Cuozzo Speed v. Lee — Patents | Outside IP Counsel

Q: Can you appeal the Patent Office's decision to institute inter partes review?

Generally no. Cuozzo held that 35 U.S.C. § 314(d) makes institution decisions final and nonappealable for ordinary disputes closely tied to the institution decision. The Court left open narrow exceptions for constitutional questions and actions that exceed the agency's statutory limits.

The Supreme Court held that decisions to institute inter partes review are largely unappealable and that the PTAB could apply the broadest-reasonable-interpretation claim-construction standard.

The America Invents Act created a fast, cheaper way to kill bad patents at the Patent Office, but it also raised a hard question: how much can a losing patent owner ask a court to second-guess? In Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. 261 (2016), the Supreme Court gave two answers that still define inter partes review (IPR). Writing for the Court on June 20, 2016, Justice Stephen Breyer held that the decision whether to institute review is, by statute, “final and nonappealable” for the ordinary run of disputes, and that the Patent Office acted within its authority when it told the Patent Trial and Appeal Board to construe claims using the “broadest reasonable interpretation” standard. The ruling cemented the IPR regime’s design and largely insulated its threshold decisions from judicial review.

At a glance

Case: Cuozzo Speed Technologies, LLC v. Lee, No. 15-446 (U.S. June 20, 2016), reported at 579 U.S. 261.
Court: Supreme Court of the United States; opinion by Justice Breyer. Justice Thomas concurred; Justice Alito, joined by Justice Sotomayor, concurred in part and dissented in part on the appealability holding.
Posture: Review of a Federal Circuit decision affirming the PTAB’s cancellation of Cuozzo’s patent claims in one of the first IPRs after the America Invents Act took effect.
Holding: Under 35 U.S.C. § 314(d), the decision to institute IPR is not appealable for challenges closely tied to that determination; and under § 316(a)(4) the PTO reasonably adopted the broadest-reasonable-interpretation standard for claim construction in IPR.
Significance: Confirmed the structure of IPR, shielded institution decisions from appeal, and launched a line of cases (later SAS and Thryv) mapping the limits of § 314(d).

The patent and the procedural fight

Cuozzo’s patent claimed a speedometer that uses GPS data to show drivers when they exceed the speed limit for their location. Garmin petitioned for IPR, and the PTAB instituted review of several claims, including claims 10 and 14. Cuozzo objected that Garmin’s petition had identified the relevant prior art with the required particularity only as to claim 17, not claims 10 and 14, so the Board should not have instituted review of those claims. The Board proceeded anyway and ultimately found the claims obvious and cancelled them. The Federal Circuit affirmed, and the Supreme Court granted certiorari on two questions: whether the institution decision could be appealed at all, and whether the PTO could apply the broadest-reasonable-interpretation standard.

Why the institution decision is (mostly) unappealable

Section 314(d) states that “[t]he determination by the [Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable.” Justice Breyer read that text to bar Cuozzo’s particularity complaint, which was, at bottom, an argument that the agency “should have refused to institute” review. Allowing such challenges on appeal would let patent owners undo the very efficiency Congress sought.

But the Court was careful to fence the holding. The bar applies to questions “closely tied to the application and interpretation of statutes related to” the institution decision. It does not necessarily reach challenges that “implicate constitutional questions,” that depend on other less closely related statutes, or that present allegations the agency acted “outside its statutory limits.” In a much-quoted passage, Justice Breyer warned that § 314(d) would not shield agency “shenanigans” from review. That carve-out — vague by design — became the seam that later cases would probe.

Broadest reasonable interpretation survives Chevron

On the second question, the Court upheld the PTO’s regulation, 37 C.F.R. § 42.100(b), directing the Board to give claims their broadest reasonable construction in light of the specification. The America Invents Act did not specify a claim-construction standard, and § 316(a)(4) gave the agency authority to issue rules governing IPR. Applying Chevron deference, the Court found the choice reasonable: the broadest-reasonable-interpretation standard had long been used in other Patent Office proceedings, and patent owners can move to amend their claims in IPR, which (at least in theory) lets them narrow language that reads too broadly.

The Court acknowledged the awkward consequence Cuozzo had pressed — that the PTAB and a district court might construe the same claim differently, the Board broadly and the court narrowly, producing inconsistent results. Justice Breyer accepted that possibility as a tolerable feature of a system in which the two forums serve different functions. The Patent Office later exercised the same rulemaking authority in reverse: a 2018 regulation replaced the broadest-reasonable-interpretation standard with the narrower Phillips standard used in federal court, so the construction holding now describes the law as it stood, not as it operates today.

Open questions

How big is the “shenanigans” exception? Cuozzo preserved review for constitutional claims and ultra vires agency action but did not define those edges, leaving lower courts to litigate them.
Which threshold disputes are “closely tied” to institution? The Court did not catalog them, setting up later fights — including the timing rules in SAS Institute and the time bar in Thryv — over what § 314(d) actually covers.
Are IPR amendments a real safeguard? The Court leaned on the right to amend to justify the broad claim-construction standard, but practitioners questioned how often amendments succeed in practice.

Implications

Institution decisions are largely final. Patent owners cannot ordinarily use an appeal to argue the Board never should have instituted review in the first place.
The agency owns the rules of IPR. Cuozzo confirmed broad PTO rulemaking authority, which the agency later used to switch claim-construction standards in 2018.
Claim construction now matches the courts. Because of that 2018 rule change, the PTAB today applies the Phillips standard, reducing the forum-to-forum divergence Cuozzo tolerated.
A narrow review valve remains open. Constitutional and ultra vires challenges survive § 314(d), a door later decisions would test.
The decision shaped a doctrine, not just a case. Cuozzo is the foundation on which SAS Institute and Thryv built the modern map of what can and cannot be appealed.

Frequently asked questions

Can you appeal the Patent Office’s decision to institute inter partes review? Generally no. Cuozzo held that 35 U.S.C. § 314(d) makes institution decisions final and nonappealable for ordinary disputes closely tied to the institution decision. The Court left open narrow exceptions for constitutional questions and actions that exceed the agency’s statutory limits.

What is the broadest reasonable interpretation standard? It is a claim-construction approach that gives patent claim terms their broadest reasonable meaning in light of the specification. Cuozzo upheld the Patent Office’s rule applying it in inter partes review. The agency later changed that rule in 2018 to match the narrower Phillips standard used in federal courts.

Did Cuozzo win or lose? Cuozzo lost. The Supreme Court affirmed the Federal Circuit, upholding both the bar on appealing the institution decision and the Patent Office’s use of the broadest-reasonable-interpretation standard, which had led to the cancellation of Cuozzo’s claims.