United States: Federal Circuit Affirms First Final Decision Appealed From An Inter Partes Review

In In re Cuozzo Speed Technologies, LLC, No. 14-1301 (Fed. Cir. Feb. 4, 2015), the Federal Circuit affirmed the first final written decision appealed from an inter partes review ("IPR"). In its decision, the Court held that it lacked jurisdiction to review the Board's decision to institute IPR on direct appeal from a final written decision, the appropriate claim construction standard in IPR proceedings is the broadest reasonable interpretation standard, the Board's factual findings are reviewed for substantial evidence, and legal determinations are reviewed de novo.

Appellant Cuozzo Speed Technologies, LLC ("Cuozzo") owns U.S. Patent No. 6,778,074 ("the '074 patent"), which claims a user interface displaying a vehicle's current speed and the legal speed limit. Garmin International, Inc. and Garmin USA, Inc. (collectively "Garmin") filed the first petition for IPR with the PTO under the post-grant provisions under the AIA. The Board instituted IPR on three of the '074 patent's twenty claims on obviousness grounds over three prior art patents and issued a final written decision, holding the claims unpatentable. The Board denied Cuozzo's motion to amend. Cuozzo appealed.

On appeal, the Federal Circuit affirmed the Board's decision. First, the Court reiterated its previous holding in St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014), that 35 U.S.C. § 314(d), which states that "[t]he determination by the Director whether to institute an inter partes review . . . shall be final and nonappealable," precludes interlocutory review of decisions on whether to institute IPR. Slip op. at 6. The Court also concluded that § 314(d) precludes review of the decision whether to institute IPR even after a final written decision, stating that § 314(d) "is written to exclude all review of the decision whether to institute review." Id. The Court also cited In re Hiniker Co., 150 F.3d 1362 (Fed. Cir. 1998), which held that, even absent a comparable provision expressly precluding appeal, the Federal Circuit would not set aside a flawed decision to institute reexamination proceedings. The Court left open the possibility, however, of the institution decision being "reviewable by mandamus after the Board issues a final decision." Slip op. at 9.

Regarding the Board's use of the broadest reasonable interpretation standard for claim construction, the Court found that "[t]here is no indication that the AIA was designed to change the claim construction standard that the PTO has applied for more than 100 years." Id. at 13. The Court also highlighted that in enacting the AIA, Congress was aware of the prevailing claim construction standard and that "[i]t can therefore be inferred that Congress impliedly adopted the existing rule of adopting the broadest reasonable construction." Id. at 14. The Court rejected Cuozzo's argument that the prevailing broadest reasonable interpretation standard relies on the ability to amend claims and that because IPR limits claim amendments, the broadest reasonable interpretation standard is inappropriate in IPR proceedings. Specifically, the Court found that "IPR proceedings are not materially different" insofar as the statute permits a patentee in an IPR to file one motion to amend and that, "[a]lthough the opportunity to amend is cabined in the IPR setting, it is thus nonetheless available." Id. at 15-16.

The Court also concluded that, absent congressional adoption of the broadest reasonable interpretation standard, the PTO's promulgation of the standard was a reasonable application of its statutory rulemaking authority. In doing so, the Court applied the analysis set forth in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Specifically, the Court noted that the IPR statute is silent on the subject of claim construction, meriting Chevron deference. The Court then concluded that because the PTO has long applied the broadest reasonable interpretation standard in other PTO proceedings, the regulation adopting the standard for IPR proceedings was a reasonable interpretation of the statute.

On the merits of the case, the Court held that the Board properly construed the claims under the broadest reasonable interpretation standard. The Court applied the deferential substantial evidence standard to the factual findings of the Board, and reviewed de novo legal conclusions under the Supreme Court's recent decision in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841 (2015). The Court ultimately held that the Board properly construed the disputed term "integrally attached."

Lastly, the Court affirmed the Board's obviousness determination. The Court found that Cuozzo agreed that the disclosed mechanical embodiment was within the scope of the claim, and the Court noted that if the disclosed mechanical embodiment is obvious, the claim would also be obvious. The Court also rejected Cuozzo's argument that there was no motivation to combine the references where one reference was an automatic device and the remaining two were manual devices, stating that "[a]pplying modern electronics to older mechanical devices has been commonplace in recent years." Slip op. at 23 (alteration in original) (quoting Leapfrog Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1161 (Fed. Cir. 2007)). The Court also affirmed the denial of Cuozzo's motion for leave to amend.

Judge Newman dissented, stating that the majority's rulings were contrary to the legislative purpose of the AIA. Judge Newman noted that the majority's adoption of the broadest reasonable interpretation standard for claim construction precludes review of patent validity in IPR comparable to that of the district courts, stating that "[t]o implement the intent of the America Invents Act, the administrative judges of the PTAB must apply the same procedural and substantive law as the district courts." Newman Dissent at 6. Judge Newman also discussed the procedural restraints on the ability to amend claims in IPRs, indicating that the procedural limitations differentiate the ability to amend in reexamination from the ability to submit substitute claims once in IPR proceedings. Judge Newman also disagreed with the majority's holding as to whether the PTO's decision to institute IPR is nonappealable. In Judge Newman's view, the AIA did not intend to foreclose full judicial review of all PTAB final decisions.

Judges: Newman (dissenting), Clevenger, Dyk (author)

[Appealed from Board]

This article previously appeared in Last Month at the Federal Circuit, March 2015.

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