court for the Eastern District of Texas USDC No. 2:21-CV-47

Before King, Elrod, and Southwick, Circuit Judges. Per Curiam:*

* Pursuant to 5th Circuit Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Circuit Rule 47.5.4. Case: 21-40601 Document: 00516492204 Page: 2 Date Filed: 09/30/2022

Plaintiff-Appellants appeal the district court’s judgment dismissing their suit for lack of standing. We affirm the judgment of the district court. I. In 2011, Congress passed the America Invents Act (“AIA”). The AIA established an executive adjudicatory body called the Patent Trial and Appeal Board (“PTAB”) within the U.S. Patent and Trademark Office (“PTO”). 35 U.S.C. § 6(a). The AIA creates a variety of avenues for patent challengers to contest the validity of a patent before the PTAB. Notable for this case are two such avenues: inter partes review (“IPR”) and post-grant review (“PGR”). See id. § 6(c). IPRs and PGRs both have two phases: an institution phase and a trial phase. The institution phase’s purpose is for the PTAB to determine whether it should institute a trial on the merits. During an IPR, the patent challenger must demonstrate “that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” Id. § 314(a). During a PGR, the patent challenger must demonstrate “that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” Id. § 324(a). If such showings are not met, the PTAB must deny institution and the proceeding ends there. Id. §§ 314(a), 324(a). Even if the patent challenger does make the statutory showing, the PTAB may still choose not to institute a trial. This is so because, under Sections 314(a) and 324(a), “the agency’s decision to deny a petition is a matter committed to the Patent Office’s discretion.” Cuozzo Speed Techs., LLC v. Lee, 579 U.S. 261, 273 (2016) (regarding IPRs); Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1049 (Fed. Cir. 2017) (regarding PGRs). That said, the PTAB’s discretion is cabined by Congress, which requires that “[t]he [PTO] Director shall prescribe regulations . . . setting

2 Case: 21-40601 Document: 00516492204 Page: 3 Date Filed: 09/30/2022

No. 21-40601

forth the standards for the showing of sufficient grounds to institute” or deny either an IPR or PGR trial. See 35 U.S.C. §§ 316(a)(2), 326(a)(2). Since the AIA was passed, PTAB panels have examined when “discretionary denials” are appropriate and have adopted a nonexclusive list of factors for consideration. See Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha, No. IPR2016-01357, 2017 WL 3917706 (P.T.A.B. Sept. 6, 2017); NHK Spring Co. v. Intri-Plex Techs., Inc., No. IPR2018-00752, 2018 WL 4373643 (P.T.A.B. Sept. 12, 2018); Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH, No. IPR2019-01469, 2020 WL 740292 (P.T.A.B. Feb. 13, 2020); Apple Inc. v. Fintiv, Inc., No. IPR2020-00019, 2020 WL 2126495 (P.T.A.B. Mar. 20, 2020). The director of the PTO (the “Director”) has designated these decisions “precedential” in the PTAB’s Standard Operating Procedure, meaning that these decisions are “binding Board authority in subsequent matters involving similar facts and issues.” PTAB, Standard Operating Procedure 2 (Revision 10), at 11 (2018), https://www.uspto.gov/sites/default/files/documents/SOP2%20R 10%20FINAL.pdf. This brings us to the instant case. Plaintiff-Appellants comprise several individual patent holders and US Inventor Incorporated (“US Inventor”), an organization representing patent holder interests. As beneficiaries of discretionary denials (because such denials avoid potentially costly IPRs or PGRs), Plaintiff-Appellants desire additional “offramps” to avoid PTAB trials. Consequently, they brought a two-count suit seeking a preliminary and permanent injunction against the Director. First, they argued that Sections 316(a) and 326(a) mandate that the Director engage in notice-and-comment rulemaking and, thus, that the Director must go through the Administrative Procedure Act’s (“APA’s”) notice-and- comment process to issue standards for when discretionary denial is appropriate. Therefore, they requested that the district court compel the

3 Case: 21-40601 Document: 00516492204 Page: 4 Date Filed: 09/30/2022

Director to engage in notice-and-comment rulemaking when issuing discretionary denials. Second, they asserted that the issuance of the Standard Operating Procedure reflected that the Director engaged in rulemaking without notice and comment, and thus the Standard Operating Procedure must be set aside as unlawful. The Plaintiff-Appellants further sought a preliminary and permanent injunction enjoining the Director from granting institution in any AIA patent trial pending completion of the compelled rulemaking. The Director moved to dismiss the complaint, arguing that the plaintiffs lacked individual or organizational standing. The district court agreed and dismissed the complaint. The court explained that the individual plaintiffs could not show a legally cognizable injury because their alleged injury—the potential increased risk to their patents if they do not receive a discretionary denial during the institution stage—was not sufficiently concrete. Additionally, the court found no organizational standing under either of US Inventor’s proffered theories because it (1) could not show that the purported actions (or inactions) of the Director caused the organization to expend resources beyond its normal expenditures and (2) did not suffer an informational injury because it was not denied any particular information to which it was entitled. Plaintiff-Appellants timely appealed the decision to both this circuit and the Federal Circuit. The appeal in the Federal Circuit is being held in abeyance pending this court’s decision. II. Before proceeding to the standing analysis, we first note that there are two independently necessary requirements of subject matter jurisdiction. “Federal courts are courts of limited jurisdiction,” and we “possess only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life

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Ins. Co. of Am., 511 U.S. 375, 377 (1994). In other words, constitutional and statutory authorizations are both necessary requirements for us to have subject matter jurisdiction to hear a case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89 (1998); Erwin Chemerinsky, Federal Jurisdiction 300 (8th ed. 2020). This appeal implicates both such requirements.

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US Inventor v. Vidal, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-inventor-v-vidal-ca5-2022.