Apple Inc. v. Qualcomm Inc.

• Decision Date: 07 April 2021
• Docket Number: 2020-1642,2020-1561
• Parties: APPLE INC., Appellant v. QUALCOMM INCORPORATED, Appellee Apple Inc., Appellant v. Qualcomm Incorporated, Appellee
• Court: U.S. Court of Appeals — Federal Circuit

992 F.3d 1378

APPLE INC., Appellant

v.QUALCOMM INCORPORATED, Appellee

Apple Inc., Appellant

v.Qualcomm Incorporated, Appellee

2020-1561

2020-1642

United States Court of Appeals, Federal Circuit.

Decided: April 7, 2021

Lauren Ann Degnan, Fish & Richardson P.C., Washington, DC, argued for appellant. Also represented in 2020-1561 by Robert Courtney, Minneapolis, MN; Oliver Richards, San Diego, CA. Also represented in 2020-1642 by Christopher Dryer, Washington, DC; Nitika Gupta Fiorella, Wilmington, DE.

Michael Hawes, Baker Botts, LLP, Houston, TX, argued for appellee. Also represented in 2020-1561 by Brian W. Oaks, Puneet Kohli, Austin, TX. Also represented in 2020-1642 by Chad C. Walters, Dallas, TX.

Before Moore, Reyna, and Hughes, Circuit Judges.

Moore, Circuit Judge.

Apple Inc. appeals an inter partes review final written decision of the Patent Trial and Appeal Board holding Apple did not prove claims 1–14 and 16–18 of U.S. Patent No. 7,844,037 would have been obvious. Apple also appeals another final written decision of the Board holding Apple did not prove claims 1–6 and 8–20 of U.S. Patent No. 8,683,362 would have been obvious. Because Apple lacks standing to maintain either appeal, we dismiss .

BACKGROUND

Qualcomm Inc. sued Apple in the United States District Court for the Southern District of California for infringing claims of the ’037 patent and the ’362 patent. Apple sought inter partes review of claims 1–14, 16–18, and 19–25 of the ’037 patent and claims 1–6 and 8–20 of the ’362 patent. The Board issued final written decisions holding Apple did not prove the challenged claims in either patent would have been obvious.¹ Before the filing of these appeals, Apple and Qualcomm settled all litigation between the two companies worldwide. Based on that settlement, the parties jointly moved to dismiss Qualcomm's district court action with prejudice, which the district court granted. J.A. 2928.² Apple, nevertheless, appeals the Board's final written decisions.

DISCUSSION

"Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy" required by Article III. Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). "[T]he irreducible constitutional minimum of standing" consists of "three elements." Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). An appellant "must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], and (3) that is likely to be redressed by a favorable judicial decision." Spokeo , 136 S. Ct. at 1547 (citations omitted). To establish injury in fact, the alleged harm must be " ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " Id. at 1548 (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ).

"Article III standing is not necessarily a requirement to appear before an administrative agency." Consumer Watchdog v. Wis. Alumni Research Found. , 753 F.3d 1258, 1261 (Fed. Cir. 2014) (citing Sierra Club v. E.P.A. , 292 F.3d 895, 899 (D.C. Cir. 2002) ). And the Patent Act permits any person "who is not the owner of the patent" to file a petition for inter partes review. 35 U.S.C. § 311(a). While nearly any person may seek an inter partes review, an appellant must "supply the requisite proof of an injury in fact when it seeks review of an agency's final action in a federal court." Phigenix, Inc. v. Immunogen, Inc. , 845 F.3d 1168, 1171–72 (Fed. Cir. 2017). Indeed, the Supreme Court has recognized that not every party will have Article III standing to appeal a Board final written decision. See Cuozzo Speed Techs., LLC v. Lee , ––– U.S. ––––, 136 S. Ct. 2131, 2143–44, 195 L.Ed.2d 423 (2016) (Parties that initiate an inter partes review "need not have a concrete stake in the outcome; indeed, they may lack constitutional standing.").

I

As a preliminary matter, Qualcomm argues Apple waived any argument to establish its standing to file this appeal by failing to address, or submit evidence supporting, standing in its opening brief. See, e.g. , Appellee Br. at 1–3. In Phigenix , we held "an appellant must identify the relevant evidence demonstrating its standing ‘at the first appropriate’ time, whether in response to a motion to dismiss or in the opening brief." 845 F.3d at 1173 (quoting Sierra Club , 292 F.3d at 900 ). Likewise, "if there is no record evidence to support standing, the appellant must produce such evidence at the appellate level at the earliest possible opportunity." Id. These rules prevent an appellee or respondent from having to "flail at the unknown in an attempt to prove the negative." Sierra Club , 292 F.3d at 901. Given the global settlement between the parties, Apple should have made its standing arguments and proffered its evidence in support of standing in its opening brief.

