MadStad Engineering, Inc. v. United States Patent & Trademark Office , 756 F.3d 1366 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
MADSTAD ENGINEERING, INC. AND
MARK STADNYK,
Plaintiffs-Appellants,
v.
UNITED STATES PATENT AND TRADEMARK
OFFICE, MICHELLE K. LEE, DEPUTY DIRECTOR,
UNITED STATES PATENT AND TRADEMARK
OFFICE, AND UNITED STATES,
Defendants-Appellees.
______________________
2013-1511, -1512
______________________
Appeal from the United States District Court for the
Middle District of Florida in No. 12-CV-1589, Judge
Steven D. Merryday.
______________________
Decided: July 1, 2014
______________________
JONATHAN S. MASSEY, P.C., Massey & Gail LLP, of
Washington, DC, argued for plaintiffs-appellants.
MARK R. FREEMAN, Attorney, Appellate Staff, Civil
Division, United States Department of Justice, of Wash-
ington, DC, argued for defendants-appellees. With him on
the brief were STUART F. DELERY, Assistant Attorney
General, A. LEE BENTLEY, III, Acting United States Attor-
2 MADSTAD ENGINEERING, INC. v. USPTO
ney, and SCOTT R. MCINTOSH, Attorney. Of counsel on the
brief were NATHAN K. KELLEY, Deputy General Counsel
for Intellectual Property Law and Solicitor, SCOTT C.
WEIDENFELLER and AMY J. NELSON, Associate Solicitors,
United States Patent and Trademark Office, of Alexan-
dria, Virginia.
______________________
Before NEWMAN, O’MALLEY, and WALLACH, Circuit
Judges.
O’MALLEY, Circuit Judge.
In this constitutional challenge, Mark Stadnyk and
MadStad Engineering, Inc. (collectively, “MadStad”) filed
suit against the United States Patent and Trademark
Office (“PTO”), its then director, David Kappos, in his
official capacity, and the United States of America (collec-
tively, “the Government”) in the United States District
Court for the Middle District of Florida. MadStad Eng’g,
Inc. v. U.S. Patent & Trademark Office, No. 8:12-cv-1589,
ECF No. 1 (July 18, 2012). MadStad sought a declaratory
judgment that the “first-inventor-to-file” provision of the
Leahy-Smith America Invents Act (“AIA”), Pub. L. No.
112-29, § 3, 125 Stat. 284, 285–294 (2011) is unconstitu-
tional and a permanent injunction barring enforcement of
the AIA.
The district court granted the Government’s motion to
dismiss for lack of standing. MadStad Eng’g, Inc. v. U.S.
Patent & Trademark Office, No. 8:12-cv-1589, 2013 WL
3155280 (M.D. Fla. May 8, 2013). MadStad appeals this
dismissal and requests that we declare the AIA to be
unconstitutional. For the reasons explained below, we
affirm the district court’s finding that MadStad lacks
standing to challenge the AIA in this action; we therefore
do not reach MadStad’s constitutional arguments.
MADSTAD ENGINEERING, INC. v. USPTO 3
I. BACKGROUND
On September 16, 2011, the President signed into law
the AIA. The AIA, inter alia, adopted the “first-inventor-
to-file” principle for determining priority among patents
and patent applications. AIA § 3, 125 Stat. at 285–294.
Before the AIA, the United States typically gave priority
to the first to invent. 1 Under the AIA, however, priority
will go to the first inventor to file a patent application.
The named inventor must have invented the invention
independently and not derived the idea from another. See
35 U.S.C. § 102 (2012).
On July 18, 2012, MadStad filed suit in the United
States District Court for the Middle District of Florida,
alleging that the first-inventor-to-file provision of the AIA
is unconstitutional under Article I, Section 8, Clause 8 of
the Constitution and that the challenged provision was
not severable from the remainder of the Act. The com-
plaint sought a declaration that the entirety of the AIA is
unconstitutional and a permanent injunction barring its
enforcement.
The parties agreed that no material issues of fact
were in debate and that MadStad’s claim could be re-
solved as a matter of law. Mr. Stadnyk is a resident of
Florida and the named inventor on three patents. 2 His
company, MadStad Engineering, is a Florida corporation
that develops and markets his inventions. Mr Stadnyk
submitted an unchallenged declaration in support of his
1 There were some exceptions to this general rule.
See 35 U.S.C. § 102(g) (2006) (stating that, if the first
inventor abandoned, suppressed, or concealed the inven-
tion, the second inventor would get priority); Gayler v.
Wilder, 51 U.S. 477, 496–98 (1850) (same). But it re-
mained the governing principle nonetheless.
2 See U.S. Pat. Nos. 7,458,626; 7,832,783; 8,118,511.
4 MADSTAD ENGINEERING, INC. v. USPTO
claimed standing to pursue his challenge to the AIA.
After considering the parties’ submissions, the district
court dismissed the action for lack of standing, without
oral argument or an evidentiary hearing. MadStad, 2013
WL 3155280, at *7.
MadStad timely appealed, arguing that the district
court erred in holding that the plaintiffs lack standing to
challenge the constitutionality of the AIA. Thus, Mad-
Stad argues that we should address the merits of its claim
and find the first-inventor-to-file provision of the AIA, and
the AIA in its entirety, unconstitutional.
II. DISCUSSION
We first discuss whether we are authorized to decide
this case under Article III.
A. Jurisdiction
Neither party disputes this court’s jurisdiction over
this appeal under 28 U.S.C. § 1295(a)(1) (2012). As a
court of limited jurisdiction, however, we still must ad-
dress this issue. See Bender v. Williamsport Area Sch.
Dist., 475 U.S. 534, 541 (1986) (“Federal courts are not
courts of general jurisdiction; they have only the power
that is authorized by Article III of the Constitution and
the statutes enacted by Congress pursuant thereto . . . .
