[co-author: Megan Hingtgen]

This post was written by summer associate, Megan Hingtgen and edited by Intellectual Property attorney, Allison Kerndt.

This article contains important information relating to recent developments in patent law and, as such, is intended for an audience that either currently owns a patent or is in the process of obtaining one.

The Supreme Court sided with the U.S. Patent and Trademark Office (USPTO) on June 20, 2016 when it decided that inter partes review (IPR) cannot be appealed under the American Invents Act (AIA) and affirmed the USPTO’s “broadest reasonable interpretation” standard for construing claims.

The case began when Cuozzo Speed Technology, LLC acquired a patent for car technology and sued car manufacturers. Garmin International and Garmin Inc. felt the patent claims were obvious in light of prior patents and requested IPR. The Patent Trial and Appeals Board (PTAB) chose to review two additional claims of the patent because they appeared to be related to the challenged claim. The PTAB found all three claims obvious, denied Cuozzo’s motion to amend the claims, and canceled them.

Cuozzo appealed the decision to the Federal Circuit Court of Appeals, claiming that the USPTO improperly instituted IPR of the additional claims and that the USPTO’s use of the “broadest reasonable interpretation” standard for construing claims was in error because it was different than the trial court standard. The Federal Circuit Court of Appeals rejected both arguments, and today the Supreme Court affirmed the Federal Circuit’s decision.

Inter Partes Review

The AIA creates IPR proceedings that allow a third party to ask the USPTO to reexamine patent claims post-issuance, as discussed in a previous post. In addition to giving the agency the power to conduct IPR, the act also states that review is “final and non-appealable.”

The majority in the Supreme Court decision found that the AIA’s grant of final and non-appealable IPR power to the USPTO was express and unambiguous. To rule otherwise, the Court reasoned, would undermine congressional authority to grant the USPTO the power to review and revise earlier-granted patents. However, the court seemed to limit its opinion to challenges to proceedings brought under 356 USC §316(a)(4), hinting that Constitutional challenges, not at issue in Cuozzo, might still be subject to review.

Broadest Reasonable Construction

The AIA also gives the USPTO the authority to issue “regulations…establishing and governing inter partes review.” 35 USC §316(a)(4). Under this authority, the USPTO has created a standard of review for patent claims, asserting that a claim “shall be given its broadest reasonable construction in light of the specification of the patent in which it appears.” 37 CFR §42.100(b).

The Court upheld the broadest reasonable interpretation standard, ruling that the statute gives the agency the power to implement its own regulations where no express standard is given. The Court found unpersuasive Cuozzo’s argument that the standard of review the USPTO uses should be aligned with the trial court’s standard, which gives claims their ordinary meaning as a person of skill in the art would understand them.

Instead, the Court determined that the patent system has historically provided different tracks for review and adjudication of patent claims, and that the public’s interest in limiting the scope of “patent monopolies” exceeded the importance of establishing trial-like proceedings at the agency level. Patent holders, the Court argued, have many opportunities to amend the claims prior to IPR proceedings and are afforded the opportunity to move for amendment during the proceedings as well. Thus, upholding PTAB determinations best serves the public interest and aligns with congressional intent when it passed the AIA.

A Win for the USPTO

In its decision, the Court emphasized the importance of ensuring precision in drafting standards to prevent patents from tying up too much knowledge and to allow the public to draw useful information from disclosed inventions. Following the Supreme Court’s decision, USPTO Director Michelle Lee expressed her approval, stating “[t]he USPTO appreciates the Supreme Court’s decision, which will allow the Patent Trial and Appeal Board to maintain its vital mission of effectively and efficiently resolving patentability disputes while providing faster, less expensive alternatives to district court litigation.”

What this means for patent owners

In its unanimous decision, the Supreme Court relied heavily on Congressional intent surrounding the enactment of the AIA and embraced the USPTO’s broadest reasonable interpretation standard. Given this, patent applicants and owners will need to continue to make direct and narrowly focused claims in order to survive PTAB scrutiny should a claim be later challenged in an IPR proceeding.