Supreme Court to Review Inter Partes Claim Construction Standard Under AIA

January 19, 2016

By: N. Scott Pierce

Hamilton Brook Smith Reynolds Alert

The Supreme Court will address aspects of inter partes review:

  • Claim construction standard
  • Ultimate authority over Patent Office institution of inter partes review proceedings

On Friday, January 16, 2016, the Supreme Court granted a petition for certiorari in the case of In re: Cuozzo Speed Technologies, LLC.  At issue is whether the Patent Trial and Appeal Board (Board) may construe claims during inter partes review (IPR) according to their broadest reasonable interpretation rather than the judicial standard of the plain and ordinary meaning, and whether a decision to institute an IPR is unreviewable if the Board exceeds its statutory authority to do so.  In addition to the immediate effect on inter partes review, the Court’s decision may have broad implications for standards of claim construction applied during patent prosecution and for the prospects of forum shopping by challengers to issued patents.

The case is an appeal by Cuozzo Speed Technologies, LLC (Cuozzo), from a decision by the Court of Appeals for the Federal Circuit (In re: Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015)) invalidating Cuozzo’s patent directed to a GPS-based color display that indicates speed in excess of the legal limit.  The decision was premised on the “broadest reasonable interpretation” standard of claim construction customarily applied to patent applications during examination at the United States Patent Office (Patent Office), rather than the narrower standard of “plain and ordinary meaning” applied to issued patents during judicial challenges to validity.  In addition to deciding the appropriateness of the Board’s criterion during inter partes review, the Court may consider whether the Patent Office has the authority to set its own standard for claim construction in any context.

The Supreme Court will also address the power of courts to review decisions by the Patent Office to institute inter partes review, even in instances where the Patent Office may have exceeded its statutory authority to do so.  Specifically, the America Invents Act (AIA), which was passed in 2011, states that inter partes review may not be instituted “unless the Director [of the Patent Office] determines that … there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged….”  However, if the Patent Office employs the wrong standard for claim construction in making this determination, then, in effect, the decision by the Patent Office will have been made outside its statutory authority.  Further, decisions by the Patent Office to institute inter partes review are, by statute, “final and nonappealable.”  Therefore, if interpreted literally, the Patent Office would have authorization to institute inter partes review on whatever criteria it chose, and the decision to so institute such proceedings consequent to that criteria would not be appealable.

Final decisions by the Board pursuant to inter partes review are appealable to the courts.  However, if the standard applied by the courts on review of the Board’s decision is to be the same standard proposed by the Patent Office, namely, that of the “broadest reasonable interpretation,” then there is a possibility, as stated in the petition for certiorari, that “the Board may freely expand its authority to invalidate a patentee’s property rights, without any judicial oversight.” 

The Supreme Court’s decision will have significant consequences.  While creation of inter partes review was intended by Congress as a path toward a “more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs,” the potential exists for gamesmanship if claims can be invalidated without judicial review simply by choosing the Patent Office as the venue.  This danger is particularly acute in view of the fact that, since enacted by the AIA, an apparently disproportionate percentage of patents (about 85%) of completed inter partes reviews have resulted in cancellation of at least one patent claim.

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January 19, 2016

By: N. Scott Pierce

Hamilton Brook Smith Reynolds Alert

The Supreme Court will address aspects of inter partes review:

  • Claim construction standard
  • Ultimate authority over Patent Office institution of inter partes review proceedings

On Friday, January 16, 2016, the Supreme Court granted a petition for certiorari in the case of In re: Cuozzo Speed Technologies, LLC.  At issue is whether the Patent Trial and Appeal Board (Board) may construe claims during inter partes review (IPR) according to their broadest reasonable interpretation rather than the judicial standard of the plain and ordinary meaning, and whether a decision to institute an IPR is unreviewable if the Board exceeds its statutory authority to do so.  In addition to the immediate effect on inter partes review, the Court’s decision may have broad implications for standards of claim construction applied during patent prosecution and for the prospects of forum shopping by challengers to issued patents.

The case is an appeal by Cuozzo Speed Technologies, LLC (Cuozzo), from a decision by the Court of Appeals for the Federal Circuit (In re: Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015)) invalidating Cuozzo’s patent directed to a GPS-based color display that indicates speed in excess of the legal limit.  The decision was premised on the “broadest reasonable interpretation” standard of claim construction customarily applied to patent applications during examination at the United States Patent Office (Patent Office), rather than the narrower standard of “plain and ordinary meaning” applied to issued patents during judicial challenges to validity.  In addition to deciding the appropriateness of the Board’s criterion during inter partes review, the Court may consider whether the Patent Office has the authority to set its own standard for claim construction in any context.

The Supreme Court will also address the power of courts to review decisions by the Patent Office to institute inter partes review, even in instances where the Patent Office may have exceeded its statutory authority to do so.  Specifically, the America Invents Act (AIA), which was passed in 2011, states that inter partes review may not be instituted “unless the Director [of the Patent Office] determines that … there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged….”  However, if the Patent Office employs the wrong standard for claim construction in making this determination, then, in effect, the decision by the Patent Office will have been made outside its statutory authority.  Further, decisions by the Patent Office to institute inter partes review are, by statute, “final and nonappealable.”  Therefore, if interpreted literally, the Patent Office would have authorization to institute inter partes review on whatever criteria it chose, and the decision to so institute such proceedings consequent to that criteria would not be appealable.

Final decisions by the Board pursuant to inter partes review are appealable to the courts.  However, if the standard applied by the courts on review of the Board’s decision is to be the same standard proposed by the Patent Office, namely, that of the “broadest reasonable interpretation,” then there is a possibility, as stated in the petition for certiorari, that “the Board may freely expand its authority to invalidate a patentee’s property rights, without any judicial oversight.” 

The Supreme Court’s decision will have significant consequences.  While creation of inter partes review was intended by Congress as a path toward a “more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs,” the potential exists for gamesmanship if claims can be invalidated without judicial review simply by choosing the Patent Office as the venue.  This danger is particularly acute in view of the fact that, since enacted by the AIA, an apparently disproportionate percentage of patents (about 85%) of completed inter partes reviews have resulted in cancellation of at least one patent claim.

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