Our holding in Phigenix is not, however, an inflexible rule. See Am. Library Ass'n v. F.C.C. , 401 F.3d 489, 493 (D.C. Cir. 2005). We have consistently held that waiver is a matter of discretion. See, e.g. , Harris Corp. v. Ericsson Inc. , 417 F.3d 1241, 1251 (Fed. Cir. 2005) ("An appellate court retains case-by-case discretion over whether to apply waiver."); Becton Dickinson & Co. v. C.R. Bard, Inc. , 922 F.2d 792, 800 (Fed. Cir. 1990) (waiver is "not governed by a rigid rule but may as a matter of discretion not be adhered to where circumstances indicate that it would result in basically unfair procedure"). "While there is no general rule for when we exercise our discretion to reach waived issues, we have done so where, among other factors, ‘the issue has been fully briefed by the parties.’ " Ericsson Inc. v. TCL Commc'n Tech. Holdings Ltd. , 955 F.3d 1317, 1322–23 (Fed. Cir. 2020) (quotation and citation omitted) (quoting Automated Merch. Sys., Inc. v. Lee , 782 F.3d 1376, 1379–80 (Fed. Cir. 2015) ).

We exercise our discretion to reach the issue of standing because: (1) the issue of Apple's standing is fully briefed; (2) we see no prejudice to Qualcomm; and (3) the question of standing impacts these and other appeals. In both appeals, Qualcomm sought leave to file a sur-reply addressing Apple's evidence and arguments on standing. Qualcomm agreed that, if we grant its motions, it will not suffer any prejudice and that evaluating the evidence may resolve standing in other pending cases. Apple Inc. v. Qualcomm Inc. , Nos. 20-1561, 20-1642, ––– F.3d ––––, 2021 WL 1287437 (Fed. Cir. 2021), Oral Arg. at 22:19–22:42, available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20-1561_03032021.mp3. Accordingly, we grant Qualcomm's motions for leave to file a sur-reply and exercise our discretion to review Apple's arguments and evidence to establish standing. See Ericsson , 955 F.3d at 1323 (exercising discretion to reach waived issue that was fully briefed); cf. Cmtys . Against Runway Expansion, Inc. v. F.A.A. , 355 F.3d 678, 685 (D.C. Cir. 2004) (excusing belated submission of standing evidence and arguments because appellee would not be prejudiced).

II

As part of the global settlement between Apple and Qualcomm, the parties executed a six-year license agreement, which included a license to the patents at issue. Apple has characterized that license agreement as a "covenant-not-to-sue," at least with respect to the patents at issue. See, e.g., Appellant's Reply Br. at 23. And in addition to the six-year license term, there is a possibility of a two-year extension. J.A. 2930. Because the parties executed the agreement in 2019, it will expire in either 2025 or 2027.

Apple argues it has standing to appeal the final written decisions of the Board based on three distinct circumstances: (1) its ongoing payment obligations that are a condition for certain rights in the license agreement;³ (2) the threat that Apple will be sued for infringing the ’037 patent and ’362 patent after the expiration of the license agreement; and (3) the estoppel effects of 35 U.S.C. § 315 on future challenges to the validity of the ’037 patent and ’362 patent. We do not agree.

A

Relying upon MedImmune, Inc. v. Genentech, Inc. , 549 U.S. 118, 120, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007), Apple argues it has standing based on its payment obligations under the license agreement. See, e.g. , Appellant Reply Br. at 20–22. According to Apple, MedImmune holds that its ongoing payment obligations as a condition for certain rights provides standing, irrespective of the other patents in the license agreement. Appellant's Reply Br. at 21. In Apple's view, 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. Oral Arg. at 4:30–5:53. We do not read MedImmune so broadly.

MedImmune does not require us to find standing here. In MedImmune , Genentech asserted that the Cabilly II patent it licensed to MedImmune covered MedImmune's new product and demanded royalty payments under the license agreement. Id. at 121, 127 S.Ct. 764. Although MedImmune disagreed it owed royalties because the patent was invalid and did not cover its product, it paid under protest to avoid termination of the agreement and a patent infringement action. Id. at 121–22, 127 S.Ct. 764. MedImmune then sought a declaratory judgment that it did not owe any royalties because the sale of its product did not infringe any valid claim of the Cabilly II patent. Id. at 122–23, 127 S.Ct. 764. The Supreme Court observed there was no dispute that the standing requirements "would have been satisfied if petitioner had taken the final step of refusing to make royalty payments under the [ ] license agreement." Id. at 128, 127 S.Ct. 764. The Court held that MedImmune was not required to break or terminate the license agreement before seeking a declaratory judgment of noninfringement and invalidity. Id. at 137, 127 S.Ct. 764. Put...