The US District Court for the District of Columbia affirmed the dismissal of a case alleging that the US Patent & Trademark Office (PTO) violated the Administrative Procedure Act (APA) by denying the plaintiffs’ rulemaking petition. The district court found that the plaintiffs’ alleged injury was too speculative to confer Article III standing. US Inventor, Inc. v. US Patent and Trademark Office, Case No. 22-2218 (D.D.C. July 12, 2023) (Bates, J.)
Under the America Invents Act (AIA), the Patent Trial & Appeal Board may hear challenges to the validity of patents through inter partes review (IPR) and post-grant review (PGR). The decision to initiate a review is made at the discretion of the PTO on a case-by-case basis. US Inventor, Inc., and National Small Business United (collectively, NSBU) filed a rulemaking petition with the PTO, arguing that the PTO unlawfully designated cases as precedential or informative without putting those considerations through notice-and-comment rulemaking, as required by the APA. NSBU expressed the same position in a previous lawsuit filed in the Eastern District of Texas that was dismissed for lack of standing—a decision upheld by the US Court of Appeals for the Fifth Circuit. NSBU subsequently filed a lawsuit in the District of Columbia. The PTO filed a motion to dismiss for lack of standing.
In a motion to dismiss, a court will accept facts alleged in the complaint as true but will not assume the truth of legal conclusions. The District of Columbia noted that not every denial of a rulemaking petition confers standing on the petitioner. Standing is established by claiming an injury in fact that can be traced to the defendant’s actions and is likely to be redressed by the court. Therefore, a plaintiff must show that the denial of the petition caused a concrete injury in fact. Injury in fact must be concrete, particularized and not conjectural or hypothetical. Standing can be established via associational standing or organizational standing. Here, the court found that NSBU could establish neither.
In finding no associational standing, the District of Columbia agreed with the PTO that NSBU’s theory of injury was too speculative and not concrete. NSBU proposed an “uncertain series of events” that could lead to an alleged injury, but the court rejected the claim as attenuated conjecture based on the actions of independent third parties (similar to the fact pattern in the Supreme Court’s 2013 decision in Clapper v. Amnesty Int’l USA.)
The District of Columbia heavily criticized the first step of NSBU’s proposed series of events, which was that a valid IPR or PGR would have to be filed on behalf of a patent held by a member of NSBU’s organizations. The court found that identifying potential members that might face IPR or PGR proceedings if a third party decided to bring a claim against them was too hypothetical and relied entirely on the actions of a third party.
The District of Columbia also disagreed with NSBU’s reliance on statistics. NSBU argued that patent cancellation is more likely through IPR or PGR, relying on statistics of higher rates of cancellation in these proceedings. The court rejected this reasoning as flawed, as Board proceedings are only initiated if there is a high likelihood of patent invalidity. The court agreed with the PTO that when all petitions are considered, less than a quarter of patents are found to be invalid (instead of the 84% proposed by NSBU).
The District of Columbia also found no organizational standing. The court disagreed with the few asserted alleged injuries, finding that any operational change the organizations may have to undertake does not qualify as an injury and instead is part of ordinary activities. Accordingly, the court granted the PTO’s motion to dismiss for lack of standing.
Hannah Hurley, a summer associate in the San Francisco office, also contributed to this case note.
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