Why it matters: On January 15, 2016, the U.S. Supreme Court granted certiorari in Cuozzo Speed Technologies v. Lee, where it will review a 2015 Federal Circuit decision that raised questions as to the proper claims construction standard that should be applied by the Patent Trial and Appeal Board in inter partes review (IPR) proceedings as well as the circumstances (if any) under which the Patent Trial and Appeal Board's decision to institute an IPR proceeding can be subject to judicial review. We will be awaiting the Supreme Court's decision in this case with avid interest, as the ruling could fundamentally alter the way that the Patent Trial and Appeal Board conducts IPRs going forward.
Detailed discussion: On January 15, 2016, the U.S. Supreme Court granted certiorari in Cuozzo Speed Technologies v. Lee, agreeing to review a 2015 Federal Circuit decision that raised important questions about how the Patent Trial and Appeal Board (PTAB) conducts post-grant IPR proceedings. The Supreme Court will be considering the following two questions presented: "(1) Whether the court of appeals erred in holding that, in inter partes review (IPR) proceedings, the Patent Trial and Appeal Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning; and (2) Whether the court of appeals erred 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."
A brief review of the facts that brought us to this point: In 2011, Congress passed the Leahy-Smith America Invents Act (AIA) that created the PTAB and three types of post-patent grant review proceedings, including the increasingly popular IPR. The new post-patent grant review system was meant to overhaul and streamline the existing processes for reconsidering the validity of patents and provide a quick and cost-effective alternative to litigation. On September 16, 2012—the first day that the new review system became operational—Garmin International, Inc., and Garmin USA, Inc. (collectively, "Garmin") filed an IPR petition with the PTAB that challenged three claims of a navigational patent held by Cuozzo Speed Technologies, LLC (Cuozzo). After hearings on Garmin's petition, the PTAB instituted the IPR—Cuozzo later claimed that this institution decision was outside the scope of the PTAB's authority because it improperly considered extraneous facts and evidence not raised in Garmin's IPR petition. In November 2013, after the conclusion of the IPR, the PTAB issued its final written decision invalidating the three claims of Cuozzo's patent as "obvious based on prior art." Integral to this ruling was the PTAB's use of a "broadest reasonable interpretation" standard for claim construction with respect to the phrase "integrally attached." Cuozzo appealed to the Federal Circuit, and although Cuozzo and Garmin settled their dispute, the U.S. Patent and Trademark Office (PTO) intervened to defend the PTAB's decision. In February 2015, the Federal Circuit (with one judge dissenting) affirmed the PTAB's decision, holding that (1) the PTAB had properly adopted the "broadest reasonable interpretation" standard for claim construction even though the federal courts and the International Trade Commission use a "plain and ordinary meaning" standard in construing claims challenging patent validity and (2) the PTAB's decision to institute the IPR was judicially unreviewable under the AIA, even though there were factual questions as to whether the PTAB exceeded its authority in doing so. In July 2015, a deeply divided panel of the Federal Circuit denied en banc review by a 6-5 vote, which led to Cuozzo filing its Petition for a Writ of Certiorari with the Supreme Court in October 2015. Of the nine amicus curiae briefs filed in support of the Court granting review, only two addressed the IPR institution decision judicial review bar with the remaining seven questioning the PTAB's use of the "broadest reasonable interpretation" claim construction standard.
The two legal issues the Supreme Court will be deciding could fundamentally change the way the PTAB conducts IPR proceedings. As Cuozzo argued in its writ petition, the PTAB's use of a claim construction standard—"broadest reasonable interpretation"—that differs from the "plain and ordinary meaning" standard used by the federal courts and the International Trade Commission (ITC) creates "tremendous uncertainty" due to "potentially conflicting invalidity decisions" across the board. It has also been cited as one of the reasons that the PTAB has been invalidating patent claims at such a "robust rate" since the new post-grant review system was put in place. Moreover, even though Section 314(d) of the AIA provides that "[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable," Cuozzo argued that this should not be an absolute and that there are circumstances (recognized by the Federal Circuit in other post-grant review contexts) where the PTAB's IPR institution decisions should be subject to judicial review—such as in this case where the PTAB allegedly exceeded its authority by instituting the IPR based on extraneous arguments and evidence not raised in Garmin's IPR petition.
As of the date of this writing, oral argument before the Court had yet to be set. We will be watching the developments in this case with great interest and report back.
See here to read the Petition for Writ of Certiorari filed on 10/6/15 by Cuozzo in the case of Cuozzo Speed Technologies, LLC (Petitioner) v. Lee (Respondent).