General Electric Company v. United Technologies Corp.
Opinion of the Court
Reyna, Circuit Judge.
General Electric Company petitioned the United States Patent Trial and Appeal Board for inter partes review of
BACKGROUND
Appellee United Technologies Corporation ("UTC") is the assignee of
On January 29, 2016, General Electric Company ("GE") filed a petition for inter partes review ("IPR") challenging claims 1 and 2 of the '605 patent on grounds of anticipation and claims 7-11 of the '605 patent on grounds of obviousness. After institution, UTC disclaimed claims 1 and 2, leaving only claims 7-11 at issue. On June 26, 2017, the United States Patent Trial and Appeal Board ("Board") issued a Final Written Decision concluding that the preponderance of the evidence did not show claims 7-11 of the '605 patent to be unpatentable for obviousness. GE timely appealed to this court.
On December 29, 2017, UTC moved to dismiss GE's appeal for lack of standing. UTC asserted that GE lacked standing because it failed to demonstrate a sufficient injury in fact. In support, UTC pointed to this court's decisions holding that an appellant does not automatically possess standing to appeal an adverse Board decision by virtue of serving its petitions in the challenged IPR. GE submitted a response on January 16, 2018, including the Declaration of Alexander E. Long, GE's Chief IP Counsel and General Counsel of Engineering for GE Aviation ("First Long Declaration"). Mr. Long explained that the commercial aircraft engine business operates on a long life-cycle and that airplane engines are designed to meet certain specifications for certain aircraft. Because the design of aircraft engines can take eight years or more, GE develops new engines based on old designs. Mr. Long stated that, in the 1970s, GE developed a geared turbofan engine with a variable area fan nozzle for NASA. GE asserted that the '605 patent impedes its ability to use its 1970s geared-fan engine design as a basis for developing and marketing future geared turbofan engine designs with a variable area fan nozzle, thereby limiting the scope of GE's engine designs and its ability to compete in a highly regulated industry. Mr. Long also declared that designing around the '605 patent restricts GE's design choices and forced GE to incur additional research and development expenses.
We denied UTC's motion without addressing the merits and ordered UTC to brief the issue in its responsive appellate brief. The parties subsequently briefed the standing issue. GE argued that the injuries it suffered include statutory estoppel, economic loss, future threat of litigation, and competitive harm. GE relied on the First Long Declaration as evidence to show its injuries. UTC argued that GE suffered no injury in fact because: (1) UTC has not sued or threatened to sue GE for infringement of the '605 patent ; (2) GE does not offer evidence of a concrete and particularized economic injury because it has not developed an engine that implicates claims 7-11 of the '605 patent ; and (3) statutory estoppel and the competitive standing doctrine do not apply to GE.
We heard oral argument on November 7, 2018. Much of oral argument focused on whether GE had constitutional standing to appeal and whether general statements made in the First Long Declaration were sufficient to establish standing. We subsequently ordered GE to supplement the First Long Declaration and submit any additional declarations that would provide greater specificity regarding the asserted injury GE contends provides sufficient standing to appeal in this matter. We provided UTC with an opportunity to respond.
Each party filed its supplemental submission. GE filed an additional declaration from Mr. Long on November 28, 2018 ("Second Long Declaration"). In his second declaration, Mr. Long stated that Boeing requested information from GE and several of its competitors for engine designs for future Boeing aircrafts. Mr. Long also noted *1353that Boeing requested information regarding designs for both geared-fan engines and direct-drive engines.
In response to Boeing's request, GE researched a geared-fan engine design that "would potentially implicate [UTC's] 605 Patent." Second Long Decl. ¶ 5. GE asserts it "expended time and money researching and further developing" this technology for the potential business opportunity with Boeing.
DISCUSSION
Not every party to an IPR will have Article III standing to appeal a final written decision of the Board. See Phigenix, Inc. v. Immunogen, Inc. ,
GE has the burden of showing that it suffered an injury in fact sufficient to confer Article III standing to appeal. See DaimlerChrysler Corp. v. Cuno ,
GE's purported competitive injuries are too speculative to support constitutional standing. See Phigenix ,
We recently addressed the "competitor standing" doctrine in AVX Corp. v. Presidio Components, Inc .,
For the competitor standing doctrine to apply, the government action must change the competitive landscape by, for example, creating new benefits to competitors. Put another way, the government action must alter the status quo of the field of competition. Here, the Board's upholding of claims 7-11 of the '605 patent did not change the competitive landscape for commercial airplane engines. See
We similarly reject GE's economic losses argument. GE contends that it has been injured by increased research and development costs sustained by attempts to design engines that could implicate the '605 patent and engines that do not implicate the '605 patent. Yet, GE provides no further details. It fails to provide an accounting for the additional research and development costs expended to design around the '605 patent. It provides no evidence that GE actually designed a geared-fan engine or that these research and development costs are tied to a demand by Boeing for a geared-fan engine. The only evidence that GE actually designed a geared-fan engine is the engine that it designed in the 1970s. Any economic loss deriving from the 1970s engine is not an imminent injury. See Lujan ,
There is also no evidence that GE is in the process of designing an engine covered by claims 7-11 of the '605 patent. Nor has GE demonstrated that it has definite plans to use the claimed features of the '605 patent in the airplane engine market. See JTEKT ,
GE also contends that estoppel under
CONCLUSION
We have considered GE's remaining arguments and find them unpersuasive. We hold that GE lacks Article III standing to appeal the Board's Final Written Decision and therefore dismiss the appeal.
