March 2015
CIPA Journal
By Anthony C. Tridico, Ph.D.; Timothy P. McAnulty; Cara Regan
Authored by Cara R. Lasswell; Timothy P. McAnulty; and Anthony C. Tridico, Ph.D.
In In re Cuozzo,1 a split panel of the Federal Circuit addressed questions relating to both the institution and the decision stages of the inter partes review (IPR) process. In a much anticipated decision, the majority held that the Court lacked jurisdiction to review the Patent Trial and Appeal Board's (PTAB) decisions to institute or deny post-grant proceedings. The majority also held that unlike the district courts, the PTAB may apply the broadest reasonable interpretation standard for claim construction. In dissent, Judge Newman opposed both holdings, arguing that administrative decisions should be reviewed by the courts and, if the new post-grant proceedings are adjudicative, judicial standards of claim construction must apply. The split panel highlights the differing views on the new post-grant procedures implemented under the AIA.
In re Cuozzo began as an IPR challenging U.S. Patent No. 6,778,074 (the '074 patent)2 owned by Cuozzo Speed Technologies LLC.3 Garmin International Inc. and Garmin USA, Inc. filed the IPR petition challenging claims 10, 14, and 17 of the '074 patent.4 Claim 10 is an independent claim, claim 14 depends from claim 10, and claim 17 depends from claim 14. The PTAB instituted review based on two obviousness grounds against all three claims.5 Notably, though each claim had been challenged under 35 U.S.C. § 103, the petition advanced separate combinations of references for each of the three challenged claims.6 And though Garmin proposed both grounds, it proposed the first ground against claim 17 only, and the second ground against claim 14 only.7 Nonetheless, the PTAB instituted both grounds against all three instituted claims.
In its final decision, the PTAB applied the broadest reasonable interpretation standard, construed the claims, and determined that all three claims were obvious in view of the instituted prior art combinations proposed by the petitioner.8 The PTAB denied Cuozzo's motion to amend, finding that the proposed amendment improperly broadened the scope of the claims relative to the scope of the original patent claims.9
Cuozzo appealed the PTAB's decision to the Federal Circuit. While on appeal, Cuozzo and Garmin settled, and Garmin, bound by the settlement agreement, did not participate in the appeal.10 By statute, the Director of the Patent and Trademark Office (PTO) is entitled to intervene in IPR appeals,11 and did so to defend the PTAB's decision.12
On appeal, Cuozzo argued that the PTAB erred in instituting review because the PTAB instituted grounds against all of the claims, even though those grounds were proposed against only some of the claims. Further, Cuozzo argued, the broadest reasonable interpretation standard was not appropriate for post-grant proceedings.13
The majority (Judges Clevenger and Dyk) relied heavily on the statutory language and concluded that the Court lacked jurisdiction to review PTAB decisions to institute or deny petitions. The majority also affirmed the PTAB's broadest reasonable interpretation (BRI) claim construction standard based in large part on historic patent office practice, and ultimately upheld the PTAB's interpretation of the claims at issue based on application of the BRI standard. Judge Newman, in a vigorous dissent, characterized the majority's decision as "thwart[ing] the statutory plan" of the America Invents Act (AIA).14
The majority began with Cuozzo's attack on the PTAB's decision to institute review, and concluded that the statutory language barring appeal on decisions to institute applied at all stages of an IPR.15 As a background, the majority noted the Court's earlier decision in St. Jude Medical, Cardiology Division., Inc. v. Volcano Corp.,16 holding that under 35 U.S.C. § 314(d) the PTAB's institution decision was not subject to interlocutory review.17 The majority explained that the statute characterizes the institution decision as "non-appealable" and "final" and this could not "reasonably be interpreted as postponing review until after issuance of a final decision."18 Thus, the majority concluded that the broadly worded § 314(d)19 "prohibits review of the decision to institute IPR even after a final decision."20
Turning to the historical context in which the provision was enacted, the majority analogized the issue raised in Cuozzo (IPR) to that of In re Hinkler (reexamination).21 In that case, the majority noted, defects in a reexamination petition and even a flawed decision to institute were held to be "washed clean" during the reexamination proceeding22 and could not be used as a basis to set aside a final decision by the PTO.23 The majority reasoned that Garmin's failure to cite all the references with respect to each claim was irrelevant, because "a proper petition could have been drafted."24 And it noted that there is no bar prohibiting the PTO from finding the challenged claims unpatentable over the instituted grounds.25 The majority left open the possibility that if a review were instituted not on prior art, the sole authorized reason to institute under the statute,26 but on some alternate theory, such as prior use or sale, relief by mandamus "m[ight] be available."27 But the majority cautioned that this remedy would be available only "in situations where the PTO has clearly and indisputably exceeded its authority."28
The PTO argued that previous Federal Circuit decisions precluded mandamus, but the majority refused to decide whether an institution decision may be reviewed by mandamus after a final written decision. The majority stated that at least one requirement for mandamus—that the decision be otherwise unreviewable—would be satisfied.29 If a petitioner could also show a "clear and indisputable right" entitling him to mandamus and could satisfy the court that a writ is appropriate, mandamus might be available.30 Cuozzo, like past litigants challenging IPR institution, could not benefit from mandamus because it showed no clear and indisputable right to the writ.31
Had the PTAB instituted a ground not raised in the petition, the majority suggested, the result might have been different. The issue remains somewhat undecided, but patentees may take comfort in knowing the Federal Circuit appears inclined to constrain IPRs to prior-art patentability challenges. Though, after In re Cuozzo, it appears that all grounds cited in a petition are at the PTAB's disposal for instituting review of challenged claims and determining that those challenged claims are unpatentable.
