The PTAB and the Federal Circuit – One Year Later

Article co-written by Yuri Levin-Schwartz, Ph.D., a law clerk at MBHB.

February 4, 2016, marked the one-year anniversary of the initial In re Cuozzo Speed Technologies, LLC[1] Federal Circuit decision – the first opinion stemming from the first appeal of the first final written decision of the first inter partes review (“IPR”) ever filed. From the time that decision came out until the end of January 2016, there have been at least 56 appeals from IPRs and Covered Business Method (“CBM”) patent reviews resolved by this appeals court. The America Invents Act (“AIA”) was responsible for creating these new procedures, and at the time of its passage, few could have expected these procedures to be as successful as they turned out to be. And, because either party dissatisfied with a final written decision in a case has a right to appeal to the Federal Circuit, there has been a concern that the court will be overwhelmed by a deluge of appeals. With an average of one appeal being resolved every week, these concerns appear to be well founded.

Nevertheless, the Federal Circuit has responded with mechanisms to control the impact of this onslaught. First, the court dispensed the majority of these cases with Rule 36 affirmances, thereby avoiding the time necessary to write up even a non-precedential opinion. Of the approximate 56 cases, more than half (33 to be exact) were affirmed in this manner. And, we can expect this percentage to increase, because many of the early cases were ones of first impression that necessitated an opinion. In addition, with respect to many of the cases, the court consolidated more than one appeal into the decision. For example, the 56 appeals through January 2016 represented 85 distinct IPRs or CBM reviews. Finally, the Federal Circuit has only reversed or vacated and remanded (at least in part) approximately five cases, choosing instead to affirm the Patent Trial and Appeal Board’s (“the Board” or “the PTAB”) decision the vast majority of the time.

The one important take-away from these statistics is that any party involved in a post-grant proceeding before the PTAB should not expect the Federal Circuit to bail them out from an adverse decision. The probability of getting a Rule 36 affirmance is more likely than not, and the chance of getting the appeals court to reverse or vacate and remand is vanishingly thin. Nevertheless, the Supreme Court has granted certiorari in the Cuozzo case to address a couple of fundamental issues: (1) whether the decision to institute a PTAB trial can be reviewed on appeal, and (2) whether the “broadest reasonable interpretation” standard for claim construction during a PTAB trial is appropriate.

Decisions to Institute

To be fair, the Cuozzo case was not the first in which the Federal Circuit interpreted the AIA sections related to PTAB trials or the rules promulgated to implement them. The court issued three cases on April 24, 2014, related to appeals from decisions denying institution.[2]The relevant statutory language can be found at 35 U.S.C. § 314(d): “No Appeal—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” The Federal Circuit made clear in those cases that it cannot review the decision by the Board to not institute a trial.

In Cuozzo, the Federal Circuit extended this prohibition to decisions to institute. In that case, the Board had instituted the trial on a ground not specifically identified in the petition. Instead, the Board recombined prior art that was found within the petition to devise its own obviousness challenge. In deciding the case, the Federal Circuit held that the statute barred it from reviewing any institution decision, even when the institution is contrary to the requirements outlined by the statute.[3] Nevertheless, it was significant that the new ground of rejection on which the Board instituted trial could have been included in a properly filed petition.[4]

Versata Dev. Grp., Inc. v. SAP America, Inc.[5] brought some hope to patent owners. This case arose in the context of a CBM review, which only applies to patents covering financial products or services that do not claim a technological invention. The Federal Circuit in Versata reviewed whether the patent at issue was indeed such a CBM patent. In response to criticism by the dissent, the court defended its analysis by pointing to the distinction between institution and invalidation. Because the determination whether the patent at issue was a CBM patent related to the “authority to invalidate” of the Board, review was appropriate.[6] This opened the door for arguing in other cases that decisions made at institution relate to the authority to invalidate, and therefore are subject to review.

So far, however, this distinction has been limited to basic jurisdictional issues in CBM cases. The Federal Circuit appeared to have expanded Cuozzo in Achates Reference Publ’g, Inc. v. Apple Inc.[7] In that case, Achates (the patent owner) had alleged that the case was time barred, because it had sued QuickOffice (a third party) more than one year before Apple filed its IPR petition. Apple was only subsequently joined to the litigation, such that the case would only have been barred under 35 U.S.C. § 315(b) if QuickOffice was a real-party-in-interest to the petition. However, the Board rejected this allegation when instituting trial, in part because “there was no evidence that any of the codefendants had ‘the right to intervene or control Petitioner’s defense to any charge of patent infringement’ . . . .”[8] On review, the Federal Circuit held that the time bar does not impact the authority to invalidate.[9] Indeed, the court continued, another petitioner could have filed a timely petition to invalidate the patent.[10] Moreover, the Federal Circuit asserted that this case was just like Cuozzo, because even if QuickOffice was a real-party-in-interest, the timeliness issue could have been avoided by filing the petition earlier, or if another party had done so (as opposed to no petition being proper regardless of the party filing it, such as in the Versata case).[11]

There may be hope for a dissatisfied party, however. It is possible that the Supreme Court will loosen the prohibition on the ability to appeal institution decisions, but it is unclear how far they will go if they do. Barring any change, an aggrieved party wishing to appeal an issue related to institution will need to show how it relates to the Board’s authority to invalidate (which is becoming increasingly more difficult to do). Otherwise, as the Federal Circuit mentioned in Achates (among other cases), there is likely an exception to the prohibition of review for the most extreme cases where the PTAB exceeds the scope of its delegated authority.[12] This exception for ultra vires agency action, however, would only apply to the most egregious error.

