Cuozzo Speed Technologies, LLC. v. Lee: Supreme Court affirms broadest reasonable interpretation standard in PTAB IPR proceedings

June 28, 2016

The Supreme Court unanimously affirmed the use of the broadest reasonable interpretation standard by the Patent Trial and Appeal Board (PTAB) during IPR proceedings. The Court also affirmed that decisions to institute inter partes review (IPR) are free from judicial review.  The Cuozzo case provided the Court with its first opportunity to construe the new statutory provisions created by the Leahy‑Smith America Invents Act (AIA).[1]  The Court’s holdings show that the Patent Office will be afforded a substantial amount of deference in administrating the post grant proceedings created by the AIA.

Cuozzo arrived at the Supreme Court as the first appeal from an IPR proceeding.  Before the Board, Garmin International sought review of all 20 claims in a patent held by Cuozzo Speed Technologies, LLC.  As part of their petition, Garmin asserted that claim 17 was obvious in light of three prior art patents.  The PTAB agreed, and instituted review on these asserted grounds—not only for claim 17—but also two other closely related claims, 10 and 14.[2]  On appeal to the Federal Circuit,[3] Cuozzo claimed that the PTAB erred in instituting review of claims 10 and 14 because they had not been challenged “with particularity” in Garmin’s petition as required by 35 U.S.C. § 312(a)(3).[4]  The Federal Circuit rejected that challenge as barred by the statutory description in 35 U.S.C. § 314(d) that the PTAB’s decision to institute proceedings was “final and non-appealable.”[5]  The Federal Circuit also rejected Cuozzo’s arguments that the Patent Office lacked legal authority to issue a regulation requiring the Board to give patent claims their “broadest reasonable interpretation” during claim construction, in light of the district court’s use of the “plain and ordinary meaning” standard.[6]

The Supreme Court granted certiorari on whether or not § 314(d) barred judicial review of the institution decision and whether § 316(a)(4) authorized the Patent Office to issue a regulation requiring the PTAB to construe patent claim terms according to their broadest reasonable construction in light of the specification of the patent.[7]  Justice Breyer authored the opinion for the majority and was joined by Roberts, Kennedy, Ginsburg, and Kagan.  Justice Thomas wrote a separate concurring opinion, while Justice Alito, joined by Justice Sotomayor concurred in part and dissented in part.

The Court unanimously upheld the Patent Office’s use of the broadest reasonable interpretation during IPR claim construction holding that “the regulation represents a reasonable exercise of the rulemaking authority that Congress delegated to the patent office” under 35 U.S.C. §316(a)(4).[8]  Justice Breyer dismissed the arguments of both Cuozzo and the amici regarding the apparent illusionary amendment process during IPR proceedings, citing the Patent Office’s long history of using the broadest reasonable claim construction standard during re-examination and interference proceedings.  The opinion also rationalized that, “construing a patent claim according to its broadest reasonable construction helped protect the public,” which was part of Congress’s goal in passing patent reform legislation.[9]  Ultimately, the majority based its opinion on the requirement of affording Chevron deference[10] to the Patent Office as an administrative agency.[11] 

The majority also found that Congress intended to prohibit judicial oversight of IPR institution decisions.  The Court relied primarily on the plain meaning of the statutory language as well as legislative history, to determine that patent owners cannot directly appeal or obtain review of the decision to institute an IPR after a final written decision has issued.[12]  Justice Breyer, however, qualified that this holding only bars appeals of IPR institution decisions and specifically stated that constitutional challenges to the institution of IPR proceedings were not foreclosed.[13]  These qualifying remarks were likely in response to Justice Alito’s dissent that the holding was too broad and could have subsequent implications in other post grant review proceedings implemented by the AIA.[14]

Authored by Karen L. Beckman

[1] Leahy‑Smith America Invents Act, Pub, L. No. 112-29 (2011).

[2] Cuozzo Speed Technologies. LLC v. Lee, No. 15‑446, 579 U.S. ____, slip. op. at 5‑6 (U.S. Jun. 20, 2016).

[3] In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015).

[4] See 35 U.S.C. § 312 (“(a) REQUIREMENTS OF PETITION.—A petition filed under section 311 may be considered only if—(1) the petition is accompanied by payment of the fee established by the Director under section 311; (2) the petition identifies all real parties in interest; (3) the petition identifies, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence that supports the grounds for the challenge to each claim . . . .”).

[5] 35 U.S.C. § 314(d).

[6] Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc).

[7] 37 C.F.R. § 42.100(b).

[8] Cuozzo Speed Technologies. LLC. v. Lee, No. 15‑446, slip. op. at 13 (U.S. Jun. 20, 2016).

[9] Id. slip. op. at 17.

[10] Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842‑843 (1984); see also United States v. Mead Corp., 533 U.S. 218, 229 (2001).

[11] Justice Thomas took umbrage with the majority’s use of Chevron deference in his concurrence. Id. slip. op. at 1‑2 (Thomas, J., concurring).

[12] Id. slip. op. at 7‑9.

[13] Id. slip. op. at 11.

[14] Id. slip. op. at 11‑14 (Alito, J., dissenting).