Pharmaceutical companies have reason to be pleased with the Supreme Court’s recent decision to grant a petition for a writ of certiorari in Cuozzo Speed Technologies, LLC v. Michelle K. Lee, Under Secretary of Commerce for Intellectual Property and Director, Patent and Trademark Office, No. 15-446 (Cuozzo). The Supreme Court has agreed to review the claim construction standard used by the Patent Trial and Appeal Board (Board) in inter partes review (IPR) proceedings, considered by many players in the pharmaceutical industry as posing a significant barrier to protecting intellectual property rights. According to a statistic presented by the petitioners, patent challengers have instituted over 3,400 petitions, resulting in the cancelation of some or all claims in the patent under review in nearly 85 percent of IPR proceedings. Id. at 16. The Supreme Court has also agreed to determine whether the Federal Circuit has the authority to review the Board’s decision to institute an IPR proceeding.

IPR is a form of post-grant review established by Congress in the Leahy-Smith America Invents Act (AIA), Pub. L. No. 112-29, 125 Stat. 284 (2011) (effective Sept. 16, 2012). Under the AIA, IPR proceedings replaced the former system of inter partes reexamination with the goal of “providing quick and cost effective alternatives to litigation.” H.R. Rep. No. 112-98, pt. 1, at 48 (2011). IPRs are trial-like proceedings conducted by the Board, and they involve a novelty or obviousness challenge to an existing patent using prior art consisting of patents or printed publications. 35 U.S.C. § 311(b). The first step in an invalidity analysis is to interpret (or “construe”) the claim terms to determine their meaning to a person of ordinary skill in the art.  Unlike federal courts, which employ an “ordinary and customary meaning” claim construction standard, the Board interprets claim terms in an unexpired patent according to their broadest reasonable construction in light of the specification in which they appear. 37 C.F.R. §42.100(b); Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48766 (Aug. 14, 2012).

Cuozzo originated as an IPR brought by Garmin International, Inc. and Garmin USA (together “Garmin”) to challenge U.S. Patent No. 6,778,074, owned by Cuozzo Speed Technologies. In construing the meaning of the term “integrally attached,” the Board employed the broadest reasonable interpretation standard. Garmin International, Inc. and Garmin USA, Inc. v. Cuozzo Speed Technologies LLC, No. IPR 2012-00001, Paper 59 at 8 (P.T.A.B. Nov. 13, 2013).  The Board’s construction was integral to its finding that all three claims under review were rendered obvious in view of the prior art.  Id. at 59.

On appeal, the Federal Circuit ruled that it lacked jurisdiction to review the Board’s decision to institute IPR. In Re: Cuozzo Speed Technologies, LLC, No. 14-1301 at 2 (Fed. Cir. Feb. 4, 2015). In particular, the Federal Circuit determined that the Board properly relied on prior art not identified by Garmin in its petition as grounds for IPR as to two of the three claims. Id. at 5.  Moreover, the Federal Circuit detected no error in the Board’s use of the broadest reasonable interpretation claim construction standard. Id. at 2.The Federal Circuit narrowly denied a petition for rehearing of the broadest reasonable interpretation standard issue, with five of the necessary six judges voting in favor of rehearing.

Nine amici briefs were filed urging the Supreme Court to grant certiorari.  Of the nine briefs, only two (filed by the New York Intellectual Property Law Association and Trading Technologies International, Inc.) requested review of the Federal Circuit’s authority to review institution of IPR proceedings. The remaining briefs requested review of the Board’s use of the broadest reasonable interpretation standard. The majority of those briefs – filed by entities including the American Intellectual Property Law Association, the Biotechnology Industry Organization, and the Pharmaceutical Research and Manufacturers of America – oppose the use of the broadest reasonable interpretation standard.

The Supreme Court is expected to hear arguments in April and should issue a ruling in June or July.