On October 11, 2018, the U.S. Patent and Trademark Office (“the Office”) published final rules changing the patent claim construction standard used by the Patent Trial and Appeal Board (“PTAB”) in AIA proceedings from the “broadest reasonable interpretation” (or “BRI”) standard to the “Phillips” claim construction standard currently used by the federal courts and International Trade Commission (“ITC”). See Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc).
In announcing the new rule change, the Office stressed that adoption of the Phillips standard in AIA proceedings would: (1) reduce costs; (2) minimize the chance of disparate claim constructions between Office proceedings and parallel federal district court litigation; and (3) would promote certainty concerning the scope of issued patents. The new Philips standard will be effective for all petitions filed on or after November 13, 2018.
The historic application of the BRI standard required the Office to consider the “broadest reasonable meaning of [a claim’s] word in their ordinary usage as they would be understood by one of ordinary skill in the art, taking into account whatever enlightenment by way of definitions or otherwise that may be afforded by the written description contained in the applicant’s specification.” In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997). The Office had used this BRI standard for both pre-issuance examinations, as well as, post-issuance re-examination proceedings.
When the AIA was enacted, the Office continued to apply this BRI standard for inter partes review (“IPR”), post grant review (“PGR”), and covered business method (“CBM”) review proceedings to construe challenged claims. The only exception where the PTAB did apply the Phillips standard pertained to patents that were expired. See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144-46 (2016). Furthermore, the PTAB had begun referencing extrinsic evidence (e.g., dictionaries), but usage of such extrinsic evidence was always limited in view of the intrinsic evidence to ensure that the PTAB’s interpretation was the broadest reasonable interpretation and not just the broadest interpretation. See e.g., PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, 815 F. 3d 747, 755 (Fed. Cir. 2016)
The problem with having two different standards was the possibility of divergent interpretations by the PTAB and federal courts when the same patent claims were considered. Sometimes this might occur when a patent is the subject of parallel proceedings and the federal courts failed to give deference to the PTAB construction under the BRI standard. Conversely, the PTAB might also arrive at a different construction since it was likewise not bound to give deference to prior district court constructions under the Philips standard. Thus, when a prior construction already existed for a claim limitation there was no certainty that a given construction would be adopted in a different forum. Another problem with having dueling standards was the unnecessary time and expenses involved in arguing multiple claim construction positions in different forums—even when the dispute focused on the same claim limitation in both forums. In recognizing these issues, the new rules adopt the Phillips standard for all AIA proceedings in an attempt to harmonize claim construction between AIA proceedings and district court litigation.
[T]he Office is replacing the broadest reasonable interpretation (‘BRI’) standard such that claims shall now be construed using the same claim construction standard that is used to construe the claim in a civil action in federal district court. This rule reflects that the PTAB in an AIA proceeding will apply the same standard applied in federal courts to construe patent claims.”
“Changes to the Claim Construction Standard for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal Board,” 83 Fed. Reg. 51340 (Oct. 11, 2018).
To implement the new claim construction standard, the Office is implementing multiple rule changes. First, 37 C.F.R. §§ 42.100, 42.200, and 42.300 are now amended to state that “a claim of a patent, or a claim proposed in a motion to amend, shall be construed using the same claim construction standard that would be used to construe the claim in a civil action under 35 U.S.C. § 282(b), including construing the claim in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”
In addition, 37 C.F.R. §§ 42.100(b), 42.200(b), and 42.300(b) are amended to state that “[a]ny prior claim construction determination concerning a term of the claim in a civil action, or a proceeding before the [ITC], that is timely made of record in the . . . proceeding will be considered.”
Basis for Rule Change
In the Federal Register notice, the Office stressed that the Phillips standard was appropriate when construing the claims in AIA proceedings because the vast majority of those matters involve parallel district court infringement actions.
Minimizing differences between claim construction standards used in the various fora will lead to greater uniformity and predictability of the patent grant, improving the integrity of the patent system. In addition, using the same standard in the various fora will help increase judicial efficiency overall. One study found that 86.8% of patents at issue in AIA proceedings also have been the subject of litigation in the federal courts, and the Office is not aware of any change in this percentage since this study was undertaken.
83 Fed. Reg. at 51342.
The risk of divergent claims construction results in PTAB trials and parallel federal court actions was problematic, since “the scope of an issued patent should not depend on the happenstance of which court or governmental agency interprets it, at least as far as the objective rules go. Employing the same standard for AIA proceedings and district courts improves uniformity and predictability as it allows the different fora to use the same standards in interpreting claims.” Id. This could result in unfairness to patent owners:
According to some patent owners, the same claim construction standard should apply to both a validity (or patentability) determination and an infringement determination. Because the BRI standard potentially reads on a broader universe of prior art than does the Phillips standard, a patent claim could potentially be found unpatentable in an AIA proceeding on account of claim scope that the patent owner would not be able to assert in an infringement proceeding. For example, even if a competitor’s product would not be found to infringe a patent claim (under the Phillips standard) if it was sold after the patent’s effective filing date, the same product nevertheless could potentially constitute invalidating prior art (under the BRI standard) if publicly sold before the patent’s effective filing date.
Id. The USPTO reasoned that the new rules reflect that “[t]he Office’s goal is to implement a balanced approach, providing greater predictability and certainty in the patent system.” Id.
The USPTO stated that it also will apply a doctrine, recognized in Phillips but infrequently used, to construe claims in a manner that preserves validity. “Additionally, to the extent that federal courts and the ITC apply the doctrine of construing claims to preserve their validity as described in Phillips, the Office will apply this doctrine in those rare circumstances in AIA proceedings.” 83 Fed. Reg. at 51343.
The Office has recognized that 86.5% of all PTAB proceedings are the subject of litigation in federal courts. By shifting to the Philips standard, practitioners should see consistent interpretation for claims disputed concurrently in both the PTAB and district courts. A common standard will also result in less time and money being spent arguing different constructions in each forum. The Office even appears to be leaning toward giving deference to federal court rulings, as any prior constructions are to be submitted and will at least be considered by the PTAB. It is hopeful that federal courts will likewise account for, and give deference to, PTAB rulings so that judicial efficiencies on claim construction between the different forums is achieved.
The only shortcoming to the new rules is that the Philips standard applies only to AIA proceedings filed on or after November 13, 2018. So, the benefits and efficiencies of shifting to the Philips standard will not be fully recognized for AIA proceedings still pending before the PTAB.