IP Law Daily Justices consider inter partes review patent claim construction standard
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Monday, April 25, 2016

Justices consider inter partes review patent claim construction standard

By Cheryl Beise, J.D.

The U.S. Supreme Court heard oral arguments today in the closely watched patent case of Cuozzo Speed Technologies LLC v. LeeDocket No. 15-466. The case challenges two aspects of the post-grant administrative inter partes review (IPR) procedures implemented by the Leahy-Smith America Invents Act of 2011—the proper claim construction standard the Patent Trial and Appeal Board (PTAB) should use in IPR proceedings and whether the PTAB’s decision to institute an IPR proceeding is judicially reviewable.

Garrard R. Beeney of Sullivan & Cromwell LLP argued on behalf of petitioner Cuozzo Speed Technologies LLC and Curtis E. Gannon, Assistant to the Solicitor General, U.S. Department of Justice, argued for respondent USPTO Director Michelle K. Lee.

At issue is a Federal Circuit decision, affirming the PTAB cancellation of three claims in a GPS-supported speed-limit indicator patent owned by Cuozzo obviousness grounds. The PTAB had instituted the IPR proceeding GPS at the behest of GPS device manufacturer Garmin International. A sharply divided Federal Circuit denied Cuozzo’s petition for rehearing en banc, with five of eleven judges dissenting.

Over three dozen amicus briefs were filed in the case. Pharmaceutical manufacturers and companies with large patent portfolios in general supported Cuozzo, whereas technology companies and generic drug manufacturers favored IPR proceedings as a way to cull weak or invalid patents.

IPR claim construction standard. The parties spent the majority of the allocated hour debating whether the PTAB in an IPR proceeding may construe claims in an issued patent according to their broadest reasonable interpretation (BRI)—the standard used during patent prosecution—rather than their plain and ordinary meaning—the standard used by federal courts in reviewing issued patents. The AIA does not address the standard for interpreting challenged claims. In theory, it is easier to find patent claims invalid under the BRI standard.

Beeney argued that the ordinary meaning should be used in IPR proceedings because Congress intended IPR to be a substitute for court-like litigation. Beeney emphasized that during patent prosecution, a patentee has a right to amend claims whereas in the IPR, a patentee may make a one-time request to amend claims, which the PTO is likely to deny. Ninty-five percent of motions to amend claims in IPRs have been denied. “Less than 30 claims have been amended, while 10,000 have been canceled,” Beeney said. Gannon, however, noted that only about 13% of patentees have filed motions to amend in IPRs.

Gannon asserted that the two different standards for construction would not in most cases alter the invalidity outcome. Gannon pointed out that the burden of proof for proving invalidity in district courts actions is higher because of the presumption of validity.

Justice Kagan suggested that Congress was aware the PTO uses the BRI standard and yet chose not to address it. Justice Breyer pressed Beeney on why a patent should not be invalidated under the BRI standard if it would not be patentable and never should have been issued under that standard in the first place. Justice Breyer added that the IPR procedures make sense if the goal is to eliminate the type of weak patents asserted by so-called patent trolls. Beeney replied that a patentee’s property rights are at stake in an IPR proceeding.

The Justices struggled with defining the nature of the IPR proceedings. Justice Ginsburg described the IPR proceeding as a “hybrid,” in some ways resembling an administrative proceeding and in others a district court proceeding. “But it seems to me perfectly clear that Congress meant for this entity to be a substitute for the judicial action,” Chief Justice Roberts said.

The Justices also expressed concern about the interplay and the potential for conflicting results in parallel IPR and district court proceedings. “[I]t's a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results,” Chief Justice Roberts said. The Chief Justice was concerned about the waste of judicial resources involved in construing patent claims that could be invalidated in an IPR. “It just seems to me that that’s a bizarre way to … decide a legal question,” Roberts said. Beeney noted that in the 85% percent of IPR there is concurrent litigation, and district courts are issuing stays 70% of the time.

Gannon stated that most district court actions are stayed at an early phase and the time limits on the IPR proceeding. In response to a question from Justice Breyer, Gannon distinguished the IPR from district court proceedings by noting several differences, including the limited grounds available for invalidity—obviousness or anticipation based on prior art.

Justice Sotomayor pressed Gannon for a concrete example of a situation where the PTAB and district court reached different validity determinations, but he was unable to cite one. In his closing arguments, Beeney pointed to many cases cited in Cuozzo’s brief where a patent is upheld by a district court and then invalidated by the Board. “That wouldn’t happen if we used the same claim construction Congress intended by having a court-like system,” Beeney said.

Review of IPR institution decisions. Beeney briefly discussed the preferred reading of the statute to mean that it only prevents interim interlocutory review of the PTAB’s institution decision, rather than barring review for all time. Justice Ginsburg remarked that under this reading, “the statute is doing no work” because “[y]ou don’t need to preclude interlocutory review when the reviewing court can review only final judgments.” Beeney said that decisions not to institute never become part of an appealable final decision.

Gannon pointed that the statute, by using the term “nonappealable,” leaves open the possibility of mandamus relief where the Board departs from statutory criteria in an IPR institution decision.

The case is Docket No. 15-466.

Attorneys: Garrard R. Beeney (Sullivan & Cromwell LLP) for Cuozzo Speed Technologies LLC. Curtis E. Gannon, Assistant to the Solicitor General, U.S. Department of Justice, for the USPTO.

Companies: Cuozzo Speed Technologies LLC

MainStory: TopStory Patent

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