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Frank Liu is a registered patent attorney who represents companies across various industries, primarily counseling clients in patent litigation and related matters. He helps clients develop effective patent litigation strategies to achieve their goals.

Last week, the Supreme Court declined to make any changes to IPR procedure in its opinion in Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. ___ (2016). Relying primarily on statutory language and concepts of agency rulemaking authority, the Court found no reason to alter the Federal Circuit’s interpretation of the “no appeal” provision of the patent act covering IPRs, or the patent office rule that the agency shall construe a claim according to its “broadest reasonable construction” during IPR. In doing so, the Court did not foreclose the possibility of other challenges to actions by the PTAB, whether constitutional or based on the manner in which the PTAB exercised its authority. For now, however, it is largely business as usual at the PTAB.

The case arose out of an IPR instituted on certain claims of a patent owned by Cuozzo (“Cuozzo Patent”). The original petitioner sought IPR on all 20 claims of the Cuozzo Patent. One of the grounds for review set forth the petition was that dependent claim 17 was obvious under §103. The PTAB instituted review of claim 17 on the §103 ground articulated in the petition, but also decided to include claims 10 and 14 in its review on the same obviousness ground as claim 17. As noted by the PTAB, claim 17 depended from claims 14 and 10, and a challenge to claim 17 implicitly raised the same challenge to claims 14 and 10. Thus, the PTAB decided to institute IPR on claims 10, 14, and 17, despite the fact that petitioner only specifically challenged claim 17 on the obviousness ground that ultimately was the basis of instituting the IPR.

During the course of IPR, the PTAB issued a final decision, in which it construed the claim terms at issue with the “broadest reasonable” construction. Cuozzo also sought to amend the claims, which the PTAB rejected, finding that the proposed amendments failed to satisfy 35 U.S.C. §112 and would have impermissibly broadened the scope of the claim language.

Cuozzo appealed the PTAB’s decision to institute review of claims 10 and 14 on the grounds that petitioner failed to identify those claims with particularity as required by 35 U.S.C. §312(a)(3). Cuozzo also appealed the PTAB’s use of the “broadest reasonable interpretation” standard to construe claims in IPR, arguing that the Congressional intent of establishing IPR as a surrogate for litigation suggests that the claim construction standard employed during IPR should be consistent with the standard used in district court cases.

The Federal Circuit affirmed the decision to institute review of claims 10 and 14 of the Cuozzo Patent, noting that the “no appeal” provision of 35 U.S.C. §314(d) explicitly states that the decision whether to institute an IPR “shall be final and nonappealable.” The Federal Circuit reasoned that §314(d) precludes not only interlocutory appeal of the PTO’s decision to institute an IPR, but also appeal of the PTO’s decision to institute an IPR after a final decision from the Patent Trial and Appeal Board. In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015).

The Federal Circuit also held that the PTO reasonably required the PTAB in an IPR to construe claims according to their “broadest reasonable construction.” While noting that there is no express requirement in the patent statute about what specific claim construction standard should be used, the Federal Circuit reviewed the judicially approved history of use of this standard in other PTO proceedings involving unexpired patents, and concluded that the PTO’s approach was a valid exercise of agency rulemaking authority.

The Supreme Court granted cert on both issues.

“No Appeal” Means “No Appeal” – Absent Shenanigans, That Is
Justice Breyer, writing for the majority, affirmed the Federal Circuit’s determination and held that §314(d)’s “no appeal” provision precluded appellate review of a decision to institute an IPR. The majority held that the plain language of §314(d) clearly set forth Congress’ intent to preclude such judicial review of a decision to institute. Any other interpretation of §314(d), the majority reasoned, “would undercut one important congressional objective, namely, giving the Patent Office significant power to revisit and revise earlier patent grants.” Cuozzo, 579 U.S. at ___ (slip op., at 8).

In making its holding, the majority “emphasize[d] that our interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.” Id. (slip op., at 11). Applying this interpretation, the majority held that Cuozzo’s challenge of the PTAB’s determination was closely tied to its determination that the information presented in the petition warranted review under §314(a).

The majority, however, did not interpret §314(d)’s “no appeal” provision to completely foreclose all judicial review of decisions to institute an IPR. In particular, the majority noted that judicial review of PTO decisions to institute an IPR would be warranted where the PTO’s decisions “implicate constitutional questions, [] depend on other less closely related statutes, or [] present other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Id. (slip op., at 11). Such questions could be reviewed under the Administrative Procedure Act (APA), which allows courts to “set aside agency action that is contrary to constitutional right, in excess of statutory jurisdiction, or arbitrary and capricious.” Id. (slip op., at 12).

