United States: Supreme Court Affirms "Broadest Reasonable Interpretation" Claim Construction Standard and Limited Appeals For AIA Trials

On June 20, 2016, the U.S. Supreme Court decided Cuozzo Speed Technologies, LLC v. Lee, No. 15-446. The Court affirmed the decision of the U.S. Court of Appeals for the Federal Circuit, holding that the USPTO acted within its authority in promulgating rules requiring the Patent Trial and Appeal Board to construe patent claims in inter partes review proceedings under the "broadest reasonable interpretation" (or "BRI") standard. The Court also held that, with limited exceptions (e.g., constitutional and other extraordinary challenges), the PTAB's decision to institute review in an IPR proceeding is not appealable.

Key points from the decision:

  • Justice Breyer wrote the majority opinion. The eight justices participating in the case were unanimous that the USPTO's rules applying the BRI claim construction standard were reasonable and within the rulemaking authority delegated to the Office in the AIA. See 35 U.S.C. § 316(a)(4).
  • The Court rejected the petitioner's argument that Congress intended the IPR process to simulate judicial proceedings considering patent validity, thus requiring the PTAB to use the Phillips claim construction standard used in federal court actions. Instead, after noting numerous procedural differences between IPRs and court actions, and a close relationship between IPRs and now-discontinued inter partes reexamination proceedings, the Court noted that IPRs remained essentially an administrative proceeding. "Although Congress changed the name from 'reexamination' to 'review,' nothing convinces us that, in doing so, Congress wanted to change its basic purposes, namely, to reexamine an earlier agency decision."
  • The Court was not persuaded that the difficulties facing patent owners in amending claims during AIA trials mandated use of the Phillips
  • The Court noted that although use of BRI in PTAB trials may result in some inconsistency with parallel district court actions, that risk "has long been present in our patent system, which uses different tracks – one in the Patent Office and one in the courts – for the review and adjudication of patent claims."

A majority of the justices also agreed that a PTAB institution decision is not appealable. Two justices (Alito and Sotomayor) dissented on this issue.

  • Although administrative proceedings generally are subject to court oversight, that presumption must be set aside because the AIA expressly provides that the decision "whether to institute an inter partes review . . . shall be final and non-appealable." See 35 U.S.C. § 314(d).
  • The Court noted that the "no appeal" rule is consistent with the Administrative Procedures Act, which does not permit appellate review of "preliminary" agency rulings. The Court noted that: "The text of the 'No Appeal' provision, along with its place in the overall statutory scheme, its role alongside the Administrative Procedure Act, the prior interpretation of similar patent statutes, and Congress' purpose in crafting inter partes review, all point in favor of precluding review of the Patent Office's institution decisions."
  • The Court noted that despite § 314(d), an institution decision could be appealed to lodge a constitutional challenge and in other extraordinary situations, such as the USPTO acting outside its statutory limits.

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.

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