On July 8, 2015, the full Federal Circuit decided not to reconsider en banc (before all the judges) the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board’s (PTAB) standard to construe patents broadly for inter partes review (IPR) rather than their actual meaning, which is the District Court standard. By a vote of 6-5, the court thereby denied Cuozzo Speed Technologies latest appeal for its speedometer patent ruling, which was already denied under similar grounds in the Federal Circuit in In re: Cuozzo Speed Technologies, LLC. Significantly, this case was the first appeal of the first IPR Final Written Decision for the first IPR ever filed.

IPRs are a trial proceeding conducted by the PTAB to review the patentability of one or more claims in a patent only on a ground that could be raised under 35 U.S.C. §§ 102 (anticipation) or 103 (obviousness), and only on the basis of prior art consisting of patents or printed publications. The PTAB is created by statute and includes statutory members and Administrative Patent Judges. The PTAB is charged with rendering decisions on appeals from adverse examiner decisions, post-issuance challenges to patents, and interferences. To date, the PTAB has adopted a standard for IPRs to construe patents broadly, known as the broadest reasonable interpretation (BRI), in part because this is the standard for patent prosecution and an IPR may result in claim amendments. During district court reviews, however, claims are given their actual meaning, emphasizing the nature of an infringement claim concerns a potentially infringing product, where the actual meaning is relevant and claim amendments are not allowed.

Circuit Judge Timothy Dyk wrote the opinion for the majority, who was joined by Judges Alan Lourie, Raymond Chen, and Todd Hughes in his written opinion. Dyk and the majority concluded that nothing in the America Invests Act (AIA) that established IPRs indicates that the standard should be anything other than the BRI, and the USPTO was granted rulemaking authority to establish the regulations regarding IPR review. If the USPTO has chosen a standard other than what Congress intended, Dyk concluded, “[T]hat is a mater for Congress. There are pending bills that would do just that.” Dyk found the dissent’s opinions that IPRs are substitute for district court litigation or that the right to amend in IPRs is limited were unavailing arguments.

Chief Judge Sharon Prost, who wrote the dissenting opinion for Judges Pauline Newman, Kimberly Moore, Kathleen O’Malley, and Jimmie Reyna, disagreed with the majority, finding IPRs to be a “new, court-like proceeding designed to adjudicate the validity of issued patent claims. In adjudicatory proceedings, claims are given their actual meaning, not their broadest reasonable interpretation. For this reason, we respectfully dissent.” In particular, Prost noted that IPRs replaced a prior reexamination process, which was essentially a re-consideration of the prior patent prosecution and USPTO examination, where claim amendments were frequently permitted. Prost argued that the intent for Congress to create IPRs was to develop a new type of USPTO proceeding “to improve patent quality and limit unnecessary and counterproductive litigation costs” while “bearing the efficiency and finality of district court decisions.” Unlike patent prosecution where the patentee and examiner may seek to resolve patent scope ambiguity and claims may be amended more readily, IPRs permit patentees one motion to amend with permission of the PTAB, additional motions only to materially advance settlement or as permitted by regulations. Prost also argued that the USPTO’s ability to promulgate regulations as to IPRs was limited to procedural regulations, not the scope of patent review, and to the extent the USPTO could choose the BRI standard, such choice was “unreasonable” in view of the purpose to substitute administrative adjudication at the USPTO for district court adjudication. Further, given that IPRs are limited to validity reviews, Prost explained, it would only make sense to evaluate claims according to the actual meaning standard in district courts, rather than the BRI, which had its place for patent prosecution and examination.

Newman wrote a separate dissent that included consideration of the extensive amicus curiae briefs filed (from nonparties to the case) including groups such as the Pharmaceutical Research and Manufacturers America (PhRMA) and pharmaceutical companies that invest extensively in new technologies, urging an en banc review of the IPR standard. Newman reiterated the amici arguments that the BRI standard enhanced “gamesmanship, delay, and burdens of patent disputes” by reducing clarity and predictability in the law and requiring patentees to defend the validity of claim scope that was not obtained from the USPTO during prosecution.

The future of IPRs to successfully challenge pharmaceutical patents that could or have been raised in Hatch-Waxman litigation remains unclear. On the one hand, there is the perception that IPRs tip in favor of the petitioner, in part because of the broader review standard than district courts. On the other hand, while some pharmaceutical companies have used IPRs successfully to extract settlements, no petitioners have successfully invalidated pharmaceutical patents using the IPR mechanism. Stay tuned – this one could be appealed to the Supreme Court or makes its way to Congressional action, given the interest and ramifications.