A nonprofit advocacy group has asked the U.S. Supreme Court to overturn a decision by the Court of Appeals for the Federal Circuit that barred the group from challenging the validity of a controversial embryonic stem cell patent.
Consumer Watchdog, represented by the Public Patent Foundation, filed a petition for certiorari Friday, asking the Supreme Court to overturn the Federal Circuit’s June ruling that said Consumer Watchdog lacked legal standing to challenge the U.S. Patent and Trademark Office’s decision to uphold a patent owned by Wisconsin Alumni Research Foundation (WARF), the University of Wisconsin’s licensing arm.
The dispute dates back to 2006, when Consumer Watchdog filed a request for inter partes reexamination at the PTO under the pre-America Invents Act (AIA) rules, challenging certain patent rights to stem cells that had been granted to WARF.
Initially, the Board of Patent Appeals and Interferences, which is now known as the Patent Trial and Appeal Board (PTAB), agreed with Consumer Watchdog and found the patent invalid. But WARF then introduced new expert testimony, and the board ruled the patent was valid.
Consumer Watchdog appealed that decision to the Federal Circuit, but rather than hear arguments on the merits, the panel of judges focused exclusively on whether Consumer Watchdog had standing because it was a third-party and did not suffer direct harm. In June the panel, made up of judges Randall Rader, Sharon Prost and Todd Hughes, ruled that Consumer Watchdog did not have standing to appeal. It was one of the last decisions written by then-Chief Judge Rader before he resigned amid an ethics controversy.
“The Federal Circuit was wrong,” Dan Ravicher, executive director of the public Patent Foundation and chief counsel for Consumer Watchdog, told CorpCounsel.com. “Congress explicitly gave a third party the right to appeal an administrative decision regardless of whether it was harmed.”
In the petition, Ravicher wrote that cases concerning the Freedom of Information Act (FOIA) and the Federal Election Campaign Act demonstrate that Congress can give third parties standing to appeal agency actions. When third parties wish to appeal administrative decisions under the Freedom of Information Act, for example, they need only show that they made a FOIA request and were not satisfied with the result. They do not need to show they suffered direct harm.
WARF did not raise the issue of standing in its Federal Circuit briefs. But about 20 seconds into Ravicher’s oral argument before the court, Rader interrupted, asking him, "Do you have standing to be here?" That question eventually led the panel to rule against the advocacy group.
On Twitter, Ravicher on Friday called that ruling “judicial activism at its finest.”
Statutes expressly say non profit groups like @ConsumerWD can challenge patents in court. Fed Cir decision judicial activism at its finest.
— Daniel B. Ravicher (@danravicher) October 31, 2014
A year before the Federal Circuit’s June decision, the Supreme Court reversed the Federal Circuit in Association for Molecular Pathology v. Myriad Genetics Inc., ruling that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated.
“Under Myriad, there’s no way WARF’s patent would survive,” Ravicher said. “Rader was on the record saying he thought the Supreme Court got Myriad wrong, and he looked for a way to avoid hearing this case on the merits because he didn’t want to further enforce the Myriad rule.”
The patent in question concerns embryonic stem cells, and scientists say the patent impedes development of embryonic stem cell therapies, which are reaching clinical trials to fight diabetes and other diseases.
In the petition, Consumer Watchdog says the Federal Circuit’s decision raises an important Constitutional question: Do Congress and the President have the power to provide for court review of administrative decisions?
“The decision will impact more than just the patent system, as its reasoning could limit the power of Congress and the President to provide for court appeal of administrative responses to request in any field,” the petition says. “This obstacle raises severe Constitutional and Separation of Powers issues.”
At a time when the patent bar, the PTO and the White House are focusing on patent quality, challenges at the PTAB have become increasingly popular under the new proceedings that took effect under the AIA. The Federal Circuit’s ruling, if upheld, would affect these as well. While third parties such as nonprofits, public interest groups and industry organizations challenging a patent would have no right to appeal an adverse PTAB ruling, patent holders losing to third-party challengers at the PTAB would.
“This ruling would undermine the strength of the AIA,” Ravicher said.
WARF could not immediately be reached, and it is not known whether it will challenge the cert petition.