IP Law Daily Apple cannot challenge nonobvious finding of Qualcomm patent
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Wednesday, April 7, 2021

Apple cannot challenge nonobvious finding of Qualcomm patent

By Jody Coultas, J.D.

A global settlement agreement between Apple and Qualcomm precluded an appeal of a nonobvious finding of Qualcomm’s patents.

Based on a global settlement between Apple Inc. and Qualcomm Inc. that included a license for tens of thousands of patents, the U.S. Court of Appeals for the Federal Circuit found that Apple lacked standing to appeal the Patent Trial and Appeal Board’s finding of nonobviousness of two of Qualcomm’s patents. The court found that Apple’s arguments as to standing to assert the validity of the patents at issue amounted to little more than an expression of its displeasure with a license provision into which it voluntarily entered (Apple Inc. v. Qualcomm Inc., April 7, 2021, Moore, K.).

After Qualcomm filed suit alleging that Apple infringed U.S. Patent No. 7,844,037 (the ‘037 patent) and U.S. Patent No. 8,683,362 (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 Patent Trial and Appeal Board held that Apple failed to show that any of the challenged claims were obvious. As part of a global settlement between Apple and Qualcomm, the parties executed a six-year license agreement, which included a license to the patents at issue. Based on that settlement, the parties jointly moved to dismiss Qualcomm’s district court action with prejudice, which the district court granted. However, Apple appealed the Board’s final written decisions.

Apple argued it has standing based on: (1) ongoing payment obligations that are a condition for certain rights in the license agreement; (2) the threat that it could be sued for infringing the ’037 patent and ’362 patent after the expiration of the license agreement in either 2025 or 2027; and (3) the estoppel effects of 35 U.S.C. § 315 on future challenges to the validity of the ’037 patent and ’362 patent.

Standing. While nearly any person may seek an inter partes review, the U.S. Supreme Court has recognized that not every party will have Article III standing to appeal a Board final written decision. 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." Here, the Federal Circuit exercised its discretion to reach the issue of standing because: (1) the issue was fully briefed; (2) there would be no prejudice to Qualcomm; and (3) the question of standing impacted these and other appeals.

The court found that Apple failed to establish standing based on its ongoing payment obligations under the license agreement. Apple argued 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. In contrast to the case cited by Apple in support of its argument, Apple has not alleged that the validity of the patents at issue will affect its contract rights. The validity of the ’037 patent or ’362 patent will not affect Apple’s ongoing payment obligations. Nor was there any contractual dispute involving Apple’s royalty obligations that related to, or could be resolved through a validity determination of, the patents at issue.

Apple failed to show an injury in fact based on potential future allegations that its products infringe the ’037 patent or the ’362 patent, according to the court. The potential for such a suit was too speculative to confer standing. Apple failed to explain why the ’362 patent creates a significant barrier. Also, there was no evidence that the cancellation of the ’362 patent was likely to affect Apple’s ongoing payment obligations. Nor did Apple provide any plans to engage in conduct after the expiration of the license agreement that might lead to an infringement suit. The court also rejected as speculative Apple’s argument that Qualcomm’s refusal to grant Apple an irrevocable license or other permanent rights in the ’037 patent or ’362 patent and Qualcomm’s history of asserting patents against Apple after certain royalty agreements expired provided standing.

Apple suggested the court could take judicial notice that Apple sells and will continue to sell its smart phone products. However, the products and product features Apple may be selling at the expiration of the license agreement in 2025 are not the kind of undisputed facts a court may take judicial notice of because they may be reasonably questioned.

Any harm Apple may face from estoppel was insufficient to provide standing, according to the court. Apple argued that its injury was compounded by the likelihood that 35 U.S.C. § 315(e) would estop it from arguing that the ’037 patent and ’362 patent would have been obvious in future disputes. The Federal Circuit has previously rejected invocation of the estoppel provision as a sufficient basis for standing." Apple’s harm was particularly suspect because it failed to show it will likely be engaging in activities that could give rise to a potential infringement suit after the expiration of the license agreement.

This case is No. 20-1561.

Attorneys: Lauren Ann Degnan, Robert Courtney, Oliver Richards, Christopher Dryer, and Nitika Gupta Fiorella (Fish & Richardson PC) for Apple Inc. Michael Hawes, Puneet Kohli, Chad C. Walters, and Brian W. Oaks (Baker Botts, LLP) for Qualcomm Inc.

Companies: Apple Inc.; Qualcomm Inc.

MainStory: TopStory Patent FedCirNews GCNNews

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