Supreme Court rejects challenge to patent review process

WASHINGTON (Reuters) - The Supreme Court on Monday ruled against Cuozzo Speed Technologies Corp in its challenge to a federal agency’s procedures for canceling patents in a case involving a vehicle speedometer that tells drivers when they are speeding.

A general view of the U.S. Supreme Court building in Washington, U.S., May 19, 2016. REUTERS/Carlos Barria

The justices’ 8-0 decision backed a 2015 appeals court ruling that upheld the U.S. Patent and Trademark Office’s invalidation of New Jersey-based Cuozzo’s speedometer patent.

The legal question was whether the federal agency’s procedures have made it too easy to successfully cancel patents. In an opinion by Justice Stephen Breyer, the court backed the process.

Cuozzo's speedometer patent was invalidated in a U.S. Patent and Trademark Office review procedure after being challenged by GPS device maker Garmin Ltd GRMN.O in 2012.

The Patent and Trademark Office’s director, Michelle Lee, said in a statement that the decision will allow the agency to efficiently resolve disputes over patent validity “while providing faster, less expensive alternatives to district court litigation.”

Despite Cuozzo’s loss, its attorney, Garrard Beeney, said the case has already contributed to “more balanced” outcomes at the patent office, with more patent owners prevailing in the reviews.

Companies that are frequent targets of patent suits, including Apple Inc AAPL.O and Google Inc GOOGL.O, have taken advantage of the patent office procedure, known as inter partes review (IPR), in unexpectedly high numbers since it was put in place in 2012.

The U.S. Congress created the reviews as part of a 2011 law called the America Invents Act to deal with the perceived high number of poor-quality patents that had been issued by the patent office in prior years.

Cuozzo was supported by several industry groups and companies. One friend-of-the-court brief filed in the case on behalf of 3M Co MMM.N, Caterpillar Inc CAT.N, Eli Lilly and Co LLY.N and Qualcomm Inc QCOM.O said the patent office reviews and litigation in district court needed to be streamlined for the "proper functioning of the patent system as a whole."

On Monday, the Supreme Court also ruled that patent office decisions to initiate reviews may not be appealed. Justices Samuel Alito and Sonia Sotomayor dissented on that part of the decision, saying appeals should be allowed.

The cancellation of Cuozzo’s patent came in the first-ever petition for an IPR. Garmin’s action was in response to a lawsuit filed by Cuozzo in federal court in 2012. Garmin is no longer involved in the case.

The case is In re Cuozzo Speed Technologies LLC v Michelle K. Lee, in the Supreme Court of the United States, No. 15-446.

Reporting by Lawrence Hurley; Editing by Will Dunham