"What Standard Should the Patent Trial and Appeal Board Apply in Interpreting Patent Claims During Inter Partes Review? Is the Institution of Inter Partes Review Ever Appealable?" ABA Supreme Court Preview

April 25, 2016

CASE AT A GLANCE

In this case, the U.S. Supreme Court will consider whether the Patent Trial and Appeal Board (PTAB or Board) should continue to apply the “broadest reasonable interpretation” (BRI) standard for patent claim construction during inter partes review (IPR) or should instead apply the “ordinary and customary meaning” standard. Petitioner Cuozzo appeals the claim construction of the PTAB applying the BRI standard, which was upheld by the U.S. Court of Appeals for the Federal Circuit. Petitioner further appeals whether the original determination by the Board to institute IPR is appealable, after the Federal Circuit found that the institution determination could not be appealed even after the final written decision of the IPR was issued.

Cuozzo Speed Technologies v. Lee
Docket No. 15-446

Argument Date: April 25, 2016
From: The Federal Circuit

ISSUES

Did the court of appeals err 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?

Did the court of appeals err 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?

FACTS

Petitioner owns U.S. Patent No. 6,778,074, which claims an interface for displaying both a vehicle’s speed and the speed limit associated with its location. In 2012, Garmin International, Inc., and Garmin USA, Inc. (Garmin), petitioned for inter partes review (IPR) of claims 1–20 in the ’074 patent. Congress established the new IPR proceedings in 2011 in the Leahy-Smith America Invents Act (AIA), at least partially in response to the concerns that the United States Patent and Trademark Office (USPTO or PTO) was issuing too many invalid patents. The AIA conferred authority on the Director of the USPTO to institute inter partes review (IPR) proceedings at 35 U.S.C. § 314(a) and the responsibility to conduct such IPR proceedings was delegated to the Board by the Director. Hence, the USPTO is the respondent in this matter.

In a January 2013 decision, the Board concluded that Garmin had not established a reasonable likelihood of prevailing on most of its assertions of invalidity. The Board determined, however, that Garmin had established a reasonable likelihood of prevailing on its contention that at least one claim was unpatentable and granted  the petition to institute IPR, limited to the obviousness challenges to claims 10, 14, and 17. The Board then conducted a full IPR proceeding and, in November 2013, issued its final written decision. The Board gave the claims at issue their broadest reasonable construction in light of the patent’s specification and concluded that, so construed, the claims were obvious and invalid over the prior art. During the IPR proceeding, the Board denied petitioner’s motion to amend the claims because the proposed amendments failed to satisfy the written-description requirement of 35 U.S.C. § 112(a) and because the proposed amendments would have impermissibly enlarged the scope of the claim language.

On appeal, the court of appeals first held that petitioner could not challenge the Board’s decision to institute review with respect to claims 10 and 14. The court explained that inter partes reviews must “proceed in two phases.” The first phase requires the Board to determine whether to institute review and, in the second phase, the Board conducts the IPR proceeding and issues a final decision. The court of appeals recognized that petitioner may obtain judicial review of the Board’s “final written decision.” The court held, however, that it lacked authority to review the Board’s prior decision to institute the IPR because 35 U.S.C. § 314(d) makes that decision “final and nonappealable.” The court noted that other provisions (specifically, 35 U.S.C. §§ 141(c) and 319) “already  limit appeals to appeals from final decisions.” The court inferred that, “[b]ecause § 314(d) is unnecessary to limit interlocutory appeals, it must be read to bar review of all institution decisions, even after the Board issues a final decision.” The court of appeals then held that, in promulgating 37 C.F.R. § 42.100(b), the PTO has reasonably required the Board in an IPR to give patent claims their “broadest reasonable construction.” The court of appeals further held that, although IPR “may be said to be adjudicatory rather than an examination,” that fact does not undermine “[t]he inference  of congressional approval of the longstanding PTO construction standard.”

