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GE Can’t Appeal Decision Upholding Competitor’s Patent (1)

July 10, 2019, 3:10 PMUpdated: July 10, 2019, 9:40 PM

General Electric Co.‘s status as a patent owner’s competitor wasn’t sufficient to establish standing to appeal a Patent Trial and Appeal Board decision.

GE’s argument that it suffered competitive injury was too speculative to support its appeal, the U.S. Court of Appeals for the Federal Circuit said July 10. The court dismissed the appeal and upheld the PTAB’s finding that certain claims of United Technologies Corp. ‘s aircraft engine technology patent were valid as they weren’t covered by prior inventions.

Anyone can file a patent challenge, known as inter partes review, at the PTAB under patent law. But that doesn’t mean a patent challenger has an automatic right to appeal, the Federal Circuit ruled.

“Absent an underlying suit or a plausible risk an appeal isn’t guaranteed,” Pauline Pelletier, a director in Sterne Kessler Goldstein & Fox PLLC’s trial and appellate practice group, said. “This case confirms it’s true that in cases even where the petitioner is a bona fide competitor in the marketplace, the mere existence of a competitive relationship isn’t going to be enough,” she said.

The ruling is the latest in a growing body of case law on whether petitioners filing patent challenges have standing to appeal, Pelletier said. Standing is a relevant factor when advising businesses on whether they should file for a PTAB review, she said.

The Federal Circuit has previously said hedge funds, citizens’ groups, and competitors not involved in litigation can’t appeal if there’s no related lawsuit in district court to create standing in appeals court.

The ruling “crystallizes” the issues that have caused the Federal Circuit to strictly interpret standing rules, Matt Rizzolo, an intellectual property litigation partner at Ropes & Gray LLP, said. “This has the possibility of catching the Supreme Court’s eye.”

GE didn’t immediately respond to a request for comment on whether it would seek review of the ruling from the full Federal Circuit bench or from the U.S. Supreme Court.

Time and Money

The dispute began in 2016 after GE challenged claims in United Technologies’ U.S. Patent No. 8,511,605, which describes gas turbine airplane engine. GE lacked constitutional standing to appeal the PTAB’s ruling because it hadn’t suffered an injury-in-fact, United Technologies argued at the Federal Circuit.

GE argued it was harmed by the PTAB decision because it spent time and money researching an engine design that could implicate the patent in response to a request from Boeing Co. GE eventually submitted a different engine design for the Boeing bid, it told the Federal Circuit.

But the court found no evidence that GE lost business or opportunities because it couldn’t make an engine covered by the patent. There also was no evidence as to whether GE submitted the different design to Boeing because of the PTAB decision, or even whether it won or lost the bid, the court said.

GE’s competitive injury argument “contends only that to maintain GE’s competitive position, it needs to be able to meet customer needs with a geared-fan engine design that may implicate the ’605 patent,” the court said, which is insufficient to create standing.

A government action can give a competing business legal standing if it “changes the competitive landscape by, for example, creating new benefits to competitors,” the Federal Circuit noted. But the decision by PTAB, a government agency, in favor of United Technologies didn’t change the competitive environment for airplane engines, the court said.

GE’s claim of economic injury from increased research and development costs was too remote to support standing, the Federal Circuit said.

Judge Jimmie V. Reyna wrote the majority opinion, joined by Judge Richard G. Taranto.

Judge Todd M. Hughes, in a concurrence, said Federal Circuit precedent compelled the decision. But he disagreed that a PTAB decision upholding a patent doesn’t change the competitive landscape.

“A Board decision erroneously upholding a competitor’s patent” isn’t “meaningfully different from the type of government actions held to invoke competitor standing” in other cases, Hughes said.

Weil, Gotshal & Manges LLP represented GE. Bartlit Beck Herman Palenchar & Scott LLP and Finnegan, Henderson, Farabow, Garrett & Dunner LLP represented UTC.

The case is Gen. Elec. Co. v. United Techs. Corp., Fed. Cir., No. 17-2497, 7/10/19.

— With assistance from Susan Decker (Bloomberg)

To contact the reporter on this story: Blake Brittain in Washington at bbrittain@bloomberglaw.com; Malathi Nayak in Washington at mnayak@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com