By Jonathan Kennedy
On November 3, 2014, a three-judge panel of the Federal Circuit heard oral arguments in In re Cuozzo—the appeal from the first inter partes review ("IPR") instituted by the USPTO. As noted in our previous post, the appeal presents a number of interesting procedural and substantive issues.
While the oral argument did not address all of the issues on appeal, the arguments from counsel and questions from the judges featured some interesting moments. The panel of judges included Circuit Judge Pauline Newman, Circuit Judge Raymond C. Clevenger, III, and Circuit Judge Timothy B. Dyk. Some of the particular arguments and questions of note are discussed below.
One of patentee-appellant Cuozzo's primary contentions in the appeal is that the PTAB lacked authority to institute the IPR for claims 10 and 14 on grounds of unpatentability not identified in the petition. In response the PTO argued that the decision to institute the proceeding is unreviewable by a court of appeal. In particular, counsel for the USPTO argued that Congress "made the decision to institute the proceeding entirely unreviewable." The judicial panel disagreed stating, "you can’t raise it by appeal, but [the statute] doesn't say that it is unreviewable." One of the judges noted that there are other statutes that make it clear certain agency decisions are entirely unreviewable on appeal or otherwise. However, in this instance the statute states, "The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable." 35 U.S.C. § 314(d). Counsel for the USPTO countered arguing because it is clear the decision not to institute an IPR is not reviewable, likewise the decision to institute an IPR is not reviewable. Again, the panel pushed back, noting the decision not to institute an IPR is within the USPTO's discretion, but if the PTAB blatantly exceeds its authority then that may provide grounds for review.
Another interesting argument related to patentee-appellant Cuozzo's argument that the broadest reasonable interpretation standard should not apply in an IPR. The USPTO's position during arguments was two-fold. First, counsel for the USPTO argued application of the broadest reasonable interpretation standard is consistent with decades of case law from the Federal Circuit. Second, the counsel for the USPTO argued that in an IPR, or other post-grant proceeding, the patentee has the ability to amend the claims without further examination, and therefore the broader standard should apply. The USPTO pointed to the discrepancy between post-grant proceedings and court proceedings in the ability to amend the claims to support its position that the Philips standard, applicable to claim interpretation in the court, should not be applied in IPR.
Judge Newman responded to the characterization that this issue has been decided for decades as not wholly accurate, since the decisions of record "haven't really gotten to the question of the difference between the appropriateness before the patent issues and after." Judge Newman went on to state the ability to amend claims in post-grant proceedings is not as easy as the counsel indicated in the argument. Counsel for the USPTO responded that amendments in post-grant proceedings should not be so easy, because no further search follows and examination follows. Thus, the onus is on the patentee to explain why the amended claim would be patentable.
This dovetailed into a discussion of the appropriate requirement standard for amending claims in an IPR—another issue on appeal. One of the judges asked, "[I]f the [patentee] make[s] a motion to amend and they can show that the amended claim is patentable, then they get the amendment, that is the test?" Counsel for the USPTO responded stating, "In order to make the motion they have to demonstrate or at least explain, give us a story as to why the claim is patentable." The panel sought clarification asking, "Yes, but is that the only thing they have to do?" Counsel for the USPTO replied with a caveat as to the number of claims for which the patentee is seeking to amend, noting the amendment would likely be denied for 500 claims, but "that is what they have to do" at least when seeking to amend one claim. The USPTO also noted that in this instance the claim amendment was denied because it was not supported by the written description.
In rebuttal, the patentee-appellant, Cuozzo, noted that in 2 years of post-grant proceedings—including covered business method patent review, post grant review, and IPR—zero opposed motions to amend have been granted and only one unopposed motion to amend has been granted. In conclusion, counsel for the patentee-appellant argued that the difficulty to amend demonstrates there is not a per se right to amend that would justify use of the broadest reasonable interpretation standard.
Ultimately, the Federal Circuit's widely anticipated opinion should provide clarity on a number of issues, and should be expected to issue in the next several months.
A recording of the oral arguments is available here.