February 13, 2015
Bloomberg
By Daniel C. Cooley; J. Derek McCorquindale; Jason L. Romrell; Cara Regan
Authored by Daniel C. Cooley, Cara R. Lasswell, J. Derek McCorquindale, and Jason L. Romrell
Since the creation of new post-grant proceedings under the America Invents Act (AIA),1 many have wondered how the Federal Circuit would handle its review of U.S. Patent and Trademark Office (PTO) decision making. In re Cuozzo2 answered several of those questions.3
On the foundational issue of jurisdiction, the Federal Circuit held that it is unable to review—even on direct appeal from a final written decision—a Patent Trial and Appeal Board (PTAB) decision to institute an inter partes review (IPR). The Federal Circuit also held that the AIA granted the PTO rulemaking authority, and through that authority, the PTO properly defined its standard for claim construction as the broadest reasonable interpretation (BRI) standard.
And signaling how it will likely handle future appeals from agency proceedings, the Federal Circuit applied the Supreme Court's new and more deferential Teva4 standard when reviewing the PTAB's claim construction. The holding of In re Cuozzo thus provides the PTO with flexibility to handle various aspects of post-grant proceedings as it sees fit.
But even as the Federal Circuit resolved the issues of In re Cuozzo in favor of increased PTO autonomy, the court signaled that it may retake ground that some considered ceded. The Federal Circuit clarified earlier decisions about its authority to grant mandamus relief for post-grant proceedings. The court also explored whether Cuozzo's appeal would, if treated as a request for mandamus, satisfy the standards for such relief.
The Federal Circuit's discussion of mandamus relief in In re Cuozzo suggests that, even for matters deemed “final and nonappealable,” the PTO's decisional freedom may yet find boundaries in an Article III court of appeals.
In re Cuozzo began as a petition for IPR of claims 10, 14 and 17 of U.S. Patent No. 6,778,074 (the ’074 patent)5 owned by Cuozzo Speed Technologies LLC.6 The PTAB instituted review of claim 17 on two obviousness grounds.7 The PTAB then “exercise[d] [its] discretion” and applied these same two grounds of unpatentability to claims 10 and 148 even though the petition did not explicitly challenge the claims in this way.
In the proceeding, the PTAB applied the BRI standard to construe the claims, and on the basis of the broadest reasonable constructions, determined that the claims were obvious in view of the instituted combinations.9 The PTAB did not allow Cuozzo to amend the claims, finding that the proposed amendment would improperly broaden the claims.10
After the PTAB's final written decision striking down the ’074 patent claims, Cuozzo appealed. The IPR petitioner did not participate in the appeal, but the Director of the PTO intervened to defend the PTAB's decision.11
On appeal, Cuozzo argued that the PTAB erred by relying on a ground not identified in the petition to institute the IPR proceedings. Cuozzo also argued that the PTAB erred by applying the BRI standard to construe the claims and that the PTAB should have used the same claim construction standard applicable to district court proceedings.12
The first issue of In re Cuozzo turned on the interpretation of 35 U.S.C. §314(d), which states: “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”'
The Federal Circuit first addressed the interpretation of Section 314(d) in St. Jude Medical v. Volcano.13 In St. Jude, the Federal Circuit concluded that Section 314(d) denied it jurisdiction to review a PTAB institution decision appealed prior to the issuance of the PTAB's final written decision.14 St. Jude stated that Section 314(d) “may well preclude all review by any route, which we need not decide,” but that “[i]t certainly bars an appeal of the non-institution decision here.”15
In re Cuozzo raised the undecided issue of St. Jude and its progeny. Cuozzo sought appellate review of a decision to institute after the PTAB issued its final written decision, in a direct appeal under 35 U.S.C. §319. The Federal Circuit's In re Cuozzo decision concluded that the broadly worded Section 314(d)16 “prohibits review of the decision to institute IPR even after a final decision.”17 The Federal Circuit determined that Section 314(d), which characterizes the institution decision as “nonappealable” and “final,” could not “reasonably be interpreted as postponing review until after issuance of a final decision.”18 The court analogized the issue to that of In re Hiniker Co.,19 in which it held that defects in a reexamination petition were “washed clean” during the trial phase of a reexamination proceeding.20 Turning back to the facts of In re Cuozzo, the Federal Circuit concluded that the petition's failure to cite certain prior art references with respect to claims 10 and 14 “provides no ground for setting aside the final decision.”21
The Federal Circuit's interpretation of Section 314(d) seemingly provides the PTAB flexibility to operate under its own procedures with respect to institution decisions. Whether and how the PTAB uses this flexibility, and whether the flexibility creates unpredictable outcomes for petitioners and patent owners, remains to be seen.
