District Court Lacks Jurisdiction to Hear APA Suit Challenging IPR Constitutionality

In Security People, Inc. v. Iancu, No. 2019-2118 (Fed. Cir. Aug. 20, 2020), the Federal Circuit affirmed the district court’s dismissal of a patent owner’s Administrative Procedure Act suit challenging the constitutionality of the PTAB canceling patent claims found unpatentable in an IPR proceeding.

Security People sued its competitor, alleging infringement of U.S. Patent No. 6,655,180. The competitor filed for an IPR petition against the ’180 patent. The Board instituted review of one claim and found that claim unpatentable. The Federal Circuit summarily affirmed the finding. Security People then sought a declaratory judgment in federal district court that the Board violated its constitutional rights by canceling the patent claim. The district court dismissed Security People’s suit for lack of subject matter jurisdiction. Security People appealed.

On appeal, the Federal Circuit affirmed the dismissal. The Court rejected Security People’s argument that the Board lacks authority to hear constitutional claims, and therefore Security People could not have raised the constitutional argument during the IPR. The Court explained that, regardless of whether the Board could hear a constitutional claim, the Federal Circuit could address constitutional claims on appeal from IPR proceedings. The Court also rejected Security People’s argument that its constitutional challenge became ripe for review only after the Board issued a certificate canceling the patent claim. The Court explained that the cancelation certificate “is irrelevant to the finality of the agency’s action,” and the final written decision is “the agency action that will directly affect the parties” where constitutionality may be raised.

The Federal Circuit further explained that Security People’s APA challenge was inappropriate because the statutory text confirms Congress’s intent to preclude district courts from reviewing final written decisions, which are instead reviewable by the Federal Circuit.