Federal Circuit Addresses Three Major Issues In The Conduct Of Inter Partes Reviews Before the Patent Trial And Appeal Board
Inter Partes Reviews (“IPRs”) have become an important tool for parties seeking to invalidate patents owned by competitors or non-practicing entities without the substantial cost associated with litigation. On February 4, 2015, the U.S. Court of Appeals for the Federal Circuit has clarified several issues relating to how IPRs are conducted in the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office. The court’s decisions regarding these issues show that the Federal Circuit intends to give the Patent Trial and Appeal Board a wide berth in conducting IPRs and addressing patents that the PTAB determines to be invalid.
In In re Cuozzo Speed Technologies, LLC
, No. 2014-1301, the Federal Circuit: (i) held that 35 U.S.C. § 314(d) “prohibits review of the decision to institute IPR even after a final decision” (though leaving open the question of post-final decision mandamus); (ii) affirmed the PTO’s broadest reasonable interpretation standard in the context of IPRs; and (iii) confirmed that the Supreme Court’s recent decision in Teva Pharms. U.S.A., Inc. v. Sandoz, Inc.
, 135 S.Ct. 831, 841 (2015), which narrowed the Federal Circuit’s review of a district court’s factual findings relating to claim construction, applies in an appeal from a final decision in an IPR. We address each of these below.
I.The PTAB’s Decision To Institute IPR Is Not Reviewable Even After The PTAB Issues Its Final Decision (Though Post-Final Decision Mandamus May Be Available)
The court first addressed the issue of whether it can review the Patent Trial and Appeal Board’s decision to institute IPR in the context of a post-final decision appeal. Section 314(d) frames the issue: “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. § 314(d). The court had previously held that § 314(d) precludes interlocutory
review of the PTAB’s decision to institute IPR. See St. Jude Med., Cardiology Div., Inc. v. Volcano Corp.
, 749 F.3d 1373, 1375-76 (Fed. Cir. 2014). In Cuozzo
, the court has now taken the next step and held that the PTAB’s decision to institute IPR is also
not appealable after a final decision. The court went so far as to say that it cannot review the PTAB’s decision to institute IPR even when the decision clearly improper, such as if the PTAB had instituted an IPR based on prior public use, which is not an allowable basis for IPR.
The majority left open the question of whether a petition for a writ of mandamus filed after the PTAB issues its final decision may provide an avenue for appellate review of the initial determination to initiate the IPR. However, the court made clear its belief that such relief would, if available at all, be available in only the narrowest of circumstances. The PTO, which intervened in the Cuozzo
appeal, argued against mandamus review at any stage, including post-final decision, and the PTO will presumably continue to take that position in future appeals addressing this issue.
As Judge Newman notes in her dissent in Cuozzo
, the majority’s ruling effectively forecloses appellate review of the PTAB’s decision to institute IPR except (possibly) in the extraordinary circumstances where post-final decision mandamus would be appropriate. But even that would likely require a showing that the PTAB had clearly and indisputably exceeded its authority—a very high bar. Therefore, at least for the time being, patentees have no realistic opportunity for appellate review—whether interlocutory or post-final decision—of a PTAB decision to institute an IPR.
II.The PTAB Properly Applies A Broadest Reasonable Interpretation Standard For Claim Construction In Inter Partes Reviews
The court next addressed the issue of whether the PTAB should construe the patent claims at issue in an Inter Partes Review pursuant to the “broadest reasonable interpretation” standard, rather than construing the relevant claim terms as district courts do, i.e.
, based on the patent and its file history and, if relevant, extrinsic evidence. The court concluded that the PTAB’s application of the broadest reasonable interpretation standard is appropriate in IPRs, as it is in other proceedings in the PTO such as reexaminations and reissues.
The court rejected the patentee’s arguments that IPRs are more akin to district court litigation than reexamination proceedings, particularly because the patentee’s ability to amend his patent claims during an IPR is extremely limited. Indeed, as Judge Newman notes in her dissent in Cuozzo
, the PTAB has allowed just two
amendments where the patentee’s motion was opposed, despite the numerous requests by patentees to amend their claims.
The court also found that Congress granted the PTO broad authority with respect to the conduct of IPRs, and that applying the broadest reasonable interpretation standard is within the ambit of this authority. This aspect of the ruling, which is supported by the statute, is likely to carry the day even among Judges who would agree with the argument that an IPR is more like a district court litigation than a reexamination proceeding and, therefore, would otherwise reject the broadest reasonable interpretation standard.
Thus, the PTAB will continue to interpret claims very broadly for purposes of determining validity in IPRs, even when a district court has construed the same claim terms narrowly in a companion lawsuit.
III.The Federal Circuit Will Review Factual Findings Relating To The PTAB’s Claim Interpretation Pursuant To The Deferential “Substantial Evidence” Standard
, the court stated that it “review[s] the Board’s claim construction according to the Supreme Court’s decision in Teva Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc.
, 135 S.Ct. 831, 841 (2015). We review underlying factual determinations concerning extrinsic evidence for substantial evidence and the ultimate construction of the claim de novo. See id.
” This appears to be the first decision from the Federal Circuit from an IPR since the Supreme Court’s Teva
decision on January 20, 2015. Thus, it is important that the Federal Circuit is not distinguishing between district court litigation and IPRs in this context but, rather, applying Teva
to all claim construction rulings, regardless of the forum.
We explained in a recent Client Alert that the Supreme Court held in Teva
that findings of fact made in connection with a patent claim construction ruling are to be reviewed for clear error, thereby reversing the Federal Circuit’s long-standing rule that all matters relating to claim construction are to be reviewed de novo. We concluded that the Teva
decision likely will not have significant impact in the context of district court litigation because, after the Supreme Court’s Phillips
decision, district courts rarely allow consideration of extrinsic evidence that would give rise to findings of fact that would be subject to the more deferential standard of review.
However, unlike district court litigation, parties in an IPR proceeding have greater latitude in relying on extrinsic evidence—i.e.
, evidence outside of the patent and its file history—to argue for or against a particular claim interpretation. Therefore, now that the Federal Circuit has stated that it will follow Teva
in the context of appeals from an IPR decision, the parties in an IPR, and the PTAB, will be more likely to rely on extrinsic evidence in order to inoculate the claim construction ruling from in-depth appellate review. However, care must be taken lest a party be hoisted by its own petard—the party that relies on extrinsic evidence to argue for a particular claim construction and is denied may face the daunting task of seeking review pursuant to the deferential clear error standard.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
It should be noted that the PTAB construes claims of an expired patent in the same manner as a district court construes claims. Thus, if the patent at issue in an IPR has expired, the PTAB will follow the Supreme Court’s Phillips
, primary focus on the patent and its file history to construe the claim terms) rather than applying the broadest reasonable interpretation standard.