For that reason, every federal appellate court has a
special obligation to satisfy itself . . . of its own jurisdic-
tion.” (citation omitted)). Indeed, MadStad itself was
sufficiently unsure of whether this court possesses juris-
diction over this matter that it filed a protective appeal in
the United States Court of Appeals for the Eleventh
Circuit soon after initiating this appeal. See Appellant’s
Br. 1–2.
The Federal Circuit has exclusive jurisdiction over
appeals “from a final decision of a district court . . . in any
civil action arising under, or in any civil action in which a
party has asserted a compulsory counterclaim arising
MADSTAD ENGINEERING, INC. v. USPTO 5
under, any Act of Congress relating to patents.” 28 U.S.C.
§ 1295(a)(1) (emphasis added). 3 Because MadStad does
not assert a claim under the AIA and, instead asserts a
claim directly under the constitution challenging the
AIA’s constitutionality, we must determine whether
MadStad’s claims “arise under” an Act of Congress relat-
ing to patents as that jurisdictional principle has been
interpreted by the United States Supreme Court.
The Supreme Court’s “arising under” jurisprudence
has developed in cases assessing whether a case suffi-
ciently arises under federal law to authorize federal
courts to exercise jurisdiction over the claims asserted.
See Grable & Sons Metal Prods., Inc. v. Darue Eng’g &
Mfg., 545 U.S. 308, 314–15 (2005) (establishing federal
jurisdiction where the interpretation of a federal statute
was essential to the state law claim). Thus, the Court has
on a number of occasions assessed whether a claim arises
only under state law or, alternatively, involves a suffi-
ciently substantial federal issue to justify federal jurisdic-
tion or—where patent-related issues are involved—even
preempt state court jurisdiction over a matter. See, e.g.,
Gunn v. Minton, __ U.S. __, 133 S. Ct. 1059, 1068 (2013)
(holding that malpractice claims, based on an attorney’s
handling of a patent case, are not subject to exclusive
jurisdiction of federal courts). While resolution of these
questions has, at times, resulted in a conclusion that a
regional circuit Court of Appeals, rather than this Circuit,
properly would have jurisdiction over the appeal at issue,
that conclusion still turned on whether the question
presented was one of state law cognizable in federal court
only by virtue of its diversity jurisdiction, or one arising
under the patent laws. See Christianson v. Colt Indus.
3 We note that the AIA also changed Section 1295.
See AIA § 19, 125 Stat. at 331–32. These changes, howev-
er, do not affect our jurisdiction over this appeal.
6 MADSTAD ENGINEERING, INC. v. USPTO
Operating Corp., 486 U.S. 800, 817 (1988) (holding that
the appeal belonged before the regional circuit because
the claims did not arise under patent law); cf. 28 U.S.C. §
1295 (establishing jurisdiction in the Federal Circuit
when there is a “compulsory counterclaim arising under”
patent law).
The Supreme Court has not had occasion to determine
whether a claim attacking the constitutionality of an Act
of Congress relating to patents is one arising under that
Act of Congress within the meaning of 28 U.S.C. §§ 1295and 1338. It appears, moreover, that we have faced this
question only once. In Patlex Corp. v. Mossinghoff, 758
F.2d 594 (Fed. Cir. 1985), we considered whether “certain
provisions of the patent reexamination statute and im-
plementing regulations” were unconstitutional under the
Fifth and Seventh Amendments of the United States
Constitution. 758 F.2d at 596. While, as here, appeals
from the trial court’s resolution of their claims were
originally asserted in both the relevant regional circuit—
the Third Circuit—as well as this one, the Third Circuit
dismissed its appeal upon motion that the appeal was
properly brought in the Federal Circuit, and we proceeded
to decide the matter. See id. at 598 n.5. We did so with-
out analysis of the jurisdictional question, however. 4
Upon consideration, we conclude that jurisdiction over
this appeal lies properly in this court. As the Supreme
Court has made clear in other contexts, a matter can still
“arise under” an Act of Congress even when the claim
“finds its origin” in other legal predicates. See Gunn, 133
S. Ct. at 1064. While the Supreme Court has not ad-
4 In Brooks v. Dunlop Manufacturing Inc., 702 F.3d
624 (Fed. Cir. 2012), we addressed the constitutionality of
another portion of the AIA, but this court unquestionably
had jurisdiction based on the other claims in the case.
702 F.3d at 626–28.
MADSTAD ENGINEERING, INC. v. USPTO 7
dressed whether a claim which finds its origin in the
United States Constitution can also be said to arise under
a federal statute for jurisdictional purposes, we believe
the Supreme Court’s jurisprudence counsels in favor of
the conclusion that, in this case, it does. 5
When assessing when a state law claim can be said to
arise under federal law, the Supreme Court considers “if a
federal issue is: (1) necessarily raised, (2) actually disput-
ed, (3) substantial, and (4) capable of resolution in federal
court without disrupting the federal-state balance ap-
proved by Congress.” Id. at 1065. While not perfectly
translatable to the question before us, these guideposts
are helpful. First, a resolution of the constitutional
challenge here would require this court to interpret the
terms “inventor” and “first-inventor-to-file” under the AIA
and to assess the interactions between those terms and
the use of the term “Inventor” in the Intellectual Property
Clause of the United States Constitution—Article I,
Section 8, Clause 8. It will also cause us to address the
scope of protections afforded to “inventors” by the right to
bring derivation actions encompassed within the first-
inventor-to-file provision of the AIA.
Second, a review of the parties’ briefs, both on the
merits and with respect to the standing question, makes
clear that these matters are at the heart of the parties’
dispute. If MadStad is to be believed, moreover, they are
5 It is not surprising that the Supreme Court has
not yet addressed this question. Outside the context of
patent law, the precise federal origin of a claim is largely
irrelevant since it is the fact that the claim originates in
something that gives rise to federal subject matter juris-
diction—the Constitution, laws, or treaties of the United
States—that resolves any jurisdictional doubts. Even in
the patent arena, it is only at the Appellate level that this
unusual jurisdictional issue arises.
