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PTAB Scrutinized in Cuozzo Supreme Court Argument

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For the first time since its inception, the Patent Trial and Appeal Board (PTAB) came under the scrutiny of the Supreme Court on Monday in Cuozzo Speed Technologies, LLC v. Lee. Ironically, the subject of the appeal is the very first inter partes review (IPR) petition filed with the PTAB (Petition No. IPR 2012-00001) and the first Final Written Decision ever authored by the PTAB in an IPR. The Court agreed to address two questions that have caused much consternation among patent holders, namely (i) whether the PTAB may construe claims according to the broadest reasonable interpretation (BRI), rather than the plain and ordinary meaning, and (ii) whether the PTAB’s decision to institute an IPR is judicially unreviewable, even if the PTAB exceeds its statutory authority in instituting the IPR.

The use of BRI in PTAB proceedings has been widely criticized by patent holders since BRI is a different and broader standard than the plain and ordinary meaning, or “Philips standard” applied in District Court. Many argue that BRI is too broad in and of itself and negates the benefit of the presumption of validity applied in District Court. Proponents of BRI point to the fact that a patent holder has the right to seek claim amendments during PTAB proceedings in order to overcome prior art rejections, an option that is not available in District Court.

Chief Justice Roberts seemed most troubled by the fact that the PTAB and a District Court can apply different standards to the same patent, arrive at different results, and neither interpretation would be binding on the other. He concluded that this was a “bizarre way to… decide a legal question” and noted that it could result in much “wasted energy” by the District Court.

Several other justices seemed more amendable to the differing standards. For example, Justice Breyer seemed comfortable applying BRI to the extent that Congress intended PTAB proceedings to address patents that never should have been issued to “patent trolls.” Justice Kennedy pointed out that any patent that was invalid under BRI should never have been issued in the first place. Referring to a patent holder’s right to amend at the PTAB, Justice Sotomayor indicated that she might be more moved by arguments against BRI “if Congress had not given any right for the Board to amend.”

The final and non-appealable nature of PTAB institution decisions has also caused problems for patent owners that believe that the PTAB often exceeds its statutory authority in granting such a high percentage of petitions. Past references to the PTAB as “patent death squads” fuel this concern regarding lack of judicial oversight.

Very little time was devoted to this issue at oral argument. The Court questioned whether the “final and non-appealable” statutory construction prevents all appeals, or only prevents interim interlocutory review of the institution decision at the time. Justice Ginsburg expressed concern that the PTAB could grant a petition entirely outside of its statutory authority and not be subject to review.

 

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