United States: Supreme Court Decides Two Key Aspects Of IPR In Cuozzo Speed Techs., LLC v. Lee

The U.S. Supreme Court ruled on June 20, 2016 in Cuozzo Speed Techs., LLC v. Lee that: (1) the statutory authority of the Patent Trial and Appeal Board ("Board") in instituting an inter partes review ("IPR") proceeding is final and non-appealable, thereby not being subject to judicial review, and (2) it is appropriate for the Board to construe claims in an issued patent according to their broadest reasonable interpretation, rather than their plain and ordinary meaning as in district court litigation.

Procedural Background

The Patent Office awarded U.S. Patent No. 6,778,074 to Cuozzo Speed Technologies, LLC, ("Cuozzo") for a speed limit indicator that, upon receiving signals from a GPS, changes color of a display when the speed of a vehicle exceeds the speed limit at the vehicle's present location. Garmin petitioned for inter partes review of all claims of the Cuozzo patent, asserting that claim 17 in particular would have been obvious based on three prior art patents – Aumayer, Evans and Wendt – in combination. The Board instituted trial on claim 17 based on this combination, as well as with respect to claims 10 and 14, even though these claims were not challenged by Garmin on this basis. Construing the claims according to their broadest reasonable interpretation, the Board deemed claims 10, 14 and 17 unpatentable. Cuozzo appealed to the Federal Circuit, alleging that: (1) the Board improperly instituted inter partes review of claims 10 and 14 on a ground that Garmin did not assert against such claims, and (2) the Board improperly used the "broadest reasonable construction" to interpret the claims instead of the "plain and ordinary meaning" standard used by district courts. The Federal Circuit denied both these assertions here.

The Board's Institution Decisions Remain Judicially Unreviewable

The Supreme Court first addressed whether the Board's decision to institute the IPR proceeding was judicially reviewable in light of the fact that 35 U.S.C. § 314(d) provides that the Board's decision "to institute an inter partes review ... shall be final and non-appealable." 35 U.S.C. § 314(d). The Court held by a 6-2 majority that absent any constitutional question, this "No Appeal" provision bars judicial review. Writing for the majority, Justice Breyer explained that, "[f]or one thing," §314(d) expressly states that the "determination by the [Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable." The majority reasoned that, because the legal dispute at issue relates to the application of certain relevant patent statutes—specifically 35 U.S.C. § 312, which states that an IPR must be pleaded "with particularity"—it falls under § 314(d). Justice Breyer also found that the legislative history suggests that Congress intended to give the Patent Office significant power to reevaluate earlier patent grants and that holding that the Board's decision to institute an IPR is judicially reviewable would undermine this important congressional objective. The Court further recognized that a "strong presumption" favoring judicial review is overcome by "clear and convincing" indications that Congress intended to bar review, i.e., the explicit language—"final and nonappealable" in § 314(d)—and the § 312-based legal dispute clearly and convincingly indicates that Congress intended to bar judicial review of the Board's decision as whether to institute an IPR. Importantly, however, Justice Breyer made clear that the majority holding was a complete bar to judicial review of a Board institution decision: "we need not, and do not, decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond 'this section.'"

Justice Alito, joined by Justice Sotomayor, dissented. In their view, "nonappealable" in §314(d) is ambiguous when the precedents have used the term to mean not immediately or independently appealable. Justice Alito explained that § 314(d) means that a court cannot stop the IPR proceeding from moving forward, but the question whether it was lawful to institute the proceeding must be subject to judicial review.

The Broadest Reasonable Construction Standard Remains Valid in IPRs

The Court also addressed whether the broadest reasonable construction standard to interpret patent claims is a reasonable exercise of the rulemaking authority granted to the Patent Office by statute. The Court unanimously upheld the Board's application of the broadest reasonable construction standard set forth in 37 C.F.R. § 42.100(b) as a valid exercise of delegated agency authority under 35 U.S.C. § 316(a)(4).

Writing for the Court, Justice Breyer reasoned that where a statute leaves a gap or is ambiguous, Congress's grant of rulemaking authority is interpreted as granting the agency "leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute" – and the statute here contains such a gap because no statutory provision unambiguously directs the agency to use one claim construction standard over the other. The Court noted that the statute indeed allows the Patent Office to issue rules governing inter partes review and the broadest reasonable construction regulation is a rule that governs inter partes review.

In addition, the Court reasoned that the nature and purpose of inter partes review does not unambiguously require the Patent Office to apply one particular claim construction standard. The Court rejected Cuozzo's argument that the alleged purpose of inter partes review – namely, to establish trial-like procedures for reviewing previously-issued patents – supports the application of the ordinary meaning standard. Justice Breyer explained that such contention ignores the fact that inter partes review differs in other significant respects from trial-procedures, for example, the lack of a standing requirement, the Patent Office's ability to proceed to final decision after settlement by an adverse party, and the lower burden of proof to invalidate claims during IPR. The Court concluded that 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 also reasoned that the broadest reasonable construction standard helps ensure precision in drafting claims and "prevent a patent from tying up too much knowledge," which, in turn, helps members of the public draw useful information for the disclosed invention and understand the lawful limits of the claim. The Court noted that the Patent Office has used this standard for more than 100 years in past adversary proceedings, such as interferences and reexamination.

Takeaways

This decision by the U.S. Supreme Court is expected to favor the patent challengers. Patent challengers will now have a choice of forum between the Board and the federal courts and will need to strategize accordingly. Due to the difference in claim construction standards used by the Patent Office and district courts, the patentability of claims is expected to differ in both tribunals. It is worth noting that the Board has already been statistically favorable to patent challengers due to the historically high cancellation rate of claims in IPR proceedings, and to many of them due to an expedited decision on patentability of the challenged claims and thus generally a lower cost. The Cuozzo decision has arguably now made the landscape even more appealing to patent challengers by affirming the Board's use of the broadest reasonable construction of claims and confirming that patent holders cannot (at least in large part) appeal the Board's decision to institute an IPR trial.

Cuozzo provides insight for patent prosecutors as well. Due to an IPR being a bigger hurdle for patent holders now, patent prosecutors should consider drafting and amending claims while interpreting them broadly, as per the Board's claim construction standard. Even though Patent Office examiners are already required to construe claims broadly, it may be best to use extra caution to avoid any unforeseeable errors by the examiner in applying the broadest reasonable interpretation standard. Patent prosecutors may also consider performing a detailed prior art search during prosecution of the patent application and narrowing broadly-worded claims to overcome any relevant art as well as its combination with the references on record.

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
Gurneet Singh
 
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.