Post-Lexmark: status of prudential standing in patent law.

• Author: Million-Perez, H. Rachael

Standing is a threshold requirement to bring a cause of action, and requires "two strands: Article III standing, which enforces the Constitution's case-or-controversy requirement, and prudential standing, which embodies judicially self-imposed limits on the exercise of federal jurisdiction." (1) On March 25, 2014, however, the Supreme Court of the United States abrogated prudential standing for the foreseeable future in Lexmark International, Inc. v. Static Control Components, Inc. (2) The fallout of this hardly publicized, yet unanimous opinion is two-fold. First, federal courts will need to dissect and reconstruct their standing requirements. Second, plaintiffs who could have had their day in court in 2014 may have the court's doors slammed in their face today. This Article focuses on the impact of the Supreme Court's ruling in the patent field and demonstrates that the ruling reinforces a party's right to access the courts in patent infringement suits.

Standing is the determination of "whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." (3) Unfortunately, standing is one of the most convoluted areas of law. This confusion stems from the Court's own inconsistencies. (4) Some argue these inconsistencies rise from the Court manipulating cases based on something other than the merits. (5) Despite inconsistent application and biases, the standing doctrine serves three policy concerns. First, the doctrine promotes separation of powers by restricting judicial review. (6) Second, it prevents a surge of lawsuits by those lacking a stake in the outcome. (7) Third, it promotes fairness such that only holders of rights may assert them. (8)

Although these policy concerns seem clear, the judiciary has blurred the difference between constitutional and prudential standing requirements. The three-pronged constitutional standing requirement is relatively clear: A plaintiff bringing an action must have an injury in fact, the defendant must have caused the injury, and it must be an injury that the court can redress. The Court's prudential standing requirements are much harder to delineate. Some prudential requirements prohibit plaintiffs from raising claims on behalf of absent third parties, or from raising generalized grievances. Other prudential requirements demand a party be within the relevant statute's zone of interests, or within the group intended to benefit from the statute. (9) Perpetual change and confusion regarding constitutional and prudential standing requirements have left lower courts to navigate standing on a statute-by-statute and case-by-case basis.

Standing in patent law cases is particularly interesting because the patent right is an exclusionary right that the patent owner may transfer either in part or in whole. In patent infringement suits, the Federal Circuit and lower courts apply Patent Act requirements, constitutional requirements, and judicially imposed prudential requirements. (10) When a patent owner transfers or divides her patent right, as by license, courts discern whether the asserting party has prudential standing by evaluating the substance of the transferred rights and determining which individual holds "all substantial rights" to the patent in question. (11) Despite serious opposition to the "all substantial rights" prudential standing test, the Federal Circuit and lower courts continue to rely on this standard to determine whether they may adjudicate the case.

Following the Supreme Court's Lexmark v. Static Control trademark decision, reliance on the patent prudential standing standard, or any prudential standard, may no longer be appropriate. In 2014, the Supreme Court effectively eliminated the longstanding doctrine of prudential standing in all federal statute cases. 12 In its stead, the Court espoused a zone-of-interests test, along with a proximate-cause requirement. (13)

Although the Supreme Court's decision in Lexmark had clear repercussions on trademark law, courts have yet to fully realize Lexmark's effect on patent law because a limited number of courts have applied it in the patent context. In accordance with national trends, courts applying patent law could interpret the Lexmark decision in three ways: first, as eliminating the patent prudential standing inquiry known as the "all substantial rights" test; second, as inapplicable in the patent context; or third, as reinforcing traditional patent prudential standing. This Article argues that a proper application of Lexmark results in the reinforcement, rather than the destruction, of the standing requirement for patent cases.

