Patent ‘Death Squad’ Rules Questioned at U.S. Supreme Court

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Customers look at products as an Apple Inc. logo is illuminated at a shopping mall in Shanghai on Sept. 25, 2015.

Photographer: Qilai Shen/Bloomberg
  • Apple, Google among supporters of new patent review system
  • Justices debate U.S. board that tends to toss issued patents

U.S. Supreme Court justices questioned a new system that has drawn applause from Google and Apple Inc. for invalidating hundreds of disputed patents without forcing the challengers to go to court.

Hearing arguments Monday, the justices debated the rules used by an administrative board that critics have labeled a "death squad" because of its tendency to throw out patents. The hour-long hearing didn’t produce any clear indication as to the likely outcome.

The case is dividing the technology industry and the broader business community. Google, Apple, Samsung Electronics Co. and the generic-pharmaceutical and banking industries support the system as a way to weed out dubious patents. The biotechnology and brand-name drug industries, along with Exxon Mobil Corp. and Tessera Technologies Inc., say the rights of patent owners are being unfairly undercut.

Under the system, set up in 2011 by Congress, competitors can ask the Patent Trial and Appeal Board to take another look at patents after they have been issued.

The Supreme Court is considering the board’s practice of interpreting a patent in the broadest way reasonably possible. That’s the standard used during the U.S. Patent and Trademark Office’s initial review of applications, and it makes it easier to find information that could prove a patent doesn’t cover anything new.

‘Extraordinary Animal’

Chief Justice John Roberts suggested during Monday’s argument that the board should use the same standard as federal judges, who interpret each patent according to the ordinary meaning of its words.

"It’s a very extraordinary animal in legal culture to have two different proceedings addressing the same question that lead to different results," Roberts said.

The Obama administration is defending the board’s standards, saying Congress didn’t intend for the patent-review system to be identical to a court hearing.

Justice Elena Kagan said Congress didn’t provide clear guidance. "If I look at the statute, I mean, it just doesn’t say one way or the other," Kagan said.

The case before the Supreme Court involves a speed-limit indicator patent owned by Cuozzo Speed Technologies LLC, which had sued companies including Garmin Ltd., General Motors Co. and TomTom NV. Garmin filed a review petition and successfully argued the Cuozzo patent was invalid because it was an obvious variation of earlier inventions.

Appeals Court

The federal appeals court that handles patent cases said the patent office acted within its authority when it decided to use the same review standard it uses in other types of proceedings.

Cuozzo’s lawyer, Garrard Beeney, told the justices that the ordinary-meaning approach should govern once a patent has been issued. That way, "we wouldn’t be depriving patent owners of their property rights based on pretending the patent means something that it doesn’t mean," he said.

Justice Department lawyer Curtis Gannon said that the review system was a hybrid proceeding and that the patent office "has reasonably decided to use its longstanding broadest-reasonable-construction approach."

The numbers tell a mixed story about the board’s impact. Critics say the panel has invalidated at least part of a disputed patent in 87 percent of the cases it reviews. Supporters counter that the board declines even to consider about half the patent challenges filed.

Popular Forum

The review board has become a popular forum for resolving patent disputes, with 1,897 review petitions filed with the agency in fiscal 2015.

Technology companies in particular have embraced the proceedings because they are seen as faster and less expensive than traditional litigation in courts -- and one ruling against a patent owner can wipe out dozens of lawsuits.

The justices are also considering whether a patent owner can go to court to challenge the review board’s decision to scrutinize a patent.

The case is Cuozzo Speed Technologies v. Lee, 15-446.

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