Supreme Court Grants Cert in Challenge to PTAB Procedure

Cuozzo Speed Tech. v. Lee (Supreme Court 2015).

On January 15th, the Supreme Court granted certiorari in Cuozzo Speed Tech. v. Lee, agreeing to hear a challenge to the Federal Circuit’s February 2015 decision upholding the PTAB’s invalidation of certain claims of Cuozzo’s U.S. Patent No. 6,778,074. In that decision, the Federal Circuit ratified the PTAB’s use of the broadest reasonable interpretation (BRI) claim construction standard and confirmed that Board institution decisions are, in almost all cases, not appealable.  In July, a sharply divided Federal Circuit opted by a 6-5 margin not to rehear the panel’s February decision en banc.

Cuozzo’s petition for certiorari poses two questions to the Supreme Court:

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; and
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.

In accepting the case the Supreme Court wrote: “The petitions for writs of certiorari are granted” – thus, the Court has accepted both questions.

The BRI issue is of particular interest to the future of the PTAB, as the BRI standard, along with no presumption of validity, are two of the major attractions for accused infringers to select the PTAB for challenging claims.  A switch to the Phillips plain and ordinary meaning claim construction standard, used in district court proceedings, could potentially result in fewer successful trials for petitioners.  (Some other advantages, such as the preponderance of the evidence standard, the possibility of a district court litigation stay, and technically trained PTAB ALJs hearing the case would remain.)

The Cuozzo petition for certiorari is modeled substantially after Judge Newman’s two dissents in the Federal Circuit proceedings, where she argued that Congress created IPRs to serve as an adjudicative “surrogate for district court litigation of patent validity” and thus should use similar standards as district court litigation.  In defending BRI, the PTO will likely argue that Congress envisioned PTAB proceedings as challenging patentability, not validity, and thus PTO standards (e.g., BRI, preponderance of evidence standard of review) should apply.  The PTO would likely cite to Congress’ express use of the term “unpatentability” versus “invalidity” in the PTAB-related statutes and their instruction to use the preponderance of evidence standard in determining patentability of claims in 35 U.S.C. § 316(e) as confirmation.  The Supreme Court’s granting of certiorari shows some indication that the Court may be inclined overrule the PTAB’s use of BRI.

In practice, parties may consider arguing that their proposed claim constructions meet both the BRI and Phillips standards at the PTAB while Cuozzo is pending at the Supreme Court.  Patent owners recently having lost PTAB cases that may have swung on the claim construction standard might consider dragging their feet (e.g., via requests for reconsideration) to keep their patent alive long enough for the Supreme Court to rule.  Regardless, developments in this case will be on all PTAB practitioners’ radar in 2016.

Petition Document: Cuozzo-Speed-Technologies-LLC-v-Michelle-K-Lee-Petition-for-a-Writ-of-Certiorari

By: Matt Johnson (Jones Day Bio)