United States: Supreme Court Hears Oral Arguments In First Appeal From AIA Post-Grant Proceeding: Justices Focus On Practical Consequences Of Dual Claim Construction Standards

On April 25, 2016, the U.S. Supreme Court heard oral arguments in its first appeal from a decision by the USPTO's Patent Trial and Appeal Board ("PTAB" or "Board") in an inter partes review proceeding ("IPR") under the Leahy-Smith America Invents Act of 2011 ("AIA"). Cuozzo Speed Techs., LLC v. Lee, Case No. 15-446. The case presents two procedural issues under the AIA trial format: First, whether the PTAB should construe claims during an IPR using the USPTO's "broadest reasonable interpretation" (or "BRI") construction standard; and second, whether the PTAB's decision to institute review is subject to review by the U.S. Court of Appeals for the Federal Circuit. The transcript of the Supreme Court argument is available at [http://www.supremecourt.gov/oral_arguments/argument_transcripts/15-446_2dp3.pdf].

Background

Cuozzo Speed Technologies, LLC owns U.S. Patent No. 6,778,074, titled "Speed limit indicator and method for displaying speed and the relevant speed limit." The patent claims a speed display connected to a global positioning system device that displays a vehicle's current speed and indicates when the speed exceeds the legal speed limit for the vehicle's exact location. Garmin International, Inc. filed a petition for inter partes review of three claims of the '074 patent, contending that specific combinations of prior art references created a reasonable likelihood that the three challenged claims were invalid. See 35 U.S.C. § 312(a). The PTAB instituted review on the three claims, although the PTAB based its decision on two of the claims by applying references that Garmin did not identify as relevant to those claims. During the IPR proceedings, the PTAB construed the claims by giving them the "broadest reasonable construction in light of the specification of the patent in which it appears." 37 C.F.R. § 42.100(b). Ultimately the PTAB ruled that all three claims were invalid as obvious.

Cuozzo appealed the result to the Federal Circuit. In a February 4, 2015 divided decision, the court ruled that the USPTO's decision to institute an IPR proceeding was not appealable, either prior to or after the PTAB's final decision. See 35 U.S.C. § 314(d) ("[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable."). The majority also held that the "broadest reasonable interpretation" standard was appropriate.

The Federal Circuit then declined the request for en banc review by a razor-thin margin. In a set of revised opinions from the panel hearing the appeal, and three additional opinions, the court exposed sharp division on the proper claim construction standard applicable to AIA trial proceedings. In re Cuozzo Speed Technologies, LLC, No. 2014-1301 (Fed. Cir. Jun. 8, 2015)(revised panel decision and order denying motion for rehearing en banc).  Five judges joined an opinion written by Chief Judge Sharon Prost, dissenting from the denial. Four other judges joined an opinion by Circuit Judge Timothy B. Dyk, concurring in the denial. Judge Newman also wrote a separate dissenting opinion. After Garmin exited the litigation through settlement, Cuozzo petitioned for certiorari to the Supreme Court.

BRI Issue Dominates Oral Arguments

The Supreme Court spent the vast majority of the argument questioning counsel about the BRI claim construction standard, and discussed the patent owner's ability to appeal PTAB institution decisions only briefly.

Cuozzo argued that the BRI standard, used by the USPTO across the board in examinations, reexamination, reissues, and other administrative settings, is not appropriate for AIA trials for two reasons. First, Congress intended the AIA post-grant proceedings to be a substitute for federal court litigation, in which court's use a different claim construction approach based on Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). Second, BRI is a conservative standard applicable only in "examinational" proceedings in which the patentee may amend the pending claims. In AIA proceedings, however, patent owners do not have the unfettered right to amend claims, and in most cases requests to amend claims are denied. Instead of BRI, Cuozzo argues that the PTAB must use the Phillips claims construction analysis applicable in federal court proceedings, where claims are construed to have their "actual" meaning to a person skilled in the art based on the claim language, specification, prosecution history, and – occasionally – other extrinsic evidence.

The USPTO argues that the AIA supports the use of BRI in AIA proceedings. Although the statute is silent on the claim construction standard to be used, Congress was aware that the USPTO has long used BRI for administrative proceedings and Congress gave the USPTO broad authority to adopt AIA trial procedures.

