May the Patent Trial and Appeal Board (“PTAB”) in an inter partes review (“IPR”) use a broadest-reasonable interpretation when construing the claims of a patent, or is the PTAB required to construe claims to their plain and ordinary meaning? May courts review the PTAB’s decision to institute an IPR proceeding?
The Supreme Court will decide the standard that the United States Patent Trial and Appeal Board (“PTAB”) should use when construing claims in an issued patent and whether the PTAB’s decision to institute an inter partes review (“IPR”) proceeding is judicially reviewable. Cuozzo Speed Technologies argues that claims should be given their ordinary meaning and that the PTAB’s decision to institute an IPR should be judicially reviewable. Meanwhile, the Patent and Trademark Office (“PTO”) argues that when the PTAB institutes an IPR, the PTAB should construe claims with their broadest-reasonable construction standard. Furthermore, the PTO argues that the PTAB’s decision to institute an IPR is final and non-reviewable by the courts. The Supreme Court’s decision may help resolve inconsistent standards used between district courts and IPR proceedings while affecting innovator’s rights.
Questions as Framed for the Court by the Parties
- Did the court of appeals err in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning?
- Did the court of appeals err in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable?
On August 17, 2004, Cuozzo Speed Technologies, LLC (“Cuozzo”) was issued U.S. Patent No. 6,778,074 (“074 patent”), “Speed Limit Indicator and Method for Displaying Speed and the Relevant Speed Limit.” The patent consisted of an interface which displays a vehicle’s current speed and the relevant speed limit by using a global positioning system. According to the patent, the speed above the speed limit may be displayed in red or in a colored liquid crystal display form.
In this case, the Supreme Court will determine whether the Patent Trial and Appeal Board (“PTAB”), in an inter partes review (“IPR”), may construe the claims of a challenged patent to their broadest-reasonable interpretation (“BRI”) or use the plain and ordinary meaning of the claims. In addition, the Supreme Court will decide whether the PTAB’s decision to institute an IPR is judicially reviewable by a court. Cuozzo Speed Technologies, LLC (“Cuozzo”) asserts that the PTAB should construe patent claims using their ordinary meaning and that the PTAB’s decision to institute an IPR should be judicially reviewable. Meanwhile, Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the Patent and Trademark Office (“PTO”), argues that the PTAB should construe claims with their broadest-reasonable construction and that the PTAB’s decision to institute an IPR is final and non-reviewable by the courts.
PATENT ADJUDICATION V. PATENT EXAMINATION
First, Cuozzo points out that Congress intended for IPRs to be a form of patent adjudication as opposed to being a form of patent examination. As such, Cuozzo posits that PTAB, through the IPR proceeding, should construe claims with their plain and ordinary meaning. Cuozzo supports its argument by pointing out that adjudication is meant to “evaluate the actual, ordinary meaning of an issued patent claim, which is a fixed property right,” while examination is meant to determine the breadth and scope of a patent claim. Additionally, Cuozzo argues that Congress intended for differences to exist between the PTO’s reexamination process and the IPR proceedings. Namely, Cuozzo focuses on how the reexamination process, like other PTO examination processes, provides the patent applicant an absolute right to amend claims—which is not the case in IPRs. Thus, Cuozzo argues that because an IPR is adjudicative in nature, the proper claim construction should employ a plain-and-ordinary meaning standard.
Contrastingly, Michelle Lee, Director of the Patent and Trademark Office, argues that Congress intended for the PTAB to apply the BRI of the claims during an IPR. Lee argues that because the IPR happens at the PTO, which has traditionally applied BRI, Congress likely intended for the PTO to apply the same standard for IPRs. Lee supports this by noting that Congress, through 35 U.S.C. § 2(a)(1) and § 131, gave the PTO the responsibility to determine patentability and not just the breadth of an invention. Lee posits that this responsibility requires applying the BRI because the PTO wanted to preclude a patent owner from being able to construe an issued patent to cover more subject matter than the PTO intended to grant. In addition, Lee compares IPRs to other PTO proceedings that have applied the BRI standard—reissue proceedings, interference proceedings, ex parte reexaminations and inter partes examinations. These types of proceedings, as noted by Lee, have had the use of BRI upheld in judicial challenges. Further, Lee argues that, because parties are still able to amend their claims in an IPR, an IPR proceeding should be considered more of a reexamination proceeding than an adjudication proceeding. Lee points out that this ability to amend a claim during an IPR comes from 35 U.S.C. § 316(d) and grants the PTAB the discretion to determine whether the patent owner should have the ability to amend the claims. Thus, Lee argues that IPRs are comparable to examinations at the PTO, and thus, the proper claim construction should be the BRI.