Justice Alito, along with Justice Sotomayor, dissented from the majority’s holding, arguing that the “strong presumption favoring judicial review of administrative action” precluded the majority’s broad reading of §314(d)’s “no appeal” provision. Id. (slip op., at 3, Alito, J., dissenting). Noting that Congress could have employed “far more unambiguous and comprehensive” language precluding judicial review in §314(d), Justice Alito concluded that §314(d) should be read to only preclude interlocutory appeal of the PTO’s determination to institute an IPR. Id. (slip op., at 5, Alito, J., dissenting). While this interpretation would allow for judicial review of the PTO’s determination to institute an IPR after a final determination, Justice Alito confirmed that “normal limits on judicial review still apply” – noting that “errors that do not cause a patent owner prejudice” or errors that are “superseded by later developments” may not warrant relief and thus do not warrant disposal of the PTO’s determination. Id. (slip op., at 9-10, Alito, J., dissenting).

The majority rejected the arguments in Justice Alito’s dissent, finding the plain language of §314(d) to be consistent with preserving “the agency’s primacy over its core statutory function in accord with Congress’ intent.” Id. (slip op., at 10). The majority noted that the APA still provided an avenue to seek judicial review of the PTO’s determination.

Despite the differences in interpretation between the majority and dissent, both opinions recognize that judicial review is appropriate where the PTO engages in “shenanigans” – such as exceeding its statutory authority by canceling a patent claim for indefiniteness under §112 in inter partes review. Id. (slip op., at 11 and slip op., Alito., J., dissenting at 12-13). Under the majority opinion, however, it is questionable whether anything short of “shenanigans” by the PTAB in a decision to institute could be subject to judicial review, nor is it entirely clear what might be considered appealable shenanigans.

“Broadest Reasonable” Is Reasonable
While noting that the patent statute does not unambiguously direct the PTO to use one claim construction standard or another, the majority also noted that the statute does expressly authorize the PTO to issue rules governing IPR. Id. (slip op., at 13). The “broadest reasonable construction” regulation is one such rule. Id.
Continue Reading Status Quo At The PTAB For Now: Supreme Court makes no changes to IPR Practice

The Federal Circuit affirmed the PTAB’s final determination in Genzyme Therapeutic Products Limited Partnership v. Biomarin Pharmaceutical Inc., Nos. 2015-1720, 2015-1721 (Fed. Cir. June 14, 2016), holding that the PTAB did not violate the Administrative Procedure Act (APA) by relying upon prior art references not identified in the grounds on which the PTAB instituted review.  In particular, the Federal Circuit held that the PTAB properly relied upon those references to establish the state of the art at the time of invention of the claimed invention.

The patents at issue are Genzyme’s U.S. Patent Nos. 7,351,410 (“the ’410 patent”) and 7,655,226 (“the ’226 patent”), which are directed towards the treatment of Pompe disease. Pompe disease is a genetic condition that results in a deficiency or absence of a certain enzyme, acid alpha glucosidase (“GAA”), that is used to break down glycogen.  The inability to break down glycogen in the body causes the glycogen to accumulate in a patient’s heart and skeletal muscles, causing progressive deterioration and ultimate failure of those muscles.  Pompe’s disease can be treated by injecting GAA with mannose-6-phosphate (“M-6-P”) into patients, causing GAA to be taken up in heart and skeletal muscles with M-6-P receptors.

Biomarin filed two IPR petitions challenging the validity of Genzyme’s ’410 and ’226 patents. The PTAB instituted review of the ’410 and ’226 patents on grounds that the claims were invalid as obvious in view of the prior art. In its patent owner responses, Genzyme argued that the claims of the ’410 and ’226 patents were not obvious because each of the prior art references were directed towards in vitro experiments, and that there was no evidence that a person of ordinary skill would have a reasonable expectation of success applying those experiments in a human.  In its reply, Biomarin challenged Genzyme’s non-obviousness argument and identified two references in response – van der Ploeg ’91 and Kikuchi – showing successful in vivo tests administering GAA.  The van der Ploeg ’91 and Kikuchi references were not identified in the instituted grounds for review.

The PTAB found the challenged claims of the ’410 and ’226 invalid as obvious. In particular, the PTAB found that a person of ordinary skill could have arrived at the claimed inventions through “routine optimization” of the prior art.  In reaching this conclusion, the PTAB relied upon the Kikuchi and van der Ploeg ’91 references to establish the state of the art regarding in vivo studies.

Genzyme challenged the PTAB’s final determination, inter alia, on the grounds that the PTAB “relied on ‘facts and legal arguments’ that were not set forth in the institution decisions.” Id. (slip op., at 7).  In particular, Genzyme took issue with the fact that the PTAB’s final determination relied on the Kikuchi and van der Ploeg ’91 references to establish obviousness without providing notice of those specific references in its institution decision.  In Genzyme’s view, the PTAB improperly “change[d] theories in midstream,” thereby depriving Genzyme of notice and an opportunity to be heard as required by the APA. Id. (slip op., at 7-8).

On appeal, the Federal Circuit rejected Genzyme’s argument, holding that Genzyme had actual notice of the Kikuchi and van der Ploeg ’91 references and had an opportunity to be heard with regards to those references.
Continue Reading PTAB Can Rely Upon Prior Art Not Cited in an IPR Institution Decision to Establish the State of Art