Source: https://www.patentdocs.org/2016/06/cuozzo-speed-technologies-llc-v-lee-2016-question-2-ptab-shenanigans-and-reviewability.html
Timestamp: 2019-04-19 11:12:19+00:00

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The saga of the first-filed IPR petition (IPR2012-00001) came to a close today when the Supreme Court decided the Cuozzo Speed Technologies, LLC v. Lee case. We have been following this case ever since the PTAB issued its Final Written Decision -- the first that the PTAB ever issued. On the first question, the Court unanimously approved of the USPTO's decision to use the "broadest reasonable interpretation" standard for claim construction in IPR proceedings. This question will be addressed in a separate post. On the second question, six members of the Court agreed that the statute mandated that the decision to institute an IPR was not subject to judicial review. Justice Breyer authored the decision of the Court, with Justice Alito penning a dissent on the second question, which was joined by Justice Sotomayor.
The second question centered on the correct interpretation of 35 U.S.C. § 314(d) ("No appeal. -- The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable."). Cuozzo took the position that the Board's institution of the IPR proceeding in this case was contrary to the statute. Specifically, the PTAB had instituted trial for at least some of the claims on grounds that were not explicitly identified in the petition. According to Cuozzo, this violated § 312(a)(3), which requires that the petition set forth the grounds for challenge "with particularity." The Patent Office instead took the position that any issue related to institution cannot be reviewed. Following oral argument, it was difficult to predict how the Court would resolve this question, particularly because very little of the time was dedicated to this issue. Justice Breyer resolved the question by looking to the congressional objective in passing the AIA -- to give "the Patent Office significant power to revisit and revise earlier patent grants." As a result, he concluded that Congress intended to bar review of the Board's decisions about whether the "reasonable likelihood" standard of ultimately prevailing in the case had been met. Justice Breyer also believed that cases "where a patent holder grounds its claim in a statute closely related to that decision to institute" the IPR proceedings cannot be reviewed.
This did not mean that Justice Breyer believed that all questions related to institution should be unreviewable. For example, the decision states that the Justices "need not, and do not, decide the precise effect of §314(d) on appeals that implicate constitutional 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.'" Therefore, according to the Court, constitutional questions related to due process could still be appealed. In addition, if the Patent Office were to partake in "shenanigans," the Federal Circuit could set aside the decision as "'contrary to constitutional right,' 'in excess of statutory jurisdiction,' or 'arbitrary [and] capricious.'" Justice Breyer used as an example the invalidation of a claim as indefinite under § 112, which would be a clear violation of statutory authority for IPR proceedings. Justice Alito's dissent-in-part disagreed with the majority. Under his understanding, many more institution decisions would be reviewable because of the strong presumption favoring judicial review. This dictated his conclusion that this statutory provision did not prevent any review, but merely channeled any appeal though the Board's final written decision.
While the majority appears to have drawn a bright line between what is and is not reviewable, the line gets fairly blurry when considering some of the questions that the Federal Circuit has determined are unreviewable. At first glance, the new standard looks similar to the "authority to invalidate" test articulated by the Federal Circuit appeared in Versata Dev. Grp., Inc. v. SAP America, Inc. In that case, the Federal Circuit reviewed whether the patent at issue was a proper CBM patent -- whether it was a patent covering a financial product or service, and whether the patent was for a technological invention. The Federal Circuit distinguished this case from its Cuozzo case (In re Cuozzo) by pointing to the distinction between institution and invalidation. Because the determination whether the patent at issue was a covered business method patent related to the Board's "authority to invalidate," review of the decision was found to be appropriate. In other words, if the patent at issue was not a proper CBM patent, it would be outside the statutory jurisdiction of the Board. Therefore, without necessarily using the same terminology, the Cuozzo v. Lee decision is consistent with allowing review of CBM patent determinations.
The difficulties arise because the "authority to invalidate" standard did not take hold at the Federal Circuit outside the context of CBMs. Many hypotheticals have been posited about the horrors that could result from the Federal Circuit's refusal to review any institution decision. Probably the most concrete example was when the Court refused to review whether a third-party was a real party in interest. This case, Achates Reference Publ'g, Inc. v. Apple Inc., did not rest on that singular question, however, but rather the Federal Circuit concluded it could not review any decision related to the statutory time-bar -- whether a petitioner was barred from filing an IPR petition because it had been sued in district court more than one year beforehand. Justice Breyer's decision suggests that this situation would fall within the "shenanigans" standard and thus allow review of such cases. However, because of the broad language used by the Supreme Court, this decision means that only time will tell if the Federal Circuit agrees. Therefore, even though we won't have any more Cuozzo decisions, the fallout from Cuozzo v. Lee is likely to be felt for years to come.

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