Supreme Court Upholds “Broadest Reasonable” Claim Construction Standard; Confirms Decision to Institute IPRs Remains “Unappealable”

Yesterday in Cuozzo Speed Techs., LLC v Lee, the Supreme Court clarified two aspects of inter partes review procedure: (1) the Patent Trial and Appeal Board (PTAB) may continue to use the broadest reasonable claim construction standard for construing the claims of unexpired patents; and (2) the PTAB’s decision to institute (or not institute) an inter partes review remains “unappealable.”

This decision leaves current inter partes review practice undisturbed.  Patent owners had hoped that the Court would require the PTAB to use the same claim construction standard as federal district courts, which construe claims more narrowly.  Instead, the Court found that the Patent Office’s adoption of the “broadest reasonable” standard is a valid exercise its rulemaking authority.  The Court explained that the America Invents Act, which established the inter partes review procedure, does not specify a particular standard for claim construction.  Therefore, the Patent Office had discretion to enact “reasonable” rules.  Because a patent owner can amend claims during an inter partes review proceeding, and because the “broadest reasonable” standard encourages precise claim drafting, the Patent Office’s decision to use its own (different) claim construction standard was reasonable.   In issuing its decision, the Court disagreed that inter partes review was intended to be lawsuit-like, instead finding that IPRs are more accurately characterized as a “hybrid” between litigation and agency proceedings.

The Court also confirmed that the PTAB’s preliminary decision whether to institute inter partes reviews is unappealable at any stage of the process, at least when the institution decision does not implicate constitutional or other more far-reaching issues.  The Court noted that the plain language of the AIA statute makes this decision “unappealable,” and that the normal presumption in favor of judicial review does not overcome the plain language.

The Supreme Court’s decision maintains the status quo, which should generally favor petitioners because it requires the PTAB to more broadly construe compared to federal courts.  It also means that the PTAB’s decisions to institute review will remain largely unreviewable.