Turning to the merits of the Board’s patentability decision, the court of appeals affirmed the Board’s interpretation of the contested claim language and its conclusion that the three claims under review were unpatentable as obvious under 35 U.S.C. § 103. The court also held that the Board had properly denied petitioner’s motion to amend its claims because the proposed amendments would have impermissibly broadened those claims.

The court of appeals denied rehearing en banc. Judge Dyk, joined  by three judges, concurred in the denial of rehearing. He concluded that, “[i]n the absence of evidence of congressional intent to abrogate the broadest reasonable interpretation standard,” the  court “should not act to adopt a different standard based on our own notions of appropriate public policy.” Five judges jointly dissented from the denial of rehearing en banc. They recognized that the statute is silent about the claim-construction rule that Congress intended the PTO to use in IPR. In light of the adjudicative nature  of IPR proceedings, however, the dissenters found it unclear “why the district court standard [of claim construction] should not apply” and would have held that, because IPR involves “an already issued claim,” disputed claim language should be construed “as in district court litigation, i.e., using the ordinary and customary meaning standard for claim construction.”

CASE ANALYSIS

In this case, the Court must determine whether the “broadest reasonable interpretation” (BRI) standard should apply for claim construction during inter partes review (IPR). The BRI standard has long been the standard for claim construction both during the process of applying for and receiving a patent at the USPTO, as well as the applied standard during both ex partes and inter partes reexaminations. When the AIA was passed in 2011, inter partes reexamination was replaced with IPR, which effectively transitioned the inter partes procedure from one that occurred before a USPTO patent examiner to one that occurred before a panel of administrative patent judges at the USPTO’s Patent Trial and Appeal Board (PTAB).

Further, the Court must also determine whether the PTAB’s determination to institute IPR is appealable at the conclusion of IPR. The PTAB can institute IPR after an IPR petition is prepared and filed by, typically, a third party seeking to invalidate a pending U.S. patent. The AIA grants the PTAB authority to institute an IPR if a limited set of circumstances is established by the IPR petition, including whether the petition “shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition” per 35 U.S.C. § 314(a). This determination is “final and nonappealable” under 35 U.S.C. § 314(d). However, it is unclear whether the determination is “nonappealable” solely at the time the determination is made, allowing the IPR to proceed to the next phase, or whether the determination is further “nonappealable” at the conclusion of the IPR after the PTAB issues a final written decision, after which the AIA permits appeal.

On the issue of whether the BRI standard should apply for claim construction during IPR proceedings, petitioner and respondent frame the issue before the Court in different ways. Petitioner frames the issue as 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.” Contrarily, respondent suggests that the issue be framed as whether “the PTO acted within its rulemaking authority in promulgating 37 C.F.R. § 42.100(b) which, consistent with the agency’s settled practice in other post-issuance proceedings, provides that patent claim’s shall be given their ‘broadest reasonable construction’ during inter partes review proceedings.” Petitioner and respondent disagree over whether the USPTO has the authority, both under the Patent Act and specifically under the AIA, to proscribe that the Board use the BRI standard in IPR proceedings and, more fundamentally, over whether the decision by the USPTO to use the BRI standard, rather than the “ordinary and customary meaning” standard used by the federal courts in construing claims, was appropriate.

Petitioner cites the Senate record in noting that the AIA converts inter partes reexamination from an examinational to an adjudicative proceeding intended to be an “adversarial evidentiary proceeding in the PTO” that could “reliably resolve most issues of patent validity, without the expense and delay of district court litigation, and sometimes even before infringement has occurred.” Petitioner emphasizes that, unlike the former system of inter partes reexamination, in the AIA IPR process the patent examiners play no role and the Board is not authorized to perform an examinational review, such as searching the prior art or formulating grounds of rejection. Rather, the IPR process is strictly adversarial and adjudicatory.

