Background
Cytonome/ST, LLC owned a patent covering microfluidics technology used in cell sorting. ABS Global, Inc., a competitor in the livestock genetics industry, petitioned for inter partes review of Cytonome’s patent. The Patent Trial and Appeal Board held that ABS had failed to prove the challenged claims were unpatentable, and ABS appealed to the Federal Circuit.
While the IPR appeal was pending, Cytonome made a strategic move in the parallel district court litigation: it filed a covenant disclaiming any right to seek infringement damages or seek an injunction against ABS Global for infringement of the challenged claims — effectively promising never to assert the patent against ABS in any way. Cytonome then argued that ABS’s appeal of the IPR decision was moot because the disclaimer eliminated any concrete controversy between the parties.
ABS argued that the IPR appeal should continue because the decision could affect its ability to use or sell accused products freely and might have broader preclusive effects.
The Court’s Holding
The Federal Circuit agreed with Cytonome and dismissed ABS’s appeal as moot. The court held that Article III’s case-or-controversy requirement applies to IPR appeals, just as it applies to all federal court proceedings. For an appeal to remain alive, the appellant must have a concrete, ongoing injury that a favorable decision could redress. Once Cytonome filed its comprehensive covenant not to sue, ABS no longer faced any threat of infringement suit based on its accused activities. There was no live controversy left to adjudicate.
The court rejected ABS’s argument that a favorable ruling on appeal might have collateral benefits — for example, clearing the field for future product sales. The court held that speculative future advantages are not sufficient to sustain standing once a covenant eliminates all concrete present harm. The IPR appeal was dismissed.
Key Takeaways
- A patent owner’s voluntary disclaimer of the right to assert infringement against an IPR petitioner and its products — if broad enough to cover the petitioner’s actual commercial activities — can moot the petitioner’s appeal of an adverse IPR decision.
- IPR challengers facing an adverse PTAB final written decision should be alert to this strategic move by patent owners; a comprehensive covenant not to sue can strip the challenger of its ability to appeal, leaving the patent in place.
- Patent owners defending against IPR challenges in parallel with district court litigation have a powerful tool: if they lose at the PTAB, they can potentially cut off the challenger’s IPR appeal by filing a covenant not to sue that eliminates the concrete controversy.
- To preserve an IPR appeal after a covenant not to sue, challengers may need to show concrete plans to engage in additional activities beyond those already disclaimed — a difficult burden in most cases.
Why It Matters
ABS Global v. Cytonome reveals an important and sometimes overlooked intersection between IPR proceedings and parallel district court litigation strategy. Most practitioners focus on the merits of IPR challenges, but this decision highlights that a patent owner can unilaterally cut off an IPR appeal simply by eliminating the concrete controversy that gives the challenger standing to appeal.
This creates an asymmetric dynamic: if the PTAB upholds a patent’s validity (a loss for the challenger), the patent owner can moot the appeal and preserve the favorable PTAB decision. But if the PTAB finds the patent unpatentable (a loss for the patent owner), the patent owner cannot use this same move to moot the challenger’s win. Practitioners advising patent challengers should factor in this risk when developing IPR strategy, particularly when a parallel district court case is pending — the patent owner may have the ability to permanently foreclose a second appellate bite at the apple if the IPR goes against the challenger.