8 MADSTAD ENGINEERING, INC. v. USPTO
certainly substantial to the current state of patent law; a
resolution in MadStad’s favor would not only result in a
declaration that the first-inventor-to-file provision of the
AIA is unconstitutional and, unenforceable, but could
compel the conclusion that the entirety of the AIA falls
along with that alleged defective provision. This is pre-
cisely the type of issue the Supreme Court classifies as
substantial in the relevant sense: “[t]he substantiality
inquiry under Grable looks instead to the importance of
the issue to the federal system as a whole.” Gunn, 133 S.
Ct. at 1066. Indeed, in Grable, the Court described a
state claim challenging the constitutionality of govern-
ment action as the “classic example” of a claim which,
though having its origin in state law, arises under federal
law for jurisdictional purposes. Grable, 545 U.S. at 312(referring to Smith v. Kan. City Title Trust Co., 255 U.S.
180 (1921), where state plaintiff’s claim called into ques-
tion the constitutional validity of an Act of Congress).
Finally, to the extent Congress has attempted to “bal-
ance” the matters committed to the jurisdiction of this
court and those committed to the regional circuits, we
believe that balance would be upset by placing jurisdic-
tion over interpretations of the AIA and an assessment of
its constitutional validity in the hands of any circuit other
than this one. Through 28 U.S.C. § 1338(a), Congress
placed the resolution of actions arising under an Act of
Congress relating to patents exclusively within the feder-
al courts. Through 28 U.S.C. § 1295(a)(1), Congress
placed appeals from such matters exclusively within the
province of the Federal Circuit. The importance of the
matters raised by MadStad’s complaint to the continued
uniform application of the patent laws is clear.
For these reasons, we find, as we did impliedly in Pat-
lex, that MadStad’s claims and this appeal “arise under”
an Act of Congress relating to patents within the meaning
MADSTAD ENGINEERING, INC. v. USPTO 9
of both 28 U.S.C. §§ 1338 and 1295(a)(1) and that we,
thus, may properly exercise jurisdiction over this appeal. 6
B. Standing
Although we have statutory jurisdiction over its ap-
peal, MadStad must have standing under Article III to
assert that claim before we may reach the merits. To
satisfy the minimum standing requirements of Article III,
a party must demonstrate an injury in fact that is: (1)
“concrete, particularized, and actual or imminent”; (2)
“fairly traceable to the challenged action”; and (3) “re-
dressable by a favorable ruling.” Monsanto Co. v. Geert-
son Seed Farms, 561 U.S. 139, 149 (2010). The party
invoking federal jurisdiction has the burden of establish-
ing each of these elements. Lujan v. Defenders of Wildlife,
504 U.S. 555, 561 (1992). Standing is a jurisdictional
question whose resolution we review de novo. Id. at 560–
561.
The Supreme Court recently addressed when a party
has standing to challenge, pre-enforcement, the constitu-
tionality of governmental regulation; indeed, it has done
so twice. In the 2013 term, the Supreme Court decided
Clapper v. Amnesty International USA, __ U.S. __, 133 S.
Ct. 1138 (2013) and, at the end of its current term, the
Court decided Susan B. Anthony List v. Driehaus, No. 13-
193, 2014 WL 2675871, at *5 (June 16, 2014). We turn
first to Clapper because that is the decision upon which
the district court premised its judgment. There, “attor-
6 In addition, because the upshot of MadStad’s
claim is that the pre-AIA version of the Patent Act was
never constitutionally amended, and thus, should contin-
ue to govern patent applications, it is arguable that his
claims can be said to arise directly under the 1952 Patent
Act. In either case, it is clear that this Court of Appeals
has jurisdiction over its appeal.
10 MADSTAD ENGINEERING, INC. v. USPTO
neys and human rights, labor, legal, and media organiza-
tions whose work allegedly requires them to engage in
sensitive and sometimes privileged telephone and e-mail
communications with colleagues, clients, sources, and
other individuals located abroad” (collectively, “Amnesty”)
brought a constitutional challenge to the Foreign Intelli-
gence Surveillance Act (“FISA”). 133 S. Ct. at 1145.
Congress had amended § 1881a of FISA to allow the
Government to acquire intelligence from any non-U.S.
person reasonably believed to be located outside the U.S.,
without requiring authorization by an Article III judge
based on a finding of probable cause. See 50 U.S.C.
§ 1881a (2012); Clapper, 133 S. Ct. at 1144. Amnesty
alleged that some of their foreign contacts were likely
subject to surveillance under the amended FISA. Accord-
ing to Amnesty, the threat of surveillance under this
amendment will force them to travel abroad to have in-
person conversations and undertake other costly
measures to protect the confidentiality of sensitive com-
munications. Clapper, 133 S. Ct. at 1145–46.
The Supreme Court held that Amnesty did not have
standing to assert a constitutional challenge to FISA
because its argument rested on its speculative, subjective
fear that:
(1) the Government will decide to target the
communications of non-U.S. persons with whom
they communicate; (2) in doing so, the Govern-
ment will choose to invoke its authority under
§ 1881a rather than utilizing another method of
surveillance; (3) the Article III judges who serve
on the Foreign Intelligence Surveillance Court
will conclude that the Government’s proposed
surveillance procedures satisfy § 1881a’s many
safeguards and are consistent with the Fourth
Amendment; (4) the Government will succeed in
intercepting the communications of [Amnesty’s]
contacts; and (5) [Amnesty] will be [a] part[y] to
MADSTAD ENGINEERING, INC. v. USPTO 11
the particular communications that the Govern-
ment intercepts.
