The Supreme Court today upheld the Patent Trial and Appeal Board’s use of the Broadest Reasonable Interpretation (“BRI”) standard when reviewing unexpired patent claims in PTAB trials, such as Inter Partes Reviews (“IPRs”). The Court also held that the PTAB’s decisions regarding whether to institute proceedings are typically not appealable. However, the Court left the door open to certain challenges, such as when a “constitutional question” is at issue.

The ruling comes in a closely-watched case involving an appeal from the first ever IPR, Garmin International Inc. v. Cuozzo Speed Technologies LLC, IPR2012-00001, filed on September 16, 2012 – the first date such reviews were permitted under the America Invents Act (“AIA”). After losing at the PTAB, patent owner Cuozzo appealed to the Court of Appeals for the Federal Circuit, asserting (among other issues) that the PTAB improperly instituted review on a few claims that were not explicitly challenged in Garmin’s petition, and that the PTAB improperly interpreted the challenged claims under the BRI standard, rather than the narrower claim construction standard used in the district courts. The Federal Circuit affirmed the PTAB, ruling that the AIA precluded judicial review of the PTAB’s institution decision, and that the PTAB acted within its discretion in adopting the BRI standard for claim construction. The Supreme Court subsequently accepted those issues for review.

As to the first issue, the Court split 6-2. Justice Breyer authored the majority opinion, which determined that the AIA “does bar judicial review of the kind of mine-run claim at issue” in Cuozzo’s challenge. The Court reasoned that the statute’s text (which makes institution decisions “final and nonappealable”) commanded this result, and noted that the alternative ruling would frustrate the “congressional objective” of eliminating “bad patents” by permitting PTAB decisions invalidating such patent claims to be “unwound under some minor statutory technicality.” The majority, however, left the door open to some challenges to the PTAB’s preliminary institution decisions, such as those that “implicate constitutional questions” or when the PTAB acts in an “arbitrary [and] capricious” manner. The dissent, authored by Justice Alito, would have permitted broader appellate review of the PTAB’s decisions instituting AIA Trials, but not its decisions refusing to institute those trials.

As to the second issue, the Court unanimously held that the PTAB was within its discretion to apply the BRI standard to interpret unexpired claims during AIA Trials. The Court rejected Cuozzo’s argument that Congress intended AIA Trials to mirror district court litigation, concluding that an IPR “is less like a judicial proceeding and more like a specialized agency proceeding.” The Court reasoned that the use of BRI was “not unfair” to patent owners, who have several opportunities during the original patent application process, and one opportunity during the IPR itself, to introduce claim amendments and avoid “overly broad claims.” The Court also did not appear concerned by Cuozzo’s argument that that the PTAB and the district courts might reach inconsistent results when analyzing the same evidence under the different standards, given that the possibility of inconsistent results “has long been present in our patent system” and was “inherent to Congress’ regulatory design.”