Ground Hog DayThe much anticipated argument in Cuozzo Speed Technologies, LLC v. Lee occurred Monday, April 25, 2016 before the United States Supreme Court.  One can glean some insight from the Justices’ questions and remarks, but the ultimate outcome in this seminal decision remains uncertain.  The following reflects the tenor of the remarks of seven of the Justices’ who spoke during oral argument.  In keeping with his much reported practice at these arguments, Justice Thomas remained mute.  The following discussion focuses exclusively on the arguments concerning whether or not the PTAB may employ the “broadest reasonable construction” standard in IPRs. 

. . . call it a partial-Groundhog-Day statute. You’ll do it again until you get it right . . .

Sotomayor:  Justice Sotomayor jumped immediately on Petitioner’s (Cuozzo’s) counsel, asserting that she might be moved to agree that application of the “broadest reasonable construction” standard is inappropriate in IPR proceedings, “if Congress had not given any right for the Board to amend.”   Justice Sotomayor further appeared to suggest that she would not expect the outcomes to differ, regardless of the standard applied.  She observed that patents challenged in IPRs had previously undergone examination in the Patent Office, where they were presumably narrowed by amendment in the face of the broadest reasonable construction standard.  By means of this process, she assumed each claim was as “precise and narrow as the Patent Office thinks it needs to be.”  Observing that the same “tools” are used to arrive at a claim construction under both standards, she wondered, “when doesn’t it end up in the same place?”  Petitioner’s counsel was at pains to suggest that application of differing standards served to deprive a patentee of its valid property rights, by adjudicating not the “actual patent rights that a patentee obtains,” but “ones someone suggests might be broader.”  Counsel’s assertions, however, merely fueled Justice Sotomayor’s apparent support for application of the broadest reasonable construction under such circumstances.  “How could [the District Court] say you have a valid property right in something that’s ambiguous?” she asked.

Alito:   Justice Alito spoke at only one point during the argument, directing his few questions to Petitioner’s counsel.  He asked if Congress had imposed upon the PTAB the same standard of proof for invalidity that is applied in the District Court.  It appeared that his question was intended to highlight that, in at least this respect, Congress had intended IPRs to operate under different rules than District Court litigation.  Responding to the complaints of Petitioner’s counsel that IPR proceedings did not provide for multiple opportunities to amend claims, he questioned the need for more than one opportunity to amend.  If the Board’s institution decision set out its understanding of the broadest reasonable construction, and if they stick with that interpretation throughout the proceeding, he asked, “why does the patent holder need more than one opportunity to amend?”

Ginsburg:   The Notorious RBG proved one of the more active participants in the oral argument.  On the issue of broadest reasonable construction, she corrected Petitioner’s counsel when he argued that the IPR proceedings were so similar to district court proceedings that the statute establishing those proceedings “basically reeks that the ordinary meaning construction standard used by the district courts should be used.”  “Kind of a hybrid,” she countered, “in certain respects [resembling] administrative proceedings and other district court proceedings.”  Later, in implicitly responding to Justice Roberts’s concerns that use of two standards would lead to inconsistent outcomes, Justice Ginsburg offered the Government’s counsel the opportunity to point out that the potential for inconsistent outcomes pre-existed the advent of IPRs, asking if it was true that even where a district court had declined to invalidate a patent, the PTO could, on its own initiative, engage in a reexamination of that same patent.  “[S]o the district court decision wouldn’t be preclusive, and the PTO has the last word then?” she asked the Government’s counsel, who was only too ready to agree.

Kennedy:   Justice Kennedy also appeared intent upon offering reasons to support the Government’s position.  “If the patent is invalid under its broadest, reasonable interpretation,” he asked Petitioner’s counsel, “doesn’t that mean that the PTO should never have issued the patent in the first place?”  Justice Kennedy suggested that this fact was significant to questions concerning the proper structure of the IPR process.  He further sought agreement from Petitioner’s counsel that, unlike in District Court proceedings, there is no presumption of validity in IPR proceedings.  “That shows a difference in these [i.e. IPR] proceedings,” he suggested.  Later, addressing the Government’s counsel, Justice Kennedy appeared to test drive the following rationale for applying differing standards in the two forums:  “With district court litigation . . . we have to have a specific controversy, specific injury, and so forth, but [] an IPR proceeding can be more speculative, in that the Board and the parties can say this could be interpreted in the future in a particular way.”

