In re Cuozzo Speed Technologies, LLC (Fed. Cir. 2015)

Federal Circuit Sides with Patent Office in First IPR Final Written Decision Review

By Andrew Williams --

Earlier today, the Federal Circuit decided the first appeal from the Patent Trial and Appeal Board ("PTAB" or "Board") related to an inter partes review ("IPR") Final Written Decision.  As we have previously reported, the In re Cuozzo Speed Technologies, LLC. case was the first appeal of the first IPR Final Written Decision for the first IPR ever filed.  As such, the significance of this case rested not only on the how the Court would address the substance of the present case, but on what the Federal Circuit would say regarding some of the more contentious rules promulgated by the Patent Office for these proceedings.  Specifically, the 2-1 decision, which was written by Judge Dyk and joined by Judge Clevenger, affirmed the Board's use of the Broadest Reasonable Interpretation (BRI) standard for claim construction, and agreed with the Office that any aspect of the decision to institute the IPR is not reviewable.  With regard to the substance of the case, the Federal Circuit also affirmed the Board's cancellation of the claims at issue as obvious over the cited art (although not necessarily as specifically cited in the petition).  Judge Newman dissented, in part, because she believed that several rulings of the Court were contrary to the legislative intent behind the creation of the PTAB and IPR proceedings.

We described the technology at issue in this case in a previous post (see "The First IPR Decision -- A Win for the Patent Challenger").  Put simply, the claimed technology is directed to indicating speed limits at particular locations on GPS units.  A GPS receiver is used to track the location of a vehicle, and the speed limit indicator correlates the vehicle's position with a database containing the speed limit for that location.  As the database is accessed, the colored filter adjusts so that speeds above the legal speed are displayed in red, and legal speeds are displayed in white.  Claim 10 reads as follows:

10.    A speed limit indicator comprising:
    a global positioning system receiver;
    a display controller connected to said global positioning system receiver, wherein said display controller adjusts a colored display in response to signals from said global positioning system receiver to continuously update the delineation of which speed readings are in violation of the speed limit at a vehicle's present location; and
    a speedometer integrally attached to said colored display.

One of the first issues resolved by the Court was whether it could even review the Board's decision to institute an IPR proceeding in the first place.  Importantly, the Federal Circuit held that the statute barred such a review, even when the institution is contrary to the requirements outlined by the statute.  In this case, the Board instituted the review on grounds not specifically identified in the petition, even though all of the art the Board cited could found therein.  The Federal Circuit's decision, however, was not so nuanced.  Instead, it went on to state that even if the Board went beyond the statute and instituted an IPR based on a prior public use (which is not permitted by the statute), such an action would not be appealable.  The Court did suggest that mandamus might be available when the Board exceeds its authority, but even that was not certain.  A petitioner would first need to establish that mandamus relief was not barred by the statute, and then it would need to demonstrate a clear and indisputable right to the issuance of a writ, and that the writ was appropriate under the circumstances.  The Court indicated that none of these had been demonstrated in this case.

The problem with the Court's analysis, however, is that the cited case law related to other Patent Office procedures in which examination of an application takes place.  For example, it cites In re Hiniker Co., 150 F.3d 1362, 1367 (Fed. Cir. 1998), approvingly, even though that case was directed to a reexamination proceeding.  The Court had found that a defect in the decision to institute was cured by the final decision.  Basically, the defective petition was irrelevant because "a proper petition could have been drafted."  First, the petition was only cured in that case because the examiner searched the prior art -- something the Board continually reminds stakeholders it will not do in an IPR proceeding.  Judge Newman even pointed out that the Board has consistently claimed that an IPR is not a patent examination, but rather "a trial, adjudicatory in nature [which] constitutes litigation," citing Google Inc. v. Jongerius Panoramic Techs, LLC, IPR2013-00191, Paper No. 50 at 4 (PTAB Feb. 13, 2014).  Moreover, the Court's rationale does not fit the hypothetical of a review instituted on prior public use.  In such a case, a proper petition could not have been drafted -- and yet such decision would not have been appealable.

Of course, the issue that has probably been the most closely watched from this case was whether the adoption of the "broadest reasonable interpretation" by the PTAB was proper.  The Federal Circuit believed that it was.  Nevertheless, as readers of this blog are aware, the use of this standard has been strongly criticized and is generally disfavored by the patent community.  As Judge Newman pointed out in dissent, IPR proceedings before the PTAB were meant to be a surrogate for district court litigations on validity.  She complained that this goal has not been realized because of the use of these two different standards of claim construction.  One of the justifications for the adoption of this standard by the Patent Office has been that a patentee can amend its claims in an IPR proceeding.  As Judge Newman noted, however, the ability to amend claims has been almost entirely illusory.  In over two years, only two sets of claim amendment motions have been granted by Board (see "PTAB Update -- The Board Grants Its Second Motion to Amend (At Least in Part)").

