Apple Inc., Appellant v. Qualcomm Incorporated, Appellee
April 7, 2021
Apple: Mom!!! My challenge to two of Qualcomm’s patents went down in flames at the PTAB! I’m going to file an appeal!!
Mom [Federal Circuit]: Don’t be ridiculous. Didn’t you just sign a six-year agreement with Qualcomm that settled all of your worldwide litigations and gave you a license to every one of their bazillion patents? You don’t have standing to file an appeal to the Federal Circuit—Qualcomm can’t sue you now.
Apple: Yeah, but after the license expires, Qualcomm’s just going to sue me again, like they always do!
Federal Circuit: Please.
As all good patent lawyers know, almost anyone can file a petition for inter partes review at the Patent Office (35 USC §311(a)); but if the patent challenger loses there, it can only file an appeal to the Federal Circuit if it can show that: (1) it has suffered an injury in fact, that (2) is traceable to the challenged conduct of the patent owner, and that (3) is likely to be redressed by a favorable judicial decision. These are, of course, the minimum requirements to establish constitutional standing in federal court.
On an appeal from an unfavorable PTAB decision, a disappointed patent challenger will typically have to show that the patent owner is likely to sue them soon for a product that is either in development or currently on sale. In this case, patent challenger Apple couldn’t make that showing.
There is no love lost between the iPhone maker and Qualcomm, a manufacturer of chips for mobile devices. They’ve had disputes all over the world, including a litigation in San Diego where Qualcomm accused Apple of infringing claims of US Patent Nos. 7,844,037 and 8,683,362. Apple filed IPRs to challenge these patents at the PTAB, but lost them both.
In 2019, the two companies entered into a global settlement that included a six-year license agreement (with an option for a two-year extension) that covered the two patents at issue here along with hundreds of other Qualcomm patents.
Despite this settlement, the iPhone maker still appealed its loss at the Patent Office. Apple claimed that it had standing to file an appeal to the Federal Circuit because: (1) it has ongoing payment obligations under the license agreement that includes the two challenged patents; (2) Qualcomm will likely sue it over the two patents after the license expires; and (3) Apple would be estopped (under §315(e)) from challenging the patents in a subsequent Qualcomm suit if it doesn’t file this appeal. The Federal Circuit didn’t buy any of this.
Apple’s first argument related to the Supreme Court’s 2007 MedImmune decision, which held that a patent licensee had standing to resolve a license dispute (whether certain products infringed a licensed patent and were therefore subject to royalty obligations under the license agreement) without breaching that agreement first. Apple had not alleged that the validity of the challenged patents would reduce its ongoing royalty obligations under the license agreement; but in their view, this is not required, because MedImmune stands for the proposition that “a licensee’s obligations to pay royalties for a license to 100,000 patents would provide standing to challenge the validity of any single licensed patent, even if the validity of any one patent would not affect the licensee's payment obligations.”
This wasn’t a view that the Federal Circuit shared; instead, they said that Apple’s failure to show that a victory on appeal would reduce their royalty obligations is “fatal to establishing standing under the reasoning of MedImmune, whether we analyze Apple's evidence for injury in fact or redressability,” and that the company’s arguments “amount to little more than an expression of its displeasure with a license provision into which it voluntarily entered.”
In its second argument, Apple said that it has standing to appeal here because Qualcomm is very litigious, and it is likely that—after the license agreement expires in 2025—the chip maker would sue Apple for infringing the two patents that had been the subject of the IPRs. The panel rejected this because: (1) for standing purposes, the Supreme Court’s Lujan decision requires an injury in fact to be “actual or imminent, not conjectural or hypothetical;” and (2) Apple provided zero evidence that the smart phone products they might sell four years from now will include technologies that could be covered by Qualcomm’s ‘037 and ‘362 patents.
Finally, Apple said that it must have standing here because if it doesn’t appeal its loss at the PTAB, the estoppel provisions of §315(e) would prevent the tech giant from arguing (in a future litigation) that these two Qualcomm patents are invalid as obvious. Here, Apple might have succeeded if it had provided evidence that its future products would infringe the challenged patents; but as discussed above, it did not. The Federal Circuit explained that under their 2019 AVX decision, this estoppel provision cannot be used as a basis for standing on appeal when a future injury is merely speculative. Because Apple failed to provide any evidence that it will infringe the patents at issue when the Apple/Qualcomm license expires in 2025, the mere possibility that it might be estopped from arguing invalidity in the future is not enough to give the company standing to appeal their two losses at the PTAB.