No Rehearing En Banc for In re Cuozzo Speed Technologies -- PTAB Update

By James Lovsin and Andrew Williams --

Earlier this week, the Federal Circuit issued an order denying a petition for rehearing en banc in the In re Cuozzo Speed Technologies, LLC case.  As we have previously reported, this case was the first appeal of the first IPR Final Written Decision for the first IPR ever filed.  The original opinion not only addressed the substance of the underlying case, but it also approved of some of the most contentious rules promulgated by the Patent Office for these proceedings.  Moreover, Judge Newman provided a strongly worded dissent.  As such, many commentators believed that the entire Court would take up such issues as whether the "Broadest Reasonable Interpretation" (BRI) is the correct claim construction standard in these post-grant proceedings.  Nevertheless, when the poll was requested and taken for rehearing en banc, it failed.  The Order was accompanied by a concurring opinion authored by Judge Dyk, the author of the original opinion, and was joined by Judges Lourie, Chen, and Hughes.  Chief Judge Prost, and Judges Newman, Moore, O'Malley, and Reyna provided a joint dissent from the petition denial.  Finally, Judge Newman provided her own dissent.  Interestingly, the original panel (Judges Newman, Clevenger, and Dyk) issued an order granting a petition to clarify the underlying decision, withdrawing that decision, and replacing it with the revised opinion and dissent accompanying the order.  The changes made to that decision will be the subject of an upcoming post.

The closeness of the vote is intriguing, and presents some interesting issues.  It would have taken a vote of six judges in active service to rehear the case en banc, given that a majority of active judges must agree to rehear the case, and at the time of the poll the Court had eleven active circuit judges.  The poll therefore failed by only one vote, with the five dissenting judges indicating that they would have reheard the case en banc.  Of course, the Senate recently confirmed Kara Stoll to be the next Circuit Judge of the Federal Circuit, so the Court will soon have its maximum number of twelve active judges.

If Cuozzo decides to petition the Supreme Court to hear its case, the close en banc vote may indicate to the Supreme Court that there is an intra-circuit split on the application of the BRI standard in post-grant proceedings.  In addition, the principal dissent from the denial of the petition is unusual in that it is a joint dissent of five judges rather than an opinion authored by one judge and joined by others (like the concurrence from the denial of the petition).  Such a joint dissent may also indicate the importance of the issue to the Supreme Court.  Given that the Supreme Court addressed the standard of review for claim construction in district court litigation last Term in Teva v. Sandoz, the Court may be inclined to address the related issue of the standard of claim construction for Patent Office proceedings.  The Supreme Court has also not yet granted certiorari in a patent case for next Term.

It will also be interesting to see if future litigants will petition the Federal Circuit again to rehear en banc the broadest reasonable interpretation standard.  The Court declining this week to consider the issue en banc in this case does not mean it will not do so in the future.  For instance, of the six judges that did not dissent from the denial of the petition, two of them did not join the concurrence from the denial of the petition, Circuit Judges Wallach and Taranto.  In addition, Judge Stoll will also likely be available to consider a future petition directed to the BRI standard.  Perhaps a different majority of the Court will decide to address the issue en banc in a future case.

Judge Dyk's Concurence

Judge Dyk concurred in the per curiam order to address the dissenting opinions' arguments why BRI should not be applied in IPR proceedings.  First, BRI has been used by the Office for more than a century.  Second, there is no demonstrated congressional intent in the America Invents Act (AIA) to change the use of this claim construction standard.  Curiously, the concurrence did note that Congress is seeking to correct this "lack-of-intent" oversight.  Nevertheless, the fact that curative legislation is now pending in both the House and Senate is insufficient to demonstrate congresses' prior intent that BRI should not be the standard.

The Joint Dissent

As mentioned above, five Federal Circuit Judges issued a joint dissent.  Their position can be summed up in the two sentences near the end of the dissent:

But in IPRs, as in district court litigation, an already issued claim is being analyzed solely for the purposes of determining its validity.  In this context, it makes little sense to evaluate the claim against the prior art based on anything than the claim's actual meaning.

Joint Dissent from Denial of Petition, at 9.  Instead, these Judges would have required that claims in these new post-grant proceeding be given their actual meaning.

The joint dissent first took issue with the panel majority's conclusion that Congress "implicitly approved" the claim construction standard adopted by the Patent Office.  Instead, they would have applied the rule that silence means just that -- silence.  The new post-grant review proceedings established by the America Invents Act were a "wholly novel procedure," meant to be more adjudicatory than examinational, as most every other Patent Office proceeding is.  Because these proceedings have no real counterpart at the Office, nothing can be gleaned from congressional inaction.  In fact, the dissent challenged the panel majority for failing to explain why congressional silence did not, instead, signal that it had intended the same legal framework as used in district courts.