ALTERNATIVES TO DISTRICT COURT LITIGATIONS
Cuozzo argues that Congress intended for IPRs to be a cheaper and quicker substitute for district court litigation. Cuozzo maintains that IPRs are a “surrogate” for district court litigation. As such, Cuozzo maintains that the PTO should apply the same claim construction standard that district courts apply—the plain-and-ordinary meaning standard. Cuozzo argues that IPRs and district court litigations both take depositions, document discovery procedures, and hold oral arguments before a judge. Further, Cuozzo notes that if the PTAB holds a claim invalid, the finding of invalidity has the same legal effect as an invalidation at a district court level. Cuozzo also points out that, following the enactment of IPRs, the PTO hired administrative judges specifically trained as judges, and not examiners, to conduct IPR proceedings. With these procedural similarities, Cuozzo posits that IPRs are simply a way to have district court litigations at a greater speed and lower cost. Consequently, Cuozzo argues that the PTAB should follow district court claim construction.
Lee, acting through the PTO, challenges Cuozzo’s argument that Congress intended the PTAB to act as a substitute for district court litigation. Although Lee concedes that IPRs were intended to provide a forum for cheaper and quicker litigation than district courts, Lee asserts that IPRs are not “surrogates” of district court litigation. First, Lee points out the potential difference between an IPR and district court litigation. She notes that IPRs allow third parties who do not have stakes in the litigation to bring forth an IPR, which is different than a district court’s requirements for bringing a case forward. Second, Lee notes that, unlike district court’s litigation, parties in an IPR are unable to settle the proceeding—once the IPR is started, it continues to the end. With these reasons in mind, Lee cites to a House Report to assert that IPRs were not only meant to allow for a cheaper and quicker venue for district court litigation, but also to “‘improve patent quality’ in ways that are not possible in ordinary litigation.” Thus, because IPRs are not surrogates for district court litigation, Lee maintains that the PTO could take a different approach to claim construction.
AGENCY POWER: THE STATUTE’S GRANT OF POWER
On the one hand, Cuozzo argues that the America Invents Act (“AIA”) allows a court to review the initiation of an IPR because an IPR is not a “valid regulation.” Cuozzo argues that the PTO has a long history of not having the power to prescribe substantive rules and that the AIA does not alter this trend. Cuozzo points out that § 316(a) of the AIA only gives the PTO the power to regulate the procedural aspects of an IPR and not the power to make substantive rules. With this logic, Cuozzo argues that construing patent claims constitutes making substantive rules—thus, the PTO exceeded its authority when using the substantive BRI standard in IPRs. Consequently, Cuozzo argues that courts should be able to review the PTAB’s decision.
On the other hand, Lee argues that Congress was clear in 35 U.S.C. § 314(d) where it stated that judicial review of the PTO’s decision to institute an IPR was “final and non-appealable.” Lee points out that 35 U.S.C. § 314 gives the PTAB the power to institute an IPR and allows the PTAB to issue a final written decision regarding patentability of the challenged claims. With this in mind, Lee posits that the relevant portions of the AIA, §§ 314(d), 318, and 319, clearly state that the decision for the PTAB to institute an IPR is non-appealable. Thus, Lee argues that the AIA precludes the courts from reviewing the PTAB’s decision to institute an IPR.
This case presents the Supreme Court with the opportunity to determine the standard the Patent Trial and Appeal Board (“PTAB”) should use when construing claims in an issued patent, and whether the PTAB’s decision to institute an inter partes review (“IPR”) proceeding is judicially reviewable. The Supreme Court’s decision in this case has the potential to affect the inconsistent constructions of patent claims occurring between district courts and IPR proceedings. Furthermore, the Supreme Court’s decision will affect innovator’s rights.
