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Supreme Court Upholds No Appeals of Decisions to Institute IPRs and PTAB Use of BRI

On June 20, 2016, the Supreme Court upheld the Federal Circuit's decision in In re Cuozzo Speed Technologies, LLC., 739 F.3d 1268 (Fed. Cir. 2015), regarding judicial review of a decision to institute an inter partes review proceeding and regarding the claim construction standard used by the USPTO during those proceedings, Cuozzo Speed Technologies, Inc., v. Lee, U.S., No. 15-446, 6/20/2016.

According to the Court, the statute expressly states that the decision of the USPTO on whether to institute an inter partes review proceeding is final and non-appealable, and Cuozzo did not present an appealable ground for attacking that decision . Additionally, the Court found that the USPTO's use of the "broadest reasonable interpretation" ('BRI") standard for claim construction is within the USPTO's discretion and statutory rulemaking authority for implementing inter partes review, as set out in the Leahy-Smith America Invents Act.

Appeal of Decision to Institute an IPR and Use of BRI

In a decision authored by Justice Breyer, the Court concluded that in this case 35 U.S.C. §314(d) bars judicial review of the USPTO's decision to institute an inter partes review on grounds not specifically mentioned in a third party's review request. He wrote that the language of the statute forbids an appeal that attacks a determination whether to institute review "by raising this kind of legal question and little more." He argued that a contrary holding would undercut the important congressional objective of giving the Patent Office significant power to revisit and revise earlier patent grants.

The Court rejected the argument that would limit the scope of "No Appeal" provision of §314(d) to interlocutory appeals as reading into the provision a limitation that the language does not mention, noting that the Administrative Procedure Act (5 U.S.C §704) "already limits review to final agency decisions," and citing legislative history of the AIA, where the petition required to show "a reasonable likelihood that" the challenger "would prevail" in §314(a) and thereby provides "a challenger with broader participation rights" compared to the previous inter-partes reexamination §312(a). Responding to concerns raised in the dissent, the Court went on to make clear it was not deciding the precise effect of §314(d) on other appeals, such as those that may implicate constitutional questions or other issues:

Nevertheless, in light of §314(d)'s own text and the presumption favoring review, we emphasize that our interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office's decision to initiate inter partes review. See §314(d) (barring appeals of "determinations . . . to initiate an inter partes review under this section" (emphasis added)). This means that we need not, and do not, decide the precise effect of §314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond "this section." 

Broadest Reasonable Inter​pretation.

The Court also ruled that the USPTO's use of the BRI standard for claim interpretation is a matter of discretion under the statutory authority given to the Office in order to implement the inter partes review process. The Court rejected the argument that the Patent Office should use the claim construction standard applied by the district courts, noting that §316(a)(4) gives the USPTO the legal authority to issue regulations to govern inter partes review, including its broadest reasonable construction regulation.

Citing deference principles under Chevron and Mead, the Court said that where there are gaps in the statute, and the statute gives an agency the authority to engage in the rulemaking process, such a statute should be interpreted to grant the "agency leeway to enact rules that are reasonable in light of the text, nature and purpose of the statute." The Court rejected arguments asserting that the district court standard was more appropriate due to the fact that inter partes review is like a judicial proceeding, and listed a number of factors that "suggest that the proceeding offers a second look at an earlier administrative grant of a patent," and further concluded that the regulation represents a reasonable exercise of rulemaking authority. Lastly, the Court made clear that it was not addressing the existence of any better alternative as matter of policy, noting that is a "question that Congress left to the particular expertise of the Patent Office."

Concurring and Dissenting Opinions

In an concurring opinion, Justice Thomas notes that the provisions of the AIA "contains an express and clear conferral of authority to the Patent Office to promulgate rules governing its own proceedings," thereby enabling the court to assess conformity with the Administrative Procedure Act, 5 U.S.C. §706(2)(A), such that the Court avoids considering the constitutional concerns raised in Chevron and in this case.

In an opinion dissenting in part and joined by Justice Sotomayor, Justice Alito emphasized that, while he agrees with the majority on the Office's authority to use the BRI standard, he disagrees on the issue of the appealability of a decision to institute an inter partes review, citing the strong presumption in favor of judicial review.

Justice Alito noted that "far more unambiguous and comprehensive" statutory language is usually present to preclude all appellate review and suggested the language of §314(d) refers to "matters that are not immediately or independently appealable, but which are subject to review at a later point." He stated that this approach strikes a sensible balance which would not prevent the Office from moving forward with a review while also holding it accountable to comply with the law. Justice Alito goes on to discuss various scenarios where the majority's interpretation would enable the USPTO to act in ways contrary to congressional intent, all without the availability of judicial review.

To read the opinions in this case, click here.​