Id. at 1148. Because it found each of these steps highly
speculative and contingent on specific choices by the
Government, the FISA Court, and Amnesty itself, the
Supreme Court “decline[d] to abandon [its] usual reluc-
tance to endorse standing theories that rest on specula-
tion about the decisions of independent actors.” Id. at
1150.
MadStad asserted standing below, arguing that it
“has numerous inventions at different stages of develop-
ment” and the AIA: (1) forces MadStad to enhance com-
puter security to protect against an increased threat of
computer hacking and theft of its intellectual property
(“IP”); (2) increases the time and effort required to file
extra patent applications; (3) puts MadStad at a competi-
tive disadvantage with larger companies; and (4) causes
MadStad to lose business and investment opportunities
for fear of IP theft. MadStad, No. 8:12-cv-1589, ECF No.
1, at 8–12; see MadStad Eng’g, Inc. v. U.S. Patent &
Trademark Office, No. 8:12-cv-1589, ECF No. 30, at 2–10
(Sep. 28, 2012). 7
7 MadStad argues that the district court only con-
sidered its first alleged injury in its order dismissing the
case. [JA12–14]. We disagree. The district court’s
analysis clearly applied to each of MadStad’s arguments,
even if it treated them collectively. See, e.g., MadStad,
2013 WL 3155280, at *6 (“The same line of reasoning
serves to classify as neither certain nor impending the
array of ‘counter-measures’—the third-party contracting
for samples, the prophylactic filing of defensive patent
applications, and other contingent items—featured by the
plaintiffs in an attempt to demonstrate causation and
standing.”).
12 MADSTAD ENGINEERING, INC. v. USPTO
The district court rejected MadStad’s assertion of
standing, relying on Clapper. The lower court concluded:
In each case, the plaintiffs responded to a felt
need to expend money to avoid entirely hypothet-
ical consequences of legislation, that is, in each
case the plaintiffs expended funds in response to
an entirely subjective and self-actuated trepida-
tion about conjectural events. In each case, actu-
alization of the conjectural events depends upon
the contingent action of a third party . . . . In each
case, the expenditures in anticipation of these con-
jectural events are controlled entirely by the
judgment and discretion of the plaintiffs . . . .
MadStad, 2013 WL 3155280, at *6. In other words, the
district court found that, in order for MadStad to actually
suffer any injury fairly traceable to the AIA, an “acutely
attenuated concatenation of events” was required. Based
on this finding, the district court determined that Mad-
Stad failed to prove that any injury was actual or immi-
nent under Clapper and therefore lacked standing to
challenge the constitutionality of the AIA. Id.On appeal, MadStad contends that the district court’s
reliance on Clapper was misplaced because the threats of
harm upon which it relies are far less speculative than
those asserted in Clapper. It also asserts that it faces a
sufficient “substantial risk” of suffering the injuries it
identifies to satisfy Article III standing under traditional
standing principles which the Clapper Court did not
expressly reject.
1. MadStad’s alleged harms
We review each of MadStad’s alleged injuries in turn
to determine whether they are sufficient to support the
minimum requirements for Article III standing, individu-
ally or collectively.
MADSTAD ENGINEERING, INC. v. USPTO 13
a. Increased risk of computer hacking
MadStad alleges that it has been forced to increase its
computer security because the AIA has made it more
attractive and profitable for computer hackers to steal IP
and file their own patents. Because MadStad claims it
has already expended money to enhance its security in
response to this alleged increased threat, it argues that it
has suffered redressable injury directly caused by the
AIA. MadStad, No. 8:12-cv-1589, ECF No. 1, at 8–9.
The district court found that this scenario was too far-
fetched because it assumes too much. Specifically, the
trial court found that, to conclude that MadStad’s need to
undertake additional security measures is traceable to the
AIA, it would have to assume that, (1) although knowing
of hacking threats to its intellectual property generally,
MadStad would not have acquired, installed, and operat-
ed the available state-of-the-art security, regardless of the
AIA, (2) thieves will successfully hack MadStad’s comput-
ers and discover patentable IP, (3) those thieves would
apply for a patent before MadStad does so, (4) the thieves
would succeed in receiving a patent, and (5) they would be
able to disguise their theft so as to defeat a challenge by
MadStad in a derivation proceeding. MadStad, 2013 WL
3155280, at *6.
On appeal, MadStad argues that the district court in-
correctly assumed that it would not purchase additional
security equipment because of the AIA. MadStad con-
tends that it has already suffered injury attributable to
the AIA because it did purchase and implement enhanced
security measures after the passage of the AIA. MadStad
further insists that the district court incorrectly assumed
that computer hacking is an “exotic scenario.” MadStad
contends that it detects intrusions on its system every
week and points to a number of statistics that indicate
computer hacking is prevalent in the United States.
14 MADSTAD ENGINEERING, INC. v. USPTO
MadStad’s arguments miss the mark. In order to es-
tablish standing, the injury must be, inter alia, “fairly
traceable to the challenged action.” Monsanto, 561 U.S.
at 149. The point of the district court’s analysis was not
to downplay the risk of hackers, but to emphasize all of
the unlikely steps required for MadStad to suffer injury
fairly traceable to any alleged increased risk of hacking
caused by the AIA. See MadStad, 2013 WL 3155280, at
*6. The mere fact that MadStad, like all other people and
companies, faces cyber threats does not create standing.
In fact, MadStad cites statistics that indicate hacking was
a growing threat well before the AIA was even enacted.
