The Significance Of In Re Cuozzo And Its Ongoing Spot In The Limelight

When the United States Court of Appeals for the Federal Circuit issued its decision in In re Cuozzo Speed Technologies in February 2015—the first decision in an appeal from an inter partes review ("IPR") conducted by the Patent Trial and Appeal Board (the "PTAB")—both the Patent and Trademark Office (the "PTO") and patent challengers could call it a success. In addition to confirming the PTAB's determination on the merits that the claims were unpatentable as obvious, the Federal Circuit ruled on three procedural issues in a manner that aligned with the PTO's position and largely disfavors patent holders. The court held that: (i) challengers to institution decisions may not appeal institution decisions in the ordinary course of an appeal but instead must meet the stringent standards for mandamus review, thereby largely insulating such decisions from appellate review; (ii) the PTAB was entitled to apply the broadest reasonable interpretation ("BRI") in construing patent claims; as a result, more prior art will potentially render patent claims unpatentable; and (iii) the PTO was delegated rulemaking by Congress for certain, standard-setting aspects of PTAB proceedings such as using the BRI standard for claim construction, requiring deference to the PTO in the content and application of such rules.

Given the foundational nature of the decision, it is not surprising that Cuozzo, the patent holder, has sought en banc review. At the time of this publication, Cuozzo's en banc petition has not been acted upon, although the court has taken the step of asking the PTO for a response (which the Office recently supplied)—suggesting at least some interest among the judges in potentially reviewing the Cuozzo decision. Meanwhile, however, the panel decision continues to control. In light of the significance of the decision, and its potential en banc review, this Commentary addresses Cuozzo's holdings and the arguments presented in the en banc petition.

Statutory Background

We begin with a brief discussion of the America Invents Act of 2011 (the "AIA"), the statutory regime that created the PTAB and IPRs. The AIA established a new framework for challenging the patentability of issued patent claims at the PTO and also created a new entity—the PTAB—for handling those challenges. Among the new procedures are IPR proceedings, set forth in sections 311 to 319 of Title 35. IPR proceedings are handled by a panel of three PTAB judges and include a trial. They replace inter partes reexaminations, which were conducted before a single patent examiner and largely on the papers.

The PTAB may not institute an IPR "unless the Director determines that the information presented in the petition" and any response thereto "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."1 The statute (35 U.S.C. § 314(d)) provides that "[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable."2

The PTAB has three months to decide whether to institute an IPR, and IPRs generally must be completed within one year of their institution.3 The issues decided in an IPR typically have estoppel effect in district court proceedings, thus limiting the invalidity arguments that the patent challenger (or one in privity with it) may later invoke in district court.4 Appeals from PTAB final written decisions may be taken only to the Federal Circuit, making that court the final arbiter of IPRs short of any United States Supreme Court review.5

Since enactment of the AIA, the PTO has promulgated various rules and standards governing IPRs. Among them is a rule that claims construed in IPRs shall be given their broadest reasonable interpretation, as opposed to the standard applicable in district court proceedings under Phillips v. AWH Corp.6 The BRI standard is friendly to patent challengers in IPRs. When a claim is interpreted broadly, it is more likely to run into invalidating prior art.

IPRs have proven very popular. Under the AIA, IPRs could be requested as early as September 16, 2012, and parties began filing requests on that first day. In the three and a half months remaining in 2012, 96 IPR petitions were filed, and the number has steadily grown, to approximately 700 in 2013 and more than double that to 1,500 in 2014.7 These numbers have been far greater than expected, and by all accounts, the growth will continue.8

Between the sheer number of IPRs instituted and the requirement to conduct the proceedings and issue a decision within one year of institution, appeals from the earliest of the PTAB trials are now routinely reaching the Federal Circuit—and are also reaching a decision. Early appeals have raised a number of challenges regarding the statutory provisions in the AIA as well as the PTO's newly promulgated rules.

Background of the Cuozzo Appeal

One of the earliest IPRs to put the statutory provisions and PTO rules to the test—in fact, one requested the first day available—was Garmin International v. Cuozzo Speed Technologies. The case was also the first IPR to reach a decision in the Federal Circuit after a final written decision by the PTAB.

In its petition for inter partes review, Garmin, the patent challenger, sought to challenge the patentability of four claims in Cuozzo's U.S. Patent No. 6,778,074 (the '074 patent) as anticipated or obvious based on certain combinations of prior art. The PTAB instituted review on only three claims, and for two of the claims the PTAB relied on obviousness rationales that differed from the grounds that Garmin had presented.9 After a trial, the PTAB issued a final written decision, holding that all three of the claims were unpatentable as obvious. The PTAB also denied Cuozzo's motion to amend its claims.

Cuozzo appealed...