Federal Circuit Judges Disagree On Correct Claim Construction Standard For AIA Post-Grant Proceedings, But Decline En Banc Review

Thursday, July 09, 2015

On June 8, 2015, the U.S. Court of Appeals for the Federal Circuit again considered one of the earliest final decisions from the USPTO’s Patent Trial and Appeal Board (“PTAB” or “Board”) in an inter partes review proceeding under the Leahy-Smith America Invents Act of 2011 (“AIA”). In a set of revised opinions from the panel hearing the appeal, and three additional opinions debating the court’s denial of the patent owner’s petition for rehearing en banc, the court exposed strongly-held – and nearly equally divided – views on the proper claim construction standard applicable to AIA trial proceedings. In re Cuozzo Speed Technologies, LLC, No. 2014-1301 (Fed. Cir. Jun. 8, 2015) (revised panel decision and order denying motion for rehearing en banc).

Cuozzo Speed Technologies, LLC owns U.S. Patent No. 6,778,074, titled “Speed limit indicator and method for displaying speed and the relevant speed limit.” The patent claims, among other things, a speed display connected to a global positioning system device that displays a vehicle’s current speed and indicates when the speed exceeds the legal speed limit for the vehicle’s exact location. Garmin International, Inc. filed a petition for inter partes review of certain claims of the ‘074 patent on September 16, 2012 – the first day that IPR proceedings were available under the AIA. Garmin contended that specific combinations of prior art references created a reasonable likelihood that the challenged claims were invalid. See 35 U.S.C. § 312(a). The PTAB instituted review on claims 10, 14 and 17 of the ‘074 patent, although the PTAB based its decision on claim 10 and 14 by applying references that Garmin did not identify as relevant to those claims. In the ensuing trial, the PTAB construed the claims by giving them the “broadest reasonable construction in light of the specification of the patent in which it appears.” 37 C.F.R. § 42.100(b). It also denied Cuozzo’s request to substitute amended claims for the challenged claims. Ultimately the PTAB ruled that all three claims were invalid as obvious.

Cuozzo appealed the result to the Federal Circuit. In a Feburary 4, 2015 divided decision, the court ruled that the USPTO’s decision to institute an IPR proceeding was not appealable, either prior to or after the PTAB’s final decision. See 35 U.S.C. § 314(d) (“[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”). The majority also held that the “broadest reasonable interpretation” standard was appropriate. The court held that the PTAB properly denied Cuozzo’s request to amend the ‘074 patent claims because the proposed claims were broader than the original claims in some respects, even though they were narrower in other respects. See 35 U.S.C. § 316(d)(3). Finally, the court affirmed the PTAB’s final determination that the three claims were obvious. In re Cuozzo Speed Technologies, LLC, 778 F.3d 1271 (Fed. Cir. 2015). Cuozzo filed a petition for rehearing en banc.

Practice Points:

  • Federal Circuit denies en banc review of a key issue arising in AIA inter partes review proceedings.
  • In an unusual step, judges issued opinions sparring over whether the PTAB should construe patent claims in AIA trials using the “broadest reasonable interpretation” standard, commonly applied during patent examination, or a meaning derived from the claims, specification, and prosecution history standard, as applied by federal courts in patent actions.
  • The court issued a revised decision in the underlying appeal, with both the majority and dissent sharpening their arguments. The revised decision did not affect the earlier holdings:
  • The “broadest reasonable interpretation” standard applies in AIA trial proceedings.
  • The PTAB’s final decision holding that three claims are invalid as obvious, despite applying references not identified in the challenger’s petition, was not erroneous.
  • The PTAB did not err in denying the patent owner’s motion to amend claims because the proposed claims would have impermissibly broadened the claimed invention.

Federal Circuit Denies En Banc Review:

The Federal Circuit declined the request for en banc review by a razor-thin margin. Five judges joined an opinion written by Chief Judge Sharon Prost, dissenting from the denial. Four other judges joined an opinion by Circuit Judge Timothy B. Dyk, concurring in the denial. Judge Newman also wrote a separate dissenting opinion.