Thus, even if the AIA were never enacted, it is clear
that MadStad would still be at risk from the “weekly”
attacks on its computer system, giving it incentive to
install the best protection against such attacks that is
available. Indeed, as MadStad admits, it had computer
security systems in place well before the AIA. Oral Ar-
gument at 3:47, MadStad Eng’g, Inc. v. U.S. Patent &
Trademark Office, 2013-1511, available at
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
13-1511.mp3 (“[MadStad] does have some [computer]
security.”). Even accepting the proposition that MadStad
did choose to install heightened security in response to
the AIA, we see nothing in the record that indicates that,
in response to the AIA, hackers would start launching
cyber-attacks which MadStad’s old security system could
not handle, but the upgraded system could. See Clapper,
133 S. Ct. at 1148. The alleged increased threat is, thus,
solely based on speculation about the capabilities and
incentives of illegal hackers. These assumptions are not
enough to create standing. See id. at 1152 (“Another
reason that respondents’ present injuries are not fairly
traceable to [the Act] is that even before [the Act] was
enacted, they had a similar incentive to engage in many of
the countermeasures that they are now taking.”). As the
trial court concluded, MadStad’s standing claim is “dilut-
MADSTAD ENGINEERING, INC. v. USPTO 15
ed” by the fact that it is unlikely that MadStad, “with or
without the AIA[,] would not avail itself to the state-of-
the-art computer security to defend against the persis-
tence and threatening hacking of IP thieves.” MadStad,
2013 WL 3155280, at *6.
Even if cyber-attacks were to increase because of the
AIA, moreover, MadStad has not presented any evidence
that, because of the AIA, there will be an increase in
successful cyber-attacks orchestrated to steal a company’s
IP so that a hacker can quickly file a patent on that IP.
Thus, even assuming that the AIA “creates an unparal-
leled reward system for corporate espionage and hacking,”
Appellant’s Br. 33, the belief that there will be an in-
crease in successful cyber-attacks attributable to the AIA
still rests on speculation about the illegal decisions of
independent actors. See Clapper, 133 S. Ct. at 1150 (“We
decline to abandon our usual reluctance to endorse stand-
ing theories that rest on speculation about the decisions of
independent actors.”). In other words, the alleged injury
that is “fairly attributable” to the AIA—the potential
increased risk of successful cyber-attacks in a first-
inventor-to-file system—is predicated solely upon the
unsupported assumption that hackers, in response to the
AIA, will increase efforts to illegally steal IP by launching
more cyber-attacks for the precise purpose of prosecuting
a patent thereon. Again, because this alleged injury is
dependent upon the hypothetical, illegal decisions of
independent actors, it is not “concrete, particularized, and
actual or imminent.” Monsanto, 561 U.S. at 149; see
Clapper, 133 S. Ct. at 1148 (“Yet respondents have no
actual knowledge of the Government’s § 1881a targeting
practices. Instead respondents merely speculate and
make assumptions about whether their communications
with their foreign contacts will be acquired under §
1881a.”).
Finally, even assuming that the AIA leads to an in-
crease of cyber-attacks, that those attacks are successful,
16 MADSTAD ENGINEERING, INC. v. USPTO
and that one of those attacks allows a hacker to steal
MadStad’s IP for the intended purpose of obtaining a
patent thereon, that hacker would still have to interpret
all of MadStad’s data, finish developing the product to a
point where it can be patented, successfully file for a
patent, and prosecute that application successfully, all
before MadStad can file its own patent application. As
MadStad emphasizes, filing for a patent is not a quick,
easy, inexpensive process. See Joint Appendix (“J.A.”) 25
(“Each patent application costs approximately $10,000 for
minimally complex products.”); Appellant’s Br. 20. Each
of these required steps only makes the alleged injury
more attenuated and less imminent. See Clapper, 133 S.
Ct. at 1147 (“Although imminence is concededly a some-
what elastic concept, it cannot be stretched beyond its
purpose, which is to ensure that the alleged injury is not
too speculative for Article III purposes—that the injury is
certainly impending.” (quoting Lujan, 504 U.S. at 564 n.2)
(emphasis in original)).
Given these circumstances, we find that the district
court did not err in concluding that, under Clapper,
MadStad failed to establish standing arising from the
alleged increased risk of hacking caused by the AIA or
any expenditures MadStad may have made in cyber
security because of that perceived risk.
b. Increased time and effort to file additional patent
applications
MadStad next argues that it is injured by the AIA be-
cause the Act forces it “to divert business resources to
prepare more patent applications and file them sooner, in
order to compete in the race to the PTO.” Appellant’s Br.
21. MadStad contends that, although large companies
can easily absorb the additional cost, small companies do
not have the resources necessary to file additional patent
applications to prevent another from filing for the same
patent first.
MADSTAD ENGINEERING, INC. v. USPTO 17
We, of course, turn to the record to determine whether
MadStad personally has suffered actual or imminent
injury because of the AIA. MadStad argues that Mr.
Stadnyk is an inventor who has patented inventions in
the past and that he intends to continue—and is, in fact
continuing—researching and developing new inventions,
which he would then patent. See Appellant’s Reply 4–5;
see also J.A. 62–63. Because he is now operating under
the first-inventor-to-file system of the AIA, MadStad
asserts that Mr. Stadnyk will be forced to move that
process more quickly and file applications for patents on
his inventions at an earlier point in the process than he
might otherwise desire to do.
As the Government points out, however, MadStad has
not asserted that he has filed any recent patent applica-
tions (i.e., after the March 16, 2013 effective date of the
first-inventor-to-file provision) and does not point to any
particular invention he claims is ready for patenting. The
Government argues, moreover, that, in order to establish
standing, MadStad must not only have an invention that
is ready for patenting and file an application for a patent
on that invention, but must also be faced with a rejection
based on an earlier filed application on that same inven-
tion and lose a derivation proceeding he initiates to chal-
lenge that earlier filing. See Oral Argument at 22:05,
24:35. 8
8 In its lower court brief, the Government specifical-
ly argued that, to establish standing, MadStad:
would have to establish that all of the following
contingencies will occur: (1) Plaintiffs’ invention
becomes “patentable” (2) only after the first-
inventor-to-file provision take[s] effect in mid-
March 2013; (3) Plaintiffs decide to seek a patent
on that invention; (4) another party independently
18 MADSTAD ENGINEERING, INC. v. USPTO
MadStad says that the government requires too much.
