PTAB’s Institution Decision Remains Largely Unreviewable - What You Need To Know

Summary

In its first case addressing an Inter Partes Review (“IPR”), the Supreme Court’s In re Cuozzodecision unanimously upheld the Patent Trial and Appeal Board’s application of the “broadest reasonable interpretation” standard for claim construction. The Court also determined that IPR institution decisions remain largely unreviewable, with the possible exceptions of decisions involving constitutional questions or statutory interpretation well beyond the IPR statute.

Background of the Case

Cuozzo’s patent on speedometer technology issued in 2004. Cuozzo filed suit against Garmin International for patent infringement in 2012 and, shortly thereafter, Garmin filed a petition seeking inter partes review of claim 17 of the patent. The Board agreed to review claim 17 but also undertook to review related claims 10 and 14. Since claim 17 depended on claim 14, which depended on claim 10, the Board reasoned that Garmin had “implicitly” challenged claims 10 and 14. In its first-ever final decision in an IPR, the Board, applying the broadest reasonable interpretation standard for claim construction, found all of these claims to be obvious.

Cuozzo appealed to the Federal Circuit, arguing that the Board should have used the “ordinary meaning” claim construction standard, typically used in district court litigation, instead of the “broadest reasonable interpretation” standard. Cuozzo also argued that the Board’s institution of review on claims 10 and 14 was improper because Garmin did not expressly challenge those claims in its IPR petition. According to Cuozzo, Garmin failed to meet the America Invents Act (“AIA”) statute’s requirement for petitions to set forth the challenged grounds “with particularity.” The Federal Circuit rejected both arguments, and Cuozzo appealed to the Supreme Court.

Decision

Broadest Reasonable Interpretation

The Supreme Court affirmed. On the issue of claim construction, the Court held that Congress authorized the Patent Office to regulate the claim construction standard in IPRs. Specifically, the AIA statute gives the Patent Office authority to issue regulations governing IPRs, and neither the statute’s language, its purpose, nor its legislative history mandated the use of a particular claim construction standard. The Court rejected Cuozzo’s argument that the trial-like nature of an IPR requires the agency to review patentability like a district court and interpret patent claims using their ordinary meaning. The Court stated that Congress intended IPRs to be “hybrid” proceedings in which the Board can revisit issued patents and consider possible claim amendments. The Court also stated that the broadest reasonable interpretation standard “helps to protect the public” by “encourag[ing] the applicant to draft narrowly.”

Review of Institution Decisions

The Supreme Court also held that the AIA statute bars Cuozzo’s challenge that the PTAB unlawfully instituted inter partes review of claims 10 and 14. The statute expressly states that the PTAB’s decision whether to institute an IPR is “final and nonappealable.” The Court explained that this statute not only prohibited interlocutory review of institution decisions, but also review of institution decisions after a final written decision. However, the Court did not foreclose all appellate review, suggesting that appeals implicating constitutional questions or statutory interpretation questions well beyond the IPR statute (such as whether indefiniteness can be a basis for IPR) may be reviewable.

Observations

The Court’s definitive statement on the claim construction standard resolves the status of ongoing and appealed PTAB cases argued or decided under the broadest reasonable interpretation standard. Although the claim construction standard does not always affect a patentability determination, the broadest reasonable interpretation standard may result in broader—and therefore easier to invalidate—constructions in PTAB proceedings compared to district court.

This decision also emphasizes that the institution decision remains critically important. The PTAB’s statistics reveal that at final written decision, 79% of all instituted claims are found unpatentable. Thus, carefully structuring the petition (for patent challengers) or the patent owner preliminary response (for patent owners) is critical to attempt to obtain a favorable institution decision, and thus, a favorable case outcome.