For the first time, the U.S. Court of Appeals for the Federal Circuit recently ruled on a final decision of the Patent Trial and Appeal Board (PTAB) in an inter partes review proceeding, or IPR. In a 2-1 decision, the Federal Circuit affirmed in In re Cuozzo Speed Technologies, LLC the PTAB’s decision that the challenged patent is invalid as obvious. This case is noteworthy because the Federal Circuit ruled that the PTAB’s initial decision to grant or deny a petitioner’s request to institute review of the patent (compared to its final decision at the end of such a review) is not appealable, and the PTAB’s use of the “broadest reasonable interpretation” standard of claim construction is the correct one in such America Invents Act (AIA) review proceedings.

First, the Federal Circuit held that it did not have jurisdiction to rule on Cuozzo’s argument that the PTAB improperly instituted the proceedings on grounds not identified in the petition. IPRs proceed in two phases. In the first phase, the U.S. Patent and Trademark Office (PTO) determines whether to institute IPR, and in the second phase, the PTAB conducts the IPR or covered business method (CBM) proceeding and issues a final decision. In holding that it did not have jurisdiction to review PTAB decisions regarding the first phase, the Federal Circuit relied on the AIA statute itself, which provides that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” The Federal Circuit rejected Cuozzo’s argument that this section merely postpones review until after a final decision.

Second, the Federal Circuit held that the PTAB did not err in using the “broadest reasonable interpretation” standard for claim construction, rather than the standard used in district court litigation, which is to ask what a person of ordinary skill in the relevant technology would understand the claim to mean. The court was persuaded by the PTO’s use of the “broadest reasonable interpretation” standard for more than 100 years in various types of proceedings such as initial examinations, interferences, reissues, and reexaminations. In the court’s view, Congress implicitly adopted this standard by not specifically directing the PTO otherwise.

In dissent, Judge Pauline Newman argued that since AIA proceedings were intended to replace district court trials on validity, “the PTAB must apply the same procedural and substantive law as the district courts.” While the majority believed the opportunity to amend in these proceedings justified the different claim construction standards, Judge Newman called the ability to amend “illusory” and therefore different from the other PTO proceedings that use the “broadest reasonable interpretation” standard.

In view of the importance of these issues and Judge Newman’s dissent, Cuozzo may seek, and the Federal Circuit may grant, en banc review. Accordingly, until this issue is finally settled, parties in these proceedings should offer claim constructions that would satisfy both the “broadest reasonable interpretation” standard and district court standard that seeks to answer what a person of ordinary skill in the art would interpret the claims to mean.

Ballard Spahr’s Intellectual Property Department comprises trial lawyers and counselors who are on the cutting edge of patent, trademark, unfair competition, copyright, trade secret, Internet, licensing, and trade dress matters. We bring and defend IP cases in courts throughout the country, and before the PTAB. We have a deep bench of lawyers with advanced technical degrees who identify and protect our clients' global intellectual property interests, and offer strategic prosecution and due diligence guidance relating to strategic product development, mergers and acquisitions and licensing, and portfolio restructuring.

If you have questions about the Federal Circuit ruling, please contact Robert R. Baron, Jr., at 215.864.8335 or baron@ballardspahr.com, Scott D. Marty, Ph.D., at 678.420.9408 or martys@ballardspahr.com, or Marc S. Segal at 215.864.8843 or segalm@ballardspahr.com.


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