Consistent with its own precedent, the US Court of Appeals for the Federal Circuit confirmed that to sustain an appeal from an America Invents Act (AIA) proceeding, an appellant party must establish a concrete and substantial risk of infringement to establish Art. III standing. JTEKT Corp. v. GKN Automotive Ltd., Case No.17-1828 (Fed. Cir. Aug. 3, 2018) (Dyk, J).

JTEKT petitioned for inter partes review (IPR) of a GKN patent directed to a drivetrain for a four-wheel-drive vehicle. Following a Patent Trial and Appeal Board (PTAB) finding that the instituted (and non-disclaimed) claims were not unpatentable, JTEKT appealed the PTAB’s decision to the Federal Circuit. GKN moved to dismiss for lack of standing. The motions panel denied GKN’s motion, determining that the issue should be briefed.

Following briefing, the Federal Circuit found that JTEKT failed to establish standing and dismissed the appeal, explaining that although Art. III standing is not required to institute an IPR proceeding, the AIA does not dispense with the Art. III injury-in-fact requirement for appeals to an Art. III court. The Court relied on Phigenix v. Immunogen (IP Update, Vol. 20, No. 2) and Consumer Watchdog v. Wisconsin Alumni Research Foundation (IP Update, Vol. 17, No. 7) to note that it is the appellant’s burden to demonstrate an injury in fact to establish standing.

By design, AIA proceedings, such as IPRs, enable a party to secure a judicial determination regarding patent validity in advance of actual, liability-creating injury, much like a declaratory judgment but without the requirement of concreteness. This, however, does not obviate the need for a petitioner to establish standing for an appeal to an Art. III court. Although a party need not have a product on the market to establish such standing, where a party relies on potential infringement liability as the basis for injury in fact, it must establish that it has concrete plans for future activity that create a substantial risk of future infringement or would likely cause the patentee to assert a claim for infringement.

The Federal Circuit concluded that the evidence presented by JTEKT—two declarations from in-house engineers—fell short of meeting this burden. The declarations established that JTEKT did not yet have a final product that could be analyzed for potential infringement because the concept for the design was not finalized and might continue to change as further testing and demonstrations were carried out. JTEKT’s own engineer declared “because the product . . . is not . . . yet finalized, JTEKT cannot definitely say whether or not it will infringe the [] patent and the potential risk of infringement . . . is impossible to quantify at this time.” The Court found such evidence insufficient to establish a concrete and substantial risk of infringement, and therefore held that JTEKT failed to establish Art. III appellate standing.

Practice Note: Petitioners seeking to initiate AIA proceedings should consider whether they have standing to appeal PTAB decisions to the Federal Circuit in the event the AIA proceeding is unsuccessful.