When Daniel Ravicher stood to argue an appeal last week at the U.S. Court of Appeals for the Federal Circuit, he was cut off almost immediately by Chief Judge Randall Rader.

“Do you have standing to be here?” Rader asked.

“I was afraid you’d ask me that,” Ravicher replied.

Thus began a legal debate that could have major repercussions for public interest groups challenging patent reexaminations by the U.S. Patent and Trademark Office. The outcome will likely determine whether third parties such as Ravicher’s client, the public interest group Consumer Watchdog, can lodge Federal Circuit appeals when PTO patent reviews don’t go their way.

The case dates back to 2006, when two public interest groups, Consumer Watchdog and the Public Patent Foundation, challenged a patent on human embryonic stem cells owned by Wisconsin Alumni Research Foundation (WARF). The watchdog groups failed to convince the PTO to invalidate the patent’s claims, which, as Ravicher started telling the court before he was interrupted, “are directed not to methods of isolating embryonic stem cells, not to methods of maintaining them, not for methods of use. Just to in vitro embryonic human stem cells. Stop.”

The challenge at the PTO took place before the U.S. Supreme Court issued its June decision in Association for Molecular Pathology v. Myriad Genetics Inc., which held that merely isolating genes that are found in nature does not make them patentable. Ravicher, who represented the plaintiffs in Myriad along with the American Civil Liberties Union, is convinced the WARF patent on stem cells is also invalid. He appealed the PTO’s decision to the Federal Circuit, where he faced off against WARF’s lawyers at Finnegan, Henderson, Farabow, Garrett & Dunner.

But rather than consider the merits of the appeal during oral arguments on Dec. 2, the three-judge panel—Judges Rader, Sharon Prost and Todd Hughes—grilled Ravicher for more than 30 minutes on whether he had standing in the case. They agreed that third parties are allowed to challenge PTO decisions on patents, but they seemed skeptical of the notion that these third parties can then appeal to the Federal Circuit if they find the PTO’s conclusions “unsatisfactory.”

“The statutes expressly give us the right to appeal to the Federal Circuit,” Ravicher told the Litigation Daily. “The question at issue is whether the courts feel empowered under the constitution to hear the case.”

The judges wondered whether dissatisfaction with a PTO decision gives rise to “injury” for purposes of standing to sue. Ravicher, a vocal patent attorney who heads the Public Patent Foundation and dabbles on Wall Street, maintains that it does. “The injury is that the government has not done what we’re entitled to have it do,” Ravicher said.

The Federal Circuit has heard reexamination appeals in the past. In most of these cases the appellant or appellee is an interested party, so standing isn’t an issue. But Ravicher said the Federal Circuit has never before raised the issue of third-party standing.

The stakes are substantial, Ravicher said, noting that the America Invents Act of 2011 explicitly gave parties the right to appeal PTO decisions to the Federal Circuit. “The court may be threatening the viability of the law passed by Congress only two years ago,” he said.

PTO inter partes reviews have become increasingly popular since they replaced inter partes reexaminations under the AIA. The patent trial and appeal board, which hears the challenges, now has the country’s third-busiest docket for patent cases, behind the district courts of Delaware and Texas.

Harold Wegner, a partner at Foley & Lardner who has been watching the case, said a court determination that Ravicher’s watchdog group has no standing to appeal to the Federal Circuit would be a serious development. “The impact and muscle of all public interest groups will be minimized if they lose their ability to appeal PTO decisions to the Federal Circuit,” he said.

After last week’s argument, the Federal Circuit asked the PTO and the solicitor general to chime in on the standing questions, with briefs due by Jan. 6. The panel also asked that the PTO and the United States participate in an oral argument, jointly or separately—also to be scheduled in January. The PTO did not submit briefs to support its position or appear before the court at the December oral argument.

For now, the question at the heart of the case—whether the patent claims on embryonic stem cells should be invalidated—will have to wait for another day.