Wednesday, February 04, 2015

CAFC in Cuozzo: § 314(d) prohibits review of the decision to institute IPR even after a final decision

In In re Cuozzo Speed Technologies, a split CAFC panel observed

Contrary to Cuozzo’s contention, we hold that we lack
jurisdiction to review the PTO’s decision to institute IPR.
We affirm the Board’s final determination, finding no
error in the Board’s claim construction under the broadest
reasonable interpretation standard, the Board’s obviousness
determination, and the Board’s denial of Cuozzo’s
motion to amend.

The legal matter involved an inter partes review [IPR]:

On September 16, 2012, Garmin filed a petition with
the PTO to institute IPR of, inter alia, claims 10, 14, and
17 the ’074 patent. Garmin contended that claim 10 was
invalid as anticipated under 35 U.S.C. § 102(e) or as
obvious under 35 U.S.C. § 103(a) and that claims 14 and
17 were obvious under § 103(a). The PTO instituted IPR,
determining that there was a reasonable likelihood that
claims 10, 14, and 17 were obvious under § 103

One legal issue pertained to the initiation of the review itself:

IPRs proceed in two phases. St. Jude Med., Cardiology
Div., Inc. v. Volcano Corp., 749 F.3d 1373, 1375–76
(Fed. Cir. 2014). In the first phase, the PTO determines
whether to institute IPR. In the second phase, the Board
conducts the IPR proceeding and issues a final decision.

Cuozzo argues that the PTO improperly instituted
IPR on claims 10 and 14 because the PTO relied on prior
art that Garmin did not identify in its petition as grounds
for IPR as to those two claims (though the prior art in
question was identified with respect to claim 17). Under
the statute, any petition for IPR must “identif[y] . . . with
particularity . . . the grounds on which the challenge to
each claim is based . . . .” 35 U.S.C. § 312(a)(3). Cuozzo
argues that the PTO may only institute IPR based on
grounds identified in the petition because “[t]he Director
may not authorize an inter partes review to be instituted
unless the Director determines that the information
presented in the petition . . . and any response . . . shows
that there is a reasonable likelihood that the petitioner
would prevail . . . .” Id. § 314(a).

The CAFC commented:

We have previously addressed § 314(d) and have held
that it precludes interlocutory review of decisions whether
to institute IPR. In St. Jude, we characterized § 314(d) as
a “broadly worded bar on appeal” and held that § 314(d)
“certainly bars” interlocutory review of the PTO’s denial
of a petition for IPR. 749 F.3d at 1375–76. This result was
supported by § 319, which “authorizes appeals to this
court only from ‘the final written decision of the
[Board] . . . .’” Id. at 1375 (quoting 35 U.S.C. § 319) (alteration
in original). Similarly, the bar to interlocutory
review is supported by 35 U.S.C. § 141(c), which “authorizes
appeal only by ‘a party to an inter partes review
. . . who is dissatisfied with the final written decision
of the [Board] under section 318(a).’” Id. (quoting 35
U.S.C. § 141(c)) (alterations in original). But while we
stated that § 314 “may well preclude all review by any
route,” we did not decide the issue. Id. at 1376.

We conclude that § 314(d) prohibits review of the decision
to institute IPR even after a final decision.
On its
face, the provision is not directed to precluding review
only before a final decision. It is written to exclude all
review of the decision whether to institute review. Section
314(d) provides that the decision is both “nonappealable”
and “final,” i.e., not subject to further review. 35 U.S.C.
§ 314(d). A declaration that the decision to institute is
“final” cannot reasonably be interpreted as postponing
review until after issuance of a final decision on patentability.

