In re Cuozzo Speed Techs., LLC

Addressing for the first time an appeal of an America Invents Act review decision out of the U.S. Patent and Trademark Office’s (PTO’s) Patent Trial and Appeal Board (PTAB or Board), the U.S. Court of Appeals for the Federal Circuit affirmed the Board’s decision that a navigation system patent was invalid as obvious, finding that the Board’s broadest reasonable claim construction standard was correct and that decisions by the Board to institute post-grant reviews are not subject to appeal.  In re Cuozzo Speed Techs., LLC, Case No. 14-1301 (Feb. 4, 2015) (Dyk, J.) (Newman, J., dissenting).

Cuozzo Speed Technologies (Cuozzo) owns a patent directed to a navigation system equipped with an interface that displays a vehicle’s current speed as well as the speed limit.  Garmin International petitioned the Board for inter partes review (IPR).  The Board granted the petition and instituted an IPR.  After the trial, the Board issued a final written decision finding the challenged claims to be invalid as obvious.  The Board also denied Cuozzo’s motion to amend.  Cuozzo appealed.

On appeal, Cuozzo argued that the Board improperly instituted IPR because the Board relied on prior art that was not identified in the petition as grounds for IPR.  The Federal Circuit concluded that 35 U.S.C. § 314(d) prohibits review of the decision to institute IPR even after final written decision.  The Court determined that the provision was not limited to precluding review only before final decision, and instead excludes all review of the decision whether to institute review.

Cuozzo also argued that the Board erred in using the broadest reasonable construction in its determination of obviousness.  The Federal Circuit also concluded that the AIA does not address on its face whether the broadest reasonable construction standard is appropriate.  The Court, however, noted that the statute conveys to the PTO rulemaking authority, with which the PTO promulgated the regulation which provides for its claim construction standard.  The Court noted that the PTO has been using the broadest reasonable construction standard for more than 100 years, and for that same period of time courts, including the Federal Circuit, have approved of it.  The Federal Circuit found no indication that the AIA was designed to change that claim construction standard. To the contrary, the Court concluded that it could be inferred that Congress impliedly adopted the existing rule in enacting the AIA.  In any event, the Court concluded that the PTO properly adopted the standard as part of the rulemaking authority vested upon it by Congress under the AIA.

With regard to the Board’s construction, the Federal Circuit (operating post-Teva) reviewed the underlying factual determinations concerning extrinsic evidence for substantial evidence and the ultimate construction of the claim de novo (IP Update, Vol. 16, No. 12).  Finding no issue as to extrinsic evidence, the Court reviewed the construction de novo and found no error in the Board’s interpretation.

In dissent, Judge Newman argued that the PTAB should be required to use the same claim construction standard as district courts.  Using this standard, according to Judge Newman, it would make it more difficult to find prior art to invalidate the patent.  Judge Newman also argued that patent owners should be allowed to appeal institution decisions.

Practice Note:  The Court did not decide the question of whether the decision to institute review is reviewable by mandamus after the Board issues a final decision or whether such review is precluded by § 314(d).