IP Law Daily GE lacked standing to appeal review decision over gas turbine engine patent
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Thursday, July 11, 2019

GE lacked standing to appeal review decision over gas turbine engine patent

By John W. Scanlan, J.D.

The engine manufacturer was not harmed because the PTAB’s decision denying its challenge did not change the competitive landscape for commercial airplane engines.

Commercial aircraft engine manufacturer General Electric (GE) lacked Article III standing to appeal the Patent Trial and Appeal Board’s decision in an inter partes review of a competitor’s patent for a gas turbine engine because it could not show that it had suffered a concrete and particularized injury, the U.S. Court of Appeals for the Federal Circuit has decided. GE could not show competitive injuries or economic harms as a result of the Board’s decision that the challenged claims were not unpatentable for obviousness. The court dismissed GE’s appeal (General Electric Co. v. United Technologies Corp., July 10, 2019, Reyna, J.).

United Technologies Corporation (UTC) was the assignee of Patent No. 8,511,605 (the ’605 patent), which related to a gas turbine engine with a gear train driven by a low stage count low pressure turbine. GE petitioned for inter partes review (IPR) of the patent, challenging two claims on grounds of anticipation and five others for obviousness. After UTC disclaimed the first two claims, the Board concluded that the evidence did not show that the remaining claims were unpatentable for obviousness. GE appealed, and UTC moved to dismiss the appeal for lack of standing, arguing that GE had not suffered a sufficient injury in fact from the decision. GE argued that it had suffered injuries including competitive harm, economic losses, and statutory estoppel under 35 U.S.C. §315(e). UTC argued that it had not threatened to sue GE for infringement; that GE had not shown evidence of a concrete and particularized economic injury because it had not developed an engine implicating the claims at issue; and that statutory estoppel and the competitive standing doctrine did not apply to GE.

Competitive injuries. The Federal Circuit first determined that GE’s alleged competitive injuries were too speculative. Two declarations by GE’s Chief IP Counsel and General Counsel for Engineering indicated that GE had spent time and money researching engine designs that potentially could implicate the patent claims at issue, but there was no evidence to show that GE had lost bids to customers seeking a geared-fan engine design that it could not offer as a result of the patent or that GE had submitted a direct-drive engine design to Boeing because of the patent. While Boeing might have asked for information regarding a geared-fan design, there was no evidence that Boeing had required such an engine, no evidence why GE had chosen to submit to Boeing a direct-drive engine rather than a geared-fan design, and no evidence that GE had, in fact, lost the Boeing bid. The court noted that it had recently addressed the "competitor standing" doctrine in its 2019 decision in AVX Corp. v. Presidio Components, Inc., in which it stated that a government action must change the competitive landscape for this doctrine to apply. However, the Board’s upholding of the challenged patent claims did not change the competitive landscape for commercial airplane engines because it did not address prices or introduce new competitors. As a result, the court found no competitive harm to GE.

Economic losses. Similarly, GE’s claims of economic losses did not confer standing. GE argued that it had suffered injury from the increased costs of attempting to develop engines that could implicate the patent claims and engines that do not, but GE did not provide any accounting for these purportedly increased costs or any evidence that it actually had designed a geared-fan engine. GE had designed such an engine in the 1970s and argued that the patent claims impeded its ability to use this design as a basis for developing and marketing future geared engine designs. The court found that any economic loss deriving from an engine designed in the 1970s could not be considered imminent.

Estoppel. Finally, the court stated that it had previously rejected the argument that estoppel under Section 315(e) created injury in fact for standing purposes, noting that GE does not currently practice the claims and the injury was speculative.

Concurring opinion. In a concurring opinion, Circuit Judge Todd M. Hughes agreed that the Federal Circuit’s jurisprudence required dismissal but wrote separately to express his belief that precedent had developed an "overly rigid and narrow standard" for standing for appeals of IPR proceedings. He argued that the Federal Circuit had erred in taking a patent-specific approach in AVX Corp. v. Presidio Components, Inc., that was inconsistent with U.S. Supreme Court precedent, and that GE would have shown standing without the holding of that case. The court in AVX Corp. determined that the government action at issue in IPR proceedings was different from other cases applying competitor standing because the "feature-specific exclusivity right" of a patent did not normally harm a firm just because it was a competitor in the same market as the patentee, the beneficiary of the government action. As with a government action that increased competition, Judge Hughes reasoned, a government action that effectively excluded an appellant from effectively competing in a market provided a benefit to the competitor and caused competitive harm to the appellant leading to economic injury. As a result, there was no reason for the Federal Circuit to maintain a patent-specific approach to competitor standing. The concurrence further said that GE sustained a concrete and particularized injury because GE and UTC were direct competitors in a highly competitive market and UTC’s patent claims prevented GE from designing and producing an engine that would satisfy at least one customer’s requirements without spending additional time and money designing around the claims.

This case is No. 2017-2497.

Attorneys: Brian E. Ferguson (Weil, Gotshal & Manges LLP) for General Electric Co. Michael Valaik (Bartlit Beck Herman Palenchar & Scott LLP) for United Technologies Corp.

Companies: General Electric Co.; United Technologies Corp.

MainStory: TopStory Patent FedCirNews

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