The CAFC alluded to Hiniker:

Our decision in In re Hiniker Co., 150 F.3d 1362, 1367
(Fed. Cir. 1998), confirms the correctness of the PTO’s
position here. There, even absent a provision comparable
to § 314(d),3 we held that a flawed decision to institute
reexamination under 35 U.S.C. § 303 was not a basis for
setting aside a final decision. Hiniker, 150 F.3d at 1367.
Under the statute at issue in Hiniker, reexamination
could only be instituted if the Commissioner determined
that there was “a substantial new question of patentability,”
i.e., new prior art not considered by the examiner. 35
U.S.C. § 303(a) (1994). In Hiniker, the PTO instituted
reexamination based on prior art considered in the original
examination (Howard). Hiniker, 150 F.3d at 1365. But
the PTO’s final decision relied on East (which had not
been before the examiner in the initial examination) in
finding the claims invalid. Id. at 1366. We held that our
jurisdiction was only “over Hiniker’s appeal from the
[final] decision of the Board.” Id. at 1367.

The CAFC did suggest an alternative:

The answer is that mandamus may be
available to challenge the PTO’s decision to grant a petition
to institute IPR after the Board’s final decision in
situations where the PTO has clearly and indisputably
exceeded its authority.

But the CAFC observed:

Even if § 314 does not bar mandamus after a final decision,
at least “three conditions must be satisfied before
[a writ of mandamus] may issue.” Cheney v. U.S. Dist.
Court for the D.C., 542 U.S. 367, 380 (2004). “First, ‘the
party seeking issuance of the writ [must] have no other
adequate means to attain the relief he desires.’” Id. (quoting
Kerr v. U.S. Dist. Court for the N. Dist. of Cal., 426
U.S. 394, 403 (1976) (alteration in original)). That condition
appears to be satisfied since review by appeal is
unavailable. “Second, the petitioner must satisfy ‘the
burden of showing that his right to issuance of the writ is
clear and indisputable.’” Id. at 381 (internal quotations,
citation, and alterations omitted). “Third, the issuing
court, in the exercise of its discretion, must be satisfied
that the writ is appropriate under the circumstances.” Id.
(citation omitted).

Here, Cuozzo has not filed a mandamus petition, but
even if we were to treat its appeal as a request for mandamus,5
the situation here is far from satisfying the clearand-indisputable
requirement for mandamus. It is not
clear that IPR is strictly limited to the grounds asserted
in the petition. The PTO urges that instituting IPR of
claims 10 and 14 based on the grounds for claim 17 was
proper because claim 17 depends from claim 14, which
depends from claim 10. Any grounds which would invalidate
claim 17 would by necessary implication also invalidate
claims 10 and 14. See Callaway Golf Co. v. Acushnet
Co., 576 F.3d 1331, 1344 (Fed. Cir. 2009) (“A broader
independent claim cannot be nonobvious where a dependent
claim stemming from that independent claim is
invalid for obviousness.”). The PTO argues that Garmin
implicitly asserted that claims 10 and 14 were unpatentable
when it asserted that claim 17 was unpatentable.
Whether or not the PTO is correct in these aspects, it is at
least beyond dispute there is no clear and indisputable
right that precludes institution of the IPR proceeding. We
need not decide whether mandamus to review institution
of IPR after a final decision is available in other circumstances.

As to the obviousness determination, the matter of "broadest reasonable interpretation"
[BRI] arose:

The America Invents Act (“AIA”) created IPR, but the
statute on its face does not resolve the issue of whether
the broadest reasonable interpretation standard is appropriate
in IPRs; it is silent on that issue. However, the
statute conveys rulemaking authority to the PTO. It
provides that “[t]he Director shall prescribe regulations,”
inter alia, “setting forth the standards for the showing of
sufficient grounds to institute . . . review,” and “establishing
and governing inter partes review . . . and the relationship
of such review to other proceedings . . . .” 35
U.S.C. § 316(a)(2), (a)(4). Pursuant to this authority, the
PTO has promulgated 37 C.F.R. § 42.100(b), which provides
that “[a] claim in an unexpired patent shall be given
its broadest reasonable construction in light of the specification
of the patent in which it appears.” 37 C.F.R.
§ 42.100(b). Cuozzo argues that the PTO lacked authority
to promulgate § 42.100(b) and that the broadest reasonable
interpretation standard is inappropriate in an adjudicatory
IPR proceeding. The PTO argues that 35 U.S.C.
§ 316 provides the necessary authority to the PTO to
promulgate § 42.100(b) and that the broadest reasonable
interpretation is appropriately applied in the IPR context.

