October 11, 2018

PTAB Changes Claim Construction Standard

On October 10, 2018, the United States Patent and Trademark Office (PTO) announced a final rule changing the claim construction standard applied during inter partes review (IPR), post-grant review (PGR), and covered business method (CBM) review proceedings before the Patent Trial and Appeal Board (PTAB). The final rule replaces the “broadest reasonable interpretation” (BRI) claim construction standard, which the PTO has used to interpret claims since post grant proceedings began in 2012 under the America Invents Act (AIA), with the “Phillips” claim construction standard used in civil actions in federal district court. Citing a study indicating that 86.8% of the patents at issue in AIA proceedings are also the subject of litigation in federal courts, the PTO indicated that use of the same claim construction standard would lead to greater uniformity and predictability of the patent grant, improve the integrity of the patent system, and increase judicial efficiency overall. The change will apply to petitions filed on or after November 13, 2018.

The final rule adopts the narrower claim construction standard articulated by the Federal Circuit in Phillips v. AWH Corp. and its progeny, where the “words of a claim are generally given their ordinary and customary meaning,” which is “the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention.”  415 F.3d 1303, 1312-13 (Fed. Cir. 2005). According to the PTO, one of the original justifications for the BRI standard is the fact that patent owners can seek to amend their patent claims during AIA proceedings. The BRI standard is used when evaluating patent claim amendments during original examination. However, according to the PTO, claim amendments made in AIA trials are relatively rare and are substantially different than amendments made during original examination, and thus the right to amend during AIA trials no longer justifies the use of BRI. Further, the PTO indicated that it currently uses the Phillips standard for AIA trials concerning expired patents and soon-to-expire patents, and that based on this experience, it has determined that no revisions to its trial procedures (such as expanding page limits or modifying briefing requirements) are needed to account for the change in standard. 

The PTO also amended the rules to add that any prior claim construction determination made in a civil action or International Trade Commission (ITC) proceeding concerning the patent claim that is timely made of record in an IPR, PGR, or CBM proceeding will be considered. This is a change from the PTAB’s current practice, wherein prior claim construction rulings from district courts and/or the ITC were not routinely considered, given the different claim construction standards. Now, although the PTAB will not necessarily defer to the prior claim construction, it will give it “appropriate weight” based on factors including how thoroughly reasoned the prior decision is and the similarities between the record in the district court or ITC and the record before the PTAB.

With the same standard applied in federal court and before the PTAB, questions are likely to arise about whether claim-construction decisions of one forum should bind the other, under the doctrine of issue preclusion. The PTO said only that district courts would have “discretion” to adopt the PTAB’s constructions; as for the effect of district court constructions on the PTAB, the PTO noted that issue preclusion does not apply until a court reaches final judgment.

The final rule published in the Federal Register on October 11, 2018, and takes effect on November 13, 2018. In response to commenters who expressed concern over the proposed “retroactive” application of the new final rule, the PTO has now determined that the rule will not be retroactively applied to pending matters. Rather, the changes will apply only to IPR, PGR, and CBM petitions filed on or after the effective date of the final rule. The PTO further stated that the PTAB “will continue to apply the BRI standard for construing unexpired patent claims and proposed substitute claims in AIA proceedings where a petition was filed before the effective date of the final rule.”