Cuozzo Speed Technologies, LLC v. Lee

By Kevin E. Noonan --

The Supreme Court on Friday granted certiorari to review the Federal Circuit's decision that the U.S. Patent and Trademark's Patent Trial and Appeal Board was entitled to perform claim construction in inter partes review proceedings using the broadest reasonable interpretation standard. This case, Cuozzo Speed Technologies, LLC v. Lee, has the potential to significantly change (and indeed, may level the playing field) for these proceedings, which have been termed "death panel[s]" for granted U.S. patents by not less an authority than former Federal Circuit Chief Judge Randall Rader (although it must be conceded that the Board's decisions have been seemingly more even-handed, i.e., not every claim in every patent challenged in these reviews has been struck down).  The Court also agreed to consider the extent to which the Board's decision to institute an IPR is reviewable when the Board does not confine itself to the art and grounds asserted in the IPR petition.

To recap (briefly), the claims of challenged U.S. Patent No. 6,778,074 (the '074 patent) relate to using a Global Positioning System ("GPS") to determine compliance with local speed limits.  Figure 1 from the patent is representative:

The speedometer 12 is mounted on dashboard 26, and has a backplate 14 with speed markings, a color display 18, and a needle 20 mounted on the backplate.  The position of the vehicle is tracked by the GPS, and the speed of the vehicle correlated with the vehicle's position and location (there being different speed limits at different places). The colored filter adjusts so that speeds above the legal speed are displayed in red, while legal speeds are displayed in white.

Claim 10 was at issue in the IPR and 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.

The PTAB found this claim to be invalid as obvious, based on claim interpretation using the "broadest reasonable interpretation" of the claim terms.  In particular, the Board construed the term "integrally attached" to require that the speedometer and the colored display be separately identifiable from each other, otherwise "'attached' effectively would be read out of the claim."  Under this construction, this claim term was construed to mean "discrete parts physically joined together as a unit without each part losing its own separate identity."

Cuozzo argued on appeal that this broad interpretation of the term was improper and that the Board should have used the claim construction standard enunciated most recently by the Federal Circuit in Philips v. AWH (Fed. Cir. 2006)(en banc); this construction would perforce have been more likely to result in a favorable outcome (for Cuozzo) for the claims at issue.  The Federal Circuit disagreed, in an opinion by Judge Dyk joined by Judge Clevenger over a strenuous dissent by Judge Newman.  The majority held that the Board's use of the BRI standard was consistent with prior Patent Office practice and Federal Circuit case law and that Congress had impliedly consented to this practice (inter alia, by not passing proposed legislation (yet) that would change the standard to the one Cuozzo advocated).  Judge Newman's dissent was based in part on the rationale generally used by the PTO and the court's to use this standard during ex parte prosecution, i.e., that the Office had an obligation to the public to issue valid claims, and the patent applicant could amend the claims in response to rejections under this standard to ensure they had the proper metes and bounds under the statute.  Judge Newman pointed out the distinction that this conventional justification for this standard did not apply to claims in inter partes review, because unlike claims in prosecution there had been a prior determination that the claims are patentable; and in practice the patentee could not readily amend the claims in response to the asserted grounds of invalidity.

Last summer the Federal Circuit refused to reconsider the question en banc, with Judges Dyk, Lourie, Chen, Wallach, Taranto, and Hughes voting against rehearing and Chief Judge Prost and Judges Newman, Moore, O'Malley and Reyna dissenting.  The dissenter's rationale was set forth succinctly as follows:

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.

Cuozzo's certiorari petition followed, having the following Questions Presented:

1.  Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2.  Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board's decision whether to institute an IPR proceeding is judicially unreviewable.

Briefs for the parties will become due in the near future, with amicus briefs on both sides of the issue being expected.  Congress could moot at least the first presented Question by passing those provisions of the most recent "patent reform" legislation that would direct the Office to use the district court standard of claim construction.  Recent experience, however, says that solution is unlikely.

For additional information regarding this topic, please see:

• "No Rehearing En Banc for In re Cuozzo Speed Technologies -- PTAB Update," July 9, 2015
• "In re Cuozzo Speed Technologies, LLC (Fed. Cir. 2015)," February 4, 2015
• "In re Cuozzo Speed Technologies LLC Federal Circuit Argument -- The Patent Office Asks to Have Its Cake and Eat It Too," November 10, 2014
• "Federal Circuit Schedules Argument for First IPR Final Written Decision – In re Cuozzo Speed Technologies LLC," October 2, 2014
• "The First IPR Decision -- A Win for the Patent Challenger," November 18, 2013

Comments

[Paul F. Morgan]

This report sounds like Couzzo was normally objecting to the [IPR and Fed. Cir.] BRI claim interpretation being too broad, when, strangely, the opposite was the case. Cuozzo was consistently arguing for a broader than BRI claim interpretation!* That, of course, is the opposite of the normal and logical objection to BRI in an IPR.
A broader claim interpretation could only make the odds of reversing the IPR decision worse. so it it difficult to see why Couzzo cert question number 1 is not an improper request for an advisory opinion in this unusual case?