Petitioner further notes that, “unlike the liberal right to amend claims and iterative back-and-forth between patent owner and examiner in inter partes reexamination, IPR allows the patentee to make a single motion to amend, after conferring with the Board” per 35 U.S.C. § 316(d)(1); 37 C.F.R. § 42.121(a). Further, petitioner argues that, per 37 C.F.R. § 42.121(a), this singular motion right “is presumptively limited to substituting one amended claim for one challenged claim, and the motion may be denied if the amendment “does not respond to a ground of unpatentability involved in the trial” or “seeks to enlarge the scope of the claims of the patent or introduce new subject matter.” Petitioner notes that the Board under the BRI standard “is having a tremendous and immediate impact on the U.S. patent system and the rights of patent owners.” To support this claim, petitioner observes that nearly 85 percent of the adjudicated IPR proceedings end in the cancellation of some or all of the patent claims under review.

Petitioner notes that, under the AIA, a patent challenger may elect to file either a federal lawsuit or an IPR petition per 35 U.S.C. § 311(b) and that there is “no sound reason for courts and the Board to apply different claim construction standards in determining validity under those statutory provisions, depending on where a challenger chooses to file.” Petitioner further adopts arguments from the joint dissenters of the Federal Circuit in observing “[t]he panel majority fails to explain why Congress (or anyone else) would have thought  it desirable or necessary for the Board to construe the claims during IPRs under a different legal framework than the one used by district courts.” Petitioner further adopts the argument of Judge Newman in her dissent, “[i]t is unacceptable to create a situation whereby the tribunals charged with determination of patent validity as a matter of law, that is, the [Board] and the district court, could validly reach a different result on the same evidence.”

Petitioner further submits that the use of the BRI standard “creates inconsistency in how patent claims are construed for validity versus infringement” and violates “the fundamental principle of patent law that claims must be interpreted and given the same meaning for purposes of both validity and infringement analyses.” Using the BRI standard in IPR proceedings, suggests petitioner, “forces patentees to defend claims broader in scope than what they could assert in infringement actions” and can compel patentees to “defend validity against prior art that might not be relevant to the same claims in district court infringement litigation.” Petitioner argues that these competing claim construction standards will inject uncertainty into the postissuance review of patent claims and lead to conflicting decisions between the Board and federal courts on claims that include similar phrases, concepts, or language.

Petitioner notes that examiners properly use the BRI standard as a tool to facilitate the appropriate claim breath to which the applicant may be entitled when examining a patent application. Petitioner concludes that the use of the BRI standard is appropriate during this examination process because the right to permissibly amend the claims repeatedly by the applicant is absolute while the application  is pending.

In response, respondent notes that Congress authorized the PTO to promulgate rules to implement the AIA’s administrative review schemes in stating that, per 35 U.S.C. §§ 316(a)(4), 326(a)(4), “the PTO may “prescribe regulations … establishing and governing” inter partes and postgrant review proceedings as well as specifying “the relationship of such review to other proceedings under this title.” Respondent also contends that the USPTO’s regulation requiring that patent claims are to be evaluated using the BRI standard during IPR is consistent with the USPTO’s long-standing practice.

In support, respondent submits that the USPTO and its predecessors have long used the BRI standard when construing unexpired patents in various kinds of postissuance proceedings for reconsidering previously granted patents and that such use has been approved by federal courts in various contexts for nearly a century. Respondent further suggests that the policy rationales that have justified application of the BRI standard in initial examinations of patent applications should also apply to postissuance review proceedings under the AIA. According to respondent, this is because, unlike in district court litigation, where a patent is presumed to be valid and the language in its claims is fixed and unalterable, patent claims can still be amended or replaced during IPR administrative proceedings, in which there is no presumption of validity. Respondent notes that IPR proceedings differ markedly from infringement actions in district court as a patentee in the IPR process retains the ability  to correct errors in claim language and adjust the scope of claim protection as needed. Respondent argues that the applicability of the BRI standard “does not turn on whether a proceeding is adversarial, but on whether the language of the patent claim is still subject to amendment.”

