Avx Corp. v. Presidio Components, Inc.

• Decision Date: 13 May 2019
• Docket Number: 2018-1106
• Citation: 923 F.3d 1357
• Parties: AVX CORPORATION, Appellant v. PRESIDIO COMPONENTS, INC., Appellee
• Court: U.S. Court of Appeals — Federal Circuit

923 F.3d 1357

AVX CORPORATION, Appellant

v.PRESIDIO COMPONENTS, INC., Appellee

2018-1106

United States Court of Appeals, Federal Circuit.

Decided: May 13, 2019

George Ellsworth Quillin, Foley & Lardner LLP, Washington, DC, argued for appellant. Also represented by Ruben Jose Rodrigues, Boston, MA; Michael Robert Houston, Richard Spencer Montei, Chicago, IL.

Gregory F. Ahrens, Wood, Herron & Evans, LLP, Cincinnati, OH, argued for appellee. Also represented by Brett A. Schatz.

Before Newman, O'Malley, and Taranto, Circuit Judges.

Taranto, Circuit Judge.

Presidio Components, Inc., which manufactures and sells a variety of ceramic capacitors, owns U.S. Patent No. 6,661,639, which describes and claims single-layer ceramic capacitors with certain features. Competitor AVX Corporation manufactures and sells a variety of electronic components, including capacitors. AVX petitioned the Patent and Trademark Office (PTO) for an inter partes review (IPR), under 35 U.S.C. §§ 311 -319, of all 21 claims of the '639 patent, asserting several grounds for unpatentability based on obviousness under 35 U.S.C. § 103. The Patent Trial and Appeal Board, acting pursuant to delegated authority, see 37 C.F.R. §§ 42.4, 42.108, instituted a review of all claims under 35 U.S.C. § 314. In August 2017, the Board issued a final written decision under 35 U.S.C. § 318. Although it held claims 13–16 and 18 unpatentable, the Board held that AVX had failed to establish unpatentability of all other claims, i.e. , claims 1-12, 17, and 19-21 (the "upheld claims").

Presidio does not appeal the Board's decision as to the unpatentable claims, but AVX appeals the Board's decision as to the upheld claims. Presidio responds to AVX on the merits but also argues that AVX, though it has a statutory right to appeal, see 35 U.S.C. §§ 141, 319, lacks the standing required by Article III of the Constitution to appeal the Board's decision. Because we conclude that AVX lacks standing, we dismiss the appeal and do not reach the merits of the Board's ruling on the upheld claims.

I

The specification of the '639 patent describes the relevant features of the claimed capacitors. Each capacitor has a dielectric layer sandwiched between two "end blocks," which are made from "composite material" that is either conductive or covered by a conductive coating. '639 patent, col. 3, lines 9–23. In some embodiments described in the specification, and in all claims in dispute on appeal, each capacitor has a "buried metallization" in the dielectric layer, which is connected to the end blocks by at least one conductive, metal-filled "via." Id. , col. 7, lines 46–60. The buried metallization varies the capacitance of the device. Id. , col. 7, lines 60–61. The dielectric and composite-material layers are laminated together, cut into chips, and sintered to produce monolithic capacitors that are structurally sound. Id. , col. 3, lines 2–9. The capacitors are cheap and easy to produce, and the thin dielectric layers give them high capacitances. Id.

Claim 1 is illustrative for present purposes:

1. A capacitor comprising:

an essentially monolithic structure comprising at least one composite portion sintered with a ceramic dielectric portion,

a buried metallization in the dielectric portion and at least one conductive metal-filled via extending from the buried metallization to the composite portion,

wherein the composite portion includes a ceramic and a conductive metal, the capacitor further characterized by a feature selected from the group consisting of:

(a) the composite portion comprises the conductive metal in an amount sufficient to render the composite portion conductive, wherein the composite portion provides an electrical lead for attaching the capacitor to a metallic surface trace on a printed circuit board; and

(b) a metallization area partially between the composite portion and the ceramic dielectric portion, and a conductive metal coating on faces of the composite portion not sintered to the ceramic dielectric portion, whereby the conductive metal coating provides an electrical lead for attaching the capacitor to a metallic surface trace on a printed circuit board.

Id. , col. 11, lines 14–35.

When AVX filed its opening brief in this court, it also submitted a declaration by its general counsel, Evan Slavitt, to try to establish its constitutional standing to bring this appeal to contest the Board's rejection of its patentability challenges to the upheld claims. Mr. Slavitt first characterized AVX's business strategy. He noted that AVX spent approximately $ 31 million on research, development, and engineering in fiscal year 2017. J.A. 2049 ¶ 6. He also stated that "AVX protects its advances by properly applying for patents where appropriate and holds dozens of U.S. patents relating to capacitors." J.A. 2049 ¶ 7.