MadStad points to a written declaration by Mr. Stadnyk
where he explains:
The Government has raised a question as to
whether my new (currently non-patented) inven-
tions will ultimately meet the necessary precondi-
tions for obtaining a patent. I am operating on
the assumption that they will meet the require-
ments of patentability. I believe that some of my
inventions are in fact close to patentability. I am
continuing to research, develop, and test my in-
ventions in preparation for filing patent applica-
tions. Certainly, prior to the AIA, I had every
intention of patenting them. As a result of the
enactment of the AIA, MadStad and I face in-
creased costs and burdens from having to operate
in a First-[Inventor-]to-File environment.
J.A. 62–63 (emphases added). MadStad explains that “in
the real world, small inventors face countervailing
needs—to develop their inventions further, attract in-
vestment, and persuade business partners that the inven-
tion is viable.” Appellant’s Reply 6. MadStad argues
that, under the first-to-invent system, small inventors are
forced to file applications containing inadequate descrip-
tions of the inventions or insufficient testing data and,
thus, are less likely to ripen into a patent, or less likely to
ripen into a patent that actually is enforceable. And,
MadStad claims that it is suffering current injury by its
invents the same invention (5) after Plaintiffs
have invented it; and (6) the other party files for a
patent (7) before plaintiffs do so, thereby securing
the patent and foreclosing Plaintiffs’ application.
MadStad Eng’g, Inc. v. U.S. Patent & Trademark Office,
No. 8:12-cv-1589, ECF No. 29, at 19 (Sep. 18, 2012).
MADSTAD ENGINEERING, INC. v. USPTO 19
need to “acquire and maintain additional equipment for
product development and testing” so that it can speed up
its inventive process, Appellant’s Br. 12, by needing to
hire attorneys at an earlier point in time, Appellant’s
Reply 6, and by needing to raise and expend money on
applications which either might prove to be unsuccessful
or need to be amended. Appellant’s Br. 12–13. Given
these business realities, MadStad asserts that it has
shown sufficient probable economic injury to satisfy
Article III’s injury-in-fact requirement for standing.
While we are not prepared to accept the Government’s
characterization of what MadStad would need to show to
establish standing—and specifically do not agree that
filing and losing a derivative action is a necessary prereq-
uisite to standing to challenge the first-inventor-to-file
provision of the AIA—we conclude that, on the record
before us, MadStad has not established standing based on
its fear of being forced into filing a patent application
sooner than it would prefer or would normally do.
Mr. Stadnyk is admittedly speculating about whether
his current research and development will result in a
patentable invention. Mr. Stadnyk admits that he still
has more research, development, and testing to do before
he can file a patent application, early or not. In other
words, he currently has not filed, nor is he preparing to
file, a patent application in the first-inventor-to-file
system. His declarations, moreover, give no specific time
frame in which he expects to file another patent applica-
tion, other than to abstractly say he “believe[s] that some
of [his] inventions are in fact close to patentability.” J.A.
62–63. Though Mr. Stadnyk has filed for patent applica-
tions in the past, merely testifying that he intends to file
for another patent at some unknown point in the future is
not enough to meet the “concrete, particularized, and
actual or imminent” injury requirement. Monsanto, 561
U.S. at 149; see Lujan, 504 U.S. at 564–65 (holding that
professions of “‘some day’ intentions—without any de-
20 MADSTAD ENGINEERING, INC. v. USPTO
scription of concrete plans or indeed even any specifica-
tion of when the some day will be—do not support a
finding of the ‘actual or imminent’ injury that our cases
require”).
We do not define exactly what steps a would-be patent
applicant would need to undertake to establish standing
to challenge the first-inventor-to-file provision of the AIA.
We merely hold that, on the record before us, MadStad
has failed to establish standing based on its fear of the
increased effort and costs involved in filing a patent
application because it does not assert that Mr. Stadnyk
has an invention for which an application could be filed.
c. Competitive disadvantage relative to competitors
MadStad also asserts that the AIA puts it at “compet-
itive disadvantages (relative to larger competitors) from
having to operate in a [first-inventor-to-file] environment,
which puts a premium on the ability to file numerous
expensive patent applications.” Appellant’s Br. 20.
MadStad contends that the AIA forces small entities to
develop and test their products in-house because sending
developing products to outside vendors exposes them to IP
theft. This requires small companies to divert some of
their limited resources to set up and maintain these in-
house development and testing centers, which larger
competitors already have in place. In support of this
claimed injury, MadStad points to testimony from inves-
tors and to statements of members of Congress describing
how the first-inventor-to-file provision of the AIA, if
passed, would place small businesses at a competitive
disadvantage relative to larger competitors.
The Government responds that the patent system has
always incentivized inventors to file quickly to preserve
their rights, to avoid the chance of an interfering applica-
tion, and to avoid the later claim of concealment or sup-
pression. The Government also points to the AIA’s
creation of “derivation proceedings” to allow an inventor
MADSTAD ENGINEERING, INC. v. USPTO 21
to demonstrate that an invention disclosed was improper-
ly derived—i.e., stolen from the inventor. Appellee’s Br.
29 (citing AIA § 3(i) (codified at 35 U.S.C. § 135)).
Putting aside the protections derivation proceedings
might provide patent applicants facing an earlier filing on
the same invention, we find that MadStad’s argument
that it is at a competitive disadvantage because it is
forced to compete with larger competitors that have a
greater ability to file numerous patent applications fails
for many of the same reasons its argument that it is
injured by having to file additional applications fails.
