Could Cuozzo v. Lee Open the Door to Appellate Relief for Unlucky AIA Petitioners?

Authored by Jason E. Stach and James D. Stein

The Supreme Court granted certiorari in Cuozzo Speed Technologies, LLC v. Lee to consider the hotly-debated question of whether the Patent Trial and Appeal Board (PTAB) should use the same claim construction standard used in district courts when construing patent claims. The PTAB currently gives claims their broadest reasonable interpretation in light of the patent specification, while district courts apply the sometimes-narrower test set forth in the Federal Circuit’s decision in Phillips v. AWH Corp.,¹ and related cases. The press mainly has focused on this aspect of Cuozzo. But the Supreme Court also granted certiorari on Cuozzo’s second issue: Whether the PTAB’s decision to institute trial is reviewable on appeal from the PTAB’s final written decision in an America Invents Act (AIA) trial. This issue has the potential to have an even greater effect on AIA trials than the claim construction issue, and some think it may be the primary reason the Supreme Court granted certiorari in the first place. If the Court sides with Cuozzo, it could open the door to appellate relief for unsuccessful petitioners—a door that so far has remained closed.

Reviewability of Institution Decisions

The AIA limits appeal of a decision whether to institute, stating that "[t]he determination by the Director whether to institute [an inter partes review or a post-grant review]. . . shall be final and nonappealable."² Based on these statutes, reviewing courts have found that they lack authority to review institution decisions regardless of whether the party seeking review is the patent owner or the petitioner, whether review is sought following the institution decision or following the final written decision on the merits (after a trial is complete), or whether the vehicle for seeking review is an appeal to the Federal Circuit, a petition for writ of mandamus to the Federal Circuit, or a suit in the Eastern District of Virginia under the Administrative Procedure Act.³

In the lone exception, the Federal Circuit reviewed the PTAB’s decision that a patent qualified as a "covered business method patent," which it viewed as part of the decision whether to institute.⁴ The court viewed this issue as reviewable because whether a patent qualifies as a covered business method patent is "a limit on [the PTAB’s] invalidation of authority under [AIA] § 18."⁵ In all other instances, the Federal Circuit has found that it lacks authority to hear appeals of institution decisions.

Background of Cuozzo

Cuozzo reaches the Supreme Court on appeal from the first ever inter partes review. Before the PTAB, Garmin International filed a petition seeking, among other things, cancellation of a set of claims on one ground. The PTAB did not institute review of those claims based on the proposed ground. Instead, the PTAB instituted review of the claims on another ground Garmin identified in the petition for a different set of claims, and issued a final written decision cancelling the challenged claims. The cancellation, therefore, was based on a ground devised by the PTAB that was not expressly proposed in the petition.

On appeal from the final written decision, Cuozzo argued that the PTAB’s decision to institute the petition violated 35 U.S.C. § 312(a) (3) and § 314(a), which according to Cuozzo, only permit institution on grounds expressly proposed in the petition and not on grounds created by the PTAB.⁶ The Federal Circuit declined to review the issue, "conclud[ing] that § 314(d) prohibits review of the decision to institute IPR even after a final decision."⁷

Cuozzo’s Certiorari Petition

Cuozzo appealed to the Supreme Court. In its certiorari petition, it argues that the PTAB’s decision whether to institute should at least be reviewable on appeal of the final written decision after the trial is complete. Cuozzo says that the "no appeal" provision of Section 314(d) may bar interlocutory review of an institution decision, but not ultimate review, because "[t]he AIA separately provides for appellate review of the Board’s final written decision, see 35 U.S.C. 141(c), 319, and those are the provisions Cuozzo invoked when it appealed at the end of the IPR proceeding."⁸

Cuozzo also argues that, even if Congress intended to bar review of institution decisions entirely, review should not be barred when the decision violates "clear statutory limits,"⁹ such as the PTAB’s decision to institute review on a ground that Garmin’s petition did not propose. According to Cuozzo, "Section 314(d) may not bar appeals that the Board ignored its own statutory authority, including the requirement that the Board base its institution decision on the parties’ submissions rather than its own research or theories."¹⁰

Potential Effect of the Supreme Court Siding with Cuozzo

If the Supreme Court agrees with Cuozzo’s primary argument, all decisions whether to institute arguably will become reviewable on appeal of a final written decision. This approach would treat the "no appeal" statutes as merely affecting the timing of appeals, barring interlocutory appeals of institution decisions but permitting appeals of all issues once the PTAB issues a final decision.

