PTAB Decision Vacated and Remanded for Changing Claim Construction “Midstream”

Monday, June 13, 2016

Even though the Federal Circuit agreed with the Patent Trial and Appeal Board’s new claim construction in the final written decision, the Court found that the Board errored by adopting a new construction for a term it had construed differently in its institution decision. (see SAS Institute, Inc. v. ComplementSoft, LLC (Fed. Cir. June 10, 2016).

The Federal Circuit vacated and remanded the portions of the Board’s final written decision that relied on the new claim construction.   Judge Stoll noted that in the context of IPR proceedings, the Board “may not change theories in midstream without giving respondents reasonable notice of the change and the opportunity to present argument under the new theory.”

In the final written decision, the Board found one of the instituted claims patentable because the prior art did not disclose the newly-construed limitation “graphical representations of data flows.”  The Federal Circuit pointed out that the patent owner, ComplementSoft, agreed with the institution decision claim construction; and likewise, SAS, the petitioner, focused on the same claim construction in its reply.  “It is difficult to imagine either party anticipating that already-interpreted terms were actually moving targets, and it is thus unreasonable to expect that they would have briefed or argued, in the alternative, hypothetical constructions not asserted by their opponent. This is especially true for SAS, considering the strict fifteen page limit for its reply to the patent owner’s response.”

In agreeing with the Board’s narrower interpretation of the claim term, the Federal Circuit stated that “[w]hile we have endorsed the Board’s use of the broadest reasonable interpretation standard in IPR proceedings, we also take care to not read “reasonable” out of the standard.” The Court noted that the specification and evidence in the record must be consistent with the ultimate claim construction. In any event, the Federal Circuit remanded the patentability decision based on the new claim construction “so that the parties may address a new construction that the Board adopted in its final written decision after interpreting the claim differently before.”