Supreme Court to Review First AIA Trials Case

Last month, the U.S. Supreme Court granted certiorari in Cuzzo Speed Techs., LLC v. Lee, in which it will review the first Inter Partes Review (IPR) decision from the Patent Trial and Appeal Board (PTAB) created under the America Invents Act. The Court will specifically review:

  1. Whether the Federal Circuit erred in holding that, in an IPR proceeding, the PTAB may construe claims in an issued patent according to their “broadest reasonable interpretation” (“BRI”) rather than their “plain and ordinary meaning;” and
  2. Even if the Board exceeded its statutory authority in instituting an IPR proceeding, whether the Federal Circuit erred in holding that the PTAB’s decision to institute an IPR proceeding is judicially non-reviewable.

This petition stems from an IPR decision in which the PTAB found certain Cuzzo patent claims to be obvious, and thus, invalid. On appeal to the Federal Circuit, Cuzzo argued that the IPR was improperly instituted because the PTAB applied prior art not raised by the petitioner to invalidate Cuzzo’s patent claims. Further, Cuzzo argued that PTAB incorrectly applied the BRI standard in interpreting the claim terms.

In a split decision, the majority panel determined that there is an implicit congressional authorization for the BRI in the AIA. This panel also held that it lacked jurisdiction to review the PTO’s decision to institute an IPR because 35 U.S.C. § 314(d) “prohibits review of the decision to institute [an] IPR even after a final decision.”

In its petition, Cuzzo first argued that, under the AIA trials, patents are being invalidated at a high rate in a significant part because the PTAB applies the BRI standard for construing patent claims, rather than the federal court’s plain and ordinary meaning standard set forth in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005). It argued that the BRI standard is that applied by patent examiners with this broader interpretations of claim language being more susceptible of encompassing prior art. Further, it noted:

Under the AIA, a patent challenger may elect to file either a federal lawsuit or an IPR petition, meaning that either district courts or the Board may decide whether patent claims are invalid pursuant to “Section 102 novelty or 103 obviousness” 35 U.S.C. 311(b). There is no sound reason for courts and the Board to apply different claim construction standards in determining validity under these statutory provisions, depending on where a challenger chooses to file.

Accordingly, Cuzzo argues that application of different standards in district courts and the PTAB “creates inconsistency in how patent claims are construed for validity versus infringement, violating the fundamental principle of patent law” and thus, PTAB should apply the plain and ordinary meaning standard applied by the district courts.

Second, Cuzzo asked the Court to review the scope of judicial review of the PTO’s decision to institute an IPR. Cuzzo acknowledged that under 35 U.S.C § 314 (d) of the AIA, Congress mandated that the PTO’s decision “whether to institute an inter partes review under this shall be final and nonappealable.” However, Cuzzo pointed to seemingly inconsistent rulings by the Federal Circuit that decisions to institute IPRs cannot be reviewed (In Re Cuzzo) but that decisions to institute covered business methods can be reviewed. See Versata Dev. Group, Inc. v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. 2015). Accordingly, Cuzzo asked the court to find that Section 314(d) bars only immediate (or interlocutory) appeals of PTO institution decisions, but, does not preclude review of those decisions after the agency issues a final determination of patentability.

Gibbons will continue to monitor further developments in this case and publish any major developments.