July 15, 2016 Practice Points

Three Key Implications of the Supreme Court's Cuozzo Decision

Moving forward, a number of questions remain open.

By Jarrad Wood

On June 20, 2016, in Cuozzo v. Lee, the U.S. Supreme Court held that (1) the America Invents Act bars the appeal of decisions by the Patent Trial and Appeal to institute post-grant review, unless the appeal raises an important question that goes beyond the merits of the litigation below; and (2) the United States Patent and Trademark Office (USPTO) had the authority to create rules governing inter-partes review—specifically rules implementing the use of the Broadest Reasonable Interpretation claim construction standard (used in, among other things, the patent application process) as opposed to the ordinary meaning standard (used in district court litigation).  

Overlapping—But Not Identical—Purposes
Proceedings before the Patent Trial and Appeals Board and district court litigation have similar purposes. Cuozzo had argued that the Broadest Reasonable Interpretation is improper because of the similarities between inter partes review and district court litigation. The Court dismissed this argument: “The problem with Cuozzo’s argument . . . is that in other significant respects, inter partes review is less like a judicial proceeding and more like a specialized agency proceeding.” “Most importantly,” the Court noted, “these features, as well as inter partes review’s predecessors, indicate that the purpose of the proceeding is not quite the same as the purpose of district court litigation.” (emphasis added). The Court was unconvinced that in changing post grant reexamination proceedings to inter-partes review proceedings, “Congress wanted to change its basic purposes, namely, to reexamine an earlier agency decision.” 

Continued Concern over Patent Troll Activity
At oral arguments, Justice Breyer had stated: 

[T]here is another way to look at it . . . that there are these things, for better words, let’s call them patent trolls, and that the . . . Patent Office has been issuing billions of patents that shouldn’t have been issued I overstate but only some. And what happens is some person in business gets this piece of paper and . . . looks at it and says, [“]oh, my God, I can’t go ahead with my invention.[”] And so what we’re trying to do with this process is to tell the office, you’ve been doing too much too fast. Go back and let people who are hurt by this come in and get rid of those patents that shouldn’t have been issued. Now, we will give you, again, once the same chance we gave you before, and that is you can amend it once if you convince the judge you should have done it before. But if, on the broadest possible interpretation, you know, reasonable interpretation, it shouldn’t have been issued, we’re canceling it.

This concern was reflected in the Court’s opinion that “in addition to helping resolve concrete patent-related disputes among parties, inter partes review helps protect the public’s ‘paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.’” 

Limits of Harmonizing Patent Law with Other Areas of Law
Cuozzo hints some of the limitations on making patent practice less sui generis. At oral arguments, Chief Justice Roberts asked at one point “why . . . should we be so wedded to the way they do business in the [USPTO] with respect to the broadest possible construction when the . . . point is not to replicate [USPTO] procedures[?]” This addressed a concern that, as Cuozzo argued, “the use of the broadest reasonable construction standard in inter partes review, together with use of an ordinary meaning standard in district court, may produce inconsistent results and cause added confusion.” Indeed, the Court, in the Cuozzo opinion, “recognize[d] that that is so.” Nonetheless, the Court observed that “[t]o try to create uniformity of standards would . . . prove difficult.” Further, the Court could not “find unreasonable the Patent Office’s decision to prefer a degree of inconsistency in the standards used between the courts and the agency, rather than among agency proceedings.” 

Moving forward, a number of questions remain open. To what extent will the Cuozzo decision inform other types of post-grant proceedings, such as Post-Grant Review or Covered Business Method review? What types of constitutionally important questions are appealable at the institution stage? To what extent should decisions of the Patent Trial and Appeal Board be consistent with district court litigation? All of these questions will have to wait as the contours of the America Invents Act continue to emerge. 

Jarrad Wood is a law c clerk with the Superior Court of the District of Columbia in Washington, D.C. 

The views expressed in this article do not necessarily represent the views of the Court, or the D.C. government.

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Jarrad Wood – July 15, 2016