In Part I, this Article begins by describing the general fundamentals of constitutional standing, followed by specific standing requirements in patent infringement cases. (14) Part I then introduces traditional and general conceptions of prudential standing and its applications in patent infringement cases; (15) this is followed by the development, decision, and outcome of the Supreme Court's decision in Lexmark, which arguably abrogated the prudential standing doctrine as a whole. (16) Part II analyzes the outcome of the Lexmark decision and contends that Lexmark does not eviscerate prudential standing in patent infringement cases because the two-step inquiry set out in Lexmark embraces the prudential standing inquiry courts have traditionally conducted in patent infringement cases. (17) This Article concludes that the traditional prudential standing inquiry in patent infringement cases aligns with the test set out in Lexmark, and thus courts should continue to apply its precedent. (18)

1. BACKGROUND

   The Supreme Court upended the long-term standing precedent in Lexmark by abolishing prudential standing doctrine. This Part analyzes the impact of this eradication in patent law by first discussing the development and precedent of standing generally, and then precedent for standing specifically in patent law prior to Lexmark. (19) Next, this Part details Lexmarks development and decision, which removed prudential consideration from the standing analysis. (20) Finally, this Part explores the limited case law applying Lexmark in the patent context. (21)

   A. Standing Generally

   Standing is one of several justiciability principles that takes root in the "cases" and "controversies" language of Article III of the United States Constitution. (22) Article III stipulates that federal judicial power and justiciability principles limit this power. (23) Justiciability is one of many doctrines courts use to determine which matters they may adjudicate and which matters they must dismiss. (24) Standing is the particular aspect of justiciability that evaluates "whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." (25) Accordingly, a federal court cannot hear or decide a particular case without the establishment of standing. (26) Standing, therefore, is a threshold requirement and is necessary for a plaintiff to gain access to the court on any subject. (27) Scholars contend the standing doctrine furthers three policy objectives: to promote separation of powers by eradicating judge-made law, to prevent those without a stake in the lawsuit from bringing suit, and to foster fairness such that only right holders assert their rights. (28)

   In restricting judicial review, the standing doctrine promotes separation of powers. (29) Writing in this journal, the Suffolk University Law Review, back in 1983, Justice Scalia contended that the standing doctrine is a "crucial and inseparable element" of the separation of powers principle. (30) According to Justice Scalia, the very existence of standing "is largely within the control of Congress." (31) Therefore, a court encroaches on the legislature's power to create cases and controversies pursuant to Article III if the court hears a case in which the plaintiff lacks standing, or conversely, declines to hear a case where Congress has provided the plaintiff with a cause of action. (32)

   Second, the standing doctrine prevents those lacking a stake in the outcome from bringing a plethora of lawsuits. (33) As a result, standing can "ensure the effectiveness of the federal courts by making sure that their limited resources are directed to those who have more than simply a political or ideological interest in the result of the case." (34) Additionally, a third party should not unnecessarily adjudicate the rights of another, especially where the holder of those rights does not wish to assert them or would not benefit from successful litigation. (35)

   Third, the standing doctrine promotes fairness because only holders of rights may assert them. (36) In Warth v. Seldin, the Court explained that plaintiffs "generally must assert [their] own legal rights and interests, and cannot rest [their] claim[s] on the legal rights or interests of third parties." (37)

   Determining whether standing exists is not a simple task. Historically, federal courts have evaluated standing through two prongs: First, by appraising constitutional limitations on federal-court jurisdiction, and second, by appraising prudential limits on the exercise of that jurisdiction. (38) Constitutional and prudential standing requirements are expounded upon below.

   1. Constitutional Standing

      Constitutional standing derives from the Supreme Court's interpretation of Article III's limit on federal court jurisdiction over "cases" and "controversies." (39) Therefore, the doctrine of constitutional standing identifies which disputes fall within the scope of these broad categories and which disputes a federal court may resolve. (40) Constitutional standing requires that a plaintiff'show: an injury in fact; a causal connection between the injury and the defendant's conduct; and that a favorable decision would redress the injury. (41) Constitutional standing is a necessary but insufficient ingredient to guarantee a court hears...