In the first-ever ruling in an appeal of an American Invents Act review decision, the Federal Circuit Court of Appeals affirmed last week that a speed limit indicator patent is invalid. As an initial issue in the decision on In re Cuozzo Speed Technologies, LLC, the Federal Circuit held that the Patent Trial and Appeal Board's (PTAB) decision to institute an AIA review cannot be appealed and is final. The court also held that the broadest reasonable interpretation standard for claim construction is appropriate in AIA reviews, rather than the narrower standard used in district court.

Background

Cuozzo Speed Technology LLC's (Cuozzo) is the assignee of U.S. Patent No. 6,778,074 (the '074 patent), entitled "Speed Limit Indicator and Method for Displaying Speed and the Relevant Speed Limit." In the first-ever request for inter partes review, Garmin International (Garmin) challenged claims 10, 14 and 17 of the '074 patent. PTAB granted Garmin's petition and instituted IPR2012-00001. In its final decision, PTAB found claims 10, 14 and 17 obvious and denied Cuozzo's motion to amend the patent with substitute claims. Cuozzo appealed PTAB's final decision to the Federal Circuit. On appeal, the Federal Circuit considered whether PTAB's decision to institute review is appealable after a final written decision and what standard of claim construction PTAB should apply in an AIA review.

Decision

In a 2-1 decision authored by Judge Dyk, the Federal Circuit held that the PTAB decision to institute an AIA review cannot be appealed. The court also affirmed the PTAB's final decision, finding no error in the PTAB's claim construction, determination of obviousness, and denial of Cuozzo's motion to amend.

Appeal of Decision to Institute AIA Review

The Federal Circuit expressly stated that the decision to institute review under AIA is unappealable and final, and it lacks jurisdiction to review the PTO's decision to institute an IPR. "We conclude that § 314(d) prohibits review of the decision to institute IPR even after a final decision. On its face, the provision is not directed to precluding review only before a final decision. It is written to exclude all review of the decision whether to institute review." Opinion at p. 6.

Claim Construction Standard in AIA Review

Cuozzo argued that the PTAB should not use the broadest reasonable interpretation standard for construing claims, as the ability to amend claims during AIA reviews is limited.

The Federal Circuit rejected Cuozzo's argument that limiting the ability to amend claims alters the standard for claim construction. "Although the opportunity to amend is cabined in the IPR setting, it is thus nonetheless available. The fact that the patent owner may be limited to a single amendment, may not broaden the claims, and must address the ground of unpatentability is not a material difference." Opinion at p. 16. "Congress in enacting the AIA was aware of these differences in terms of amendments and adjudication and did not provide for a different standard."

The court found that because the U.S. Patent and Trademark Office has used the broadest reasonable interpretation standard in various proceedings for years, Congress implicitly adopted this standard in enacting AIA. "There is no indication that the AIA was designed to change the claim construction standard that the PTO has applied for more than 100 years."

Review of PTAB's Claim Construction

Both the PTAB's claim construction and the Federal Circuit's review centered on the term "integrally attached" in claim 10 of the '074 patent. The term "integrally attached" was not included in the specification or the claims as originally filed. The phrase was added by amendment to overcome an anticipation rejection during prosecution.

The PTAB interpreted "integrally attached," as "discrete parts physically joined together as a unit without each part losing its own separate identity". Cuozzo argued this was improper as it excluded a single embodiment of the invention. The Federal Circuit disagreed with Cuozzo and found no error.

Dissent:

In dissent, Judge Newman reasoned that to implement the intent of AIA, PTAB must apply both the same procedural and substantive law as the district courts. Thus, Judge Newman argued that 1) the PTAB should construe claim terms to have their ordinary meaning in the context of the patent documents, as interpreted by a person of ordinary skill as set forth in Philips v. AWH Corp., and 2) the patent owner should be allowed to appeal PTAB decisions, including the decision to institute an IPR.

As this case addresses novel and significant procedural questions involving the review of patents under the AIA, it is likely that Cuozzo will seek rehearing and/or Supreme Court review. In the meantime, petitioners and patent owners should keep in mind:

• A PTAB decision to not institute review under AIA is not appealable and could potentially be offered into evidence in support of validity in a district court dispute involving the same patent. See Universal Elecs., Inc. v. Universal Remote Control, Inc., No. 8-12-cv-00329, (C.D. Cal. Apr. 21, 2014, Order) (Guilford, J.). As such, to maximize the likelihood of the PTAB instituting review, a Petitioner should articulate a focused explanation of the invalidity grounds that points out which parts of each prior art reference read on each claim element, including citations to a detailed expert declaration testimony, if applicable.
• While the AIA does provide a limited ability to amend claims during the review process, the PTAB has only granted a motion to amend with substitute claims in a few instances. See e.g. Int'l Flavors & Fragrances Inc. v. The United States of America, IPR2013-00124, Paper 12 (Granting-in-part Motion to Amend), May 20, 2014. As such, patent owners should consider maintaining continuation applications for technology directed to key products of their business. Alternatively, if there are no pending continuations, a patent owner can consider initiating its own ex parte reexamination as a more liberal avenue for amending the claims to overcome the prior art.