Cuozzo Speed Technologies, LLC v. Lee

In this case, the Supreme Court will determine whether the Patent Trial and Appeal Board (“PTAB”), in an inter partes review (“IPR”), may construe the claims of a challenged patent to their broadest-reasonable interpretation (“BRI”) or use the plain and ordinary meaning of the claims. In addition, the Supreme Court will decide whether the PTAB’s decision to institute an IPR is judicially reviewable by a court. Cuozzo Speed Technologies, LLC (“Cuozzo”) asserts that the PTAB should construe patent claims using their ordinary meaning and that the PTAB’s decision to institute an IPR should be judicially reviewable. Meanwhile, Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the Patent and Trademark Office (“PTO”), argues that the PTAB should construe claims with their broadest-reasonable construction and that the PTAB’s decision to institute an IPR is final and non-reviewable by the courts.

PATENT ADJUDICATION V. PATENT EXAMINATION

First, Cuozzo points out that Congress intended for IPRs to be a form of patent adjudication as opposed to being a form of patent examination. As such, Cuozzo posits that PTAB, through the IPR proceeding, should construe claims with their plain and ordinary meaning. Cuozzo supports its argument by pointing out that adjudication is meant to “evaluate[] the actual, ordinary meaning of an issued patent claim, which is a fixed property right,” while examination is meant to determine the breadth and scope of a patent claim. Additionally, Cuozzo argues that Congress intended for differences to exist between the PTO’s reexamination process and the IPR proceedings. Namely, Cuozzo focuses on how the reexamination process, like other PTO examination processes, provides the patent applicant an absolute right to amend claims—which is not the case in IPRs. Thus, Cuozzo argues that because an IPR is adjudicative in nature, the proper claim construction should employ a plain-and-ordinary meaning standard.

Contrastingly, Michelle Lee, Director of the Patent and Trademark Office, argues that Congress intended for the PTAB to apply the BRI of the claims during an IPR. Lee argues that because the IPR happens at the PTO, which has traditionally applied BRI, Congress likely intended for the PTO to apply the same standard for IPRs. Lee supports this by noting that Congress, through 35 U.S.C. § 2(a)(1) and § 131, gave the PTO the responsibility to determine patentability and not just the breadth of an invention. Lee posits that this responsibility requires applying the BRI because the PTO wanted to preclude a patent owner from being able to construe an issued patent to cover more subject matter than the PTO intended to grant. In addition, Lee compares IPRs to other PTO proceedings that have applied the BRI standard—reissue proceedings, interference proceedings, ex parte reexaminations and inter partes examinations. These types of proceedings, as noted by Lee, have had the use of BRI upheld in judicial challenges. Further, Lee argues that, because parties are still able to amend their claims in an IPR, an IPR proceeding should be considered more of a reexamination proceeding than an adjudication proceeding. Lee points out that this ability to amend a claim during an IPR comes from 35 U.S.C. § 316(d) and grants the PTAB the discretion to determine whether the patent owner should have the ability to amend the claims. Thus, Lee argues that IPRs are comparable to examinations at the PTO, and thus, the proper claim construction should be the BRI.

ALTERNATIVES TO DISTRICT COURT LITIGATIONS

Cuozzo argues that Congress intended for IPRs to be a cheaper and quicker substitute for district court litigation. Cuozzo maintains that IPRs are a “surrogate” for district court litigation. As such, Cuozzo maintains that the PTO should apply the same claim construction standard that district courts apply—the plain-and-ordinary meaning standard. Cuozzo argues that IPRs and district court litigations both take depositions, document discovery procedures, and hold oral arguments before a judge. Further, Cuozzo notes that if the PTAB holds a claim invalid, the finding of invalidity has the same legal effect as an invalidation at a district court level. Cuozzo also points out that, following the enactment of IPRs, the PTO hired administrative judges specifically trained as judges, and not examiners, to conduct IPR proceedings. With these procedural similarities, Cuozzo posits that IPRs are simply a way to have district court litigations at a greater speed and lower cost. Consequently, Cuozzo argues that the PTAB should follow district court claim construction.

Lee, acting through the PTO, challenges Cuozzo’s argument that Congress intended the PTAB to act as a substitute for district court litigation. Although Lee concedes that IPRs were intended to provide a forum for cheaper and quicker litigation than district courts, Lee asserts that IPRs are not “surrogates” of district court litigation. First, Lee points out the potential difference between an IPR and district court litigation. She notes that IPRs allow third parties who do not have stakes in the litigation to bring forth an IPR, which is different than a district court’s requirements for bringing a case forward. Second, Lee notes that, unlike district court’s litigation, parties in an IPR are unable to settle the proceeding—once the IPR is started, it continues to the end. With these reasons in mind, Lee cites to a House Report to assert that IPRs were not only meant to allow for a cheaper and quicker venue for district court litigation, but also to “‘improve patent quality’ in ways that are not possible in ordinary litigation.” Thus, because IPRs are not surrogates for district court litigation, Lee maintains that the PTO could take a different approach to claim construction.

AGENCY POWER: THE STATUTE’S GRANT OF POWER

On the one hand, Cuozzo argues that the America Invents Act (“AIA”) allows a court to review the initiation of an IPR because an IPR is not a “valid regulation.” Cuozzo argues that the PTO has a long history of not having the power to prescribe substantive rules and that the AIA does not alter this trend. Cuozzo points out that § 316(a) of the AIA only gives the PTO the power to regulate the procedural aspects of an IPR and not the power to make substantive rules. With this logic, Cuozzo argues that construing patent claims constitutes making substantive rules—thus, the PTO exceeded its authority when using the substantive BRI standard in IPRs. Consequently, Cuozzo argues that courts should be able to review the PTAB’s decision.

On the other hand, Lee argues that Congress was clear in 35 U.S.C. § 314(d) where it stated that judicial review of the PTO’s decision to institute an IPR was “final and non-appealable.” Lee points out that 35 U.S.C. § 314 gives the PTAB the power to institute an IPR and allows the PTAB to issue a final written decision regarding patentability of the challenged claims. With this in mind, Lee posits that the relevant portions of the AIA, §§ 314(d), 318, and 319, clearly state that the decision for the PTAB to institute an IPR is non-appealable. Thus, Lee argues that the AIA precludes the courts from reviewing the PTAB’s decision to institute an IPR.