B. Claims Construed Under the Broadest Reasonable Interpretation Standard
The Court then turned to Cuozzo's second challenge: the claim construction standard. The statute does not specify a claim construction standard. But, by its own rule, the PTAB determines patentability based upon the "broadest reasonable interpretation" of challenged claims.32 In contrast, the district courts apply the Phillips standard,33 which interprets claims based on the "ordinary meaning of claim language as understood by a person of skill in the art."34 Generally, the Phillips standard is a narrower interpretation of the claims.35 The AIA granted the PTO certain rulemaking power, but provided no specific guidance on the required claim construction standard for post-grant review.36
Though Cuozzo asserted that the PTO lacked authority to determine a standard for claim construction, and argued the Phillips standard should apply,37 the majority affirmed the PTO standard. Noting first that the PTO has long applied the broadest reasonable interpretation standard in examination, interferences, reissues, and reexamination,38 the majority reiterated that Congress is credited with knowledge of existing rules.39 Absent any indication that the AIA was designed to alter the PTO standard, the majority reasoned, "[i]t can . . . be inferred that Congress impliedly adopted the existing rule of adopting the broadest reasonable construction."40
Cuozzo argued that prior judicial acquiescence to the PTO standard was conditioned on the patentee's freedom to amend his claims. The Federal Circuit has condoned the PTO's historical practice of using the BRI, because the Patent Owner's ability to amend claims distinguishes these PTO proceedings from judicial actions in the district courts.41 Though Patentees seeking amendment have rarely been successful in adding new claims in post-grant proceedings, the majority was unpersuaded by Cuozzo's argument.42 It noted that the right to amend, however cabined, is still present in the new post-grant regime, and concluded that the BRI standard remains appropriate.43
Further, the majority mentioned that even if Congress had not adopted the existing PTO standard, Chevron44 deference compels the same result.45 Because the statute itself is silent regarding the claim construction standard, and the PTO's interpretation is based in a permissible construction, the "broadest reasonable interpretation" standard was properly adopted and applied by the PTO.46
Having affirmed the PTO's rule, the majority evaluated its application of that standard. Central to the PTAB's decision was the construction of "integrally attached."47 Determining that the term required physical joinder of discrete parts, the PTAB excluded embodiments in which the required parts' separate identity was lost from the scope of the patent, and found all claims obvious on both grounds.48
In the Court's second precedential application of the Teva49 standard, the majority saw no error in this construction.50 In Teva Pharm. USA, Inc. v. Sandoz, Inc., 574 U.S. ___(2015), the Supreme Court retracted the Federal Circuit's long-standing de novo review of claim construction, and held that a district court's factual determinations regarding extrinsic evidence must be evaluated for clear error on appeal.51 Though claim construction remains ultimately a matter of law, subject to de novo review, the Federal Circuit must now defer to a trial court's extrinsic fact finding and give the lower court deference.52 Finding that no extrinsic evidence was in question in the PTAB decision, the majority reviewed the PTAB's construction de novo, but found that in light of the prosecution history the PTAB had not erred in its interpretation of the claims.53 Applying the PTAB's interpretation, the majority agreed that the issued claims were obvious, applying a substantial evidence standard to the PTAB's determination.54 The majority also affirmed the PTAB's denial of Cuozzo's motion seeking to amend the original claims.55 Using the test developed through reissue and reexamination cases, the majority noted that if "a claim is broader in scope than the original claims [i.e.,] if it contains within its scope any conceivable apparatus or process which would not have infringed the original patent" amendment should be prohibited.56 Based on its claim construction decision, the majority agreed that Cuozzo's amendment broadened the claims, and affirmed the PTAB.57
In one of the first decisions from the Federal Circuit addressing post-grant decisions, several important practices of the PTAB were affirmed. Largely foreclosing review of PTAB decisions instituting or denying grounds, the Court only left open the rare possibility of relief by mandamus to correct institutions based on non-prior art grounds. And the Court also upheld the BRI standard of claim construction. Many other issues regarding post-grant practice are unresolved and the split panel still highlights the differing views on the new Patent Trials. Stay tuned for what promises to be a rapidly growing area of the law.
