The Supreme Court will hear oral arguments in the Cuozzo Speed Technologies, LLC v. Lee on April 25, 2016, with a decision expected sometime before the end of June. This will mark the first time that the Supreme Court has reviewed the post-issuance review proceedings of the America Invents Act (“AIA”). This case stems from the first Federal Circuit appeal involving the first final written decision of the first inter partes review (“IPR”) ever filed. The Supreme Court will be reviewing two of the most controversial issues of the new AIA post-grant proceedings: (1) the use of the broadest reasonable interpretation standard for construing claims, and (2) the unreviewability of any decision related to the institution of a PTAB trial.
The Federal Circuit decided the In re Cuozzo Speed Technologies, LLC on February 4, 2015. Since then, that Court has been busy hearing appeals from the Patent Trial and Appeal Board (“PTAB” or “Board”). For example, the Federal Circuit has issued around 80 decisions that represent appeals from over 125 IPR and CBM patent reviews. In most cases, the Court has approved of the PTAB’s actions. These cases have ranged from the constitutionality of these proceedings (which was upheld), to the procedural aspects adopted by the PTAB (which have mostly been upheld). However, some of the Federal Circuit judges have shown signs that their position on these questions are not as rigid as previously thought. This is not unprecedented – for example, when the Supreme Court was on the verge of considering the patent fee-shifting statute of 35 U.S.C. § 285 in the Octane Fitness case, Judge Rader was seen criticizing the Federal Circuit’s established test in a concurrence to the Kilopass Tech. Inc. v. Sidense Corp. case. The current Federal Circuit may also be recognizing that the present understanding of PTAB jurisprudence may be soon changing.
Broadest Reasonable Interpretation
In the Cuozzo case, the Federal Circuit affirmed the Patent Office’s use of the Broadest Reasonable Interpretation standard for claim construction as consistent with the intent of Congress. At the time, however, not all members of the Court agreed. Judge Newman noted in her Cuozzo dissent that Congress intended the post-grant proceedings before the PTAB to be a surrogate for district court litigation on validity. According to her, the Patent Office was frustrating this goal by using a different claim construction standard.
Nevertheless, there has been some indication during the past year that the dual claim construction standards might not be as dire as originally feared. This convergence of standards began with the Microsoft Corp. v. Proxyconn, Inc. case, in which the Federal Circuit reaffirmed Cuozzo, but warned that the Board’s adoption of a construction that is “unreasonable” constitutes error. This included constructions that are so broad that they did not reflect the plain language used by the applicant.
It was the Trivascular, Inc. v. Samuels case from February of 2016 that really suggested that the PTAB’s claim construction standard might not be that different from the standard used by district courts. In that case, the Federal Circuit warned that the PTAB does not have an “unfettered license” to construe claims inconsistent with the specification and prosecution history. Instead, the Court concluded that any construction must reflect the “ordinary” and “customary” meaning of the terms as understood by those skilled in the art.
Nevertheless, even as the PTAB’s standard appears to be sounding like the “plain and ordinary meaning” standard used by Federal courts, the Federal Circuit has warned that the PTAB’s standard is not necessarily the same as that laid out in the Phillips case. In PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, the Federal Circuit was able to use this difference in standards to uphold the PTAB’s construction, despite the fact that different results could occur. Clearly, therefore, the Supreme Court’s review of this standard is still essential.
Decisions to Institute
The second issue to be addressed by the Supreme Court is the Federal Circuit’s determination that the nonappealability of institution decisions provided for in 35 U.S.C. § 314(d) (“No Appeal—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”) applies equally to all decisions to institute. In the Cuozzo case, the Board had instituted the trial on a ground not specifically identified in the petition. The Federal Circuit held that the statute barred it from reviewing any institution decision, even when the decision is contrary to the requirements outlined by the statute. The Court found it significant in that case that the new ground of rejection on which the Board instituted trial could have been included in a properly filed petition.
Soon after, the Federal Circuit appeared to limit the Cuozzo rule in the Versata Dev. Grp., Inc. v. SAP America, Inc. case. In that case, the Court reviewed whether the patent at issue was a proper CBM patent – whether it was a patent covering a financial product or service, and whether the patent was for a technological invention. The Federal Circuit distinguished these two cases by pointing to the distinction between institution and invalidation. Because the determination whether the patent at issue was a covered business method patent related to the Board’s “authority to invalidate,” review was appropriate.
Nevertheless, this distinction relying on the “authority to invalidate” has been limited to that basic jurisdictional question. For example, the Federal Circuit could have expanded this doctrine in Achates Reference Publ’g, Inc. v. Apple Inc., but chose not to. Even though the statute prohibits petitions filed more than one year after a party has been sued, the Federal Circuit held that this time bar does not affect the Board’s authority to invalidate. Instead, the Court found that another petitioner could have timely filed a petition to invalidate the patent. Therefore, the Federal Circuit asserted, the petitioner could have avoided the timeliness issue by filing the petition earlier, as opposed to no petition ever being proper regardless of when its filing date.
There are signs that at least some Federal Circuit judges would take a less strict stance. For example, in another case from March of 2016, Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., Judge Reyna provided a special concurrence in which he chastised the Board for not including its reasoning for denying institution based on redundancy grounds. If such a denial is unreviewable, however, the Board has no incentive to include such a reason. This concurrence, therefore, appears to signal a shift, or at least an acceptance that the Supreme Court may change the rules. Nevertheless, Judge Reyna did fully join the panel opinion, so a pronouncement by the Supreme Court on the issue is still essential.
There are, therefore, signs that the Federal Circuit has accepted the fact that the rules regarding claim construction at the PTAB and the unreviewability of institution decisions may be changing. Nevertheless, the ultimate stance of the Federal Circuit on these issues has not changed, making Supreme Court review on these issues still necessary.