The US Court of Appeals for the Federal Circuit ruled that a party did not have Article III appellate standing to obtain review of a final ruling of the Patent Trial & Appeal Board because the underlying district court proceedings had been dismissed with prejudice after a settlement and license agreement were reached. Apple Inc. v. Qualcomm Inc., Case Nos. 20-1561; -1642 (Fed. Cir. Apr. 7, 2021) (Moore, J.)
After Qualcomm sued Apple in district court, Apple filed petitions for inter partes review (IPR) of the asserted patent claims. The Board instituted on both petitions but found that Apple did not prove the challenged claims were obvious. Apple appealed the Board’s final written decisions finding non-obviousness.
While the IPR proceedings were pending, the parties settled their litigation worldwide. The settlement included a license to Apple and payment of royalties to Qualcomm. The parties filed a joint motion to dismiss Qualcomm’s district court action with prejudice, which the district court granted.
At the Federal Circuit, Qualcomm argued that Apple waived any argument to establish its appellate standing by failing to address or submit supporting evidence in its opening brief. However, the Federal Circuit exercised its discretion to reach the issue of standing, explaining that the issue of standing was fully briefed, there was no prejudice to Qualcomm, and the question of standing impacted these and other appeals. Qualcomm sought leave to file a sur-reply addressing Apple’s evidence and arguments on standing, and agreed that if its motions to file a sur-reply were granted, it would not suffer any prejudice, and that evaluating the evidence may resolve standing in other pending cases. The Court granted Qualcomm leave to file a sur-reply.
Apple argued that it had appellate standing based on its ongoing payment obligations that conditioned certain rights in the license agreement, the threat that Apple would be sued for infringing the two patents-at-issue after the expiration of the license agreement, and the estoppel effects of 35 USC § 315 on future challenges to the validity of the asserted patents. The Federal Circuit disagreed.
Distinguishing the 2007 Supreme Court case MedImmune v. Genentech (where standing was found based on license agreement payment obligations after analyzing evidence for injury in fact or redressability), the Federal Circuit explained that Apple did not allege that the validity of the patents-at-issue would affect its contract rights and ongoing royalty obligations. The license agreement between the parties involves tens of thousands of patents. Apple did not argue or present evidence that the validity of any single patent (including the two patents-at-issue) would affect its ongoing payment obligations, or identify any related contractual dispute that could be resolved through determining the patents-at-issue’s validity. Accordingly, the Court concluded that Apple failed to establish Art. III standing under MedImmune.
THREAT OF POST-LICENSE SUITS
Apple’s second argument was based on the possibility that Qualcomm might sue Apple for infringing the patents-at-issue after the license expired. The Federal Circuit found the mere possibility of any such suit [...]