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InTELLECTUAL PROPERTY ALERT

February 2015

Executive Summary

A recent court decision suggests that it may be even easier to invalidate patent claims via a relatively quick proceeding before the U.S. Patent and Trademark Office (“PTO”) – known as inter partes review (“IPR”) – as compared with traditional litigation. The Federal Circuit recently approved of the PTO’s method of construing patent claims broadly during IPR proceedings. It is often easier to invalidate patent claims when they are given broad constructions. The Federal Circuit also indicated that a decision to institute this type of proceeding will likely not be reversed. As such, these proceedings are an attractive option for a party faced with patent infringement allegations because they provide quicker certainty with constructions that tend to favor the patent challenger. Attorneys in McCarter’s Intellectual Property group have significant experience with IPR and other post-grant proceedings, and are available to discuss the potential advantages of IPR proceedings for your business.

In the first-ever opinion from the Federal Circuit on an appeal of an IPR decision, the court in a 2-1 decision affirmed a Patent Trial and Appeal Board (“Board”) determination that the challenged claims of the patent at issue were invalid as obvious, holding that the Board was correct in using the “broadest reasonable interpretation” standard in its claim construction analysis. Additionally, the Federal Circuit held that a decision by the Board to institute an IPR is not subject to appeal, although it appears that such a decision may be contested by mandamus in the right circumstances.

In In re Cuozzo Speed Technologies, LLC, No. 2014-1301 (Fed. Cir. Feb. 4, 2015), Garmin International, Inc. and Garmin USA, Inc. (collectively, “Garmin”), filed a petition with the PTO to institute an IPR to address, among other things, certain claims of Cuozzo Speed Technologies, LLC’s (“Cuozzo”) patent directed to a “speed limit indicator.” The PTO determined that there was a reasonable likelihood that these claims were invalid as obvious and therefore instituted the IPR. The Board issued a Final

Written Decision holding that the claims were invalid. The Board also denied Cuozzo’s motion to amend its patent claims.

Cuozzo appealed the Board’s decision to the Federal Circuit. On appeal, Cuozzo argued that the PTO improperly instituted IPR proceedings on some claims by relying on art that Garmin did not identify as grounds for the IPR with respect to those claims. The Federal Circuit rejected this argument, explaining that a decision to institute an IPR proceeding cannot be appealed even after a final decision. Nonetheless, the Federal Circuit implied that mandamus review “may be available” to challenge a decision to institute IPR proceedings after the Board issues a final decision when “the PTO has clearly and indisputably exceeded its authority.” However, the Federal Circuit explained that even if it treated Cuozzo’s appeal as a request for mandamus, Cuozzo failed to demonstrate that it was entitled to this type of remedy.

Cuozzo also argued that the Board should not have applied the “broadest reasonable interpretation” standard when construing claim terms. However, the Federal Circuit acknowledged that the PTO and its predecessor have applied this standard in construing claims for more than a century. The Federal Circuit also recognized that it has approved of this interpretation standard in various proceedings and that this standard “has been applied in every PTO proceeding involving unexpired patents.” The court explained that it can be “inferred that Congress impliedly adopted the existing rule of adopting the broadest reasonable construction” in connection with IPR proceedings. Furthermore, the Federal Circuit explained that even if Congress had not adopted this standard, it was within the PTO’s authority to adopt this standard by regulation.

Against this backdrop, the Federal Circuit determined that the Board did not err in construing the claims at issue. Furthermore, the Federal Circuit determined that the Board’s conclusion that the claims at issue were obvious was not erroneous. Finally, the Federal Circuit explained that the Board was correct in denying Cuozzo’s motion to amend its patent claims because its proposed amendment would have broadened the scope of the patent.

Inter Partes Review Proceedings Continue to Be an Efficient and Effective Way to Address Patent Infringement Allegations in Light of a Recent Federal Circuit DecisionBy Jonathan Short, Dennis D. Gregory and Matthew Sklar

www.mccarter.com McCARTeR & eNGLISH, LLP // FeBRUARy 2015

It is notable that in dissent, Judge Newman argued that a decision to institute an IPR should be appealable upon the issuance of a Final Written Decision. Judge Newman also urged that the claim construction standards that apply in cases pending before the district courts should also apply in IPR proceedings pending before the Board.

The Cuozzo opinion indicates that certain principles apply to IPR proceedings. It is now clear that the “broadest reasonable interpretation” standard applies to claim construction issues in these proceedings. The Federal Circuit has clarified that this standard, which has been used by the PTO for other proceedings, applies to the relatively new IPR proceeding as well. Furthermore, the Federal Circuit explained that a decision to institute an IPR proceeding is not reviewable by way of an appeal, but left open the possibility that mandamus review of such a decision may be available in certain instances.

These principles should be carefully considered by those involved in IPR proceedings as well as those engaged in any patent dispute. At the forefront of IPR proceedings, McCarter & english, LLP has experienced dozens of post-grant proceedings, several of which have resulted in settlement or issuance of a Final Written Decision. Please contact a member of McCarter’s Intellectual Property group to discuss the potential advantages of IPR proceedings for your business.

If you would like additional information on this topic, please contact a member of the Intellectual Property/Information Technology Group linked here or your lawyer at McCarter & english, LLP.

Disclaimer by McCarter & english, LLP: This publication is for informational purposes only and is not offered as legal advice regarding any particular matter. No reader should act on the basis of this publication without seeking appropriate professional advice. Before making your choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If this publication is inaccurate or misleading, the recipient may make a report to the Committee on At-torney Advertising, Hughes Justice Complex, P.O. Box 037, Trenton, New Jersey 08625.© 2015 McCarter & english, LLP. All Rights Reserved.