Respondent further argues that it is reasonable to place limits on  a patent holder’s ability to amend his claims in a postissuance review scheme since the patent owner has already enjoyed one full opportunity during the initial examination to refine his claims into patentable form. It is hardly surprising, respondent suggests, that  a postissuance review scheme places limits on a patent holder’s ability to amend his claims, since the patent owner has already enjoyed one full opportunity during the initial examination to refine his claims into patentable form. Respondent asserts that, unlike in district court litigation, a patent owner in an inter partes review proceeding may still “propose a reasonable number of substitute claims” responsive to the agency’s concerns, 35 U.S.C. § 316(d)(1) (B), and thereby clarify the intended scope of his asserted patent rights. In determining that the BRI standard should be used in an IPR, respondent admits that “the opportunity to amend contested claims is more limited during inter partes review than during the initial examination, but concludes that, for this IPR procedural purpose, the BRI standard is appropriate as inter partes review is more closely analogous to initial examination than to district court litigation.

In response, petitioner argues that, the BRI standard is not merely procedural but is “clearly substantive because, by allowing prior art that would be irrelevant in district-court proceedings to invalidate  a patent, it effects a change in existing law or policy which affects individual rights and obligations.” Petitioner notes that respondent itself recognizes that the “BRI standard has never been used as an adjudicatory tool to assess the validity of issued patents” and is simply “an examination expedient.”

Petitioner suggests that respondent incorrectly analogizes IPR proceedings to inter partes reexamination proceedings, because the purpose of inter partes reexamination was to restart the examination process and “to examine new or amended  claims, as they would have been considered if they had been originally examined in light of all of the prior art of record in the reexamination proceeding.” Petitioner notes that IPR proceedings under the AIA do not involve USPTO examination at all, but rather “adjudicates the validity of the patent in a trial-like setting before a panel of three administrative patent judges.”

Indeed, both the Board and the Federal Circuit panel majority acknowledge that an IPR proceeding “is neither a patent examination nor a patent reexamination,” but “a trial, adjudicatory in nature.” Given the adjudicatory nature of IPR proceedings, the government makes no effort to explain—as the panel majority did not—“why Congress (or anyone else) would have thought it desirable or necessary for the Board to construe the claims during IPRs under a different legal framework than the one used by district courts.”

Petitioner, supported by the American Intellectual Property Law Association and the Intellectual Property Owners Association, as amici, notes that respondent fails to provide a rationale for applying the BRI standard in IPR proceedings given that such an application can lead to the invalidation of patents that would be held valid  under the correct standard in district court. According to petitioner, respondent’s reading violates settled law that “claims must be interpreted and given the same meaning for purposes of both validity and infringement analysis.”

Petitioner argues that patentees’ amendment ability in IPR is far “more closely analogous” to “district-court litigation” than to “initial examination.” In an IPR, and unlike in examination proceedings, petitioner notes that “a patentee has no right to freely amend as part of an iterative back-and-forth with the examiner,” and is limited to one motion to amend that is “presumptively limited to substituting one amended claim for each challenged claim.”

In reply, respondent notes that the USPTO has long applied the BRI standard in a variety of administrative contexts, including but not limited to the initial examination of patent applications. As noted by respondent, the common feature of the agency proceedings in which that interpretive method has been applied, and the core rationale for its use in those various settings, is that the patent applicant or patentee may still amend its claims to disavow the broader reading if that reading does not reflect the patentee’s actual intent. Respondent argues that, although the right to amend claims during IPR is more limited than in the initial examination process, the opportunity to amend remains available, and the restrictions on potential amendments are comparable to those that apply in other postissuance proceedings in which the USPTO has long used the BRI standard. Respondent further notes that while IPR proceedings were intended in part to reduce the need for expensive and time- consuming litigation, Congress did not anticipate or intend that it would always produce the same patentability determination that a district court would make.

