On November 3, 2014, the Federal Circuit heard oral arguments in the appeal of the first inter partes review decided under the America Invents Act. In the case, In re Cuozzo Speed Technologies, LLC, Fed. Cir. 14-1301, the Federal Circuit has been asked to review the procedures of the new inter partes review proceedings, especially the standard of claim construction and the availability of appeals for IPR institution decisions.
In re Cuozzo Speed Technologies was the first inter partes review instituted by the PTAB after the AIA went into effect in September 2012. Since that time, the IPR procedure has been highly popular with accused infringers. The USPTO reported that, as of September 25, 2014, a total of 1,821 petitions for IPR had been filed. The PTAB has reached a decision on whether to institute review for 938 of those petitions. In 731 of those decisions, the PTAB instituted an IPR. At this time, the first appeals out of the IPR proceedings are beginning to reach the Federal Circuit, with various challenges to the PTAB’s rules and regulations.
One of the primary concerns raised by patent owners is that the standard relied upon during an instituted IPR, the “broadest reasonable interpretation,” in contrast to the “ordinary and customary meaning” construction standard relied upon during court proceedings.
During the oral arguments, the judges appeared largely supportive of the overall IPR procedure, although they also noted concerns about some of the IPR rules. As asked by Judge Pauline Newman, “So after the patent has issued, why should the result be different in the office than in the court, based on how the claims are construed?” Under the BRI standard, a broader swath of prior art is available to patent challengers and/or accused infringers. The primary justification raised for using the BRI standard is that patentees can amend their claims during the IPR proceeding in response to the PTAB’s construction of the claims. Judge Newman also pushed back on this claim, noting that “It’s not so easy.”
As noted by attorneys for Cuozzo Speed Technologies, in the two years of AIA IPR proceedings, no opposed motion to amend has been granted. Previously, former Federal Circuit Chief Judge Randall Rader even referred to the IPR proceedings as “death squads.”
The other main issue raised by In re Cuozzo Speed Technologies, LLC is whether “non-discretionary” jurisdictional requirements of the IPR proceedings may be appealed. According to briefs filed by Cuozzo, the “non-discretionary” requirements encompass: 1) “the petition must be filed by a person who is not the patent owner (35 U.S.C. § 311(a))”; 2) “the grounds of un-patentability must be limited to 35 U.S.C. § 102 or 103 and only based on patents or printed publications (35 U.S.C. § 311(b))”; 3) “the petitioner or real party in interest cannot have filed a civil action challenging the validity of a claim of the patent (35 U.S.C. § 315(a))”; and 4) “the petitioner, real party in interest or privy of the petitioner cannot have been served with a complaint alleging infringement of the patent more than 1 year before the date on which the petition is filed (35 U.S.C. § 315(b)).” See Reply Brief of Appellant, In re Cuozzo Speed Techs., LLC, No. 2014-1301, 2014 WL 3055159, at *2-3 (Fed. Cir. June 23, 2014). The issues raised by Cuozzo are relevant, because under 35 U.S.C. § 314(d) “The determination by the Director whether to institute an inter partes review under this section shall be final and non-appealable.”
The decision of the Federal Circuit in In re Cuozzo Speed Technologies, LLC will impact the IPR decisions that are just beginning to reach the courts, and potentially alter the course of the IPR proceedings if the Federal Circuit agrees that the BRI standard is inappropriate.
Regardless of the decision, the IPR proceedings remain an attractive option for accused patent infringers, given the substantially lower cost of the IPR proceedings versus litigation, as well as the accelerated timeline of IPRs. But for patent owners, the decision could signal an attempt to balance the IPR proceedings from thus far being heavily in favor of the patent challenger.