To BRI or Not to BRI, That Is the Question

On April 25, 2016, the Supreme Court of the United States heard oral argument in the case of Cuozzo Speed Technologies, LLC v. Lee, No. 15-446. The Cuozzo case presented two questions on certiorari:

1. Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2. Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.

Even though there were two independent issues, most of the questions from the justices focused on the first issue of whether IPRs should be based on the use of the broadest reasonable claim interpretation (BRI) or the plain and ordinary meaning standard set forth in Phillips v. AWH Corp., 415 F. 3d 1303 (Fed. Cir. 2005) (en banc).

What did we learn from the oral argument? As a threshold matter, the questions from the justices betrayed a general unfamiliarity with the procedures and substance of patent law. To those who have followed previous Supreme Court arguments in patent cases, this difficulty in formulating relevant questions comes as no surprise. After all, none of the justices arrived at the Supreme Court with any significant background or experience in patents.

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That said, the questions posed by the justices did shed some light on what we can expect from the Supreme Court’s eventual decision in Cuozzo, at least with this respect to the question of BRI versus plain and ordinary meaning. Although it is always risky to predict outcomes based on the questions posed at oral argument, it looks like the Supreme Court will maintain the USPTO’s reliance on the broadest reasonable interpretation in IPRs.

Much of the focus of the justices during questioning was on whether inter partes reviews are more like district court litigation or more like the examination of patent applications in the USPTO. For example, Justice Ginsburg queried whether IPRs are best described as “[k]ind of a hybrid” between litigation and Patent Office examination. Transcript at 23. Justice Sotomayor suggested that the ability to amend claims during an IPR, though limited, is inconsistent with district court litigation where substantive amendment of claims is not allowed. Id. at 4. In Justice Alito’s one contribution to the oral argument, he suggested that though amendments are limited during IPR proceedings, having one opportunity to amend the claims might be adequate. Id. at 8-9.

Justice Breyer led a more extended discussion comparing IPRs to district court litigation. He indicated that if IPRs were intended to be “a little court proceeding,” then the use of the Phillips standard might be appropriate. Id. at 14. But if IPRs were intended to address the issue of patent trolls, Justice Breyer continued, then the use of BRI might make more sense. In the context of patent trolls, Justice Breyer observed that: “the Patent Office has been issuing billions of patents that shouldn’t have been issued – I overstate – but only some.” Id. Justice Breyer concluded by pointing out that even if the purpose of IPRs were ambiguous between a little court proceeding or a mechanism for canceling the “billions of patents that shouldn’t have been issued,” the Patent Office should be accorded Chevron deference to choose the appropriate standard. Id. at 15.

Justice Kennedy’s questions were less pointed than those posed by Justice Breyer. Justice Kennedy proposed that if a patent claim is unpatentable under the broadest reasonable interpretation, then the USPTO “should never have issued the patent in the first place.” Id. at 11. (Justice Breyer made a similar point. Id. at 13.) This reasoning would seem consistent with the use of BRI in IPRs. Justice Kennedy also pointed out that district court judges construe claims to preserve their validity and apply the statutory presumption of validity, neither of which is true in IPRs. Id. at 20-21.

Justice Kagan took a different tack with her questions. She first established that Congress was silent in the America Invents Act as to which standard applies in post-grant proceedings. Id. at 21. Since Congress was presumably well aware that the USPTO used BRI in examining the patentability of claims, Congress would have been expected to explicitly call out any change in the standard. “I mean, I guess if I’m trying to put myself in Congress’s position, I’m – I’m looking at the PTO, and it does pretty much everything by this broadest-construction standard. And if I had the clear intent that you’re suggesting [to use Phillips], given the backdrop of how the PTO generally operates, wouldn’t I say so?” Id. at 22.

Chief Justice Roberts showed significant concern in his questioning for the possibility of inconsistent results for a given patent claim in district court litigation versus inter partes review. Based on this concern, the Chief Justice’s questions displayed a strong belief that the same claim construction standard should be used in litigation and IPRs. For example, he stated that “it seems to be perfectly clear that Congress meant for this entity [the PTAB] to substitute for the judicial action. So why – why should we be so wedded to the way they do business in the PTO with respect to the broadest possible construction when the — the point is not to replicate PTO procedures. It’s supposed to take the place of district court procedures.” Id. at 31. Chief Justice Roberts went on to state that “it’s a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results.” Id. at 32.   Later during the argument he stated that “[i]t just seems to me that that’s a bizarre way to conduct legal – to decide a legal question.” Id. at 41. Finally, after establishing that it is entirely possible to have inconsistent decisions on the identical patent claim in an IPR versus litigation, he expressed incredulity that this could be the result “under a statute designed to make the patent system more reasonable and more expeditious in reaching judgments.” Id. at 44.

Based on the colloquy from the Supreme Court justices, how will the vote on the first question in Cuozzo turn out? It appears clear that Justice Breyer will vote in favor of BRI and equally clear that Chief Justice Roberts will vote for plain and ordinary meaning. Though less certain, it does seem that Justices Kennedy, Kagan, Sotomayor and Ginsburg are leaning towards BRI. (The data is too scant or completely absent, respectively, to speculate about Justices Alito and Thomas.) Therefore, a 5-3 or 6-2 affirmance of Cuozzo on the first question seems likely.

But perhaps the most perceptive questioning during oral argument came from Justices Sotomayor and Ginsburg concerning what practical effect, if any, the adoption of Phillips versus BRI would have on the outcomes of inter partes reviews. Justice Sotomayor pointed out that both construction standards use the same tools, i.e., the intrinsic record, and therefore should yield the same results. Id. at 17. “So how different at the end of that process is the ordinary meaning from a continuing broad meaning?…. [D]oesn’t it end up in the same place?” Id. at 27-28. In a similar vein, Justice Ginsburg indicated that choosing one or the other claim construction standard “doesn’t determine who’s going to win or lose this case, does it?” Id. at 10.

Justices Sotomayor and Ginsburg may be onto something here. A good argument can be made that a given panel of PTAB judges will construe claims in the manner that makes most sense to them, regardless of the legal rubric they are assigned. Indeed, we can draw a direct analogy from the experience following the Supreme Court’s decision in Teva v. Sandoz on the degree of appellate deference to be accorded to a district court’s claim construction. Notwithstanding decades of anticipation surrounding that issue, there has been little practical effect on the outcomes of litigations or appeals as a result of Teva. District court judges and Federal Circuit panels still approach claim construction issues in essentially the same way they did before. It seems likely that the use of BRI versus plain and ordinary meaning in inter partes review proceedings will also turn out to be much ado about nothing.

On the second question under consideration by the Supreme Court, very little insight was gained during oral argument. The second question focused on Section 314(d) of patent statute, which states “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. § 314(d). At one point Justice Ginsburg indicated that this statutory language must do more than just prevent interlocutory appeals, because the lack of a final judgment would bar such appeals in any case. Id. at 25. Justices Ginsburg and Sotomayor also asked whether there shouldn’t be some level of review available for institution decisions, especially in cases where the USPTO’s decision is clearly wrong. Id. at 50-52. Other than that, the ability to challenge institution decisions was ignored by the justices.

Though it can be daunting to interpret the significance of silence during oral argument, the clarity of the statute (What part of “nonappealable” don’t you understand?) may provide the answer. Faced with such unambiguous statutory language, was there really a need for questions? If true, that would point towards an affirmance on the second Cuozzo question as well.