Respondent is supported by Dell et al., which suggests that the USPTO’s use of the broadest reasonable construction reflects a policy decision that the USPTO should not issue patent claims that can reasonably be construed to encompass the earlier inventions of others; and, if the PTO later finds it has issued such a claim, it should permit narrowing of the claim or cancel it. Further, Dell et al. notes that the right to amend the claims is not illusory as, even during an IPR proceeding, where the rights of a specific opposing party are at stake, the patent holder can amend to “propose a reasonable number of substitute claims,” 35 U.S.C. § 316(d) (1)(B), so long as the amendment “respond[s] to a ground of unpatentability involved in the trial,” 37 C.F.R. § 42.121(a)(2)(i), and the USPTO permits additional motions to amend a claim for good cause. Thus, Dell et al. supports respondent’s position that the patent holder has the opportunity to narrow its claims to remove any construction the USTO might adopt that covers ground the holder does not actually intend to claim.

Notably, the majority of the amicus briefs filed to date agree with petitioner that the correct claim construction standard to be used in IPR proceedings under the AIA is the “ordinary and customary meaning” standard rather than BRI standard that was adopted by the USPTO. Only EMC Corporation, Dell et al., Public Knowledge, and TD Ameritrade et al. support respondent’s position with respect to the use of the BRI standard by the Board in an IPR proceeding.

On the issue of whether the Board’s decision to institute an IPR proceeding is judicially reviewable, all parties agree that 35 U.S.C. § 314 bars interlocutory appeals at the time of instituting the IPR in order to allow the IPR to proceed within its one-year timeline. In addition, both petitioner and respondent agree that a decision not to institute IPR is not appealable by the third-party requester. Petitioner and respondent disagree, however, over whether the decision to institute the IPR is ever reviewable, even after a final written decision on the patentability of the claims issues at the conclusion of the IPR.

As an initial matter, the parties disagree on whether the Board improperly granted the IPR in the first place. Petitioner notes that the Board “invalidates more than four out of every five patent claims that reach a final decision” and therefore advocates a strict interpretation of 35 U.S.C. § 314(a), which provides that the Board may institute IPR only after “determin[ing] that the information presented in the petition … and any response … shows that there is a reasonable likelihood that the [third-party] petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” By petitioner’s reasoning, the Board “is not authorized  to institute IPR or invalidate patents on the basis of prior art it collects or arguments it devises” because patent owners can only respond to the arguments laid out in the petition to institute IPR and therefore cannot rebut any new arguments or prior art used by the Board. In the case at bar, the Board instituted IPR after applying several combinations of prior art to claims to which the third-party petitioner had not applied the same combinations.

Respondent counters that “it was appropriate for the Board to treat [petitioner’s] two obviousness challenges … as also being implicitly raised” for the other claims. Moreover, respondent also asserts that “Petitioner was not deprived of any notice that would have enabled  it to refute” the Board’s findings because it was allowed to argue before both the Board and the Federal Circuit.

To argue that the Board’s decision to institute IPR is appealable, petitioner first notes that the appeal provision of 35 U.S.C. § 141(c) does not limit the scope of appeal after the final written decision of the IPR issues. In addition, the Federal Circuit prior to Cuozzo had found a patent owner could appeal whether the USPTO erred in instituting a proceeding for both Covered Business Method Review under the AIA and reexaminations prior to the AIA after the final written decisions issued, even though the statutes recite that the institution decisions are nonappealable. Regarding reexaminations, petitioner alleges that “Congress was presumably aware of that  body of law when it incorporated the same statutory language into Section 314(d).”

Petitioner further submits that, because the AIA establishes a standard for institution of an IPR, the “reasonable likelihood” of invalidity, the Board’s exercise of discretion must be reviewable. Petitioner also counters the Federal Circuit’s suggestion that “the patentee might be able to seek mandamus relief after the Board issues its final decision” by stating that “there is no reason to divorce that review from the direct appeal.”

Petitioner also adopts reasoning from the amicus brief of the New York Intellectual Property Law Association, arguing that “[i]t is the Government’s position that undercuts the AIA by giving the Board a ‘blank check’ to ‘rewrite its statutory authority.’” Petitioner then urges that the AIA must be read to only bar interlocutory appeal “in light of the ‘strong presumption’ favoring judicial review of administrative action.” Finally, petitioner submits that the Supreme Court should at least adopt an “implicit and narrow” exception “for agency action that plainly violates an unambiguous statutory mandate,” also known as the “Kyne” exception.

