Federal Circuit Affirms Use of Broadest Reasonable Interpretation of Claims in IPR Proceedings

In affirming the decision of the USPTO’s Patent Trial and Appeal Board (PTAB) in In re Cuozzo Speed Technologies, LLC, the Federal Circuit upheld the PTAB’s use of the “broadest reasonable interpretation” of the claims in Inter Partes Review (IPR) proceedings. The court also determined that it did not have jurisdiction to review the PTAB’s decision to institute the IPR.

The Patent At Issue And The IPR

The patent at issue was Cuozzo’s U.S. 6,778,074, directed to a speed limit indicator that uses signals from a GPS receiver to indicate “which speed readings are in violation of the speed limit at a vehicle’s present location.”

Garmin International, Inc. and Garmin USA, Inc. filed a petition for inter partes review of claims 10, 14, and 17, and the PTAB issued a decision to institute an IPR proceeding. During the IPR, the PTAB denied Cuozzo’s motion to amend the claims by replacing the challenged claims with new claims 21, 22, and 23, and held the challenged claims invalid as obvious.

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Dyk and joined by Judge Clevenger. Judge Newman filed a dissenting opinion.

Broadest Reasonable Interpretation

Addressing the BRI issue, the majority opinion acknowledged that the IPR statutes enacted pursuant to the America Invents Act do not address the manner in which the PTAB should construe the claims in an IPR proceeding, but noted that Congress gave the USPTO authority to prescribe regulations governing IPR proceedings. The opinion also noted the USPTO’s longstanding practice of applying the “broadest reasonable interpretation” of claims (BRI) “in various types of PTO proceedings.”

The opinion emphasized:

This court has approved of the broadest reasonable interpretation standard in a variety of proceedings, including initial examinations, interferences, and post-grant proceedings such as reissues and reexaminations. Indeed, that standard has been applied in every PTO proceeding involving unexpired patents.

and cited the principle that ”Congress is presumed to legislate against the background of existing law where Congress in enacting legislation is aware of the prevailing rule” to support the conclusion that

Congress implicitly adopted the broadest reasonable interpretation standard in enacting the AIA.

The majority opinion also determined that the rulemaking authority Congress conveyed to the USPTO in 35 USC § 316 gave the USPTO authority to prescribe how claims should be construed in an IPR, such that the USPTO’s BRI rule (37 CFR § 42.221(a)) is subject to deference under Chevron.

The regulation here presents a reasonable interpretation of the statute. The PTO has long applied the broadest reasonable interpretation standard in other proceedings, suggesting that a broadest reasonable interpretation standard is appropriate in IPRs. As discussed above, the policy rationales for the broadest reasonable interpretation standard in other examination proceedings also apply in the IPR context. … Even if the broadest reasonable interpretation standard were not incorporated into the IPR provisions of the statute, the standard was properly adopted by PTO regulation.

In reaching this conclusion, the majority was not swayed by Cuozzo’s arguments that the use of BRI in other proceedings was supported by the ability to amend claims in those proceedings, while claim amendments are limited in an IPR. Perhaps focusing on the letter of the PTAB’s rules rather than the reality of their implementation, the majority opinion states:

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.

The Decision To Institute IPR

Cuozzo challenged the decision to institute the IPR “because the PTO relied on prior art that Garmin did not identify in its petition as grounds for IPR as to [claims 10 and 14],” although “the prior art in question was identified with respect to claim 17.”

The majority determined that 35 USC § 314(d) precluded review. This section of the statute states:

(d) No Appeal.— The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

Referring to its earlier decision holding that § 314(d) precludes interlocutory review, the majority explained:

We conclude that § 314(d) prohibits review of the decision to institute IPR even after a final decision. 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.

The majority did leave open the possibility 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.”

Judge Newman’s Dissent

Judge Newman dissented from the majority’s decision on both issues.

With regard to the BRI issue, Judge Newman’s main point was that IPR was not created as another typical PTO proceeding, but as “a surrogate for district court litigation.” As such, she believes that the PTAB should apply litigation-style claim construction in IPR proceedings.

With regard to the decision to institute IPR, Judge Newman disagreed with the majority’s interpretation of § 314(d), finding instead that its purpose “is to bar interlocutory proceedings and harassing filings by those seeking to immobilize the patent or exhaust the patentee.”

What Next?

Since this case addresses novel and important issues surrounding the meaning of various aspects of the new IPR statute, it is likely that Cuozzo will seek rehearing and/or Supreme Court review. Until then, patent holders facing IPRs should try to maintain continuation applications as vehicles for claim amendments that may not be permitted in an IPR, and patentees dissatisfied with a decision to institute an IPR should consider whether a mandamus action is a viable option.