In re Cuozzo Speed Technologies, LLC: Is BRI the correct standard for IPR claim construction?

On November 3, 2014, the Federal Circuit heard oral arguments in the appeal of the first inter partes review decided under the America Invents Act. In the case, In re Cuozzo Speed Technologies, LLC, Fed. Cir. 14-1301, the Federal Circuit has been asked to review the procedures of the new inter partes review proceedings, especially the standard of claim construction and the availability of appeals for IPR institution decisions.

In re Cuozzo Speed Technologies was the first inter partes review instituted by the PTAB after the AIA went into effect in September 2012. Since that time, the IPR procedure has been highly popular with accused infringers. The USPTO reported that, as of September 25, 2014, a total of 1,821 petitions for IPR had been filed. The PTAB has reached a decision on whether to institute review for 938 of those petitions. In 731 of those decisions, the PTAB instituted an IPR. At this time, the first appeals out of the IPR proceedings are beginning to reach the Federal Circuit, with various challenges to the PTAB’s rules and regulations.

One of the primary concerns raised by patent owners is that the standard relied upon during an instituted IPR, the “broadest reasonable interpretation,” in contrast to the “ordinary and customary meaning” construction standard relied upon during court proceedings.

During the oral arguments, the judges appeared largely supportive of the overall IPR procedure, although they also noted concerns about some of the IPR rules. As asked by Judge Pauline Newman, “So after the patent has issued, why should the result be different in the office than in the court, based on how the claims are construed?” Under the BRI standard, a broader swath of prior art is available to patent challengers and/or accused infringers. The primary justification raised for using the BRI standard is that patentees can amend their claims during the IPR proceeding in response to the PTAB’s construction of the claims. Judge Newman also pushed back on this claim, noting that “It’s not so easy.”

As noted by attorneys for Cuozzo Speed Technologies, in the two years of AIA IPR proceedings, no opposed motion to amend has been granted. Previously, former Federal Circuit Chief Judge Randall Rader even referred to the IPR proceedings as “death squads.”

The other main issue raised by In re Cuozzo Speed Technologies, LLC is whether “non-discretionary” jurisdictional requirements of the IPR proceedings may be appealed. According to briefs filed by Cuozzo, the “non-discretionary” requirements encompass: 1) “the petition must be filed by a person who is not the patent owner (35 U.S.C. § 311(a))”; 2) “the grounds of un-patentability must be limited to 35 U.S.C. § 102 or 103 and only based on patents or printed publications (35 U.S.C. § 311(b))”; 3) “the petitioner or real party in interest cannot have filed a civil action challenging the validity of a claim of the patent (35 U.S.C. § 315(a))”; and 4) “the petitioner, real party in interest or privy of the petitioner cannot have been served with a complaint alleging infringement of the patent more than 1 year before the date on which the petition is filed (35 U.S.C. § 315(b)).” See Reply Brief of Appellant, In re Cuozzo Speed Techs., LLC, No. 2014-1301, 2014 WL 3055159, at *2-3 (Fed. Cir. June 23, 2014). The issues raised by Cuozzo are relevant, because under 35 U.S.C. § 314(d) “The determination by the Director whether to institute an inter partes review under this section shall be final and non-appealable.”

The decision of the Federal Circuit in In re Cuozzo Speed Technologies, LLC will impact the IPR decisions that are just beginning to reach the courts, and potentially alter the course of the IPR proceedings if the Federal Circuit agrees that the BRI standard is inappropriate.

Regardless of the decision, the IPR proceedings remain an attractive option for accused patent infringers, given the substantially lower cost of the IPR proceedings versus litigation, as well as the accelerated timeline of IPRs. But for patent owners, the decision could signal an attempt to balance the IPR proceedings from thus far being heavily in favor of the patent challenger.

By: Matt Remissong

And All For The Want Of A Day

In 14.5 years, the drug Lipitor (Pfizer) has generated more than $125 billion in sales. A quick calculation would show that this drug has seen revenues of roughly $24 million a day. It goes without saying that each day counts in the pharmaceutical world. Now imagine missing four years of patent protection over a flagship drug because of one day. This was the situation in a recently filed malpractice suit filed by The Medicines Company (MDCO) against its former patent counsel, Fish & Neave. See The Medicines Co. v. Fish & Neave, et al., No. MRS L-2516-14 (N.J. Super. Ct. Oct. 10, 2014).

Fish & Neave missed a critical deadline for filing a Patent Term Extension (or PTE) application for Angiomax, an anticoagulant used to inhibit a key contributor to the formation of blood clots. According to an Annual Report provided by MDCO, MDCO’s 2013 U.S. sales of the drug exceeded $550 million.

The extension concerned U.S. patent number 5,196,404, the “principal patent covering Angiomax in the United States.” On December 23, 1997, MDCO filed a new drug application for Angiomax with the FDA. Under U.S. law, a new drug cannot be commercially marketed or used until it receives FDA approval. During the FDA review period, the applicant receives no commercial benefit from any patents on the drug. However, to balance the restrictions on commercially benefiting from drugs pending FDA approval, 35 U.S.C. § 156 (the Hatch-Waxman Act) allows the holder of a drug patent to apply for a patent term extension to compensate for the delay in obtaining FDA approval. The timing to file the PTE to the USPTO is “within the sixty-day period beginning on the date the product received permission . . . for commercial marketing or use.” 35 U.S.C. § 156(d)(1).

The FDA’s approval of the new drug application for Angiomax was set forth in a letter faxed to MDCO at 6:17 p.m. on Friday, December 15, 2000. Assuming that Friday December 15, 2000 was day 1, and the 60 day period means calendar days, the critical date for the PTE application for Angiomax was Tuesday, February 13, 2001. If approved, the extension application would have changed the expiration date of the ’404 patent from March 23, 2010 until December 2014. MDCO alleged that the additional patent term translated into approximately $2.0 billion in sales.

The USPTO denied MDCO’s application for patent-term extension, stating that it was untimely because it should have been filed on February 13, 2001, not February 14, 2001. MDCO alleges that Fish & Neave was at fault for the late filing. MDCO further alleges Fish & Neave failed to calculate and docket the correct filing date. Instead, Fish & Neave allegedly assigned responsibility for the filing to an unsupervised part-time law student.

In March 2010, MDCO sought review of the USPTO’s denial of the patent term extension application in the U.S. District Court for the Eastern District of Virginia. Ultimately, the court found for MDCO since the FDA’s approval was sent at 6:17 p.m. on Friday, December 15, 2000. Current FDA practice dictates that submissions received after the close of business are considered filed on the next business day. The court found no reason why the same standard should not apply when the FDA issues approval after the close of business, and thus the clock should start from the next business day. If day 1 started on the day following the day of the faxed transmission, the critical date would fall on February 14, 2001.  MDCO’s application was filed within this time period as determined by Judge Hilton.  See The Medicines Co. v. Kappos, et al., 731 F. Supp. 2d 470 (E.D. Va. 2010).

MDCO ultimately “won” and received the additional four-plus years of patent term extension, but alleges that they suffered “seismic” and “irreparable” damages as a result of millions spent on its legal and legislative battles to obtain the patent term extension. The complaint further alleges reduced stock value and loss of business opportunities.

This case illustrates both the importance of proper IP docketing practices and the duty of law firms to supervise subordinates.  Proper docketing in IP practice is crucial. As the case and numbers show, an error of even one day can make a billion dollar difference.