The CAFC went through a history of BRI:

A 1906 PTO decision explained, “[n]o better method
of construing claims is perceived than to give them in
each case the broadest interpretation which they will
support without straining the language in which they are
couched.” Podlesak v. McInnerney, 1906 Dec. Comm’r Pat.
265, 258. For more than a century, courts have approved
that standard. See, e.g., Miel v. Young, 29 App. D.C. 481,
484 (D.C. Cir. 1907) (“This claim should be given the
broadest interpretation which it will support . . . .”); In re
Rambus, Inc., 753 F.3d 1253, 1255 (Fed. Cir. 2014)
(“Claims are generally given their ‘broadest reasonable
interpretation’ consistent with the specification during
reexamination.” (citation omitted)); In re Am. Acad. of Sci.
Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004) (“Giving
claims their broadest reasonable construction ‘serves the
public interest by reducing the possibility that claims,
finally allowed, will be given broader scope than is justified.’”
(quoting In re Yamamoto, 740 F.2d 1569, 1571 (Fed.
Cir. 1984))); In re Morris, 127 F.3d 1048, 1054 (Fed. Cir.
1997) (“[W]e reject appellants’ invitation to construe
either of the cases cited by appellants so as to overrule,
sub silentio, decades old case law. . . . It would be
inconsistent with the role assigned to the PTO in issuing
a patent to require it to interpret claims in the same
manner as judges who, post-issuance, operate under the
assumption the patent is valid.

Chevron vs. NRDC, a favorite of Professor Sunstein when at
UChicago Law, arose:

Because Congress authorized the PTO to prescribe
regulations, the validity of the regulation is analyzed
according to the familiar Chevron framework. See United
States v. Mead Corp., 533 U.S. 218, 226–27 (2001); Wilder
v. Merit Sys. Prot. Bd., 675 F.3d 1319, 1322 (Fed. Cir.
2012). Under Chevron, the first question is “whether
Congress has directly spoken to the precise question at
issue.” Chevron, U.S.A. v. Natural Res. Def. Council, Inc.,
467 U.S. 837, 842 (1984); accord Cooper, 536 F.3d at 1337
(quoting Hawkins v. United States, 469 F.3d 993, 1000
(Fed. Cir. 2006)). If the statute is ambiguous, the second
question is “whether the agency’s interpretation is based
on a permissible construction of the statutory language at
issue.” Cooper, 536 F.3d at 1338 (quoting Hawkins, 469
F.3d at 1000).

Next, the CAFC referenced the recent case Teva v. Sandoz:

The second issue is whether the Board here properly
construed the claims under the broadest reasonable
interpretation standard. We review the Board’s claim
construction according to the Supreme Court's decision in
Teva Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., 135 S.
Ct. 831, 841 (2015). We review underlying factual determinations
concerning extrinsic evidence for substantial
evidence and the ultimate construction of the claim de
novo. See id. Because there is no issue here as to extrinsic
evidence, we review the claim construction de novo.

As to the obviousness determination:

The third question is whether claims 10, 14, and 17
were obvious. We review the Board’s factual findings for
substantial evidence and review its legal conclusions de
novo. In re Baxter Int’l, Inc., 678 F.3d 1357, 1361 (Fed.
Cir. 2012). The ultimate determination of obviousness
under § 103 is a question of law based on underlying
factual findings. Id. (citing Graham v. John Deere Co., 383
U.S. 1, 17–18 (1966)). What a reference teaches and the
differences between the claimed invention and the prior
art are questions of fact which we review for substantial
evidence. Id. (citations omitted). Cuozzo states that, “[f]or
the purposes of this appeal, claims 10, 14, and 17 rise and
fall together.” Appellant Br. 17 n.1. Therefore, we analyze
only claim 10.

