June 20, 2016

Supreme Court Decides Cuozzo Speed Technologies, Inc. v. Lee

On June 20, 2016, the U.S. Supreme Court decided Cuozzo Speed Technologies, Inc. v. Lee, holding that, in an inter partes review, the Patent and Trademark Office (PTO) may give a patent claim its broadest reasonable interpretation in determining its validity, and a patent holder may not appeal the issue of whether the Office complied with the authorizing statute in deciding to initiate the review.

In what is called an inter partes review proceeding, the Patent Office is allowed “to reexamine the claims in an already-issued patent and to cancel any claim that the agency finds to be unpatentable in light of prior art.” 35 U.S.C. § 314. The Director of the PTO is given the authority to determine whether to institute an inter partes review, and his decision to institute a review is declared to be “final and nonappealable.” Patent Office regulations state that, in an inter partes review, a claim is given “its broadest reasonable construction in light of the specification of the patent in which it appears.”

Giusuppe A. Cuozzo was issued a patent for a device that links a GPS receiver and speed-limit database to a car’s speedometer, so the speedometer needle changes color when the car exceeds the speed limit for the road it is on. Garmin sought inter partes review of the patent, asserting that one of the claims was obvious in light of prior patents. The PTO agreed to reexamine the challenged claim, as well as two other claims that the PTO said “Garmin had implicitly challenged” because the explicitly challenged claim depended on them. It found all three claims to be obvious and not patentable. The Court of Appeals for the Federal Circuit affirmed.

The Supreme Court affirmed, by a 6-2 vote as to the appealability issue and by a unanimous vote as to the broadest-reasonable-interpretation issue. The Court first held that a patentee’s “contention that the Patent Office unlawfully initiated its agency review is not appealable,” at least “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.” The Court found that while § 312 requires petitions to the Patent Office for inter partes review to be made “with particularity,” this did not mean that the Patent Office could only review claims specifically challenged in the petition. Here, the Court held that the Patent Office was allowed to review the patentability of two claims that were not challenged in the initial petition. The Court cautioned, however, that it was not determining whether appeals were available to raise “constitutional questions” or other 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.’”

Second, the Court held that the Patent Office has “the legal authority to issue its broadest reasonable construction regulation.” Applying Chevron deference, the Court concluded that construing patent claims broadly in determining their validity was a reasonable approach that “encourages the applicant to draft narrowly,” which “helps prevent a patent from tying up too much knowledge, while helping members of the public draw useful information from the disclosed invention and better understand the lawful limits of the claim.” The Court found that using the broader standard is “not unfair to the patent holder” because it may move “to amend or narrow the claim” during inter partes review. The Court was not persuaded by the fact that as of July 2015, only five of 86 motions to amend had been granted, finding that this may simply reflect that “the patent should never have issued at all.”

The Court recognized that judicial review of patents uses the ordinary-meaning standard, so allowing the Board to use a broader construction raises the potential that “[a] district court may find a patent claim to be valid, and the agency may later cancel that claim in its own review.” But the Court noted that inter partes review already involves “a different burden of proof” than judicial review, so the “possibility of inconsistent results is inherent to Congress’ regulatory design.”

Justice Breyer delivered the opinion of the Court, which was unanimous as to the broadest-reasonable-construction rule, and which was joined by Chief Justice Roberts and Justices Kennedy, Thomas, Ginsburg, and Kagan as to the reviewability issue. Justice Thomas filed a concurring opinion. Justice Alito filed an opinion concurring in part and dissenting in part, in which Justice Sotomayor joined.

Download Opinion of the Court

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