The second major issue of In re Cuozzo involved the claim construction standard for AIA post-grant proceedings. The AIA allowed the PTO certain rulemaking authority to set “‘standards' for instituting review and regulating IPR proceedings” pursuant to 35 U.S.C. §316,22 and under this authority the PTO promulgated a regulation requiring the PTAB to give claims their “broadest reasonable construction in light of the specification.”23 By contrast, district courts apply the Phillips24 standard, which construes claims based on the “ordinary meaning of claim language as understood by a person of skill in the art.”25 Cuozzo asserted that the PTO's rulemaking authority did not allow it to use the BRI standard, urging the Phillips standard instead.26
In resolving the issue, the Federal Circuit noted that BRI “has been applied by the PTO and its predecessor for more than 100 years,”27 and that Congress, when creating the AIA, “legislate[d] against the background of existing law.”28 In view of this history, the Federal Circuit concluded that the AIA “impliedly adopted” the existing BRI standard used at the PTO.29 Cuozzo had argued that prior judicial acquiescence to the PTO standard was conditioned on the patentee's freedom to amend his claims, but the Federal Circuit stated that this right, however cabined, was still present in the new post-grant regime.30 The Federal Circuit also noted that, even if Congress had not adopted the existing PTO standard, Chevron31 deference compelled the same result.32 Because the statute itself is silent regarding the claim construction standard, and the PTO's interpretation is based in a permissible construction, the BRI standard was properly adopted.33
Although the main holding relating to BRI is straightforward—that BRI applies to post-grant proceedings—the deeper meaning of In re Cuozzo’s analysis of 35 U.S.C. §316 remains unclear. In re Cuozzo repeatedly states that Section 316 provides the PTO with rulemaking authority,34 and it upholds the PTO's regulation that sets the standard for claim construction. But the intersection between substantive law and the PTO's standards for instituting review and regulating IPR proceedings will likely be debated for years to come.
Having affirmed the PTAB's claim construction standard, the Federal Circuit then evaluated the PTAB's application of that standard, applying the Supreme Court's new Teva35 standard.36
Teva involved claim construction in a district court action and hinged heavily on the impact of Rule 52 of the Federal Rules of Civil Procedure and its “clearly erroneous” standard for setting aside factual findings.37 Although the AIA did not adopt the Federal Rules of Civil Procedure for post-grant proceedings, the Federal Circuit applied Teva to the claim construction issue in In re Cuozzo, noting that the standard of review for PTAB fact findings is “substantial evidence.”38 But “[b]ecause there [was] no issue here as to extrinsic evidence,” the court ultimately reviewed the PTAB's claim construction under a “de novo” standard.39 Practitioners will look to future cases to see how the Federal Circuit applies its standard of review for claim construction in post-grant proceedings.
In re Cuozzo provides the PTO with substantial discretion to resolve issues surrounding decisions to institute inter partes reviews. But the Federal Circuit signaled that the PTO's discretion may have boundaries. In particular, the Federal Circuit stated that “mandamus may be available” in certain situations “where the PTO has clearly and indisputably exceeded its authority.”40 The PTO argued that the Federal Circuit had already decided in previous cases that mandamus review would be improper, but the Federal Circuit disagreed, stating that those cases “did not decide the question of whether the decision to institute review is reviewable by mandamus after the Board issues a final decision or whether such review is precluded by § 314(d).”41
The Federal Circuit stopped short of saying that mandamus is available to review a decision to institute, but it characterized its previous mandamus denials as failing to warrant an extraordinary writ based on the merits of those cases—i.e., the petitioner did not establish (1) a clear and indisputable right to relief, (2) a lack of adequate alternative means to obtain the relief requested, and (3) that the issuance of a writ is appropriate under the circumstances—rather than failing as a jurisdictional matter due to Section 314(d).42 Indeed, unlike the ordinary appeals in St. Jude and In re Cuozzo where the Federal Circuit found that it lacked jurisdiction to review institution decisions,43 the Federal Circuit has never stated that Section 314(d) creates a jurisdictional bar to mandamus review of an institution decision. Even in previous denials of mandamus relief, such as In re Procter & Gamble Co.,44 the Federal Circuit denied the petitions on the merits rather than dismissing them because of a lack of jurisdiction due to Section 314(d).
Therefore, although In re Cuozzo suggests that the PTO has flexibility to address certain issues in post-grant proceedings, time will tell how the Federal Circuit will exercise its residuum of mandamus power under the All Writs Act45 or treat future PTO rulemaking if the PTO expands its territory too far.
