Cuozzo Speed Technologies, LLC v. Lee

On April 25, the Supreme Court will hear oral arguments in a patent case that has implications for the integrity of the patent system. At issue is the continued viability of the most comprehensive reform of the patent system since 1952, the America Invents Act.  With five votes, the Court can overturn this landmark legislation by diminishing the power of the US Patent and Trademark Office.

Cuozzo, an independent inventor, obtained a patent in 2004 on a speedometer that informs a driver when the car is travelling above the legal speed limit.  Combing GPS technology with standard electronic speedometers, the invention was subject to review by the USPTO for novelty, usefulness, and nonobviousness. Once Cuozzo obtained the patent, he had the legal presumption that the patent is valid.

But the USPTO can make mistakes.  Examiners may have missed prior art showing that the invention, or something close, was already in the field. They may have misjudged how nonobvious the invention was in light of the prior art and standards in the field.  Because mistakes happen, the law allows private parties, often times competitors in the same industry, to challenge the patent based on evidence of newly discovered prior art. The goal is to make sure that patents are awarded only to inventions that are deserving.

Prior to the enactment of the AIA in 2011, the main way to challenge a patent was in the courts. The AIA, however, created new procedures in the USPTO permitting administrative challenges to newly granted patents before the Patent Trial and Appeals Board (PTAB), part of the patent and trademark office. These proceedings are known as the post grant review (available up to 8 months after a patent issues) and the inter partes review (available after the time frame for post grant reviews). Garmin had successfully brought an inter partes review to challenge Cuozzo’s patent in 2015. The Patent Trial and Appeals Board found that some of Cuozzo’s patent was invalid.  Consequently, Cuozzo appealed the decision to the United States Court of Appeals for the Federal Circuit, which agreed with the PTAB.   Cuozzo took the next step and appealed the decision to the US Supreme Court, that is now preparing for oral arguments on April 25.

Underlying the various technical features of his argument is the goal of cabining the USPTO’s role in identifying and cancelling invalid patents.  Under the AIA, the USPTO determines whether an inter partes review should be pursued. This determination involves examining whether the  challenger has evidence in the form of prior art that could potentially invalidate the patent. This decision by the USPTO is not subject to review by the courts.  Congress did not want to complicate the process by having patent owners subject the USPTO to court review at the threshold even before the agency has a chance to examine the new prior art evidence. The goal was to avoid delay tactics by the patent owner.  Of course, once the USPTO has made a decision to invalidate a patent, that decision is reviewable by the courts as we see in the Cuozzo appeals.

One difficult question in patent law is understanding what the patent means.  This question is called claim construction.  When a court takes on a patent case, it engages in extensive, often expensive, review of the patent document to understand its language. Since the USPTO review process is meant to be more expedited, the AIA allows the USPTO to sidestep the extensive process of claim construction that courts undertake. Following long standing practice, the USPTO interprets a patent as broadly as is reasonable to determine whether it is valid.  While it might be the case that a broad reading would make it more likely that a patent is invalid, the rule of “broadest reasonable interpretation” allows for a more streamlined review of a patent at relatively low cost. The final decision by the USPTO can be appealed to the courts if the patent owner feels that the agency interpreted the patent too broadly.

Cuozzo is asking the Court to overturn the USPTO’s broadest reasonable interpretation standard.  Presumably, if this standard is rejected, the USPTO will have to engage in the extensive method of claim construction we see in the courts. This radical shift will burden the new procedures Congress created leading to further delay and increased costs for those legitimately seeking to challenge patent validity.

There are many reasons to be skeptical of Cuozzo’s arguments. They threaten the independence of the USPTO from the courts. At the heart of the matter is the separation of powers between the executive branch and the judiciary in reviewing patents and shaping policy. On a more practical level, there is a genuine question of expertise.  Patents are, needless to say, the bread and butter of the USPTO; they are only a small part of the range of cases that come before the judiciary. By undercutting the independence of the agency, Cuozzo’s arguments will lead to the loss of important expert input as challengers raise questions of patent validity. Congress designed the new administrative procedures with the goals of harnassing USPTO expertise and opening up the process of reviewing patents to include a wide range of parties that could be adversely affected by the grant of an invalid patent. Cuzzo’s arguments, if accepted, will roll back Congress’ efforts.

The Supreme Court has demonstrated a careful approach to the potential overreach of intellectual property rights. It has implemented this approach through recent decisions on what can and cannot be patented, the right to resell patented inventions, and what makes an invention nonobvious and patentable. The Court should continue this cautionary approach in ruling on Cuozzo’s arguments. At stake is not only the AIA, but the integrity of the patent system in granting exclusive rights to genuinely novel and innovative inventions.

Please join us April 21 for a webinar to discuss these and other issues raised by the Cuozzo case. Topics to discuss include:

  • Role of the PTAB and its relationship to the courts
  • Use of post-grant proceedings such as inter partes review
  • Vulnerability of patents in post-grant proceedings
  • Implications of Cuozzo for patent practice and technology commercialization