Earlier today, the Supreme Court issued its decision in Cuozzo. The decision preserves the status quo for PTAB trials by (1) confirming that decisions to institute trial by the PTAB are not reviewable and (2) finding that the PTAB reasonably acted within its rulemaking authority in construing claims under the broadest reasonable interpretation (BRI) standard.
Institution Decision Not Reviewable: The Court confirmed that the PTAB’s decision whether or not to institute an IPR is not subject to judicial review. This was expected, as the statute states: “determination by the [Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable.” The Court did, however, provide a few limited exceptions: (a) if the petition is so empty of substance that the entire proceeding results in a due process violation (which seems highly unlikely to occur in actual practice), or (b) if the PTAB engages in “shenanigans” by acting outside its statutory authorization (such as by instituting an IPR on a section 112 ground). In the end, this is how the Board and the Federal Circuit have been operating for years, and there will be no change.
IPR Claim Construction Standard is BRI: While the fight over the right claim construction standard focused on dueling policy issues between the parties and the amici, in the end, the Court appears to have found the decision to be a fairly straightforward application of administrative procedure law. The statute provided the PTO with discretion to create regulations “establishing and governing inter partes review,” and the PTO exercised that discretion by promulgating a regulation setting the claim construction standard in IPR as BRI. Case closed. While the parties argued that an IPR is either more like an application procedure or more like a court case, the Court found that it had ample elements of an agency (not court) proceeding. For example, any party can file an IPR even if it has no constitutional standing because not accused and the PTAB can continue the proceeding even if the petitioner settles. In the end, the decision came down to reasonableness in exercising rulemaking authority. The BRI standard was reasonable. (Based on the Court’s discussion, it appears likely that if the PTO had established an IPR claim construction that was more like the Phillips standard, the Court would have found that standard to be reasonable as well.)
Rejection of Cuozzo’s Arguments: The Court rejected Cuozzo’s two primary arguments about unreasonableness. (1) Cuozzo argued that BRI was unfair because in practical application, the PTAB hardly ever allows amendment. The Court stated that the PTAB’s manner of exercising its discretion on amendments in IPRs was not before it, and in any event, Cuozzo’s proposed amendment actually would have, according to the PTAB, broadened the claim. (2) The Court also rejected Cuozzo’s argument that the twin claim construction standards created inconsistency in the courts and the PTO. The Court responded that this inconsistency in standards has long existed, with the BRI standard being used in other PTO proceedings. Again, with the focus on whether the PTO acted reasonably in its rulemaking, the Court found it reasonable for the PTO to ensure that all or most of its proceedings use the same BRI standard even if that continued the split between courts and the agency.
Posted on 06/20/2016 by Deakin T. Lauer
The Supreme Court heard oral arguments yesterday in Cuozzo Speed Technologies v. Lee, a case that challenges the appropriateness of broadest reasonable interpretation (BRI) in IPR proceedings and the judicial reviewability of institution decisions.
The majority of the time was spent on the BRI question. On this issue, the leanings of the justices appeared to be influenced by whether they view the IPR proceeding as (1) a procedure to fix bad patents issued by the PTO or (2) an alternative to patent litigation. Justice Breyer, expressing skepticism about the quality of patents issued by the PTO, appeared to be in the first camp, while Chief Justice Roberts, expressing concern about competing proceedings and claim construction standards, appeared to show more interest in the second. A few quotes from these justices are provided below:
Justice Breyer: “The Patent Office has been issuing billions of patents that shouldn’t have been issued. I overstate, but only some. … And so what we’re trying to do with this proceeding is to tell the 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.”
Chief Justice Roberts: “So if the district court interprets the patent, is that binding on the PTO?” [Answer: “No”] And if the PTO interprets the patent, that’s not binding on the district court?” [Answer: “That’s right.”] “I’m sorry. It just seems to me that that’s a bizarre way to … decide a legal question. I mean, how does it work? Whoever gets to the judgment first …”
A decision in this case is expected before the Court recesses in June.
Posted on 04/26/2016 by Deakin T. Lauer