Supreme Court Affirms Federal Circuit in Cuozzo, Upholding USPTO Procedure in IPR Proceedings | Practical Law

Supreme Court Affirms Federal Circuit in Cuozzo, Upholding USPTO Procedure in IPR Proceedings | Practical Law

In Cuozzo Speed Technologies LLC v. Lee, in an appeal stemming from the first inter partes review (IPR) proceeding filed under the Leahy-Smith America Invents Act (AIA), the US Supreme Court held that the AIA barred judicial review of the Patent Trial and Appeal Board's (PTAB) decision to institute IPR of the challenged patent, and that the US Patent and Trademark Office (USPTO) acted within its authority in directing the PTAB to apply a broadest reasonable interpretation claim construction standard in IPR proceedings.

Supreme Court Affirms Federal Circuit in Cuozzo, Upholding USPTO Procedure in IPR Proceedings

by Practical Law Intellectual Property & Technology
Published on 21 Jun 2016 • USA (National/Federal)
In Cuozzo Speed Technologies LLC v. Lee, in an appeal stemming from the first inter partes review (IPR) proceeding filed under the Leahy-Smith America Invents Act (AIA), the US Supreme Court held that the AIA barred judicial review of the Patent Trial and Appeal Board's (PTAB) decision to institute IPR of the challenged patent, and that the US Patent and Trademark Office (USPTO) acted within its authority in directing the PTAB to apply a broadest reasonable interpretation claim construction standard in IPR proceedings.
On June 20, 2016, in Cuozzo Speed Technologies LLC v. Lee, the US Supreme Court considered two issues stemming from the first inter partes review (IPR) proceeding filed under the Leahy-Smith America Invents Act (AIA), where the Patent Trial and Appeal Board (PTAB) had invalidated Cuozzo's patent claims as obvious and denied its motion to amend them ( (June 20, 2016)). Following a closely-split decision from the US Court of Appeals for the Federal Circuit, the Supreme Court granted certiorari, holding that the AIA:
  • Bars judicial review of PTAB decisions to institute IPR, where a patent owner challenges the PTAB's determination that the IPR petition satisfies the requirements for instituting IPR under 35 U.S.C. § 314(a).
  • Authorized the US Patent and Trademark Office (USPTO) to issue a regulation directing the PTAB to apply a "broadest reasonable interpretation" (BRI) claim construction standard in IPR proceedings, rather than the "ordinary meaning" standard used by district courts.
For background on the case and the Federal Circuit's decision, see Legal Update, Split Federal Circuit Confirms Broadest Reasonable Interpretation Claim Construction Standard in IPR Proceedings.
Regarding its nonappealability holding, the Supreme Court reasoned that:
  • 35 U.S.C. § 314(d) expressly states that the USPTO's determination whether to institute IPR is final and nonappealable.
  • Permitting appeal of the PTAB's institution decision would undercut Congress's objective when passing the AIA of giving the USPTO significant power to revisit and revise issued patents.
  • Similar other provisions, such as those relating to patent reexamination, make certain initial USPTO decisions final and nonappealable.
  • There is no statutory or contextual basis for limiting the "no appeal" language of Section 314(d) to interlocutory appeals.
  • The court's general adherence to a strong presumption in favor of judicial review is outweighed by the AIA's clear language and legislative history.
Significantly, the court did not categorically preclude review of any PTAB institution decision following a final decision, noting that judicial review may be appropriate where either:
  • The IPR petition fails to give sufficient notice to the patent owner resulting in a due process issue with the proceeding.
  • The USPTO acts outside its statutory limits by, for example, cancelling a claim based on review grounds not permitted in an IPR under the AIA.
Regarding the BRI claim construction standard, the Supreme Court reasoned that:
  • The AIA expressly grants the USPTO authority to issue regulations establishing and governing IPR proceedings (see 35 U.S.C. § 316(a)(4)).
  • No provision in the AIA unambiguously directs the agency to use any particular claim construction standard.
  • The quasi-adjudicative nature of IPR does not require the USPTO to apply the same claim construction standard applied in judicial proceedings, as IPR is a specialized administrative proceeding that differs from judicial proceedings in many respects.
  • The USPTO's regulation imposing the BRI standard, 37 C.F.R. § 42.100(b), was a reasonable exercise of its rulemaking authority from Congress because:
    • giving a patent claim its broadest reasonable construction increases the likelihood that the USPTO will find a claim invalid as too broad, protecting the public from overbroad patent monopolies and promoting narrow claim drafting; and
    • the USPTO has used the BRI standard for more than 100 years, including in reexamination proceedings.
The court also rejected Cuozzo's arguments that:
  • The BRI standard should not apply in IPR proceedings because the patent owner has no automatic right to amend the challenged patent's claims, unlike during initial examination. The court responded by noting that, while uncommon, claim amendment is permitted in IPR proceedings.
  • Use of the BRI standard will lead to inconsistent results across forums. The court responded by noting that any such inconsistent results have been long present in the patent system, such as those resulting from patent interference proceedings.
Justices Alito and Sotomayor filed an opinion concurring in part but dissenting from the majority's opinion regarding nonappealability of institution decisions, stating that the court's strong presumption of judicial review should limit Section 314(d)'s "no appeal" provision to interlocutory appeals.