Mr. Slavitt further explained how AVX and Presidio interact in the capacitor market. He noted that, since 2008, there have been four district court actions between AVX and Presidio involving potential infringement of various capacitor patents (belonging to one side or the other). J.A. 2049–53.¹ In one of those cases, AVX was required to pay roughly $ 3.3 million in damages and was enjoined from selling a capacitor found to infringe a Presidio patent not involved in this appeal. J.A. 2050 ¶ 13. In AVX's view, the true costs of litigation are even higher because "it costs AVX substantial goodwill in presenting its customers with alternative products." J.A. 2053 ¶ 24. Because it can be difficult to substitute one component for another, Mr. Slavitt stated that "even the threat of a permanent injunction can dissuade customers from choosing a particular capacitor." J.A. 2054 ¶ 27. He noted that he knew of at least one customer who would not buy one of AVX's capacitors because of the risk of a future injunction. Id. ¶ 28.

With respect to the '639 patent, Mr. Slavitt expressed his belief that "[t]he threat of future litigation between Presidio and AVX ... is substantial" given the parties' litigation history. Id. ¶ 29. He noted that AVX would be "materially hindered" if the Board decision stood and were given estoppel effect under 35 U.S.C. § 315(e), which would preclude AVX from repeating, in future litigation, the obviousness challenges to the '639 patent that the Board reviewed and rejected in this IPR. Id. ¶ 30. Mr. Slavitt suspected that Presidio would be "especially encouraged to assert the '639 patent" to gain leverage in negotiations to settle another pending lawsuit. J.A. 2055 ¶ 32. He asserted that even the "substantial threat of litigation" over the '639 patent"will dissuade some customers or potential customers from choosing AVX capacitors." Id. ¶ 33.

II

Because the Constitution limits its grant of the "judicial power" to "Cases" or "Controversies," U.S. Const., art. III, § 2, any party that appeals to this court must have standing under Article III before we can consider the merits of the case. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 559–60, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ; Arizonans for Official English v. Arizona , 520 U.S. 43, 64, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997) ("The standing Article III requires must be met by persons seeking appellate review, just as it must be met by persons appearing in courts of first instance."). For a party to have standing, it must show (1) an "injury in fact," (2) "a causal connection between the injury and the conduct complained of," and (3) a likelihood that "the injury will be redressed by a favorable decision." Lujan , 504 U.S. at 560–61, 112 S.Ct. 2130 (internal quotation marks omitted). An injury in fact is "a legally protected interest which is (a) concrete and particularized" and "(b) actual or imminent, not conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130 (internal quotation marks omitted). An injury is concrete if it is "real" rather than "abstract," though it need not be "tangible." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1548–49, 194 L.Ed.2d 635 (2016). An injury is particularized if it "affect[s] the plaintiff in a personal and individual way." Lujan , 504 U.S. at 560 n.1, 112 S.Ct. 2130.

A person does not need to have Article III standing to file an IPR petition and obtain a Board decision, because Article III requirements do not apply to administrative agencies. See Cuozzo Speed Techs., LLC v. Lee , ––– U.S. ––––, 136 S. Ct. 2131, 2143–44, 195 L.Ed.2d 423 (2016). An IPR petitioner that lost on some or all of its challenges before the Board therefore might lack Article III standing to appeal. Recognizing that possibility, and noting that "the party seeking judicial review ... has the burden of establishing" standing, we have held that "in IPR appeals, ‘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,’ by creating a necessary record in this court, if the record before the Board does not establish standing." JTEKT Corp. v. GKN Automotive Ltd. , 898 F.3d 1217, 1220 (Fed. Cir. 2018) (quoting Phigenix, Inc. v. Immunogen, Inc. , 845 F.3d 1168, 1171-72 (Fed. Cir. 2017) ). We have added that, "when the record before the Board is inadequate," the appellant " ‘must supplement the record to the extent necessary to explain and substantiate its entitlement to judicial review,’ such as by submitting ‘affidavits or other evidence to demonstrate its standing.’ " Id. (quoting Phigenix , 845 F.3d at 1173 ).

AVX does not contend that a statutory right to appeal itself establishes AVX's constitutional standing. See 35 U.S.C. §§ 141, 319. We have rejected such a contention, Phigenix , 845 F.3d at 1175, relying on the Supreme Court's explanation that "Congress cannot erase Article III's standing requirements by statutorily granting the right to sue to [an appellant] who could not otherwise have standing," Raines v. Byrd , 521 U.S. 811, 820 n.3, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997). See also Frank v. Gaos , ––– U.S. ––––...