INCONSISTENCY IN CONSTRUCTIONS OF PATENT CLAIMS
Pharmaceutical Research and Manufacturers of America (“PhRMA”), in support of Cuozzo, argues that Congress intended for IPRs to be a complete substitute for litigation. However, PhRMA argues that, by using the BRI standard, the PTAB is expanding their authority beyond Congress’s intent. According to PhRMA, the BRI standard allows for forum-dependent construction of patent claims. In other words, the BRI standard increases the risk that the patent claim can be found both valid by a district court and invalid by the PTAB in an IPR proceeding. PhRMA further contends that the inconsistency will create an unfair system in which district courts will narrowly construe claims for infringement cases and broadly for IPR validity challenges. According to PhRMA, patent holders will suffer because of the inconsistency, as they will have to deal with varying construction standards. 3M Company et al. (“3M Company”), in support of the petitioner, point out that “the invalidity rates resulting from these IPR proceedings are far higher than those in the courts.”
CME Group, Inc. et al. (“CME Group”), in support of Lee, argue that Congress intended IPR to use the BRI standard because in order for IPR to serve as a review for USPTO’s initial decision to grant a patent, IPR must use the same BRI standard as used during the initial decision making process. CME Group further argues that Congress intended for district courts and PTAB in IPR proceedings to potentially result in different outcomes. CME Group explains that Congress mandated for a different burden of proof in IPR and district court proceedings. Furthermore, CME argues that Congress would not have mandated a different burden of proof if Congress did not intend for IPR and district court proceedings to have different outcomes.
POTENTIAL EFFECT ON INNOVATORS
3M Company explains that the application of the BRI standard is partially justified by the ability of a patent owner to amend claims. 3M Company argues that the justification is invalid because the patent owner does not have a meaningful opportunity to amend patent claims. 3M Company maintains that in addition to PTAB restrictions on claim amendments, the America Invents Act does not grant the ability either. 3M Company therefore claims that the BRI standard should not be supported based on a right that the patent owners do not have. 3M Company further claims that patent owners’ property rights will be damaged if a later IPR proceeding finds the claim invalid. In addition, PhRMA argues that innovators will be discouraged from innovating if the PTAB applies the BRI standard, given that the BRI standard does not clearly delineate the scope of patent claims.
Dell et al., in support of Lee, argue that the BRI standard helps inventors receive fair notice regarding any potential infringement actions that could be brought against the inventor in the future. According to Dell et al., the BRI standard covers a range of reasonable readings that could affect the inventor in the future. EMC Corporation, also in support of Lee, adds that the BRI standard will curtail the inventor’s usage of unclear claim terms intended to circumvent the obviousness requirement of § 103. EMC Corporation claims that inventors will have to anticipate a broader reading for both the PTAB’s initial decision and the IPR. Therefore, EMC Corporation concludes that inventors will use language that will pass the BRI standard.
In this case, the Supreme Court will decide whether the Patent Trial and Appeal Board (“PTAB”), when reviewing the validity of a patent, should construe the meaning a patent’s claims in the broadest-reasonable interpretation or use its plain-and-ordinary meaning. The Court will also decide whether the PTAB’s decision to institute an inter partes review (“IPR”) proceeding is judicially reviewable. Cuozzo Speed Technologies argues that the PTAB, in an IPR, should use the plain-and-ordinary meaning when construing claims because IPRs are adjudicatory in nature and are meant to provide a quicker and cheaper means for district court litigation. Cuozzo Speed Technologies also argues that the PTAB’s decision to institute an IPR should be judicially reviewable because the PTAB’s decision to institute an IPR is an invalid agency action. Conversely, Lee argues that the PTAB should use the broadest-reasonable interpretation when conducting an IPR because IPRs are similar to examination proceedings in the PTO and because IPRs were not meant to simply be a surrogate for district court litigation.As for the second issue, Lee argues that the controlling statute clearly states the PTAB’s decision to institute an IPR is final and non-appealable, and thus the PTAB’s decision to institute an IPR should not be judicially reviewable. In addition, the outcome of this case may resolve inconsistent standards for claim construction between courts and the Patent Office as well as affect innovator’s rights.
- Dennis Crouch, Sharply Divided Federal Circuit Confirms that PTO can Broadly Construe Claims During Inter Partes Reviews, Patently-O (July 8, 2015).
- Gene Quinn, Supreme Court Accepts Cuozzo Speed Technologies IPR Appeal, IPWatchdog (Jan. 15, 2016).
- Anthony C. Tridico, Ph.D et al., In re Cuozzo: Thumbs Up for the PTAB, Finnegan (Mar. 2015).