Muniauction was cited:

It is a “long-established rule that ‘claims which are
broad enough to read on obvious subject matter are unpatentable
even though they also read on nonobvious
subject matter.’” Muniauction, Inc. v. Thomson Corp., 532
F.3d 1318, 1328 n.4 (quoting In re Lintner, 458 F.2d 1013,
1015 (CCPA 1972)) (internal alterations omitted).

Judge Newman's dissent began:

I respectfully dissent, for several of the panel majority’s
rulings are contrary to the legislative purpose of the
Leahy-Smith America Invents Act, Pub. L. No. 112-29,
125 Stat. 284 (2011) (effective September 16, 2012).

The America Invents Act established a new Inter
Partes Review system for the purpose of “providing quick
and cost effective alternatives to litigation.” H.R. Rep.
No. 112-98, pt. 1, at 48 (2011). This purpose was achieved
by providing a new adjudicatory proceeding in the administrative
agency, the Patent and Trademark Office in the
Department of Commerce, whereby a newly formed
Patent Trial and Appeal Board (PTAB) serves as a surrogate
for district court litigation of patent validity. The
goal is improved service to technology-based innovation,
and thus to the nation. The panel majority thwarts the
statutory plan in several ways.

Judge Newman brought up the freedom to amend issue:

This court has approved the use of “broadest reasonable
interpretation” as an expedient in examination and
reexamination, but our approval was based on the unfettered
opportunity to amend in those proceedings. That
opportunity is not present in Inter Partes Review;
amendment of claims requires permission, and since the
inception of Inter Partes Review, motions to amend have
been granted in only two cases, although many have been

Judge Newman also raised a "scope of petition" issue

Several other aspects of the America Invents Act are
incorrectly or confusingly treated. For example, as Cuozzo
points out, here the PTAB decision relies on arguments
and evidence that had not been raised in the petition to
institute, although the statute requires that all arguments
and evidence must be presented in the petition.
The panel majority holds that “[t]he fact that the petition
was defective is irrelevant because a proper petition could
have been drafted.” Maj. op. at 8. Such broad and conflicting
departure from the statutory provisions cannot
have been intended.

Judge Newman observed:

The goal of Inter Partes Review is to rehabilitate the
innovation incentive, by reinforcing valid patents and
eliminating invalid patents through an expeditious and
cost-effective alternative to litigation, on whose results
the innovation community can rely. To this end, the new
Inter Partes Review proceedings provide for discovery,
expert testimony, depositions, subpoenas, briefs, and oral
argument by adversaries. See Abbott Labs. v. Cordis
Corp., 710 F.3d 1318, 1326 (Fed. Cir. 2013) (the America
Invents Act created an adversarial proceeding as in the
district courts, where all appropriate evidence can be

Inter Partes Review is limited to patent validity, for
validity is a central issue in patent litigation, and often is
dispositive of the entire litigation. To serve as a reliable
substitute for district court validity determination, the
legislation was designed to achieve the same correct
decision as would be obtained in a district court on the
same evidence and the same law. However, this court
holds that PTAB adjudication need not conform to the law
and consider the same evidence as in the courts.


Although the PTAB is authorized to apply trial and
evidentiary procedures, my colleagues hold that the PTAB
need not apply the same rules of law and evidence as in
the district courts. It is critical to the success of Inter
Partes Review that it serve its purpose as a district court
surrogate, yet it is not disputed that the “broadest reasonable
interpretation” of claims and technology can differ
from the ultimately correct decision on the standards of
Phillips v. AWH Corp., 45 F.3d 1303 (Fed. Cir. 2005) (en
banc). This built-in discrepancy defeats the legislative
purpose of substituting administrative adjudication for
district court adjudication, for a PTAB decision based on
this artificial “broadest” standard cannot substitute for
litigation directed to the correct result.