The principal point of disagreement on the court was the standard the PTAB should use to construe claims during AIA proceedings. The USPTO implemented the AIA’s post-grant provisions by promulgating rules requiring that claims be interpreted using the “broadest reasonable interpretation” standard. In federal court proceedings, on the other hand, claims are construed to have their “actual” meaning to a person skilled in the art based on the claim language, specification, prosecution history, and – occasionally – other extrinsic evidence. The USPTO’s broader construction may make it easier for the Board to invalidate a claim as obvious or lacking novelty. This is a conservative approach when a claim is undergoing examination, but becomes an issue when applied to issued claims not undergoing further examination.

In a short opinion concurring in the denial of rehearing, Circuit Judge Dyk argued that the “broadest reasonable interpretation standard” was supported by the AIA’s legislative history. The USPTO’s use of that standard for decades was well known to Congress, and the legislative history is silent about requiring a different standard. In addition, Judge Dyk argued, Congress extended broad regulatory authority to the USPTO to adopt rules governing PTAB trials, so it must have understood that the Office was likely to adopt the standard it had consistently used. Judge Dyk also noted that court action was inappropriate when Congress currently is considering legislation that would change the applicable standard:

In the absence of evidence of congressional intent to abrogate the broadest reasonable interpretation standard, we should not act to adopt a different standard based on our own notions of appropriate public policy. If the standard is to be changed, that is a matter for Congress. There are pending bills which would do just that.

Slip op.at 2 (citing three bills pending in current Congress: Innovation Act, H.R. 9, § 9(b)(1)(C); PATENT Act, S. 1137, § 11(a)(4)(A)(vii); and; STRONG Patents Act of 2015, S. 632, § 102(a).

In her dissent, Chief Judge Prost argued that the AIA post-grant trial mechanism was a “new, court-like proceeding[,]” and thus the construction standard that applies in traditional litigation matters should apply. The dissent dismissed Judge Dyk’s review of the AIA legislative history, noting that the history is silent about the proper claim construction standard and, as the Supreme Court has noted, Congress’ silence on an issue is not helpful in resolving an issue of statutory intent. Instead, she argued:

Congress’s intent in creating a completely new type of PTO proceeding—one bearing the efficiency and finality of district court adjudications of patent validity— could not have been clearer. The panel majority fails to explain why Congress (or anyone else) would have thought it desirable or necessary for the Board to construe the claims during IPRs under a different legal framework than the one used by district courts.

Prost Dissent at 3. Chief Judge Prost also argued that the Federal Circuit has only embraced the “broadest reasonable interpretation” standard as a useful tool prior to patent issuance or during reexaminations or reissues. In those settings, the standard reduces the possibility that a claim later will be construed more broadly than was assumed during examination. In contrast, the standard should not apply when the patentee lacks a liberal ability to amend pending claims. She noted that under the PTAB rules, amendments are possible, but limited. Because the AIA IPR trials are much like the district court proceedings they were intended to replace, with “no back-and-forth between the patentee and examiner seeking to resolve claim scope ambiguity [and] there is no robust right to amend[,]” the dissent argued that the “broadest reasonable interpretation” standard should not apply.

To find otherwise would ignore the difference between the broadest reasonable interpretation and what a patent actually claims. In obtaining a patent, a patentee discloses his invention to the public in exchange for a limited monopoly, as defined by the claims of the patent. To invalidate those claims using a different standard than one that considers the true meaning and scope of a claim would violate the bargain the patentee struck with the public.

Prost Dissent at 4-5.

Judge Newman filed a separate dissent, pointing out that all amicus briefs submitted in the case argued against different standards in PTAB and district court proceedings, stressing the concern that different claim constructions would lead to uncertainty a lack of predictability in patent rights.

In light of the divergent views expressed in the concurring and dissenting opinions, it is likely that Cuozzo will petition the U.S. Supreme Court to take the case in the 2015 term. In addition, the judicial debate may affect Congress’ consideration of pending proposals to resolve the issue in patent reform legislation. In the interim, the “broadest reasonable interpretation” standard will continue to apply in all AIA proceedings.

 

For more information on post-grant proceedings, visit www.bkpostgrant.com.