In any event, the Court held that adoption of this standard was consistent with the legislative history, even though its strongest pronouncement was that it "can be inferred that Congress impliedly adopted the existing rule of adopting the broadest reasonable construction."  Judge Newman disagreed with this assessment.  Instead, she pointed to the difference in language used in the various part of the statute -- reexaminations, interferences, and reissues refer to the "patentability" of claims, while the IPR statute uses the word "validity."  Certainly, the difference in wording cannot be ignored, because this distinction must be significant.  Finally, the Court also noted that adoption of this standard was within the rulemaking authority of the PTO as established by the statute, and a Chevron analysis dictates deference in this case.  Judge Newman argued that the intention of Congress was clear, albeit the exact opposite of how it was interpreted by the Patent Office and the majority.

With regard to whether this case contained any significant comments about whether the PTAB is properly handling motions for claim amendments, the holding is fairly limited.  Both the statute and the rules prohibit claim amendments that broaden the scope of the claims.  The Federal Circuit cited cases in the reissue and reexamination context when it clarified that a claim is "broader in scope than the original claims if it contains within its scope any conceivable apparatus or process which would not have infringed the original patent."  Because the proposed claim amendment in this case would have encompassed a new embodiment, the Court affirmed the denial of the motion to amend.

For anyone practicing before the PTAB looking for a take home lesson, it would probably be that you should not leave any of your cards on the proverbial table.  An unsuccessful challenger or defender of a patent before the PTAB should not look to the Federal Circuit for an easy reversal.  This case makes clear the Federal Circuit's willingness to defer to the PTAB on issues of both substance and procedure.  This result should not be surprising, however, and may be pragmatic, especially in view of the deluge of IPR appeals that the Court is anticipating in the very near future.

In re Cuozzo Speed Technologies, LLC (Fed. Cir. 2015)
Panel: Circuit Judges Newman, Clevenger, and Dyk
Opinion by Circuit Judge Dyk; dissenting opinion by Circuit Judge Newman

Comments

[EG]

Andrew,

I side completely with Newman's dissent. Dyk's majority opinion is an utter travesty, including suggesting that the patentee should use mandamus to challenge an egregious violation of the IPR statutes. How can Dyk with a straight face suggest that even an egregious violation by the PTAB of the IPR statutes is unreviewable as somehow comporting with "due process" when it takes a patentee's statutorily recognized "property"? I suspect this panel decision will go to the en banc Federal Circuit, and I do hope that a majority realize the "due process" implications of Dyk's opinion, as well as Newman's correct interpretation of the proper claim construction standard for IPR.

[moondog]

Andrew: Do you think the Chief Judge has found her "hitman" in Judge Dyk? Have you noticed that Judge Dyk seems to get the cases where a decision (written by him, joined frequently by a judge on senior status) further weakens patent protection? Seems unlikely to be a coincidence.

[Dan Feigelson]

While I share EG's sentiments, I am less sanguine about both the chances of this case being taken up en banc and the likelihood of it being overturned in the course of such review. I am curious to see what happens when the same BRI question arises in a case with a different panel: in principle the later panel is supposed to follow the ruling of the first panel that dealt with a matter of first impression. But we've seen enough CAFC cases where that didn't happen (or where later panels even strayed from earlier *en banc* decisions) that it's not a foregone conclusion that this panel's view of BRI in IPR will be followed by later panels.

[EG]

Andrew,

Note David Boundy's excellent article just posted on the administrative law/procedure problems with In re Cuozzo Speed Technologies: http://patentlyo.com/patent/2015/02/administrative-attorneys-technologies.html . It reaffirms that I’m not alone in wondering how Dyk’s majority opinion can possibly comport with due process and the APA.

[Skeptical]

I note in the comments there the "skepticism" being afforded the earned respect and the great power/great responsibility duality that comes with wearing those black robes.

Officers of the court have a duty to remind the court when they stray. All too often I see a very much "look the other way because I like the result" attitude expressed. It is a sickness in our ranks that philosophy is pursued at the expense of law - and this sickness needs to be treated no matter whom has become infected.