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Attorneys

USPTO Proposes Change in Claim Construction Standard for PTAB Proceedings Under the AIA

May 16 2018

By Jo Dale Carothers

Currently, the standard for claim construction is different in AIA reviews before the United States Patent and Trademark Office’s (“USPTO”) Patent Trial and Appeal Board (“PTAB) than in proceedings in federal district courts and the International Trade Commission (“ITC”). The USPTO construes claims to have their broadest reasonable interpretation (“BRI”) while district courts and the ITC apply the Phillips standard.

Under the BRI standard, a claim term is given its broadest reasonable construction “in light of the specification as it would be interpreted by one of ordinary skill in the art.” Under the Phillips standard, a claim term is given the “ordinary and customary meaning” it would have to “a person of ordinary skill in the art … at the time of the invention.” The Federal Circuit has explained that the “broadest reasonable interpretation of a claim term may be the same as or broader than the construction of a term under the Phillips standard. But it cannot be narrower.” Thus the Phillips standard is generally considered narrower than the BRI standard.

Currently, the USPTO applies the BRI standard during prosecution of patents, in ex parte reexaminations, and in AIA reviews including inter partes reviews (“IPR”), post grant reviews (“PGR”), or covered business method (“CBM”) proceedings before the PTAB involving unexpired patents. The PTAB applies the Phillips standard when interpreting expired patent claims. Further, either side in an AIA review may request application of the Phillips standard for patents that will expire within 18 months of the petition’s filing date. In contrast, district courts and the ITC always apply the Phillips standard for claim construction.

Many patent owners feel that alleged infringers have an unfair advantage under the current system that applies different claim construction standards for the different forums. An alleged infringer can argue for a narrow claim construction under Phillips in district court to avoid a finding of infringement and simultaneously argue for a broad construction under the BRI standard before the PTAB in an attempt to invalidate the asserted patent claims. Therefore, patent owners have repeatedly argued the PTAB should use the same claim construction standard as district courts.

On May 9, 2018, the USPTO issued a notice of proposed rulemaking in which it proposed to adopt the narrower Phillips standard for construing unexpired patent claims and proposed amended patent claims in PTAB trials under the AIA. The proposal also would amend the rules to add that the PTAB will consider prior claim constructions in civil actions and ITC proceedings that are made of record in a timely manner in IPRs, PGRs, or CBMs.

The USPTO stated “[t]he goal is to implement a fair and balanced approach, providing greater predictability and certainty in the patent system” and increased judicial efficiency. The USPTO acknowledged that one of the primary concerns of patent owners is that under the PTAB’s current BRI standard, a patent claim could theoretically be found invalid in an IPR, PGR, or CBM review based on a claim interpretation that the patent owner would not be able to apply in asserting infringement in a district court case. Therefore, the proposed rule change will also alleviate this concern by harmonizing the standards across forums.

Most patent owners will see this proposed rule change as a sign more patent claims will be upheld by the PTAB in AIA reviews conducted under the narrower claim construction standard. In most cases, however, those patent owners will likely be disappointed. While the difference in claim construction standards has critically impacted a few decisions, in most instances, the BRI standard and the Phillips standard lead to the same result. There may also be a downside for patent owners who are anxious for patent infringement litigation to quickly move forward against alleged infringers. Given the Supreme Court’s recent ruling in SAS Institute v. Iancu requiring the PTAB to review all claims challenged in a petition if review is instituted and the proposed harmonization of the claim construction standard between district courts and the PTAB, district courts will be even more likely to grant stays of infringement cases pending IPRs, PGRs, and CBMs. In sum, while patent owners were hoping the change in claim construction standards would make it harder to invalidate patent claims, that may not be the result and instead district courts are likely to decide it is judicially more efficient to let the PTAB conclude its AIA reviews before proceeding with infringement actions.

If the USPTO’s proposed rule change is implemented, there will also be a stronger basis for reliance on claim construction rulings across the forums. But will PTAB claim construction rulings be binding on district courts? It has been noted that in B&B Hardware v. Hargis Industries, the Supreme Court held that decisions of the Trademark Trial and Appeal Board can be considered binding in subsequent matters before federal courts considering the same questions. One could argue that claim construction rulings by the PTAB could be similarly binding in subsequent district court infringement cases.

The USPTO has indicated that, if adopted, the proposed rule changes will apply to all IPR, PGR, and CBM proceedings, including those pending at the time the rule change takes effect. This proposed change will not apply to claims during prosecution at the USPTO. Further, it does not appear the change will apply to ex parte reexaminations, which could make that option more intriguing for those instances where the BRI standard is more likely to lead to invalidating claims than the narrower Phillips standard.

The USPTO is accepting comments on the proposed rule change for 60 days from its date of publication. Therefore, the proposed change could go into effect as early as summer of 2018.