Endnotes
1 In re Cuozzo Speed Techs., LLC, No. 14-1301 (Fed. Cir. Feb. 4, 2015) [hereinafter "slip op."].
2 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).
3 Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Final Written Decision, Paper 59 at 2 (P.T.A.B. Nov. 13, 2013).
4 See Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Petition for Inter Partes Review, Paper 1 (P.T.A.B. Sep. 16, 2012).
5 See Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Decision to Initiate Trial for Inter Partes Review, Paper 15 at 26 (P.T.A.B. Jan. 9, 2013).
6 Petition for Inter partes Review, Paper 1 at 5-6 (arguing obviousness based on Aumayer, Evans, and Wendt for claim 17 but not claim 10 or 14 ,and arguing obviousness based on Tegethoff, Awada, Evans, and Wendt for claim 14 but not claim 10 or 17), and Decision to Initiate Trial for Inter Pares Review, Paper 15 at 26 (instituting review of claims 10, 14, and 17 based on Aumayer, Evans, and Wendt and on Tegethoff, Awada, Evans, and Wendt).
7 Id.
8 See Final Written Decision, Paper 59 at 49.
9 See Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Notice of Appeal, Paper 60 (P.T.A.B. Jan. 8, 2014).
10 See Motion of Appellees Garmin International, Inc. and Garmin USA, Inc. to withdraw party, Garmin International, Inc.; Garmin USA, Inc., as a party to this appeal, In re Cuozzo Speed Techs., LLC, No. 14-1301 (Fed. Cir. Feb. 4, 2015) (No. 17).
11 Se 35 U.S.C. § 143.
12 Motion of Intervenor-Michelle K. Lee, Director, United States Patent and Trademark Office, In re Cuozzo Speed Techs., LLC, No. 14-1301 (Fed. Cir. Feb. 4, 2015) (No. 7).
13 See Brief of Appellant, In re Cuozzo Speed Techs., LLC, No. 14-1301 (Fed. Cir. Feb. 4, 2015) (No. 12).
14 Slip op., Newman, J., dissenting, at 1.
15 Slip op. at 5-6.
16 St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014).
17 Id. at 1376.
18 Id.
19 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 non-appealable.").
20 Id. at 6.
21 Id. at 7.
22 Id. at 7-8.
23 Id.
24 Id. at 8.
25 Id.
26 See 35 U.S.C. § 311 (permitting IPR petitions based on "prior art consisting of patents or printed publications").
27 Slip op. at 8.
28 Id.
29 Id. at 9.
30 Id. at 8-9.
31 Id. at 9.
32 See 37 C.F.R. § 42.100(b).
33 Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).
34 Id. at 1314.
35 See, e.g., Facebook, Inc. v. Pragmatus AV, LLC, 582 F. App'x 864, 869 (Fed. Cir. 2014) ("The broadest reasonable interpretation of a claim term may be the same as or broader than the construction of a term under the Phillips standard. But it cannot be narrower.").
36 See 35 U.S.C. §§ 316(a)(2), (a)(4); Slip op. at 11.
37 See Brief of Appellant, No. 12 at 32; Slip op. at 16.
38 Slip op. at 11-13.
39 Id. at 13.
40 Id. at 14.
41 See In re Yamamoto, 740 F.2d 1569, 1572 ("An applicant's ability to amend his claims to avoid cited prior art distinguishes proceedings before the PTO from proceedings in federal district courts on issued patents."); Slip op., Newman, J., dissenting, at 8-10.
42 Slip op., Newman, J., dissenting, at 2.
43 Id. at 14-16.
44 Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).
45 Id. at 17.
46 Id. at 18-19.
47 Id. at 19; Final Written Decision, Paper 59 at 7.
48 Final Written Decision, Paper 59 at 9, 13-14, 49.
49 Teva Pharm. USA, Inc. v. Sandoz, Inc., 574 U.S. ___(2015) articulated a new standard of claim construction. The Federal Circuit's first precedential application of that standard took place in In re Papst Licensing Digital Camera Patent Litigation, No. 14-1110 (Fed. Cir. Feb. 3, 2015). The new standard was noted by the Federal Circuit in In re Kevin R. Imes, No. 14-1110 (Fed. Cir. Jan. 29, 2015), but was not applied. Id. at 4.
50 Slip op. at 20.
51 Teva Pharm. USA, Inc. v. Sandoz, Inc., No. 2014-1301, at 11, 1-2 (U.S. 2015).
52 Id. at 5.
53 Slip op. at 19.
54 Id. at 23.
55 Id. at 25.
56 Id.
57 Id. at 26.
Originally printed in CIPA Journal. 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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