Judge Newman mentions "legally unreliable":

Contrary to the panel majority’s theory, the differences
between reexamination and the new post-grant
proceedings are very relevant to Inter Partes Review. The
standard for adjudication of validity is set forth in Phillips
v. AWH Corp., where claims are given their correct
construction as understood by a person of ordinary skill in
the field of the invention. Adoption of a broadest interpretation
renders the PTAB rulings legally unreliable,
leaving the parties to district court proceedings, whatever
the decision of the PTAB. That was not the legislative

Judge Newman notes a significant distinction between patentability and

The distinction is carefully
made in the statute, for “validity” is the province of adjudication,
while “patentability” applies to examination.
See In re Donaldson Co., Inc., 16 F.3d 1189, 1193 (Fed.
Cir. 1994) (referring to “a patentability determination in
the PTO or . . . a validity or infringement determination
in a court”). This distinction is significant.

Judge Newman mentions "illusory":

It is reported that the ability to amend claims in Inter
Partes Review proceedings, as administered by the PTO,
is almost entirely illusory. Amendment requires permission,
37 C.F.R. § 42.20(b), and to date motions to amend
have been granted in only two cases, see supra note 1.
Patent owners are limited to “one motion to amend,” and
are presumptively limited to substituting one issued claim
for one amended claim. 37 C.F.R. § 42.221(a)(3).

Instead of Chevron, Judge Newman cites Davis:

The panel majority states that the PTO is acting within
its rulemaking authority. The Supreme Court has
stated that “although an agency’s interpretation of the
statute under which it operates is entitled to some deference,
‘this deference is constrained by our obligation to
honor the clear meaning of a statute, as revealed by its
language, purpose, and history.’” Se. Cmty. Coll. v. Davis,
442 U.S. 397, (1979) (quoting Teamsters v. Daniel, 439
U.S. 551, 566 n. 20 (1979)); see also Muwwakkil v. Office
of Pers. Mgmt., 18 F.3d 921, 925 (Fed. Cir. 1994) (“When
an agency’s interpretation of a statute it is entrusted to
administer is contrary to the intent of Congress, as divined
from the statute and its legislative history, we owe
it no deference.”).

As to the 314(d) matter, Judge Newman wrote

The ultimate authority regarding what a statute says
and how it applies is the judiciary. The purpose of the
“nonappealable” provision apparently is to bar interlocutory
proceedings and harassing filings by those seeking to
immobilize the patent or exhaust the patentee. The bar of
interlocutory appeals is routine. However, sensitive
scrutiny is required, not blanket enlargement for all
circumstances. In Bowen v. Michigan Academy of Family
Physicians, 476 U.S. 667 (1986) the Court explained that
“[f]rom the beginning ‘our cases [have established] that
judicial review of a final agency action by an aggrieved
person will not be cut off unless there is persuasive reason
to believe that such was the purpose of Congress’.” Id. at
670 (alteration in original) (quoting Abbott Labs. v. Gardner,
387 U.S. 136, 140 (1967))

Toward the end of the dissent, one has the text

The panel majority holds that “[t]he fact that the petition was defective
is irrelevant because a proper petition could have
been drafted.” Maj. op. at 8. Is this prohibited appellate
review of the nonappealable petition? Or simply a curious
departure from the fundamental rule of administrative
action, that agency decisions must be reviewable on
appeal? In Block v. Community Nutrition Institute, 467
U.S. 340 (1984), the Court elaborated on the principle of
judicial review of agency determinations. The Court
Whether and to what extent a particular statute
precludes judicial review is determined not only
from its express language, but also from the structure
of the statutory scheme, its objectives, its legislative
history, and the nature of the
administrative action involved.
Id. at 345.

The statute requires thoughtful adjustment to the legislative
purpose, not heavy-handed foreclosure of all
review of anything related to the petition.


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