Supreme Court Rules on Inter Partes Review of Patent Claims
Intellectual Property Update
Date: June 22, 2016
On June 20, 2016, in Cuozzo Speed Technologies, LLC v. Lee, the Supreme Court of the United States upheld the United States Patent and Trademark Office’s (USPTO) authority to use the broadest reasonable construction of an issued patent claim when reevaluating patentability during an inter partes review – a relatively new procedure created by the America Invents Act. Under the broadest reasonable construction standard, the scope of an issued patent claim may be quite expansive, opening up the claim to attack from a larger universe of prior art. Opponents of the broadest reasonable construction standard argued that the USPTO should use the same claim construction standard a court would use when evaluating infringement of a patent. Unlike the USPTO, courts interpret disputed patent claim terms by determining their ordinary meaning as understood by a person of skill in the art. By ruling that the USPTO could continue to use the broadest reasonable construction standard, the Supreme Court preserved inter partes review as a powerful weapon to invalidate troublesome patents.
Inter partes review is a trial proceeding, initiated by someone other than the patent owner, which is conducted at the Patent Trial and Appeal Board to review the patentability of one or more issued patent claims, but only on the basis of prior art patents or printed publications. When Congress created the inter partes review procedure, it also granted the USPTO authority to issue regulations governing the procedure. Under that authority, the USPTO issued a regulation stating that, when conducting an inter partes review, the agency should give a patent claim “its broadest reasonable construction in light of the specification of the patent in which it appears.”
In Cuozzo, the Supreme Court concluded that the USPTO’s selection of that standard was a reasonable exercise of its rulemaking authority granted by Congress. The Court observed that the USPTO has been using the same standard to examine the patentability of applications for more than 100 years. In addition, the Court stated that construing a patent claim according to its broadest reasonable construction helps protect the public interest by increasing the possibility that an examiner will deny a claim as too broad, thus encouraging applicants to draft patent claims precisely.
Since the procedure for conducting inter partes review came into effect on September 16, 2012, it has become extremely popular with entities desiring to challenge an issued patent’s validity. It is not uncommon for accused infringers to petition for inter partes review even after a patentee has filed an infringement action in court. Based on statistics compiled by the USPTO, 4,538 petitions for inter partes review have been filed as of May 31, 2016. Part of their popularity is their high success rate: Of the 3,114 petitions that have reached final dispositions, 1,580 have resulted in the institution of a trial, and only 931 have been denied. Another 546 petitions were settled before the USPTO reached a decision whether to institute an inter partes review. Of the 1,580 final dispositions in which trials were instituted, 846 (54 percent) resulted in a finding that at least some of the reviewed claims were unpatentable and another 432 were settled. In only 142 (9 percent) of the 1,580 trials instituted at the Patent Trial and Appeal Board did the USPTO find that none of the reviewed claims were unpatentable.
The result of the Supreme Court’s Cuozzo decision is that inter partes review is likely to remain a favorable and effective option for entities, including accused infringers, seeking to challenge the validity of issued patent claims. In particular, the USPTO’s use of the broadest reasonable construction, as compared to the narrower construction available in court, could mean the difference between validity and invalidity in view of the prior art.
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Jeffrey C. Metzcar
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