Even if the Court only agrees with Cuozzo’s fallback position—that institution decisions violating clear statutory limits are reviewable—many institution-related issues may become reviewable on appeal. For example, the Federal Circuit has deemed unreviewable the PTAB’s decision that a petitioner is not time-barred under 35 U.S.C. § 315(b).¹¹ If the Supreme Court adopts Cuozzo’s fallback position, it may overrule this view and may do the same for other institution-related issues.¹²

Will Cuozzo Give a Denied Petitioner a Right of Appeal?

When the PTAB finally declines to institute an AIA petition (after all requests for rehearing have been exhausted), the petitioner currently has no recourse aside from filing another petition. But if the PTAB denies institution on an issue that the petitioner cannot correct by filing a new petition, such as by finding that the petitioner is time-barred under 35 U.S.C. § 315(b), then filing another petition may not be a viable option. Even if the petitioner is not barred from filing another petition, the PTAB will sometimes exercise its discretion not to institute the corrected petition. For many petitioners, a right of appeal is either essential or desirable if they want the PTAB to review a patent.

Cuozzo’s certiorari petition does not directly address this issue because it is directed to the appealability of issues once they become part of a final written decision, not to cases for which a final written decision never issues because the PTAB declines to institute. If the Supreme Court sides with Cuozzo, its reasoning might afford denied petitioners a right of appeal. If the Supreme Court interprets the "no appeal" statutes as precluding interlocutory appellate review, in effect treating them as appeal-timing statutes, then appeals of denials of institution may become available because they effectively are final. The denial would not be an interlocutory order at that point; it would be the final determination on the petition. If the Supreme Court finds that issues regarding the PTAB’s statutory authority are appealable, then this subset of issues may become appealable even though not rolled into a final written decision.

Conclusion

While many are focusing on the how the Supreme Court will address the broadest reasonable interpretation standard in AIA trials, the Court’s decision on rights of appeal may have a greater lasting effect. Depending on the Court’s reasoning, its decision may affect issues Cuozzo has not raised directly, including appeals of decisions not to institute AIA trials.

Endnotes
¹ Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc).

² 35 U.S.C. §§ 314(d) (inter partes review), 324(e) (post-grant review).

³ See Dominion Dealer Sols., LLC v. Lee, 2014 WL 1572061 (E.D.Va. 2014); St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014); In re Procter & Gamble Co., 749 F.3d 1376 (Fed. Cir. 2014); In re Dominion Dealer Sols., LLC., 749 F.3d 1379 (Fed. Cir. 2014); In re Versata Dev. Grp., Inc., 564 Fed. Appx. 1025 (Fed. Cir. 2014); Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015); Sightsound Techs., LLC v. Apple Inc., No. 2015-1159 (Fed. Cir. Dec. 15, 2015); GTNX, Inc. v. INTTRA, Inc., 789 F.3d 1309 (Fed. Cir. 2015); In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (2015).

⁴ Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306 (Fed Cir. 2015).

⁵ Id. at 1322.

⁶ In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1268 (Fed. Cir. 2015).

⁷ Id. at 1273.

⁸ Cuozzo’s Petition at 30.

⁹ Id. at 28,

¹⁰ Id. at 31.

¹¹ Achates Reference Publ’g, 803 F.3d 652.

¹² See, e.g., Sightsound Techs., No. 2015-1159 (deeming unreviewable the PTAB’s decision to institute review on obviousness rather than the anticipation ground proposed in the petition).