By Cheryl Beise, J.D.
The U.S. Supreme Court has affirmed a decision of the U.S. Court of Appeals for the Federal Circuit, holding that that Patent Office decisions regarding whether to institute inter partes review (IPR) of issued patents are not judicially reviewable under 35 U. S. C. §314(d) and that the Office has the inherent authority to apply the broadest reasonable interpretation (BRI) claim construction standard in IPR proceedings. Justice Stephen Breyer delivered the opinion for a unanimous Court with respect to the claim construction standard, and on behalf of the majority (with Justices Alito and Sotomayor dissenting) regarding the reviewability of IPR institution decisions (Cuozzo Speed Technologies LLC v. Lee, June 20, 2016, Breyer, S.).
The Leahy-Smith America Invents Act (AIA) of 2011 created a new post-grant "inter partes review" procedure that allows a third party to ask the USPTO to reexamine the claims in an already-issued patent and to cancel any claim that the agency finds to be unpatentable in light of prior art.
On February 4, 2015, the Federal Circuit affirmed the Patent Trial and Appeal Board’s decision to cancel three claims in a GPS-supported speed-limit indicator patent—U.S. Patent No. 6,778,074 (the ’074 patent)—owned by Cuozzo Speed Technologies, Inc., on obviousness grounds. The Federal Circuit also held that it lacked jurisdiction to review the USPTO’s decision to institute inter partes review of the patent. The PTAB had instituted the IPR proceeding GPS at the behest of GPS device manufacturer Garmin International, Inc. A sharply divided Federal Circuit denied Cuozzo’s petition for rehearing en banc, with five of eleven judges dissenting. The PTAB has designated its decision in this case as precedential.
Cuozzo’s petition for writ of certiorari posed two questions: (1) whether the PTAB may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning; and (2) whether the Board’s decision regarding whether to institute an IPR proceeding is judicially unreviewable. On January 15, 2016, the Court agreed to hear the case.
IPR institution decision. On appeal, Cuozzo argued that the PTO improperly instituted inter partes review with respect to claims 10 and 14 of the ’074 patent. The AIA’s "No Appeal" provision states that the Patent Office’s decision "whether to institute an inter partes review under this section shall be final and non-appealable," 35 U. S. C. §314(d).
The Supreme Court held that the plain language of Section 314(d) barred Cuozzo’s challenge to the Patent Office’s decision to institute inter partes review. The "strong presumption" favoring judicial review of agency decisions may be overcome by "clear and convincing" indications that Congress intended to bar review, the Court said. This was such a case. The Court also observed that the Administrative Procedure Act already limits review to final agency decisions." The Patent Office’s decision to initiate inter partes review is "preliminary," not "final," according to the Court.
While Section 314(d) may not bar consideration of a constitutional question, such as a due process challenge, or a challenge to the PTO acting outside its statutory grant of authority, it plainly bars judicial review "of the kind of mine-run claim at issue here, involving the Patent Office’s decision to institute inter partes review," the Court determined. Cuozzo’s allegation that Garmin’s petition for IPR review did not plead "with particularity" the challenge to claims 10 and 14 as required by §312 is little more than a challenge to the Patent Office’s conclusion under §314(a) that the "information presented in the petition" warranted review.
The Patent Office’s decision to deny a petition is a matter committed to the Patent Office’s discretion, the court concluded.
BRI claim construction standard. The AIA grants the Patent Office authority to issue "regulations … establishing and governing inter partes review," §316(a)(4). A Patent Office regulation provides that, during inter partes review, a patent claim "shall be given its broadest reasonable construction in light of the specification of the patent in which it appears." 37 CFR §42.100(b).
Cuozzo argued that the Patent Office in an IPR proceeding should not construe claims in an issued patent according to their broadest reasonable interpretation (BRI)—the standard used during patent prosecution—but should give terms their plain and ordinary meaning as understood by a person of skill in the art—the standard used by federal courts in reviewing issued patents. Cuozzo contended that Congress intended IPR to be an adjudicatory substitute for court-like litigation.
The Supreme Court, however, pointed out that Congress designed the IPR as a specialized agency hybrid reexamination proceeding. The purpose of inter partes review is not only to resolve patent-related disputes among parties, but also to protect the public’s "paramount interest in seeing that patent monopolies … are kept within their legitimate scope," the Court said (citations omitted). The Court observed that there were differences between IPR and judicial proceedings, such as proof of invalidity "by a preponderance of the evidence" in an IPR and proof of invalidity by "clear and convincing evidence" in district court litigation. In addition, the Patent Office may continue to conduct an inter partes review even after the adverse party has settled and may even intervene in a later judicial proceeding.
The Supreme Court concluded that the Patent Office regulation requiring the Board to apply the BRI construction standard to interpret patent claims was a reasonable exercise of the rulemaking authority granted to the Patent Office by statute. The statute grants the Patent Office the authority to issue regulations "governing inter partes review," and no statutory provision unambiguously mandates a particular claim construction standard, the Court explained.
The Federal Circuit’s decision was accordingly affirmed in its entirety.
Concurring opinion. Justice Clarence Thomas wrote separately to clarify his understanding that the majority’s inquiry regarding whether the Patent Office’s preferred rule was reasonable effectively asked whether the rulemaking was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," in conformity with the Administrative Procedure Act, 5 U. S. C. §706(2)(A). Noting the Court’s citation to Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984), Justice Thomas opined that in an appropriate case, the Court "should reconsider [the] fiction of Chevron and its progeny."
Concurring and dissenting opinion. Justice Samuel Alito, joined by Justice Sotomayor, filed an opinion concurring in part and dissenting in part. Justice Alito, consistent with the strong presumption favoring judicial review of final agency decisions, would limit the scope of the "No Appeal" provision of Section 314(d) to interlocutoryappeals, leaving a court free to review the initial decision to institute review a final agency decision. Justice Alito disagreed with the majority’s contention that a "decision to initiate inter partes review is ‘preliminary,’ not ‘final.’"
Justice Alito explained that Congress crafted a three-tiered framework for Patent Office review of issued patents: broad post-grant review in a patent’s infancy, followed by narrower inter partes review thereafter, with a limited exception for broad review of older covered business method patents. "Today’s decision threatens to undermine that carefully designed scheme," he said. Justice Alito would vacate the Federal Circuit’s judgment and remand for consideration of whether the Patent Office exceeded its authority to institute inter partes review with respect to claims 10 and 14 of Cuozzo’s patent.
The case is Dkt. No. 15-446.
Attorneys: Garrard R. Beeney and Jeffrey B. Wall (Sullivan & Cromwell LLP) for Cuozzo Speed Technologies LLC. Donald B. Verrilli Jr., Solicitor General, and Curtis E. Gannon, Assistant to the Solicitor General, U.S. Department of Justice, for Michelle K. Lee, Under Secretary of Commerce for Intellectual Property and Director, Patent and Trademark Office.
Companies: Cuozzo Speed Technologies LLC
MainStory: TopStory Patent
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