IPR Appeal? Not Without Standing (and not if Moot), According to the Federal Circuit.

Written by: James Matthew Gould

There is now a clear line between the statutory right of any party (other than the patent owner) to file a petition for inter partes review (IPR), and the additional Article III requirements to appeal an adverse final written decision resulting from that proceeding.  Relying on this new distinction yesterday, the U.S. Court of Appeals for the Federal Circuit (CAFC) dismissed an appeal―from biotech company Momenta―of an IPR final written decision upholding the patentability of Bristol-Myers Squibb’s claims covering its Orencia® (abatacept) biologic product.  Because of evidence that Momenta had abandoned its development of an Orencia® biosimilar, the CAFC found that Momenta’s IPR appeal was barred by a lack of standing and for mootness.

The challenged claims are drawn to formulations of an immunosuppressive protein molecule (CTLA4Ig) used in treatment of immune system disorders such as rheumatoid arthritis.  In 2015, Momenta was in the process of developing a competing abatacept biosimilar product and petitioned for IPR arguing that the BMS’ claims were obvious.  The PTAB instituted the IPR, but ultimately issued a final written decision upholding the patentability of the claims.  Momenta appealed to the CAFC.

Rather than ruling on the merits of Momenta’s patent challenge, the CAFC dismissed Momenta’s appeal out of hand “for absence of standing/jurisdiction and for mootness” after it became apparent that Momenta’s proposed product had failed clinical trials and that Momenta had terminated its development of the biosimilar.  In particular, the CAFC held that “Momenta does not have standing to invoke federal appellant jurisdiction, and the appeal is mooted by Momenta’s discontinuance of any potentially infringing activity.”

On the issue of standing, the CAFC noted that Momenta “initially stressed that it had spent millions of dollars in its development of an Orencia® biosimilar”, but, citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), the CAFC ruled that “now upon Momenta’s termination of all potentially infringing activity, Momenta has not shown ‘an invasion of a legally protected interest’ that is ‘actual or imminent, not conjectural or hypothetical’.”  Despite all of Momenta’s prior activity, the CAFC emphasized that “Momenta has now made clear that no concrete plans are afoot” (thus distinguishing E.I. DuPont de Nemours & Co. v. Synvina C.V., 904 F.3d 996 (Fed. Cir. 2018), where DuPont had “concrete plans” for present and future activity that created a “substantial risk of future infringement”).  Thus, in view of Momenta’s abandonment of development of a competing product, the CAFC ruled that “Momenta has no legally protected interest in the validity of the [patent at issue], and there is no ‘real need to exercise the power of judicial review’.”  In response to Momenta’s argument that “it might at some future time receive a royalty from Mylan, if Mylan should produce an Orencia® biosimilar”, the CAFC cited Clapper v. Amnesty Int’l USA, 568 U.S. 398 (2013), in holding that “there is no support [for such an argument] in precedent”.

Momenta additionally argued that it was injured by the estoppel provision (35 U.S.C. § 315(e)), which would preclude it in any subsequent litigation from asserting certain invalidity defenses against BMS’ patent.  But the CAFC did not accept that argument either noting that “estoppel cannot constitute an injury-in-fact when Momenta ‘is not engaged in any activity that would give rise to a possible infringement suit.’”

Turning to the issue of mootness, the CAFC acknowledged that “standing and mootness may not be coextensive in all cases” (a finding of mootness being predicated on the “requisite interest” continuing throughout the litigation’s existence) but nevertheless ruled that in this case “the cessation of potential infringement means that Momenta no longer has the potential for injury, thereby mooting the inquiry.”

In Europe, opposition proceedings at the European Patent Office, which have been available for several decades to parties wanting to challenge granted patents (regardless of specific commercial interest), were often cited favorably during efforts here in the U.S. to establish IPR proceedings in the US Patent Office (an effort that finally came to fruition in 2011 under the AIA).  Although there are many differences between European oppositions and IPRs, it is interesting to note that first instance decisions in European oppositions (issued by the Opposition Division) are always appealable―as of right―to the EPO’s Technical Board of Appeal ― regardless whether or not the party challenging the patent claims has a demonstrable commercial interest or other such actual dispute or controversy.

By contrast, in rendering its decision, the CAFC has drawn a clear distinction between, on the one hand, the ability to file an IPR petition at the PTAB, and, on the other hand, the right to appeal an adverse IPR decision, where, according to the Court, requirements as to standing and the existence of “actual cases or controversies” will now come into play.  In other words, the right to challenge patentability at the agency level does not automatically extend to federal court jurisdiction on appeal.  Thus, this decision will potentially affect not only a pharmaceutical company such as Momenta that abandons its efforts to develop a competing product, but also so-called “non-practicing entities” such as hedge funds and other venture groups that have from time to time filed their own IPR petitions ― notably in the pharmaceutical sector.

And in the case of pharmaceutical and biotech companies, the Momenta decision leaves open the following question:  Short of outright abandonment of a competing program, how much ongoing, relevant commercial interest or “concrete plans” would be necessary to avoid a finding of lack of standing or mootness on appeal.  For example, would the result be different if a clinical trial for a planned biosimilar failed, but the company sponsoring the failed biosimilar could show that they were seriously considering pre-clinical development of a slightly different biosimilar product that would still be covered by the claims at issue?