Supreme Court Affirms the Federal Circuit's Very Limited Review of Post-Grant Institution Decisions and the Patent Office's "Broadest Reasonable Interpretation" Claim Construction Standard

Cuozzo Speed Techs., LLC v. Lee, __ U.S. __ (June 20, 2016) (Breyer, J.; concurrence by Thomas; partial concurrence and dissent by Alito, with Sotomayor joining)

Yesterday, the Supreme Court affirmed the Federal Circuit's decision that (a) it could not review the Patent Office's grant of inter partes review (IPR) on a ground that the petitioner had not explicitly requested, and (b) the Patent Board could apply in the IPR its "broadest reasonable interpretation" (BRI) standard for construing patent claims.

Review of Institution Decisions:
When instituting the IPR, the Board had treated several claims together, finding that the petitioner "implicitly" challenged them all. The Supreme Court agreed that such a decision was unreviewable because 35 U.S.C. 314 governs such determinations and says that institution decisions "under this section shall be final and nonappealable." The Court rejected Cuozzo's argument that the institution decision here actually fell under 35 U.S.C. 312, which requires particularity in petitions, finding instead that the Patent Office’s determination was subject to Section 314. The Court also emphasized the importance that the Patent Office be able to revisit its prior patent grants, and the fact that similar patent provisions had similar results. The Court's majority also held that the statutory language could not support a holding that would block review only of interlocutory appeals (as the dissent advocated), but allow review after final agency decisions. Although there is a "strong presumption" in favor of review of agency action, that presumption was overcome by the points just discussed and others. The majority expressly noted that it was not deciding whether review could be had of constitutional questions or issues that turn on a section other than Section 314 (e.g., if the PTO cancelled a claim using 35 U.S.C. 112).

Broadest Reasonable Interpretation:
Applying Chevron deference, the Court noted that the relevant statute clearly contains a gap, and that the Patent Office has unambiguous direction to make rules to address the gap. The adjudicatory nature of IPR proceedings changes nothing because, in numerous other ways, IPRs are similar to other classic Patent Office proceedings (and unlike judicial proceedings). The Patent Office's regulation, in the Court's view, is a "reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office." Slip op. at 17.

In concurring, Justice Thomas referred to "Chevron's fiction that ambiguity in a statutory term is best construed as an implicit delegation of power to an administrative agency to determine the bounds of the law." He thought it enough for the Court to find an "express and clear conferral of authority to the Patent Office to promulgate rules governing its own proceedings."

Justice Alito (with Justice Sotomayor joining) believed that judicial review of institution decisions in the middle of an IPR (interlocutory reviews) should be blocked, but that review of an IPR that has been completed should be fine. (He recognized in a footnote that there could be no review from a decision to not institute an IPR, even though it would be a final decision.) In Justice Alito's reasoning, the statute says that the institution decision is "nonappealable," but not that it can never be reviewed. He did note, however, that the review should be properly limited in various typical manners.

Stay tuned to the Fish Litigation Blog for additional discussions of Supreme Court IP-related decisions.