Second, the joint dissent asserted that existing case law not only failed to support the panel majority's conclusion, but it supported the opposite conclusion.  The prior cases made clear that the BRI standard was appropriate before issuance of a patent to clarify "the metes and bounds of an invention during the back-and-forth between the applicant and examiner when claims are not yet in their final form."  Id. at 3 (citing In re Prater, 415 F.2d 1393, 1405 (CCPA 1969)).  It is this same "give-and-take" that has existed in previous post-grant proceedings in which BRI has been approved.  In contrast, in district court adjudications, the courts arrive at a "'concise statement[] of the subject matter for which the statutory right to exclude is secured by a grant of the patent.'"  Id. at 4 (quoting Multiform Desiccants, Inc. v. Medzam, Ltd., 133 F.3d 1473, 1476 (Fed. Cir. 1998)).  In other words, it is the difference between the use of the BRI standard and determining what the patent claims actually mean.  And because an IPR is a "curtailed, trial-like proceeding meant to efficiently resolve a challenge to patent validity," the claim construction standard used in these proceedings should be no different than that used in district court.

Finally, the joint dissent took issue with the panel majority's holding that the Court should apply Chevron deference to Patent Office's promulgated rules.  First, they did not think it was clear that deference was warranted.  The only congressional grant of authority was for procedural regulations, according to the joint dissent, and therefore should not apply to the claim construction standard.  But, assuming for argument sake that claim construction was more procedural in nature, the joint dissent would still not believe that deference would be warranted because the PTO regulation is contrary to congressional intent.  Nevertheless, even under the deferential standard, the joint dissent would have found the BRI standard unreasonable.

Judge Newman's Dissent

Judge Newman authored her own dissent to address the concerns expressed by the amicus curiae.  In addition to the appellant and the Office of the Solicitor, briefs were filed in this case by the Pharmaceutical Research and Manufacturers of America (PhRMA), the Intellectual Property Owners Association (IPO), the New York Intellectual Property Law Association (NYIPLA), and a collective of companies (3M, Caterpillar, Eli Lilly, General Electric, Glaxosmithkline, Illinois Tool Works, Johnson & Johnson, Pfizer, Procter & Gamble, and Sanofi US) that reportedly "collectively hold tens of thousands of patents."  In fact, based on this showing, Judge Newman made the sweeping comment that the BRI standard "has no defender other than a majority of the Federal Circuit court."

Judge Newman noted the collective's concern that the currently used claim construction standard is inconsistent with the AIA and is against sound patent policy.  The resulting environment "is costly to the inventive community and discourages innovation."  Moreover, the application of different standards in these proceedings and in district court results in no estoppel effect and encourages gamesmanship.  Judge Newman also noted the IPO's concern that the BRI standard is upsetting the settled expectations of inventors, patentees, and anyone else that depends on the patent system.  PhRMA highlighted the importance of the patent system for medical advances, where approximately $40-50 billion in investments are made annually.  Finally, the NYIPLA stressed that the claim construction standard is of great importance and should be heard by the Court en banc.

Judge Newman continued by stressing that all of the amici curiae were in agreement that these new post-issuance adjudicative proceedings are important.  Nevertheless, the legislative purpose is thwarted by the application of a different claim construction standard before the Board.  This was clearly not the legislative intent, and as Judge Newman also pointed out, there is corrective legislation in bills that have already been approved by both the House and Senate committees, although "[p]rompt resolution is reported to be unlikely."  She then provided a list of why the BRI standard is inappropriate:

• Claim construction should be the same for validity and infringement;
• Claim amendments in AIA proceedings require permission, and are limited even when permitted;
• A patentee must now defend a broader construction than it ultimately obtained during prosecution;
• The AIA procedures are surrogate tribunals for determining validity, and the claim construction standard should therefore be the same;
• The public notice of patent claims requires the correct claim construction;
• There is no guidance on what is too broad -- therefore predictability is replaced with fuzziness and uncertainty;
• The PTO tribunals are to review the validity of patents, and it was expected that they would apply the correct law of validity.

Finally, Judge Newman took issue with the concurrence's comment that BRI has been used by the Patent Office for a hundred years.  In patent interferences, according to Judge Newman, the Office does not apply the "broadest" interpretation of anything.  And, in reissue proceedings, the goal is correctness, not breadth.  Therefore, according to Judge Newman, the deciding "question before this court is not whether to 'eliminate' BRI, but whether to impose it on issued patents, where it has not previously reposed."

Comments

[Dan Feigelson]

Yet another dissent from Judge Newman in which she's 100% right. I wince when this happens.

[EG]

"Yet another dissent from Judge Newman in which she's 100% right. I wince when this happens."

Dan,

I wince too. The holding by the majority in this case is a travesty, as is the IPR proceedings. But as David Boundy has pointed out, there are other serious issues with IPRs, including whether the IPR rules were properly promulgated, something which might cause a challenge like in Tafas/GKS. Also, there are currently 2 cases percolating up, one to the Federal Circuit, the other to the 4th Circuit that make very cogent arguments that delegating IPRs to an Article I tribunal to invalidate granted patents is an unconstitutional violation of both the 7th and 5th Amendments.

[Platos Cave]

Obviously the problem is with BRI as a standard in the first place for anything. Why don't we have a BRI standard for private contracts or for torts. Only science majors could split hairs like this. Everyone else doesn't like to over cogitate a problem. Just use one standard for all phases of prosecution and enforcement and get over this charade.

[Platos Cave]

The reason Congress is silent is because they can't believe what the knuckleheads in the patent business are up to this time.