Federal Circuit Makes Two Significant Holdings Framing How Inter Partes Review Will Proceed
When introduced, the America Invents Act (“AIA”) provided revised mechanisms to challenge the validity of issued patents. These changes were intended to provide a more efficient and cost-effective method to deal with patent issues. Recently, in In re Cuozzo Speed Technologies, LLC, the United States Court of Appeals for the Federal Circuit (“the Court”) considered two key issues related to inter partes review (“IPR”) in front of the United States Patent and Trademark Office (“PTO”) and specifically in front of the Patent Trial and Appeal Board (“the Board”).
Under the AIA, IPRs proceed in two phases. In a first phase, the PTO determines whether the case is appropriate for an IPR. In a second phase, the Board conducts the actual IPR proceeding and issues a final decision.
In looking at the first phase of the process, the Court held in a split decision that under the AIA, the Court is prohibited from reviewing the PTO’s decision to institute IPR even after a final decision on the merits from the Board. Section 314(d) of the AIA is entitled “No appeal” and provides that “[t]he determination by the Director whether to institute an [IPR] under this section shall be final and non-appealable.” The challengers argued in In re Cuozzo Speed Technologies that § 314(d) does not completely preclude review of the decision to institute IPR, but instead only postpones review of the PTO’s decision until after the Board issues a final decision on the merits. The Court (in a split decision) disagreed, stating that § 314(d) is “written to exclude all review of the decision whether to institute review. Section 314(d) provides that the decision is both ‘non-appealable’ and ‘final’, i.e., not subject to further review,” no matter if review of the PTO’s decision is before or after a final decision by the Board.
Turning to the second phase, the Court held that with respect to IPR proceedings and claim construction, Congress implicitly adopted the broadest reasonable interpretation standard in enacting the AIA despite the adjudicatory nature of IPRs (this was again a split decision). The challenger argued that the Board erred in finding the claims of its patent obvious because the Board should not have applied the broadest reasonable interpretation standard in claim construction. The Court explained that the AIA created IPR, but on its face does not resolve the issue of whether the broadest reasonable interpretation standard is appropriate in IPRs. The Court concluded in its holding that despite the silence on the issue in the AIA, Congress in enacting the statute was aware of the adjudicatory nature of IPRs, but did not provide for a different standard in claim construction than the broadest reasonable interpretation standard.
Thus, in the wake of In re Cuozzo Speed Technologies, LLC, a party cannot appeal the decision of the PTO to institute IPR, no matter the stage of the IPR proceeding. Moreover, despite the adjudicatory nature of IPR, the broadest reasonable interpretation standard in claim construction applies to the second stage of IPR proceedings. Thus, when looking at whether an IPR is appropriate, finality of the Board’s initial decision and a very broad claim interpretation should be expected.