Respondent counters that the nonappealability of the institution of the IPR after the final written decision “provide[s] for efficient proceedings that will improve the quality of issued patents.” Respondent argues that the two separate provisions for nonappealability of the institution decision, under § 314(d), and the appealability of the final written decision, under § 319, “demonstrate Congress’s intent that the Board’s ultimate decision about patentability, but not its decision whether to institute an inter partes review, should be subject to judicial scrutiny.” Respondent then argues that § 319 only allows appeal of the final written decision because it specifically references § 318(a), the section concerning the final written decision.

Respondent also refers to the Administrative Procedures Act (APA) to argue that § 314(d) would be unnecessary under petitioner’s interpretation that it only prevents interlocutory appeal. Because the decision to institute IPR is undoubtedly not a “final agency action,” the APA would automatically bar interlocutory appeals. In addition, because the ex parte reexamination provision provides that the decision not to institute ex parte reexamination is nonappealable, respondent submits that § 314(d), which states to the decision “whether to institute” an IPR is nonappealable, by contrast bars appeal of both a decision to institute and a refusal to institute IPR.

Further contrasting the pre- and post-AIA statutes, respondent notes that the prior inter partes reexamination statute stated that the “determination by the Director under subsection (a) shall be final and non-appealable.” Because subsection (a) referred to the standard for instituting inter partes reexamination (the “substantial new question of patentability” standard) and because the new statute removes this reference, the new statute reasonably bars appeal of all aspects of the institution decision, not just whether the standard was properly applied.

Respondent additionally notes that “the statute never mandates the institution of” an IPR, giving the PTO discretion to refuse institution even if all requirements are met. By contrast, respondent notes that “an intention to preclude review is plainly discernible in the differences between Section 314(d) and Sections 303 and 319.” Finally, respondent argues that finding the institution decision is never appealable “avoid[s] the waste and expense entailed in relitigating threshold questions that do not bear on the proper scope of the patentee’s exclusive rights” and instead “ensures that the PTO’s substantive patentability determinations are subject to judicial scrutiny.” To find otherwise, according to respondent, “would disserve the AIA’s principal purpose of improving patent quality.”

As amicus in support of neither party, IBM urges that at least limited review of institution decisions should be permitted “where the Board has exceeded its congressional mandate,” citing the “strong presumption” favoring judicial review of administrative action.

The statute thereby “allows review of decisions to institute review alleged to be ultra vires after the conclusion of the inter partes review proceeding.” Otherwise, any institution decisions that go beyond the Board’s authority under the statute “will go uncorrected indefinitely” and the “statutory limitations will be rendered inert, and the system will depend on the will of the decision maker.”

The Intellectual Property Owners Association, also in direct support of neither party, notes that “roughly 70% of IPR Petitions are brought by petitioners who are also defendants in [U.S.] patent lawsuits” and that there has been a 33% increase in IPR petitions from 2014 to 2015. The Association thereby submits that “the availability of appellate review of institution decisions once a final written opinion has been rendered” helps IPR to “be viewed as a reliable, fair and cost-effective surrogate to federal court litigation, as intended by Congress in passing the AIA.”

Dell et al. agrees with respondent, noting that “Congress’s decision to allow parties to appeal the Board’s patentability decision—but not the initial decision to institute review—plays an important   role in creating a ‘cost-effective alternative to formal litigation,’” citing the Congressional Record. Referring to petitioner’s argument that § 314(a) bars interlocutory appeal, Dell et al. argues that “Congress’s goal of efficiency would be equally disserved by overturning a completed inter partes review for reasons unrelated to the merits of the patent and then possibly sending the case back for the PTO either to reinstate unpatentable claims or to reconsider the institution decision and restart the process.” Dell et al. further submits that mandamus review would be an appropriate remedy “in extraordinary cases,” arguing that petitioner fails to meet that standard in the instant case.