Breyer:   Echoing the comments of Justice Kennedy, Justice Breyer began by demanding Petitioner’s counsel agree that the PTO does not issue a patent claim that is not patentable when judged by its broadest reasonable construction: “I’m saying, if at the end of the day, on the broadest reasonable interpretation, it is not patentable, there is no patent issued.”  Continuing to direct his comments to Petitioner’s counsel, Breyer then offered that if the new law were “trying to build a little court proceeding . . . [i]f I thought it was just doing that, I would say you were right.”  However, Justice Breyer cautioned that there was another way to view the intent of the law.  He suggested that the law could be viewed as a response to “patent trolls” and the concern that “the Patent Office has been issuing billions of patents that shouldn’t have been issued—I overstate—but only some.”  So, the law under this interpretation is designed to “tell the office . . . [g]o back and let people who are hurt by this come in and get rid of those patents that shouldn’t have been issued, . . . we will give you, again, once the same chance we gave you before, and that is you can amend it once if you convince the judge you should have done it before.”  If the legislation were motivated by this purpose, Breyer announced, “then I would think, well, maybe this is right, what they’re [i.e. the Patent Office] doing.”  Importantly, Breyer shared his view that if the court cannot conclude which of the two purposes motivated the legislation, “I would begin to think, well, maybe they [i.e. the Patent Office] should have the power themselves under Chevron, Meade, or whatever, to decide which to do.”  Later, paraphrasing the Government’s argument, Justice Breyer called the legislation a “partial Groundhog Day statute,” that instructs a Patent Office “to do it again until you get it right.”  Justice Breyer announced that if the problem sought to be addressed was “threats of suits in respect to patents that obviously should never have been issued,” then it “makes sense to say at least the PTO has the authority under a partial-Groundhog-Day statute to do that part over.”  Justice Breyer pointedly stated that he was “unmoved” by arguments that only six motions for leave to amend had been granted by the PTAB.  In Justice Breyer’s view that was to be anticipated because, despite the narrowing process already applied to these claims during their original prosecution, they had nevertheless been deemed unpatentable in subsequent review.  In the end, he seemed to appeal to the Government’s counsel, seeking from him an articulation of facts establishing that the legislation was intended to provide a do-over:  “What’s the evidence?”

Kagan:   Justice Kagan also challenged Petitioner’s counsel, “Is your argument, Mr. Beeney, that Congress couldn’t have thought anything else except that the ordinary meaning standard would control?”  She bemoaned the fact that the statute does not say one way or the other, leaving the Court “reading the tea leaves.” Nevertheless, “trying to put myself in Congress’s position,” Justice Kagan speculated aloud, “I’m looking at the PTO, and it does pretty much everything by this broadest-construction standard.”  “[I]f I had the clear intent that you’re suggesting,” she advised Petitioner’s counsel, “given the backdrop of how the PTO generally operates, wouldn’t I say so?”

Roberts:   Justice Roberts was far and away the most hostile to the Government’s position. He immediately announced his position to the Government’s counsel, “it seems to me perfectly clear that Congress meant for this entity to substitute for judicial action.”  “Why,” wondered Justice Roberts, “should we be wedded to the way they do business in the PTO . . . when the point is not to replicate PTO procedures.”  Ultimately, however, Justice Robert’s concerns appeared driven less by the debate over Congress’s motive in establishing IPRs, and more by his objection to any system that presented the potential for inconsistent results: “it’s a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results.”  In particular, Justice Roberts’ objections appeared to stem from his concerns with the burden imposed upon the District Courts: “You put the district court to all the trouble of trying to construe the patent, and then the defendant comes in and says, well, guess what? I won before the IP review, and so sorry, but all that was wasted energy.”  “It just seems to me,” Justice Roberts announced, “that’s a bizarre way to conduct legal—to decide a legal question.”  With perhaps a faint wisp of sarcasm, Justice Roberts asked rhetorically, “and this is under a statute designed to make the patent system more reasonable and more expeditious in reaching judgments?”

Predictions in these circumstances are unreliable.  Nevertheless, let’s take a stab.  With the court short one justice, a plurality of four is sufficient to sustain the Federal Circuit’s application of the broadest reasonable construction.  Based upon their comments, it would appear that Justices Sotomayor, Ginsburg, Kagan and Breyer lean towards maintaining the application of the broadest reasonable construction.  Justices Kennedy and Alito also appear, based on their comments, to be possible votes in favor of maintaining application of the broadest reasonable construction. Justice Roberts appears opposed.  Justice Thomas has offered no indication.  Based on this presumed headcount, the broadest reasonable construction may be here to stay (at least for now).

Notwithstanding that prediction, however, parties filing IPR petitions in this uncertain environment may do well to suggest that their proposed constructions would not differ, regardless of the standard applied, or otherwise explain claims, whether construed under one or the other, are equally invalid under the identified prior art.