18 Jan
2016

With the Cuozzo case going to SCOTUS, doesn't natural justice demand a suspension of the IPR regime?

The Supreme Court’s decision to grant a writ of certiorari to the petitioner in Cuozzo Speed Technologies v Lee has sent shockwaves through the US patent community. When the case comes before the nine justices what will be at stake is the future of the inter partes review system as it is currently structured under the auspices of the Patent Trial and Appeal Board (PTAB). Specifically, the court will consider two fundamental issues:

1. Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2. Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.

I am no patent lawyer, so will not attempt to provide any kind of in-depth analysis of what is at stake; but, in broad terms, it is clear that if the Supreme Court does what it usually does when it comes to patent matters and overturns the Federal Circuit, this will be very good news for patent owners who up to now have felt that the odds at the PTAB have been stacked against them. Given that the court is also due to hear the Halo and Stryker cases relating to wilful infringement, it could be that the long-awaited pendulum swing back to rights holders in the US does begin to happen in 2016.

Against that, though, it is also worth noting that when the Supreme Court has reviewed patent cases in recent times its instinct has generally been to limit patent rights and to make them harder to enforce. Thus, the alternative scenario to a swing-back – the consolidation of an increasingly pro-defendant US environment – should be taken seriously.

However, in taking the Cuozzo case, the Supreme Court justices have made clear that they believe the issues raised by it need to be looked at closely. As a result, it is quite possible that the standard to be used at the PTAB will be changed to reflect the one used in the courts and that a degree of court scrutiny may be placed over institution decisions. With that in mind, wouldn’t the responsible thing to do now be to suspend the IPR regime until the court has issued its decision? By that, I mean the USPTO issuing an order to stay all current cases and not to take any new ones.

If that does not happen, there is a very real danger that patents will be invalidated and in a few months we will find out they should not have been, and that parties will be denied court redress when actually they should have had it. As we are talking about hugely important assets here - ones that are often the most valuable a business owns - natural justice surely demands that decisions taken at the PTAB about them are made with absolute certainty. Now that the Supreme Court has acknowledged that there are issues to be dealt with, that cannot currently be the case.

If the Supreme Court finally decides that current standards are the correct ones, all that will be lost by a suspension and stays is some time. But if it decides that the BRI standard should not have been applied, and patents have continued to be invalidated based on it, that will cause egregious and totally unwarranted harm not only to patent owners, but also to their employees and their investors. For the sake of a few months, can that possibility really be permitted?

Beyond that, two other points cross my mind:

  • What, if any, recourse to law will patent owners whose rights have been invalidated under a standard that the Supreme Court rules should not have been applied be entitled to? As I say, I am no lawyer, but if the USPTO and the CAFC have got it horribly wrong, a lot of companies that have seen hugely important assets thrown out are going to be spitting blood and looking for redress. Maybe they will just have to take it on the chin, but I can’t help thinking that a few at least might want to find out if that really is the case. That, in turn, will affect a lot of PTAB petitioners and potential infringers who were in the clear and had implemented strategies accordingly. Such a scenario could get very messy very quickly.

  • If the Court does rule that institution proceedings are appealable to the courts under certain circumstances, does that give Big Pharma a lifeline to challenge whether reviews instituted following petitions from Kyle Bass and Erich Spangenberg, as well as other investor funds, should have been allowed? If the answer to that is yes, where does that leave the current impasse over further legislative reform?

Any thoughts that any readers have on any of the above would be gratefully received.   

Joff Wild

Author | Editor-in-chief

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Joff Wild