MadStad has not asserted that it has, in fact, set up in-
house research facilities which it did not have in place
before the AIA and has not even alleged that it is engaged
in a research project that would employ or make use of
any such new facilities. Again, we find MadStad’s con-
cerns too speculative and generalized to meet the “con-
crete, particularized, and actual or imminent” injury
requirement. Monsanto, 561 U.S. at 149; Lujan, 504 U.S.
at 564–65. 9
MadStad’s argument that it is at a competitive disad-
vantage relative to larger companies because it must
divert resources to create in-house development and
testing centers fails for additional reasons as well. Like
MadStad’s argument regarding the increased risk of
hacking, the actual injury fairly traceable to the AIA here
is too speculative to be imminent. See Clapper, 133 S. Ct.
at 1150. In order for MadStad to suffer injury that is
fairly traceable to the AIA we would have to assume, at
9 We note, moreover, that MadStad has alleged that
it will be at a competitive disadvantage relative to larger
competitors without actually alleging that there are in
fact larger entities against which its inventions compete
that have “the ability to file numerous expensive patent
applications.” Appellant’s Br. 20.
22 MADSTAD ENGINEERING, INC. v. USPTO
least, that MadStad’s outside vendors do not have ade-
quate security measures in place to prevent hacking,
hackers are prepared to and could successfully hack into
the vendor’s system, those hackers will discover Mad-
Stad’s secret designs, and they will apply for a patent on
those designs. This level of attenuation, which depends
on the illegal motivations of third parties, is too specula-
tive to be imminent for Article III purposes. See id. at
1147.
On the record before us, therefore, MadStad has failed
to establish standing based on the alleged competitive
disadvantage caused by the AIA relative to its competi-
tors. 10
d. Lost business and investment opportunities
MadStad also alleges standing because the AIA inhib-
its it from sharing ideas with potential partners and
investors, causing lost business and investment opportu-
nities. Mr. Stadnyk declared that, because of the AIA, he
already has been deterred from disclosing secret infor-
mation to one potential investor who refused to sign a
non-disclosure agreement. The Government again argues
that MadStad’s subjective and unsubstantiated fear that
a potential investor will illegally “scoop” its inventions is
too speculative to create Article III standing.
We agree with the Government that, under Clapper,
the injury claimed by MadStad is neither fairly attributa-
ble to the AIA nor sufficiently imminent. See Clapper,
133 S. Ct. at 1147. While MadStad may have a subjective
belief that it needs a non-disclosure agreement to dis-
suade any incentive to “scoop” its IP which the AIA cre-
10 Because we hold that the alleged competitive dis-
advantage injury is not imminent, we do not reach Mad-
Stad’s argument that “competitive disadvantage is itself a
form of cognizable injury.” Appellant’s Br. 27.
MADSTAD ENGINEERING, INC. v. USPTO 23
ates, we again find the threat of such injury too attenuat-
ed to create standing here. MadStad seems to believe
that the threat of a civil breach of contract suit will dis-
suade a potential investor—who is otherwise willing to
commit at least two criminal actions—from stealing its
idea. See 18 U.S.C. § 1832 (2012) (criminalizing the theft
of trade secrets); 37 C.F.R. § 1.67 (2012) (punishing willful
false statements in an inventor’s declaration by fine or
imprisonment, or both). And, that it is the AIA, and only
the AIA, which convinced the potential investor to resist a
non-disclosure agreement. That is a rabbit hole which the
imminency requirement prohibits us from going down.
We find that, on this record, MadStad has failed to
show actual or imminent injury for lost business and
investment opportunities.
2. The district court’s reliance on Clapper was proper
MadStad also insists that the district court’s reliance
on Clapper, without considering other Supreme Court
precedent, was improper. MadStad contends that the
series of speculative assumptions the Government argues
it must make here is far less attenuated than those in
Clapper. MadStad emphasizes that Clapper was a case
where the plaintiffs themselves were not directly affected
by the Act. Appellant’s Br. 39–40; Oral Argument at 5:29.
While we concede that this distinction is meaningful, we,
like the district court before us, find many of the general
standing principles set forth in Clapper both enlightening
and, ultimately, controlling. Yes, the facts in Clapper are
even less conducive to a finding of standing than those
MadStad asserts here, but the facts here still do not
remove MadStad’s injuries from the realm of speculation
that damned the claims in Clapper.
In Clapper, the Supreme Court distinguished several
of the cases on which MadStad relies on grounds that
make this case distinguishable as well. For example, the
Supreme Court distinguished Monsanto because “re-
24 MADSTAD ENGINEERING, INC. v. USPTO
spondents in the present case present no concrete evi-
dence to substantiate their fears, but instead rest on mere
conjecture about possible governmental action.” Clapper,
133 S. Ct. at 1154 (citing Monsanto, 561 U.S. at 153–54).
The farmers in Monsanto presented evidence showing
that bees pollinated alfalfa and that their farms and the
farms with genetically modified alfalfa were within the
bees’ pollination range. Monsanto, 561 U.S. at 153 n.3.
In this case, on the other hand, as in Clapper, MadStad
provides no concrete evidence to substantiate its fears
that the AIA will increase the risk of IP theft (either by
hackers or untrustworthy potential investors). See Clap-
per, 133 S. Ct. at 1153–54. Instead, MadStad’s fears, like
the challengers in Clapper, “rest on mere conjecture about
possible [hacker or potential investor] actions.” Id.For further example, in Friends of the Earth, Inc. v.
Laidlaw Environmental Services, Inc., 528 U.S. 167(2000), standing was based on a company’s continuous
illegal discharge of pollutants into a river. 528 U.S. at
184. The polluter in Laidlaw conceded that the pollution
was ongoing. Id. In Clapper, the Supreme Court distin-
guished Laidlaw because there was no evidence that the
Government was using the statute at issue to acquire the
challenger’s communications. See Clapper, 133 S. Ct. at
1153. Similarly, in this case, MadStad does not allege or
present evidence that anyone is actively trying to steal its
intellectual property because of the AIA.
