On April 25, 2016, oral arguments for Cuozzo Speed Technologies v. Lee were heard by the United States Supreme Court (SCOTUS). One of the primary questions in the dispute related to whether the United States government has made it too easy for companies to challenge competitors’ patents via a procedure known as inter partes review (IPR). IPR is a newly implemented review function that was put into effect with the implementation of the America Invents Act (AIA) of September 16, 2012. IPR is held in front of the Patent Trial and Appeal Board (PTAB), which is an administrative board, existing within the executive branch. This procedure is in addition to the traditional judicial route, which takes place in federal court.
One peculiar aspect associated with the IPR procedure is that the PTAB has applied a “broadest reasonable interpretation” (BRI) standard when interpreting patent claims of a patent in question. In contrast, a “plain and ordinary meaning” standard is applied by federal courts when evaluating patent scope. As a result, under the current IPR framework, opponents now have two avenues (and two standards) with which to invalidate a competitor’s patent. This distinction is critical because the BRI standard generally leads to an interpretation of broader claim scope, making it easier to find prior art that overlaps with the claim scope of the patent in question. Put another way, the BRI standard makes it easier for a reviewer to find publications that show a patent does not cover something new and non-obvious, making it easier to invalidate the patent.
Companies that are frequent targets of patent suits, including large technology companies, such as Apple Inc. and Google Inc., have turned to IPR proceedings as a tactic in patent challenges. IPR is typically considered more efficient, both in terms of cost and time, than a federal court challenge.
The case before SCOTUS involves a patent owned by Cuozzo Speed Technologies LLC. The patent in question covers a speed-limit indicator. Cuozzo Speed Technologies LLC sued a number of companies including Garmin Ltd., General Motors Co. and TomTom NV. Garmin challenged the Cuozzo patent using the IPR procedure and the PTAB sided with Garmin, invalidating the Cuozzo patent on obviousness grounds. In turn, Cuozzo challenged the PTAB’s action in federal court, whereby the Court of Appeals for the Federal Circuit (CAFC) ultimately upheld the application of the BRI claim construction standard by the PTAB in the IPR proceedings.
SCOTUS was asked to determine whether it is appropriate for the PTAB to review patent validity under a BRI standard in light of the plain and ordinary meaning standard traditionally applied in federal court.
During oral arguments, Chief Justice Roberts found the IPR process to be “a bizarre way to . . . decide a legal question” and noted “it’s a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results.” Justice Roberts went on to suggest that the PTAB should apply the same standard as used by federal courts. Justice Kagan seemed to blame Congress for the confusion in stating “If I look at the statute, I mean, it just doesn’t say one way or the other.” Justice Breyer was more understanding of the USPTO’s position and suggested that the reason for the bifurcated review process was because Congress intended IPR to cut down on the “patents that shouldn’t have been issued in the first place.”
On June 20, 2016, in a unanimous decision, SCOTUS upheld the CAFC ruling requiring the PTAB to apply the broadest reasonable interpretation (BRI) standard in IPR proceedings. It was also held that the Patent Office’s decision to institute an IPR proceeding “shall be final and non-appealable” to the Federal courts.
In light of this decision Michelle Lee, Director of the United States Patent and Trademark Office (USPTO), offered the following statement:
“The USPTO appreciates the Supreme Court’s decision which will allow the Patent Trial and Appeal Board (PTAB) to maintain its vital mission of effectively and efficiently resolving patentability disputes while providing faster, less expensive alternatives to district court litigation.”