Apple, Inc., also in support of respondent, rebuts petitioner’s argument for application of the Kyne exception because the exception would only apply to “clearly statutory limits on the Board’s authority to declare patent claims unpatentable.” Apple, Inc., argues that the requirements of § 312(a) appealed by petitioner are nonjurisdictional requirements for the petition to institute IPR, including, for example, numbering of the exhibits. Thus, according to Apple, Inc., § 312(a) is not a limit on the USPTO’s adjudicative authority and therefore is nonappealable per § 314(d). Apple, Inc., further submits that it would be unfair to allow appeal of a decision to institute IPR but not to decisions declining to institute IPR, as argued by petitioner.

SIGNIFICANCE

On the issue of the use of the BRI standard in an IPR proceeding,  a decision affirming the use of the BRI standard would reaffirm  the USPTO’s position that the BRI standard forms the foundation of American patent law, as the USPTO has properly applied this standard during the initial examination of every patent application proceeding, to include reexamination, reissue, and interference proceedings. Similarly, a decision affirming the use of the BRI standard in an IPR proceeding could prevent the USPTO from being forced to apply two divergent standards in the same IPR—using  the BRI standard for amended claims and the judicial “ordinary and customary meaning” standard for issued claims. Thus, affirming the use of the BRI standard in an IPR proceeding could support a central goal of USPTO proceedings, judicially recognized for nearly a century—namely, to encourage patentees to narrow their claims to cover their actual invention only, while leaving breathing room for the public to practice the prior art.

Should the Court reject the use of the BRI standard in an IPR proceeding and adopt the use of the judicial “ordinary and  customary meaning” standard for issued claims, patent owners could be protected from the economic uncertainties resulting from the potential of the same government issued patent property having different claim construction boundaries emerging from concurrent proceedings before the Board and the courts. Indeed, if the claim construction standard before the Board and the courts over the same government issued patent property is not the same, law developed and refined by the Federal Circuit when addressing district court claim constructions under the “ordinary and customary meaning” standard will diverge when the Federal Circuit reviews decisions based on the BRI standard.

On the issue of appealing the institution of IPR, a decision barring a party from challenging whether the Board properly instituted IPR would likely give the Board significant discretion in its interpretation of the standards for instituting reexamination. In Cuozzo, for instance, the Board would be able, without judicial oversight to approve or restrict its interpretation, to apply rejections proposed for some claims to other claims of the patent that the IPR petitioner had not proposed. On other issues, such as whether the cited prior art qualifies as approved prior art for IPR, patent owners may still be able to appeal because the nature of the prior art is arguably a basis for the final written decision of the IPR, which the statute clearly states is appealable. In fact, future litigation may be required to determine which issues pertain to the appealable final written decision and the nonappealable institution decision.

Should the Supreme Court allow appeal of some or all issues related to the institution of IPR, patent owners will have an additional arrow in their quiver to defend their patents. Because IPR is still viewed to some extent as a “death squad” for patents, patent  owners will accept any additional defenses that they can find.

On the other hand, the ability to attack the institution of IPR will inject additional uncertainty into the finality of the IPR decision, potentially broadening the scope of appeals and further complicating the process. If the Supreme Court were to limit appeals concerning IPR institution to only when the Board has exceeded its statutory authority ultra vires, the effect might limit this uncertainty while allowing patent owners to hold the Board accountable to the standards for IPR institution set by the statute, effectively compromising between the two extremes promoted by either party.

For those parties seeking to invalidate patents through IPR, the availability of later appeal by the patent owner on the determination to institute may also affect IPR requests. A decision allowing appeal may result in petitioners drafting more thorough and airtight requests for IPR to ensure that the Board is given solid ground by which to institute IPR. Were the Supreme Court to open IPR institution decisions to later appeal, petitions to institute IPR could have the opposite effect: petitioners could potentially take larger risks in pushing the bounds of the standards set by statute.

Intellectual Ventures Management, LLC, as amicus argues for such a result.

© 2016 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

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