The Supreme Court in Clapper also addressed Meese
v. Keene, 481 U.S. 465 (1987). In Meese, the Government
had taken action that threatened to harm the plaintiff by
labeling films that he wished to exhibit as “political
propaganda.” 481 U.S. at 473–75. In Clapper, on the
other hand, the Government had not yet taken any action
that threatened the plaintiffs and the standing theory
was based on speculation about potential, future Govern-
ment action. Clapper, 133 S. Ct. at 1153 (citing Meese,
481 U.S. at 473–74). Here, as in Clapper, MadStad’s
MADSTAD ENGINEERING, INC. v. USPTO 25
alleged injury is based entirely on speculation about the
potential, future activity of third parties. See id. 11
MadStad finally argues that the trial court failed to
consider an alternative test for standing under which it
need only allege facts showing it has a “substantial risk”
of injury. Citing to footnote 5 in Clapper, MadStad con-
tends that the Supreme Court did not intend to displace
this traditional test for Article III standing. 12 Because,
according to MadStad, it faces a substantial risk of injury,
it satisfies the Article III standing requirement even if the
threat of harm is not otherwise “certainly impending.”
See id. at 1150 n.5. That brings us to the Supreme
Court’s most recent case addressing Article III standing,
Susan B. Anthony List.
In Susan B. Anthony List, the Supreme Court held
that a pro-life advocacy organization had the right to
challenge the constitutionality of a statute criminalizing
false statements made during an election because the
Elections Commission had already found probable cause
11 MadStad’s reliance on the other cases in its brief
is likewise unpersuasive. See, e.g., Mass. v. Envtl. Prot.
Agency, 549 U.S. 497, 518–21 (2007) (finding standing for
a state, not a private party); Duke Power Co. v. Carolina
Envtl. Study Grp., Inc., 438 U.S. 59, 73–74 (1978) (finding
standing for individuals living near a proposed nuclear
power plant due to increase in non-natural radiation and
thermal pollution).
12 The Supreme Court explained that “[o]ur cases do
not uniformly require plaintiffs to demonstrate that it is
literally certain that the harms they identify will come
about. In some instances, we have found standing based
on a ‘substantial risk’ that the harm will occur, which
may prompt plaintiffs to reasonably incur costs to miti-
gate or avoid that harm.” Clapper, 133 S. Ct. at 1150 n.5
(citing Monsanto, 561 U.S. at 153–54).
26 MADSTAD ENGINEERING, INC. v. USPTO
to believe the organization had violated the statute in the
past based on behavior the Petitioner expressed a firm
intention to repeat and the fact that the intended behav-
ior would subject it to the threat of criminal prosecution
and attendant penalties. Susan B. Anthony List, 2014
WL 2675871, at *6–7. In finding standing, the Supreme
Court reinforced previous decisions that made clear that a
challenger need not expose himself to arrest or prosecu-
tion to challenge a statute as long as the threat of arrest
or prosecution is sufficiently “credible.” Babbitt v. Farm
Workers, 442 U.S. 289, 298 (1979); see Holder v. Humani-
tarian Law Project, 561 U.S. 1 (2010) (finding standing
because the challengers faced a “credible threat” of prose-
cution); Virginia v. Am. Booksellers Ass’n Inc., 484 U.S.
383, 393 (1988) (finding standing because the challengers
“alleged an actual and well-founded fear that the law will
be enforced against them”); Steffel v. Thompson, 415 U.S.
452, 459 (1974) (finding that the challenger’s fear of
arrest was not “chimerical” because his companion has
already been prosecuted).
Before discussing these cases and the principles from
them the Court reinforced, the Court stated generally
that “[a]n allegation of future injury may suffice if the
threatened injury is ‘certainly impending’ or there is a
‘substantial risk’ that the harm will occur,” citing both
Clapper’s text and its footnote 5. Susan B. Anthony List,
2014 WL 2675871, at *5 (emphasis added). This sentence
seems to support MadStad’s argument that there is a
separate “substantial risk” test that survived Clapper and
that the district court should have considered. We need
not decide whether these are alternative tests for stand-
ing applicable to all factual circumstances, however. As
the Court did in Clapper, we find both that MadStad’s
alleged harms are not “certainly impending” and that
MadStad has not alleged facts from which we can find
that it faces a “substantial risk” of injury.
MADSTAD ENGINEERING, INC. v. USPTO 27
Unlike Susan B. Anthony List, MadStad has not iden-
tified a “history of past enforcement” to support its claim
of injury, id. at *9; MadStad neither asserts that it has
previously sought a patent unsuccessfully, nor that it has
a firm plan to do so at any defined point in the future.
And, MadStad does not assert that any act it even hopes
to undertake someday would subject it to criminal prose-
cution and potential criminal penalties. Most important-
ly, unlike the “substantial” and “credibl[e]” threat of
Elections Commission action against Susan B. Anthony
List, id. at *9–10, MadStad’s threat of harm depends upon
speculation about the choices which might be made by
third parties. For these reasons, we find that MadStad
“falls short of even the [substantial risk] standard.”
Clapper, 133 S. Ct. at 1150 n.5 (“[R]espondents fall short
of even [the substantial risk] standard, in light of the
attenuated chain of inferences necessary to find harm
here . . . . In addition, plaintiffs bear the burden of plead-
ing and proving concrete facts showing that the defend-
ant’s actual action has caused the substantial risk of
harm. Plaintiffs cannot rely on speculation about ‘the
unfettered choices made by independent actors not before
the court.’” (quoting Lujan, 504 U.S. at 562) (citations
omitted)).
For all these reasons, we hold that the district court
did not err by relying on Clapper or concluding that
MadStad lacked standing to assert the constitutional
claims in its complaint.
III. CONCLUSION
For the foregoing reasons, we affirm the district
court’s dismissal for lack of standing.
AFFIRMED