DISMISSED
COSTS
No costs.
Concurring Opinion
Because our recent precedent compels holding that General Electric Company lacks Article III standing here, I concur in the judgment. I write separately because I believe that precedent has developed an overly rigid and narrow standard for Article III standing in the context of appeals from inter partes review proceedings.
Our recent decision in AVX Corp. v. Presidio Components, Inc. ,
I
The parties here are direct competitors in the commercial aircraft turbofan engine market. GE, both itself and through joint ventures, "designs, tests, certifies, manufactures, and supplies aircraft engines" for major airplane manufacturers, or "airframers," such as Boeing and Airbus. Decl. of Alexander E. Long 2 ¶ 3, ECF No. 36. During the design process, "airframers explain to GE their needs and requirements for turbofan engines, to enable GE to provide competitive offerings that will satisfy the airframers' requirements." Suppl. Decl. of Alexander E. Long 2 ¶ 3, ECF No. 64.
Due to the safety and regulatory requirements of the turbofan engine market, "designing, developing, testing, and certifying a new aircraft engine can take eight to ten years or longer." Long Decl. 3 ¶ 6. And "[t]here is enormous up-front investment required." Long Decl. 4 ¶ 7. Accordingly, "new aircraft engine design work necessarily begins years before there is any commercial sale or offer for sale of the final engine." Long Decl. 4 ¶ 8.
According to GE, competition in the aircraft engine market is fierce, and the market is dominated by three major players: GE, Universal Technologies Corporation, and Rolls-Royce. GE petitioned for IPR of a patent owned by UTC. That patent is directed to a turbofan engine design - the *1356very type of technology over which GE and UTC fiercely compete. The Board decided that GE failed to show that the challenged claims were unpatentable, and GE appealed that decision to this Court.
UTC filed a motion to dismiss the appeal, arguing that GE lacks Article III standing because GE does not produce or plan to produce an engine that would infringe its patent. Relying on precedent of both this Court and the Supreme Court, GE argued that the Board's decision to uphold UT's patent caused GE a concrete competitive injury sufficient to satisfy Article III standing.
II
The sole issue with respect to standing in this case is whether GE has shown that it has suffered an injury-in-fact. An injury-in-fact requires a party to establish "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Lujan v. Defs. of Wildlife ,
Many of our recent cases dealing with injury-in-fact in IPR appeals have focused on the appellant/petitioner's likelihood of facing a future infringement suit. See JTEKT Corp. v. GKN Auto. LTD. ,
The risk of a future infringement suit is not the only way an IPR petitioner can show injury-in-fact. "The [Supreme Court] routinely recognizes probable economic injury resulting from [government actions] that alter competitive conditions as sufficient to satisfy the [Article III injury-in-fact requirement]." 3 K. Davis & R. Pierce, Administrative Law Treatise 13-14 (3d ed. 1994); see also Clinton v. City of New York ,
Thus, even when the parties are direct competitors, our cases require an unsuccessful IPR appellant/petitioner to show concrete current or future plans to infringe the challenged patent. I do not believe that Article III requires such a showing, particularly where Congress has provided IPR petitioners a procedural right of appeal. See
AVX Corp. found that the "government action at issue [in IPR] is quite different" from the government action in other cases applying competitor standing. AVX Corp. ,
Our patent-specific treatment of competitor standing is out of step with its application in other areas. The Supreme Court has repeatedly found standing where government action subjects the plaintiff to *1358increased competition because of the probable economic injury that accompanies it. See Clinton ,
In both Data Processing and Clinton , the government action subjected the challenger to increased competition. The exclusionary right of a patent, however, allows the patent owner to exclude others from competing in its market. But like an action that increases competition, government action that excludes an appellant from effectively competing in a market, such as erroneously upholding its competitor's patent, provides a benefit to the competitor and causes competitive harm to the appellant that presumptively leads to economic injury. See Canadian Lumber ,
The facts of this case further demonstrate why AVX Corp. 's patent-specific approach is incorrect. GE and UTC are direct competitors in a fiercely competitive market that requires significant up-front investment years before any profits can be realized. During the engine design process, "airframers explain to GE their needs and requirements for turbofan engines, to enable GE to provide competitive offerings that will satisfy the airframers' requirements." Long Suppl. Decl. at 2 ¶ 3. According to GE, one such air-framer specifically requested that GE research an engine design that would implicate UTC's patent. But at least until that patent expires, GE cannot design and produce such an engine without risking infringement. Thus, UTC's patent effectively precludes GE from meeting its customer's design needs without spending additional resources to design around the patent.
*1359harm to GE. See Lujan ,
Finally, as the majority correctly notes, we have repeatedly held that the estoppel provisions of
Absent AVX Corp. , which I believe was incorrectly decided, I would conclude that GE has established Article III standing to appeal the Board's adverse decision. Because I am bound by that precedent, however, I respectfully concur only in the judgment.
In Biotechnology Industry Organization v. District of Columbia , we found that "[w]hether the Act is enforced or not," pharmaceutical manufacturers challenging a statute that penalized selling prescription drugs at "excessive price[s]" could demonstrate injury-in-fact due to the "actual administrative costs" they would necessarily incur in complying with the statute.
Reference
- Full Case Name
- GENERAL ELECTRIC COMPANY, Appellant v. UNITED TECHNOLOGIES CORPORATION, Appellee
- Cited By
- 11 cases
- Status
- Published