Broadest Reasonable Interpretation

The adoption of the broadest reasonable interpretation (“BRI”) standard for claim construction is one of the most controversial aspects of the rules that the Patent Office promulgated in implementing the post-grant proceedings. In Cuozzo, the Federal Circuit affirmed the use of the BRI standard as being consistent with the legislative history.[13] There are members of the court that do not agree, however. Judge Newman pointed out in her Cuozzo dissent that Congress intended the post-grant proceedings before the PTAB to be a surrogate for district court litigation on validity.[14] She complained that this goal was being frustrated because of the use of two different claim construction standards.[15]

The Patent Office also justified the adoption of the BRI standard because of the ability of the patentee to amend its claims. Judge Newman noted, however, that the ability to amend claims was almost illusory.[16] Even today, with an apparently lowered standard for granting amendment motions, claim amendments still rarely occur.

There has already been some positive signs, however, that the situation might not be as dire as originally feared. In Microsoft Corp. v. Proxyconn, Inc.[17], the Federal Circuit reaffirmed Cuozzo, holding that it does not constitute error to use the BRI standard for claim construction.[18] Nevertheless, the Court warned that it was error to adopt a construction that is “unreasonable.”[19] This can include a construction that is contrary to the arguments made or positions taken during the original prosecution. Moreover, “[a] construction that is ‘unreasonably broad’ and which does not ‘reasonably reflect the plain language and disclosure’ will not pass muster.”[20] In other words, the construction cannot be divorced from the specification or the record.[21] And, if the Board needs to consider how the patentee and Office used the term during prosecution, it is possible that such a “broadest reasonable interpretation” might not differ significantly from the plain and ordinary meaning used by Federal Courts.

Until the Supreme Court ultimately decides the Cuozzo case, however, it would behoove any party involved in a post-grant proceeding at the Board to provide alternative constructions based on the two standards, or better yet to explain why the proffered construction would be correct regardless of the standard used. But, if a dissatisfied party wishes to successfully appeal a claim construction to the Federal Circuit, it should focus on why the Board’s construction might be unreasonable, especially if the prosecution history was ignored.


The Federal Circuit has certainly been active this past year hearing appeals from the Board’s final written decisions. In addition to the cases referenced above, the Court has approved most of the procedural aspects adopted or used by the Board, including the motion-to-amend practice,[22] whether to allow supplemental evidence,[23] and the exclusion of evidence.[24] The Federal Circuit even upheld the constitutionality of the post-issuance review proceeding,[25] the delegation of institution authority from the director to the Board,[26] and the appropriateness of the same three-judge panel making institution decision as well as rendering the final written decisions.[27] Nevertheless, there are many other issues for the Federal Circuit to determine in the upcoming year and beyond. Stay tuned.

[1]778 F.3d 1271 (Fed. Cir. 2015). The Federal Circuit withdrew this case because it was superseded on rehearing July 8, 2015. The remainder of this article will cite to the opinion from July 8, 2015 (In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. 2015)).

[2]In re Dominion Dealer Solutions, LLC., 749 F.3d 1379 (Fed. Cir. 2014); In re Procter & Gamble Co.,

749 F.3d 1376 (Fed. Cir. 2014); St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014).

[3] In re Cuozzo, 793 F.3d at 1273-74.

[4] Id. at 1274.

[5] 793 F.3d 1306 (Fed. Cir. 2015)

[6] Id. at 1320.

[7] 803 F.3d 652 (Fed. Cir. 2015).

[8] Id. at 654.

[9] Id. at 657-58.

[10] Id. at 657.

[11] Id. at 657-58.

[12] Id. at 658-59.

[13] In re Cuozzo, 793 F.3d at 1277-78.

[14] Id. at 1285-86 (Newman, J., dissenting).

[15] Id.; see also id. at 1287 (“. . . [W]ords of a claim ‘are generally given their ordinary and customary meaning’ as understood by a person of ordinary skill in the art in question at the time of the invention.”)

[16] Id. at 1287-88.

[17] 789 F.3d 1292 (Fed. Cir. 2015)

[18] Id. at 1297.

[19] Id. at 1298.

[20] Id.

[21] See also Straight Path IP Group, Inc. v. Sipnet EU S.R.O., 806 F.3d 1356, 1362 (Fed. Cir. 2015) (“And the plain meaning is positively confirmed by the prosecution history, which we have indicated is to be consulted even in determining a claim’s broadest reasonable interpretation.”).

[22] See Prolitec, Inc. v. ScentAir Technologies, Inc., 807 F.3d 1353 (Fed. Cir. 2015).

[23] See Redline Detection, LLC v. Star Envirotech, Inc., No. 2015-1047, 2015 WL 9592608 (Fed. Cir. Dec. 31, 2015).

[24] See Belden Inc. v. Berk-Tek LLC, 610 Fed. Appx. 997 (Fed. Cir. 2015).

[25] MCM Portfolio LLC v. Hewlett-Packard Co., No. 2015-1091, 2015 WL 7755665 (Fed. Cir. Dec. 2, 2015).

[26] Ethicon Endo-Surgery, Inc. v. Covidien LP, No. 2014-1771, 2106 WL 145576 (Fed. Cir. Jan. 13, 2016).

[27] Id.


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