The U.S. Court of Appeals for the Federal Circuit recently issued the first decision in an appeal of a final decision of the Patent Trial and Appeal Board (the "Board") under the America Invents Act ("AIA"). In the 2-1 decision in In re Cuozzo Speed Technologies, LLC, the Federal Circuit affirmed the Board's obviousness determination and upheld the Board's use of the broadest reasonable interpretation ("BRI") standard for claim construction.

The Board granted Garmin International Inc. and Garmin USA, Inc.'s petition with regard to three claims in a patent owned by Cuozzo and instituted an inter partes review ("IPR") proceeding. The technology in Cuozzo related to a speed limit indicator that utilized a global positioning system to alert a driver to a vehicle's current speed as well as the current speed limit. The dispositive claim term at issue was for a speed limit indicator that was "integrally attached" to a colored display. The Board construed the claim term using the BRI standard and found that, as interpreted, the claims were invalid for obviousness under 35 U.S.C. Sec. 103. The Board denied Cuozzo's motion to amend the patent by replacing the challenged claims, holding that the substitute claims would improperly enlarge the scope of the claims as construed by the Board.

The Federal Circuit noted that the BRI standard has been applied by the United States Patent and Trademark Office ("PTO") for more than 100 years in various types of proceedings, including initial examinations, interferences, and post-grant proceedings involving unexpired patents, such as reissues and reexaminations. In upholding the Board's use of the BRI standard for claim construction, the court affirmed the PTO's rulemaking authority under the AIA and held that Congress had "impliedly adopted" the existing BRI standard from other PTO proceedings for use in IPR proceedings, even though the statute does not specify a claim construction standard. In doing so, the Federal Circuit rejected Cuozzo's argument that the Board should apply the district court claim construction standard from Phillips v. AWH Corp. to IPR proceedings. The Federal Circuit also rejected Cuozzo's argument that the BRI standard should not be used due to the limited availability of amendments in IPR proceedings. The Federal Circuit noted that although "the opportunity to amend is cabined in the IPR setting, it is thus nonetheless available."

Cuozzo provides, at least for now, an answer to the much debated question of how claims involved in an IPR should be construed. Given that unexpired patent claims in reissue and reexamination proceedings have been given their BRI, the Board's promulgation of rules for IPR proceedings using that same standard seemed appropriate at the time. However, when the Board's IPR decisions demonstrated that amending claims would be, at best, very difficult, the continued viability of the BRI standard came into question.

By deciding that the BRI standard is proper for IPR proceedings, the Federal Circuit has aided those who wish to continue to use IPRs to challenge patents. In particular, in sharp contrast to district court patent infringement actions, IPR proceedings accord patents no presumption of validity, use the preponderance of the evidence standard (rather than the higher clear and convincing evidence standard), and now clearly evaluate the patentability of patent claims under the BRI standard (rather than the more patentee-friendly district court standard). Indeed, by endorsing the BRI standard, the Federal Circuit has affirmed a scenario where there is an unpatentability ruling in an IPR proceeding based on prior art that would not invalidate in a district court proceeding because of the different claim construction standards. In theory this potential for conflicting rulings is offset by the ability to amend claims in IPR proceedings. However, as a practical matter that option has been largely unavailable, making IPRs in actuality like district court actions where amendment is not an option. All this makes IPR proceedings an ever more attractive means to challenge patents.

Despite the Cuozzo decision, the viability of the BRI standard remains fluid. If the Supreme Court grants certiorari on an IPR appeal decision from the Federal Circuit, it could reject the BRI standard, Congress could amend the AIA1, or the Federal Circuit could change its view in an en banc ruling if amendments continue to be largely unavailable in IPRs. As a result, it is prudent for IPR petitioners, when possible, to demonstrate unpatentability under both the BRI and district court standards. Although the BRI does enhance the attractiveness of IPRs to patent challengers, its applicability should not lull petitioners into thinking that they do not need to thoroughly prove their case. Particularly in the chemical, biotech, and life sciences areas, the Board has demonstrated great willingness to scrutinize IPR petitions and to rule in favor of patentees when petitioners fall short on any technical detail. Despite the beneficial nature of the BRI standard, it remains important for IPR petitions and supporting declarations to fully discuss claim construction and to thoroughly demonstrate why the claims, as so construed, are anticipated by or rendered obvious over the cited prior art.

1On February 5, 2015, House Judiciary Committee Chairman Bob Goodlatte and other sponsors introduced a bill entitled the "Innovation Act" (H.R. 9) directed toward patent reform. If enacted, the bill, in relevant part, would overturn Cuozzo by requiring the Board to employ in post-grant proceedings the same standard for claim construction as is used by district courts.