Let’s Be Reasonable! In re Cuozzo & PTAB’s Broadest Reasonable Interpretation

Cuozzo is a name that, strangely enough, reminds me of pizza. It must be the two z’s. Unfortunately, the two are unrelated even through a broadest reasonable interpretation (bad patent law pun intended). In re Cuozzo was a case decided by the United States Court of Appeals for the Federal Circuit in February 2015 but during July 2015, in almost a direct split of 6-5, the Federal Circuit rejected Cuozzo Speed Technology LLC’s petition for an en banc rehearing. Cuozzo’s speedometer patent was invalidated. However, more importantly, this case holds special significance as the first decision in an appeal from an inter partes review (IPR) conducted by the Patent Trial and Appeal Board (PTAB). The Federal Circuit affirmed the PTAB’s “broadest reasonable interpretation” claim construction standard.

In short, the post-grant proceeding known as an inter partes review (IPR) came into being as one of the big changes wrought by the America Invents Act (AIA) as an alternative to district court litigation within the United States Patent Trademark Office (UPTO). The AIA also created a new entity called the PTAB for handling those adjudications. Not only have IPRs been popular but they have also been very lethal with 88% of petitions with final written decisions from September 2012 to August 2015 resulting in at least one claim being invalidated. Part of its deadly nature derives from the broadest reasonable interpretation. From its conception, IPRs have been governed by the claim construction standard of broadest reasonable interpretation, and not the district court standard under Phillips v. AWH Corp. According to the Patent Office, under the broadest reasonable interpretation, claim terms are given their broadest reasonable interpretation in view of the specification to one having ordinary skill in the art at the time of the invention in without importing limitations into the claims from the specification. By allowing the broadest reasonable interpretation during examination, where the patentee is able to amend claims, this interpretation reduces the chance that the claims would get overly broad exposure after issuance. In IPRs, on the other hand, claims may not be amended as a matter of right. District courts apply the Phillips standard, which analyzes intrinsic evidence such as the specification, claims of the patent, and the prosecution history in addition, to a lesser extent, extrinsic evidence such as expert testimony and dictionaries. The disparity between the broadest reasonable interpretation and Phillips standards has actually created ambiguity and inconsistent claim constructions in a few cases. Even though these variations exist, In re Cuozzo was a step on behalf of the Federal Circuit toward supporting the PTAB.

Alas, the juggernaut that was In re Cuozzo started off with humble beginnings when Garmin, the patent challenger, challenged four claims in Cuozzo’s U.S. Patent No. 6,778,074 in an IPR. The PTAB instituted review on three of those claims and held all of them un-patentable. Unsurprisingly, Cuozzo appealed to the Federal Circuit and ironically, Garmin settled with Cuozzo during the appeal but since the UPTO intervened to defend the final decision, the appeal continued between Cuozzo and the UPTO. The rest, as they say, is history.

The Federal Circuit argued that Congress “implicitly adopted” the broadest reasonable interpretation through its silence during passage of the AIA. After all, Judge Dyk argued, they knew that the UPTO had been practicing that standard for over a hundred years. The majority also shrugged off Cuozzo’s concern that there was a limited opportunity to amend claims by virtue of the fact, that claim amendments are still “nonetheless available.” The Federal Circuit went on to state that even if Congress did not adopt the broadest reasonable interpretation directly in the AIA, it did so in that the AIA allowed the UPTO the discretion for “setting forth the standards for the showing of sufficient grounds to institute a review.”

Judge Newman’s dissent viewed the broadest reasonable interpretation as antithetical to the purpose of initiating IPRs in the first instance because IPRs, in themselves, are not purely examination proceedings but rather an adjudicatory proceeding, with the limited ability to amend claims. She argued that this was clear evidence that inter partes review was meant to serve as a cheaper and more efficient alternative to district court litigation, thus warranting district court claim construction standards.
The debate over the broadest reasonable interpretation in IPRs has been going on for a while now. In Versata Development Group v. SAP America, a group of thirteen corporations including 3M, General Electric, Procter & Gamble and others filed a joint amicus brief challenging the PTAB’s application of the broadest reasonable interpretation in post-grant proceedings. The brief argues that the UPTO’s usage of the broadest reasonable interpretation in post-grant proceedings is against the language and congressional intent of the AIA, and different claim construction standards in different adjudicatory proceedings (IPRs vs. district court proceedings) make for bad policy. Cuozzo just might be the straw that broke the camel’s back and the proposal to do away with the broadest reasonable interpretation in post-grant proceedings is catching momentum.

But with the Cuozzo decision in tow, nothing is likely to change unless either Congress or the Supreme Court step in. During the summer, Congressional action proved a possibility as two bills, the Innovation Act and Patent Act, were floating around with provisions to mandate the district court claim construction standard for post-grant proceedings. However, it is rather strange to have this provision in bills that are purported to be anti-troll bills because the shift towards the district court standard favors the patent trolls/patentees. This is probably the reason why, as of this October, those bills are at a standstill and not close to enactment. However, apart from Congressional channels, it was confirmed that Cuozzo Speed Technologies LLC asked the U.S. Supreme Court  to resolve the claim construction issue once and for all. Given the fact that the Federal Circuit was split almost right down the middle on this issue, the Supreme Court may step in after all and grant its coveted certiorari. The only thing to do now is wait and see if Cuozzo has its big comeuppance and the Supreme Court decides whether the broadest reasonable interpretation is really all that reasonable.

Julian Pymento is a J.D. candidate, 2017, at NYU School of Law