** LEGAL UPDATE **
In 2011, the Leahy-Smith America Invents Act (commonly known as the “AIA”) was enacted into law. The AIA made significant changes to American patent law, indeed some of the most sweeping reforms in many decades. Among those changes was a shift from a “first to invent” system of establishing patent rights to a “first to file” system, putting the United States on par with many other nations. The AIA also created a process known as “inter partes review,” through which a third party could challenge the validity claims asserted in an existing patent.
In the 2016 case of Cuozzo Speed Technologies, LLC v. Lee, the U.S. Supreme Court held that the USPTO's decision of whether or not it initiates an inter partes proceeding is final and non-appealable. The case therefore sets important guidelines for parties seeking to challenge the agency’s determinations of patent validity.
Created through the AIA, inter partes review is a procedure to challenge the validity of an existing patent. After a petition by a third party, the Patent Trial and Appeal Board (PTAB) adjudicates the proceeding, first determining whether or not to initiate an investigation of the patent and then if so, whether or not to cancel the patent.
According to federal law (35 U.S.C. § 314(d)), the USPTO’s decision about whether to institute an inter partes review under this section is final, and cannot be appealed. Moreover, the Patent Act gives the USPTO the authority to issue implementing regulations that establish and govern this inter partes review process.
Under 37 C.F.R. §42.100(b) (contained in the Code of Federal Regulations), the USPTO notes that it shall give patent claims the “broadest reasonable construction in light of the specification of the patent in which it appears.”
In 2012, Garmin International, Inc., and Garmin USA, Inc. asked the USPTO to initiate an inter partes review of all 20 claims of a patent held by Cuozzo Speed Technologies, LLC. The patent involved a speedometer that would show a driver when he or she is driving above the speed limit.
Garmin argued that claim 17 of that patent was “obvious” in light of prior patents. This, of course, would be fatal. Under 35 U.S.C. § 103, which establishes conditions for patent validity, a patent is invalid if the claimed invention would be “obvious” in light of “prior art” (in other words, prior patents).
The USPTO agreed to review claim 17 of Cuozzo’s patent, and also decided to examine claims 10 and 14 on the same grounds. The PTAB eventually agreed with Garmin that those claims were invalid because of “prior art” and therefore cancelled all three claims.
Cuozzo appealed the determination to the U.S. Court of Appeals for the Federal Circuit—the federal court with jurisdiction over most patent appeals. It argued that the USPTO had overstepped its bounds by cancelling the various claims of its patent, and had also applied the wrong standard in its review. The Federal Circuit disagreed, holding that the USPTO exercised appropriate authority under the Patent Act and that the agency’s decision to initiate inter partes review was non-appealable.
Cuozzo asked the U.S. Supreme Court to review the case, and the High Court agreed to hear it, granting certiorari on January 15, 2016.
In a 6-2 decision, the U.S. Supreme Court affirmed the holding of the U.S. Court of Appeals for the Federal Circuit. Essentially, the Court held that 35 U.S.C. § 103 permits the USPTO to decide whether to initiate inter partes review, and that its decision cannot be appealed.
Justice Stephen Breyer, in his June 20, 2016 opinion for the Court, noted that “the legal dispute at issue is an ordinary dispute about the application of certain relevant patent statutes concerning the Patent Office’s decision to institute inter partes review.”
Under a plain reading of the Patent Act provision, “the “No Appeal” provision’s language must, at the least, forbid an appeal that attacks a ‘determination… whether to institute’ review by raising this kind of legal question and little more.”
This authority, Justice Breyer argued, is consistent with Congress’ likely intentions in passing the AIA. To hold otherwise "would undercut one important congressional objective, namely, giving the [USPTO] significant power to revisit and revise earlier patent grants…. We doubt that Congress would have granted the [USPTO] this authority… if it had thought that the agency’s final decision could be unwound under some minor statutory technicality related to its preliminary decision to institute inter partes review.”
In other words, the Supreme Court effectively relied on legislative history as well as the plain language of the AIA to conclude that the USPTO enjoyed broad authority to make determinations on patents, as it did with Cuozzo’s patent.
Cuozzo Speed Technologies, LLC v. Lee is among the first major Supreme Court cases to clarify the new language of the AIA, which was enacted relatively recently.
Readers will notice that the decision itself is somewhat complex—as many of the Supreme Court’s patent cases tend to be—and includes a concurring opinion by Justice Thomas, as well as a partial concurrence and dissent by Justice Alito and Justice Sotomayor. The divergent viewpoints among the justices on this statute suggest that the AIA will surely be subject to more litigation in the years ahead, and the Court will be called upon to interpret the recent changes to the laws governing patents. For now, though, the USPTO’s authority with respect to inter partes proceedings has been sustained.
Effective Date: June 20, 2016