The Federal Circuit recently confirmed that challengers using IPR outside the typical context of ongoing litigation face a trap for the unwary: those that are not careful to lay the proper groundwork may not be able to appeal an adverse decision by the Board.

In order to seek help in court—including at the Federal Circuit, which hears IPR appeals—parties must show that they have suffered harm that the court can fix. This requirement doesn’t exist in administrative proceedings like IPRs. But in the context of appeal from IPR, harm must be proven, and the harm must be from the challenged patent.

In Phigenix v. Immunogen, the Federal Circuit applied this rule to IPRs for the first time. Phigenix challenged a patent in IPR that it alleged interfered with its attempts to license its own technology. The Board found the patent nonobvious, and Phigenix appealed. The Federal Circuit dismissed the appeal, however, since Phigenix failed to prove harm from the challenged patent.

The loss of the ability to appeal to the Federal Circuit could be significant for some challengers. Although the Federal Circuit has often been deferential to the Board, the Board’s decisions are not always free of errors, and some could be fixed during appeal. Losing the ability to appeal raises the stakes and, for some challengers, may make IPR too much of a risk.

While this decision clarifies the trap that some challengers face, the Federal Circuit did not create an absolute rule that challengers like Phigenix cannot appeal. Rather, the decision turned on the insufficiency of Phigenix’s evidence of harm from the challenged patent. The court left open the door for others in Phigenix’s position to provide better evidence.

Takeaways

Although the loss of the ability to appeal is significant, parties should not apply this case too broadly. In the typical scenario where a challenger uses an IPR after being sued for infringement of the challenged patent, the existence of the infringement suit is sufficient harm. This case would not stand in the way of appeal.

However, challengers using IPR outside the typical context of ongoing litigation should be prepared to provide evidence of the harm from the challenged patent. Evidence of revenue lost or expenses incurred due to the challenged patent, for example, would have put Phigenix in a stronger position. Future cases will clarify how much evidence of harm from the patent is actually enough.

Challengers anticipating an issue should begin collecting evidence of harm early. Much of the relevant evidence may concern the lead-up to the decision to request IPR. Whether the challenger will get what it needs may turn on how carefully it builds its case—and how carefully the patent owner avoids giving the challenger the evidence it needs.

Although this case will not impact most IPRs, it is a reminder to all challengers not to take the ability to appeal for granted. It also illustrates that a careful patent owner may be able to dampen a potential challenger’s interest in IPR.