*even attempting an illegal patent claim broadening by amendment in the IPR.

[EG]

Paul,

I've reviewed the Federal Circuit panel decision with respect to proposed Claim 21 which was offered by the patentee in the IPR and was rejected by the PTAB for lack of "written description," as well as allegedly "broadening" the claim scope, even under BRI. Here's proposed Claim 21:

“a speedometer integrally attached to [a] colored display, wherein the speedometer comprises a liquid crystal display, and wherein the colored display is the liquid crystal display.”

Frankly, I don't see Claim 21 as trying to "broaden" the claim scope but instead offering a potential narrowing by the patentee. Indeed, that's the whole problem with the excessively restrictive motion to amend practice in IPRs which apply the BRI standard of patent application prosecution but then unduly burden the patentee with having to then prove that the proffered amendment is patentable on its face.

Also, if, as alleged by the patentee, the "PTO relied on prior art that Garmin did not identify in its petition as grounds for IPR," you have a potential violation of either procedural or substantive "due process." For the Federal Circuit to say that 314(d) makes any such alleged violation of "due process" completely unreviewable by any court is either a misinterpretation of 314(d), or if correctly interpreted, renders 314(d) unconstitutional as violating "due process" on its face.

[Paul F. Morgan]

Re the second cert question expressed above as: "The Court also agreed to consider the extent to which the Board's decision to institute an IPR is reviewable when the Board does not confine itself to the art and grounds asserted in the IPR petition."
That suggests a due process issue. But as the Fed. Cir. clearly noted, all the applied prior art patents and grounds WERE asserted in the IPR petition [i.e., the patent owner was fully on notice ab initio] but one patent in the combination of patents was not asserted against some subject claims in the petition which the Board did in its final decision.

[Paul F. Morgan]

Re: "This case .. has the potential to significantly change (and indeed, may level the playing field) for these proceedings."
This is because some people have convinced themselves that changing from BRI to Phillips claim construction would make a huge difference in the outcomes of IPRs. However, that one difference does not seem nearly that significant to others, including some IPR experts. BRI, if properly applied by APJs, considers much of the same intrinsic evidence as Phillips claim interpretations. Patent owners are also free to submit declarations of extrinsic evidence in support of their own desired claim interpretations. Less than a handful of Board IPR decisions have been reversed by the Fed. Cir. on claim interpretation issues.
The far more important reason for IPR claim rejection rates are their vastly more extensive and thorough prior art searches and presentations, and their evaluations against the claims by patent attorney APJs. Also, the number of IPRs refused institution, or settled without a decision, must be statistically considered. Furthermore, alleged average IPR claim rejection rates are missleading. Recent statistics showed that the IPR claim rejection rate is very much lower if one excludes the large number of 103 rejected broad computerized functional claims of the type that are now also judicially vulnerable under Alice-101. Nor are valid comparisons to validly decisions in D.C. litigation easy when something like 97% of patent suits are settled, or decided solely on non-infringement, without any validity determination.

[EG]

"the number of IPRs refused institution, or settled without a decision, must be statistically considered."

Paul,

Fair enough point made. But that still doesn't excuse the PTAB from compliance with the AIA statutes, or playing fairly according to its owns promulgated rules in in IPRs. And the Federal Circuit can't simply hide behind either a misinterpretation, or worse, an unconstitutional interpretation of 314(d) when "due process" is being violated in IPRs.

[Paul F. Morgan]

EG, the Fed. Cir. opinion deals with the Cuozzo claim broadening attempts in detail, including the long established law that narrowing an issued patent claim in one respect does not excuse broadening it in any other respect (so that it could read on anything it did not read on before). Only a broadening reissue filed within two years of patent issuance can do that.

[Paul F. Morgan]

EG, if you are referring to Cuozzo cert question 2 re alleged statutory or rule violations, hopefully that will be dealt with by the Sup. Ct. It should be fully clarified that the IPR statute in question is only a bar to INTERLOCUTORY appeals of only the initial Board decision that sufficient pleading and evidence has been provided to proceed [which is common to much other litigation]. That is, NOT a bar to review of any illegality as part of the normal appeal of the IPR decision.