In Altaire Pharm., Inc. v. Paragon Biotek, Inc., Case No. 2017-1487 (Fed. Cir. May 2, 2018), the Federal Circuit reversed in part a PGR final written decision that upheld the patentability of challenged claims, and determined that a risk of a future lawsuit for patent infringement may be sufficient to establish Article III standing for the appeal.

Under Supreme Court precedent, Article III standing requires: (1) a concrete and particularized injury, (2) caused by the challenged conduct, (3) which can be redressed by a judicial decision. Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). Ironically, a party that has not been charged with infringement may have sufficient standing to file a petition with the PTAB, but lack standing to appeal the PTAB’s final decision to an Article III court. For example, in Phigenix, Inc. v. ImmunoGen, Inc., (discussed here), the court determined that the petitioner lacked standing to appeal because its alleged “hypothetical licensing injury” was not sufficient to establish a concrete and particularized injury.

In this case, Paragon argued that Altaire lacked standing because Altaire was not engaged in infringing activities. According to Paragon, Altaire’s future plans for infringing activities were “at most contingent,” and it did not, therefore, suffer any injury caused by the challenged patent.

Paragon’s challenged patent covers formulations of R-phenylephrine hydrochloride, which is administered to patients to dilate their pupils during eye examinations. Altaire filed a PGR petition alleging that the challenged claims were unpatentable over prior-art R-phenylephrine hydrochloride products that it sold at a time when FDA approval was not required for such products. When the FDA changed its practice regarding unapproved drugs in 2011, Paragon and Altaire entered into an agreement by which Paragon agreed to file a New Drug Application (NDA) for the product with the FDA. The agreement gave Paragon an exclusive right to sell the product on behalf of Altaire after obtaining FDA approval, and prevented Paragon from disclosing confidential information concerning formulation of the product.

After filing the NDA with the FDA, Paragon requested that the parties amend their agreement, to permit Paragon to file a patent application covering formulations of R-phenylephrine hydrochloride. Altaire did not agree to the proposed amendment. Paragon, however, proceeded to file its patent application, which ultimately issued as the patent challenged in the PGR petition.

After the NDA was approved and the patent issued, the parties became involved in litigation over their agreement. In the litigation, which was still pending at the time of the Federal Circuit decision, Paragon sought to terminate the agreement prior to its expiration in 2021.

In evaluating standing, the court determined that injury to Altaire was imminent, because following expiration (or earlier termination) of the agreement, it intended to file its own ANDA for R-phenylephrine hydrochloride and reasonably expected Paragon to sue it for infringement. The court determined that injury to Altaire was concrete and particularized, because invalidating the patent is necessary for Altaire to manufacture and market its products prior to expiration of the patent, and because during infringement litigation it will be estopped under 35 U.S.C. § 325(e)(2) from asserting invalidity grounds that it raised or reasonably could have raised during the PGR. Accordingly, the court concluded that Altaire had standing to appeal.

In a dissenting opinion authored by Judge Schall, the dissent argued that the case should be dismissed for lack of standing, because Altaire cannot infringe the challenged patent while the agreement between the parties is in effect, and the agreement is not due to terminate for another three years. According to the dissent, this is not sufficient to establish imminent harm, as required for Article III standing.

This blog post was written by Marshall Gerstein summer associate Bilal Adra.