Justices Split on the First Patent Trial & Appeal Board Case

PTO IconBy Don Wang

In 2011 Congress enacted the Leahy-Smith American Invents Act (AIA), which established a new Patent Trial & Appeal Board (PTAB) within the Patent & Trademark Office (PTO) and instituted several new administrative proceedings to review certain issues of patentability. Ever since, patents before the Board have been perishing like Game of Throne wedding guests (or as Judge Rader puts it: PTAB are the “death squads killing property rights”). Unsurprisingly, unhappy patent owners seized their first possible opportunity to challenge various aspects of PTAB proceedings. This led to the Supreme Court hearing of Cuozzo Speed Technologies, LLC v. Lee, No. 15-446. The oral argument was conducted on April 25, 2016, and the transcript can be found here.

There are two questions on appeal, but the Court focuses almost exclusively on the first question: which claim construction standard should be used in a PTAB proceeding, the “broadest reasonable interpretation” standard (BRI) or the “plain and ordinary meaning” standard? The BRI is the claim construction standard applied by PTO during a patent examination.

In contrast, “plain and ordinary meaning” is the standard applied by district courts in patent infringement and validity suits. In theory, the BRI standard makes it easier to invalidate a patent because this standard construes patent claims more broadly. A broader construction, in turn, allows more prior art to be qualified to challenge the novelty of the subject patent. Understandably, the patent owners were displeased when the PTAB announced that it will adopt the BRI standard.

As a preliminary issue, Congress has been completely silent on this matter. As Justice Kagan pointed out, “if I look at the statute, I mean, it just doesn’t say one way or the other. So we’re a little bit reading tea leaves, aren’t we?” As a result, both parties devoted the majority of their time on the question: which proceeding is the PTAB proceeding more analogous to, a district court proceeding or a patent examination proceeding? The tricky thing is, as Justice Ginsburg observed, a PTAB proceeding is “[k]ind of a hybrid . . . it’s a little of one and a little of the other.”

Justice Roberts appeared to have no difficulty in finding the similarities between the PTAB proceedings and district court actions. He stated, “it seems perfectly clear that Congress meant for [the PTAB] to substitute for the judicial actions.” He went further to point out that, as a district court and a PTAB apply different standards, a district court’s interpretation of a patent would not bind a PTAB board, and a PTAB board’s interpretation would not bind a district court, either. Justice Roberts noted that “it’s a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results” and “that’s a bizarre way to . . . decide a legal question.”

Justice Breyer, on the other hand, appeared to suggest that the PTAB is not meant to be the substitute for district courts, but rather a corrective measure for some of PTO’s past examination problems. He stated that “[if the Congress was] trying to build a little court proceeding [within PTAB,] . . . I would say you were right. But there is another way to look at it . . . the Patent Office has been issuing billions of patents that shouldn’t have been issued . . . 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 . . . get rid of those patents.”

This case is also interesting for two additional reasons. For one, it has long been observed that the Supreme Court’s patent law jurisdiction swings between the pro-patent stance and the anti-patent stance like a pendulum. For the past five or six years, this pendulum has swung wildly in the anti-patent direction, which was also evident in Justice Breyer’s comments in the present hearing. However, Justice Roberts’ comments during the hearing appear to signal some attempt to push back on the recent swing. For another, the renowned NYU Professor Rochelle Cooper Dreyfuss has observed that, although the Federal Circuit regularly upheld the PTAB’s decisions, the court has essentially afforded the Board no deference during appellate reviews. The present case, being the first ever Supreme Court review of a PTAB decision, might provide some clarity on how much deference the Federal Circuit should give to the Board on appeals.

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