At oral argument, counsel for Cuozzo argued that the PTAB should apply the Phillips claim construction analysis to IPR proceedings for several reasons: 1) BRI only applies when a claim under review may be freely amended; 2) Congress intended the IPR process to be "adjudicatory" rather than "examinational;" and 3)  the two different standards would result in anomalies, including situations where claims mean "one thing for patentability in the Board, but a wholly different thing for infringement in the district courts."

Cuozzo's counsel suggested that the BRI standard is one designed to address ambiguity in claims under examination, not necessarily the patentability of the claims. "What it does is try to test for ambiguity in the inter partes claim language, not patentability. Patentability is the standard that Congress set in inter partes review. But what the broadest reasonable interpretation does is try to test for ambiguity in the patent language so it can be amended. So the fact that a patented invention or an application may not pass the broadest reasonable expedient does not mean that the inventor has not claimed a patentable invention. It simply means that the language is ambiguous, and the language needs to be refined. And that is a wholly different exercise."

Justice Breyer suggested that, although a Phillips-based standard might be appropriate if Congress intended to create a "little court proceeding," the BRI standard might be appropriate if Congress intended IPR proceedings as a mechanism to allow the public to force a second look at many patents controlled by patent trolls that never should have been allowed. He suggested that it the intent was to "tell the [patent] office, you've been doing too much too fast. Go back and let people who are hurt by this come in and get rid of those patents that shouldn't have been issued. Now, we will give you, again, once the same chance we gave you before, and that is you can amend it once if you convince the judge you should have done it before. But if, on the broadest possible interpretation, you know, reasonable interpretation, it shouldn't have been issued, we're canceling it. And ­­ and that is for the benefit of those people who were suffering from too many patents that shouldn't have been issued in the first place. I don't know. If it's that second purpose, then I would think, well, maybe [the BRI standard] is right, what they're doing. And if it's ambiguous between those two purposes, I would begin to think, well, maybe they should have the power themselves under Chevron, Meade, or whatever, to decide which to do."

The Solicitor General argued that, although IPR proceedings include a hybrid of features found in ex parte patent examination and district court litigation, the proceedings are similar enough to examination to require the BRI standard. It argued that the patent owner has the right to request amendment, and although amendments have been entered in only a few cases, that usually has been because the patent owner failed to prove that the amended claims were patentable.

From a practical point of view, the difference between the BRI standard and a Phillips-based standard is not likely to make a significant difference in most post-grant proceedings. Although Cuozzo argues that its claims would have survived if the PTAB had used a different standard, it appears from the briefs (including an amicus brief filed by Dell Computer) that the standard does not affect the outcome in most cases.

The Court seemed most concerned by the procedural impact of claim construction in PTAB trials, and the potential effect on district court litigation concerning the same patents. Chief Justice Roberts and Justice Ginsburg expressed a general concern about consistency between the district court actions and AIA proceedings concerning the same patent.  Chief Justice Roberts noted that "it's a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results[.]" The panel also questioned counsel on the preclusive effect a decision by either the PTAB or a district court could have over a proceeding involving the same patent in the other forum.

Appellate Review of Institution Decisions.

The second issue before the Court, whether the Federal Circuit may review the PTAB's decision to institute review (at least in connection with an appeal of the final written decision), has greater potential to affect AIA trial practice, but was hardly mentioned by the Court during argument.

The AIA provides that the PTAB's decision "whether to institute an inter partes review . . . shall be final and nonappealable." 35 U.S.C. § 314(d). The USPTO interprets this provision as foreclosing all review of the institution decision, including review as part of a review of the final written decision on the merits. Cuozzo argues that principles of judicial oversight of administrative proceedings mandate the availability of judicial review.

The Solicitor General argued that § 314(d) should be read to preclude all appeals from a decision whether to institute review, not just a potential appeal of a refusal to institute. The government noted that a similar provision governing ex parte reexamination proceedings prevents appeals of decisions that a request for reexamination does not demonstrate a substantial new question of patentability, 35 U.S.C. § 303(c), and thus Congress could have adopted that approach in the AIA. By precluding all appeals, it argued, § 314(d) only permits challenges to PTAB institution decisions through a writ of mandamus.

Given the minimal discussion, it is difficult to determine the outcome of the appeability issue.  One thing is certain, the Supreme Court's ruling will have a significant impact on a patent owner's ability to seek appellate review of a PTAB decision to institute an IPR proceeding.

A decision is expected in June.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.