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Federal Circuit Upholds Bar on Appeal of IPR Decision to Institute IPR and BRI Standard

A decision by the U.S. Patent and Trademark Office to institute an Inter Partes Review (IPR) is not only non-appealable as an interlocutory ruling, but it is also non-appealable as part of a final decision by the Patent Trial and Appeal Board, the Federal Circuit held February 4, 2015 in In re Cuozzo Speed Technologies, LLC, Fed. Cir., No. 2014-1301, 2/4/2015.

The 2-1 decision also held that patent claims in an IPR are to be construed under the “broadest reasonable interpretation” standard, not under the narrower standard that applies in district court litigation, because a party in an IPR is able to amend claims at least to a limited extent.

Background

Cuozzo is the assignee of a patent entitled “Speed Limit Indicator and Method for Displaying Speed and the Relevant Speed Limit” (6,778,074). Garmin petitioned for an IPR, contending that the patent was invalid as anticipated and obvious.

The USPTO granted the petition under 35 U.S.C. §314(a), which requires a reasonable likelihood that the petitioner would prevail. Section 314(d) states that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”

The Board found the patent claims in suit invalid for obviousness based on its “broadest reasonable interpretation” of the claim term “integrally attached.” Cuozzo appealed the final judgment in the case, arguing in part that the IPR petition should not have been granted.

Judicial Review of Decision to Institute

The nonappealability provision at Section 314(d) was addressed by the Federal Circuit in St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014), holding that Section 314(d) precludes interlocutory review. That decision cited the broad language of Section 314(d) as well as the bar to interlocutory appeals under Section 141(c).

The Federal Circuit majority in this case concluded that Section 314(d) also bars a challenge to the decision to institute an IPR in an appeal of the final Board decision. Judge Dyk explained as follows:

On its face, the provision is not directed to precluding review only before a final decision. It is written to exclude all review of the decision whether to institute review. Section 314(d) provides that the decision is both “nonappealable” and “final,” i.e., not subject to further review. 35 U.S.C. §314(d). A declaration that the decision to institute is “final” cannot reasonably be interpreted as postponing review until after issuance of a final decision on patentability. Moreover, given that § 319 and § 141(c) already limit appeals to appeals from final decisions, § 314(d) would have been unnecessary to preclude non-final review of institution decisions. Because §314(d) is unnecessary to limit interlocutory appeals, it must be read to bar review of all institution decisions, even after the Board issues a final decision. Nor does the IPR statute expressly limit the Board’s authority at the final decision stage to the grounds alleged in the IPR petition. It simply authorizes the Board to issue “a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).” 35 U.S.C. § 318(a).

The Court also found this issue analogous to the decision to institute a reexamination, addressed in In re Hiniker Co., 150 F.3d 1362 (Fed. Cir. 1998), which held that appellate jurisdiction existed only over the Board’s final decision.

Mandamus

The Court was not persuaded by the argument that Congress would not have intended to allow the PTO to institute an IPR in direct contravention of the statute. “The answer is that mandamus may be available to challenge the PTO's decision to grant a petition to institute IPR after the Board's final decision in situations where the PTO has clearly and indisputably exceeded its authority.”

The Court acknowledged past decisions that denied mandamus to challenge the denial of an IPR petition (inapt because there is no “clear and indisputable right” to challenge a non-institution decision) and to immediately challenge the grant of an IPR petition (irremediable harm was not show to relieve the patentee of the burden of going through the IPR).

“However, we did not decide the question of whether the decision to institute review is reviewable by mandamus after the Board issues a final decision or whether such review is precluded by §314(d). … Nor do we do so now,” Judge Dyk wrote.  He also pointed out that Cuozzo did not file a mandamus petition, and that it is not clear an IPR is strictly limited to the grounds asserted in the petition. It is beyond dispute, the Court concluded, that there is no clear and indisputable right that precludes institution of the IPR proceeding, removing any need to decide this mandamus issue.

Broadest Reasonable Interpretation

Cuozzo next challenged the Board’s obviousness decision, arguing that it should not have applied the “broadest reasonable interpretation” standard in claim construction.

Although the America Invents Act is silent on whether that claim construction standard is appropriate in IPRs, Judge Dyk pointed out that it does provide broad authority for the PTO to issue regulations “setting forth the standards for the showing of sufficient grounds to institute … review.” The PTO did so in 37 CFR 42.100(b), which states that a claim “shall be given its broadest reasonable construction in light of the specification of the patent in which it appears.”

This standard has been applied to the PTO for more than 100 years, and there is no indication that the AIA was designed to change that. Congress was well aware of the broadest reasonable interpretation standard, and it can be inferred that it impliedly adopted it.

The Court was not persuaded by the argument that general uses of this standard have been premised on the right to amend claims, and that such amendments are limited in IPR proceedings. IPR proceedings “are not materially different in that respect,” Judge Dyk wrote, explaining as follows:

Although the opportunity to amend is cabined in the IPR setting, it is thus nonetheless available. The fact that the patent owner may be limited to a single amendment, may not broaden the claims, and must address the ground of unpatentability is not a material difference. Nor is the fact that IPR may be said to be adjudicatory rather than an examination. Interference proceedings are also in some sense adjudicatory, … yet the broadest reasonable interpretation standard applies…. In any event, Congress in enacting the AIA was aware of these differences in terms of amendments and adjudication and did not provide for a different standard than the broadest reasonable interpretation standard.

Congress implicitly adopted the broadest reasonable interpretation standard in enacting the AIA, the Court concluded. Even if it did not, the PTO had rulemaking authority to do so. Judge Dyk acknowledged that PTO authority under Section 2(b) has been found not to include substantive rulemaking authority, but the authority at Section 316(a)(2) and (a)(4) expressly include establishing “standards” for instituting an IPR. Moreover, the PTO rule is also entitled to Chevron deference as it reflects a reasonable interpretation of an ambiguous statute.

Claim Construction

The Court decided that the Board properly construed the claim term “integrally attached.” Judge Dyk acknowledged the new standard of review under Teva Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., but said de novo review of the intrinsic evidence applied since there were no factual determinations concerning extrinsic evidence.

The Court also found no error in the Board’s refusal to permit Cuozzo to amend its claim, pointing out that both the statute and the rules bar amendments which would broaden the scope of the cl​aims. Applying the same test used in reissues and reexaminations, the Court agreed with the Board that such broadening would result from the proposed amendment.

Dissenting Opinion

In her dissenting opinion, Judge Newman said the majority decision is contrary to the legislative purpose of the AIA, which was to provide a new adjudicatory proceeding in the PTO as a surrogate for district court litigation. With respect to the broadest reasonable interpretation, she noted the Court's past approval of this standard, but said it was premised on “the unfettered opportunity to amend.”

As a further departure from the AIA, Judge Newman continued, the majority insists on reading Section 314(d) to bar review of all institution decisions, even after the Board’s final decision. This ruling appears to impede full judicial review of the PTAB’s final decision, further negating the purpose of the AIA to achieve correct adjudication of validity in the PTO, she concluded.

To read the Court’s opinion in this case, click here.