Endnotes
1 Leahy-Smith America Invents Act, Pub. L. 112-29, 125 Stat. 284 (2011).
2 In re Cuozzo Speed Techs., LLC, No. 2014-1301, 2015 BL 27538 (Fed. Cir. Feb. 4, 2015) (89 PTCJ 877, 2/6/15) [hereinafter Slip Op.].
3 The panel was divided 2–1, with Judge Newman dissenting.
4 Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 113 U.S.P.Q.2d 1269 (2015) (89 PTCJ 737, 1/23/15).
5 The ’074 patent relates to a speed limit indicator that can be used for “displaying the current speed of a vehicle and how it relates to the legal speed limit for the current location in which the vehicle is traveling.” ’074 patent col. 2 ll. 18-23 (filed Mar. 18, 2002) (issued Aug. 17, 2004).
6 Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, 108 U.S.P.Q.2d 1852, Final Written Decision, Paper 59 at 2 (P.T.A.B. Nov. 13, 2013) (87 PTCJ 112, 11/15/13) [hereinafter Final Written Decision].
7 See Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-0001, Decision to Initiate Trial for Inter Partes Review, Paper 15 at 26 (P.T.A.B. Jan. 9, 2013).
8 Id. at 18-19, 22.
9 See Final Written Decision at 49.
10 See Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-0001, Notice of Appeal, Paper 60 (P.T.A.B. Jan. 8, 2014).
11 See Stipulation of Withdrawal of Appellees Garmin International, Inc. and Garmin USA, Inc., Cuozzo Speed Techs. LLC v. Garmin Int'l, Inc., No. 2014-1301 (Fed. Cir.) (No. 17); Notice of Intervention by the United States Patent and Trademark Office, Cuozzo Speed Techs. LLC v. Garmin Int'l, Inc., No. 2014-1301 (Fed. Cir. Apr. 18, 2014) (No. 7).
12 See Brief of Appellant, Cuozzo Speed Techs. LLC v. Garmin Int'l, Inc., No. 2014-1301 (Fed. Cir. Apr. 22, 2014) (No. 12) [hereinafter Brief for Appellant]. For a full discussion of the parties' positions on appeal and the procedural background of the case, see Erika H. Arner, Daniel C. Cooley, J. Derek McCorquindale, and Jason L. Romrell, Reading the Tea Leaves: In re Cuozzo and the Federal Circuit's Consideration of PTAB Institution Decisions and Claim Construction, 89 Pat., Trademark & Copyright J. 251 (2014) (89 PTCJ 251, 11/28/14).
13 St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373, 110 U.S.P.Q.2d 1777 (Fed. Cir. 2014) (88 PTCJ 18, 5/2/14).
14 Id. at 1376.
15 Id.
16 See 35 U.S.C. §314(d) (“The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”).
17 Slip Op. at 6.
18 Id.
19 In re Hiniker Co., 150 F.3d 1362, 47 U.S.P.Q.2d 1523 (Fed. Cir. 1998).
20 Slip Op. at 7-8.
21 Id. at 8.
22 Slip Op. at 17-18.
23 See 37 C.F.R. §42.100(b).
24 Phillips v. AWH Corp., 415 F.3d 1303, 75 U.S.P.Q.2d 1321 (Fed. Cir. 2005) (en banc) (70 PTCJ 309, 7/15/05).
25 Id. at 1314.
26 See Brief of Appellant at 32; Slip Op. at 16.
27 Slip Op. at 11-12.
28 Id. at 13.
29 Id. at 14.
30 Id. at 14-16.
31 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).
32 Slip Op. at 16-19.
33 Id. at 18-19.
34 Id. at 16-18.
35 Teva v. Sandoz, supra note 4.
36 Slip. Op. at 19.
37 Teva, 135 S.Ct. at 836-38.
38 Slip. Op. at 19; cf. In re Gartside, 203 F.3d 1305, 1315, 53 U.S.P.Q.2d 1769 (Fed. Cir. 2000) (59 PTCJ 599, 2/25/00)(“Because our review of the Board's decision is confined to the factual record compiled by the Board, we accordingly conclude that the ‘substantial evidence’ standard is appropriate for our review of Board factfindings.”).
39 Slip. Op. at 19.
40 Id. at 8.
41 Id. at 8-9.
42 Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367, 380-81 (2004).
43 St. Jude, 749 F.3d at 1376; Slip Op. at 2.
44 In re Procter & Gamble Co., Misc. No. 121, 2014 BL 113676 (Fed. Cir. Apr. 24, 2014) (88 PTCJ 18, 5/2/14).
45 28 U.S.C. §1651.
©Bloomberg Finance L.P. 2015. Originally published by Bloomberg Finance L.P. Reprinted by permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm’s clients.
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