Todd Hughes, United States Circuit Judge for the Federal Circuit
Todd Hughes, United States Circuit Judge for the Federal Circuit (Diego M. Radzinsch / The National Law Journal)

Daniel Ravicher was only 20 seconds into his argument before the U.S. Court of Appeals for the Federal Circuit when Chief Judge Randall Rader interrupted. “Do you have standing to be here?” he asked the attorney for Consumer Watchdog, a public interest organization challenging stem cell patents.

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

Since then, the Federal Circuit has held two full rounds of arguments on whether third parties like Ravicher’s client have standing to appeal decisions of the Patent Trial and Appeal Board. Ravicher says Consumer Watchdog has standing, particularly because the 2011 America Invents Act states that “a person who is not the owner of a patent” may seek inter partes review at the PTAB, and “any party to the inter partes review shall have the right to be a party to the appeal.”

But a Federal Circuit panel hinted strongly during arguments in December and again March 13 that Congress exceeded its powers.

“The fact you were allowed to participate [before the PTAB], you paid a fee, you expended resources, that’s not an injury under the Constitution,” the Federal Circuit’s newest judge, Todd Hughes, said at the March 13 hearing. “You have to show something directly tying your interest specifically in this litigation to an injury in fact.”

The upshot could be that public interest organizations like Consumer Watchdog, Electronic Frontier Foundation and Ravicher’s own Public Patent Foundation—which helped knock out patents on human DNA at the Supreme Court last year—might have to live with whatever decision they can get from the PTAB. Patent holders, meanwhile, would likely retain standing to appeal an adverse decision.

“It is disturbing,” said EFF staff attorney Daniel Nazer. “The public interest is not well enough represented in the patent system. If the court were to lock out public interest organizations from pressing appeals, that would compound the problem.”

Foley & Lardner partner Harold Wegner, who has spotlighted Consumer Watchdog v. Wisconsin Alumni Research Foundation recently on his Top 10 Patent Cases list, said the impact could reach beyond public interest groups to any company that wants to invalidate overly broad claims by potential competitors. “The public interest groups are a sideshow to the main event,” he said. “What it would do is create a chilling effect on patent challenges.”

University of Missouri law professor Dennis Crouch, who flagged the issue last fall on his Patently-O blog, has suggested that patent defense outfits such as RPX Corp. and Unified Patents Inc. could be affected too.

Consumer Watchdog describes itself as “a nonprofit organization dedicated to providing an effective voice for taxpayers and consumers.” It challenges a patent on in vitro cultures of embryonic stem cells that is based on the work of University of Wisconsin researcher James Thomson.

Science magazine called Thompson’s invention one of its Scientific Breakthroughs of the Year in 1999, and it set the stage for a revolution in medicine and science, said Finnegan, Henderson, Farabow, Garrett & Dunner partner Kara Stoll in her brief for Wisconsin Alumni Research Foundation. WARF has licensed the patent for free to academic institutions.

Consumer Watchdog says the “breakthrough” was obvious and did not require innovation, and the patent poses a threat to scientific research. The group sought inter partes review from the U.S. Patent and Trademark Office. The board initially sided with Consumer Watchdog, but ultimately upheld the claims last year after WARF amended them.

Before the Federal Circuit, neither party raised the issue of standing. The court asked for briefing on its own in November, then after the first hearing asked the PTO to weigh in. The PTO sided with WARF.

U.S. Department of Justice attorney Mark Freeman said at the March hearing that most inter partes challenges are between parties already in litigation at a district court. “Those parties obviously would have standing,” he said. “This is the easy case because this is a party that has no interest at all in the underlying patent.”

Freeman said industry competitors will “very often” have standing, even if there’s no immediate threat of litigation between them, because the America Invents Act relaxed other standing requirements in ways that are constitutional.

Judge Rader, meanwhile, still had pointed questions for Consumer Watchdog, which this time was represented by Ravicher’s cocounsel Sabrina Hassan. “Ever since my first year of law school, I’ve wanted to ask this question: What does Marbury v. Madison have to say about this case?” he asked her. “Congress couldn’t do what—write jurisdiction that exceeded what the Constitution required, right?”

Hassan argued that Consumer Watchdog has suffered concrete, constitutional injury by paying an $8,800 filing fee and going to the time and expense of digging up prior art and litigating before the board. She analogized to the Freedom of Information Act, where ordinary citizens request information from the government. Courts have made clear that if the request is denied, the citizens have Article III standing to sue.

Hughes acknowledged that “the FOIA example is a very good one.” But he still sounded mostly skeptical, disagreeing with Hassan’s contention that WARF and the PTO are proposing a new standing requirement for PTAB appeals.

“It doesn’t seem that new to me at all,” Hughes said.

Contact the reporter at sgraham@alm.com.