On June 20,  the U.S. Supreme Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 2016 WL 3369425 (June 20, 2016) upheld the Patent Office’s long-held policy of construing a patent claim according to its broadest reasonable construction even in inter partes review and also barred judicial review of Patent Trial and Appeal Board (PTAB) decisions instituting inter partes review. This is a victory for patent challengers because patents are more easily invalidated under the broadest reasonable interpretation construction than under the ordinary meaning standard used by federal courts. 

BACKGROUND

Leahy-Smith America Invents Act

The Leahy-Smith America Invents Act (AIA), which was signed into law on September 16, 2011, amended U.S. patent laws and created the inter partesreview, replacing inter partes reexamination as a means for third parties to challenge the validity of issued patents. The legislative history of the AIA suggests that Congress sought to give the Patent Office more power to review the quality of currently granted patents. H.R.Rep. No. 112-98, pt. 1, pp. 45-48 (2011). 

To enable the Patent Office to review the quality of issued patents, the AIA states in part that “[t]he Director shall prescribe regulations establishing and governing inter partes review under this chapter,” and that “[t]he determination by the Director [of the Patent Office] whether to institute an inter partes review under this section shall be final and non-appealable.” 35 U.S.C. §§ 316(a)(4), 314(d). In implementing its authority under the AIA, the Patent Office promulgated rules governing inter partes proceedings, stating that a patent claim should be construed according to “its broadest reasonable construction in light of the specification of the patent in which it appears.” 37 C.F.R. § 42.100(b). Notably, the Patent Office’s claim construction standard is significantly broader than the standard that a patent claim should be construed according to its “ordinary meaning…as understood by a person of skill in the art” which is used in federal courts. See, e.g., Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005).

CURRENT DECISION

Giuseppe Cuozzo had several patent claims cancelled after a challenger soughtinter partes review of all 20 of the patent’s claims. In instituting the inter partesreview, the PTAB agreed to institute review of claim 17, as well as claims 10 and 14 on the same obviousness grounds, even though these grounds were only explicitly raised for claim 17. The PTAB reasoned that the petitioner had “implicitly” challenged claims 10 and 14, since claim 17 depended from these claims. The U.S. Court of Appeals for the Federal Circuit affirmed. 

On certiorari, Cuozzo argued that the PTAB’s decision to institute an inter partesreview should be appealable when the institution is based on grounds not specifically mentioned in a third party’s review request, and that the AIA does not authorize the Patent Office to issue a regulation stating that the agency will construe claims according to their broadest reasonable construction. The Court affirmed both of the Federal Circuit’s holdings against Cuozzo’s challenges. 

The Court reached this conclusion after Cuozzo argued that, because inter partesreviews are a “surrogate for court proceedings,” the Patent Office’s practice of applying the broadest reasonable construction standard is improper. In short, Cuozzo argued that Congress would not have intended the Patent Office to apply one claim construction standard in inter partes review, while a narrower “ordinary meaning” claim construction standard applies in federal courts. Cuozzo also argued that the broadest reasonable interpretation standard is unfair to patent holders, who are given no meaningful opportunity to amend during inter partesreview, as evidenced by the extremely small number of motions to amend which have been granted by the PTAB. 

The Court found that 35 U.S.C. § 316(a)(4) leaves a “gap” and “ambiguity” as to which claim construction standard should apply. In accordance with its decisions in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and United States v. Mead Corp., 533 U.S. 218 (2001), the Court also found that the Patent Office has the power to enact reasonable policies within the context of the statute. 

Applying this standard, the Court firmly rejected Cuozzo’s arguments, holding that implementing the broadest reasonable interpretation standard is within the power granted to the Patent Office. Supporting its holding, the Court found that this standard has been applied by the Patent Office for more than 100 years in interference and reexamination proceedings. The Court also found that the standard presents no unfairness to patent holders, who are given the opportunity to amend both during the original application process and during inter partesreview. Further, the Court also emphasized that the Patent Office’s rule of applying the broadest reasonable interpretation standard in claim construction helps to ensure patents are written narrowly to cover only the invention of the applicant. This idea, according to Justice Stephen Breyer, helps the public learn from the disclosed information and understand the limits of a patent. 

The Court also rejected Cuozzo’s arguments that Patent Office determinations on whether to institute inter partes review should be appealable, in light of the explicit statutory authority that these determinations shall be “final and non-appealable.” 35 U.S.C. § 314(d). The Court emphasized that, although a presumption of judicial review exists, Congress never intended for courts to review decisions to instituteinter partes reviews  and that reviewing such decisions undercuts the intent of Congress to give the agency power to improve the quality of currently existing patents. In reaching this decision, Justice Breyer emphasized that Cuozzo’s claim does not implicate a constitutional question or present any other questions of interpretation that reach beyond this statute in terms of scope and impact. 

LOOKING AHEAD

While the Supreme Court has affirmed the Federal Circuit’s rulings, Cuozzo may provide further fodder for the Patent Office to continue using broader claim constructions than the “ordinary meaning” claim constructions used in federal court litigation to invalidate vague, broad patent claims. The Court appears to have left a small opportunity for parties wishing to appeal institution decisions, however, if these challenges are based on constitutional questions or present broad questions that reach well beyond the patent laws in terms of scope and impact.