Baker Donelson - USA
On June 20 2016 the Supreme Court added to the far-reaching efforts to reduce the number of patents in the United States through inter partes reviews. Such proceedings are used predominantly by alleged patent infringers or their proxies (eg, manufacturers) to attempt to invalidate patents under a lesser standard than is required to prove invalidity of patents in district courts. In Cuozzo Speed Technologies, LLC v Lee the Supreme Court held that:
- there is no right to appeal determinations by the Patent Trial and Appeal Board (PTAB) to institute inter partes review proceedings; and
- the PTAB may apply the “broadest reasonable construction standard” to claim constructions in inter partes review.
The cumulative effect of the court’s decision is that patent owners continue to face an uphill battle to save their patents from invalidity.
Patent owners such as Cuozzo have long questioned the constitutionality of denying a patent owner faced with a PTAB determination to institute inter partes review the ability to review the decision. Under existing law, the PTAB need only determine that the petitioner has demonstrated “a reasonable likelihood of success” that the claims at issue are unpatentable for the PTAB to institute an inter partes review. Pursuant to the language of the statute, such determination is non-appealable. The Supreme Court declined to go beyond what it viewed as the clear intent to make such determination non-appealable and upheld the language of the statute without serious challenge.
Patent owners also have long questioned whether the PTAB has the authority to apply the 'broadest reasonable interpretation' standard to claim constructions in inter partes review. Instead, patent owners have asserted that the PTAB should give claims their “ordinary meaning… as understood by a person of skill in the art”. This would ensure that the PTAB and district courts are applying the same standard to determine claim constructions and by extension, invalidity. Although the Supreme Court recognised that such differing standards could and do result in inconsistent determinations in the PTAB and district courts, the court essentially stated that such inconsistencies were of no consequence because this was how Congress designed the amendments to the Patent Act.
The Supreme Court’s Cuozzo decision continues a trend of enabling successful challenges to the validity of patents in the United States. There is little question that inter partes review has an extremely high 'kill rate' for patents. Many patent owners had hoped that the court’s decision would push the pendulum back toward the middle ground and reduce the number of patents that continue to be invalidated through inter partes review. Instead, the court’s decision will maintain the high kill rate and dual system of litigating the validity of patents under different standards in different venues and the resultant instability in the patent monetisation market. This instability in the US market will continue to support an aggressive review of patent owner’s non--US portfolios to locate and assert patents in countries not as determined to reduce the number of patents.
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