The Federal Circuit on Wednesday reversed Court precedent and long held belief that inter partes review (“IPR”) institution decisions were categorically non-reviewable. The Court, sitting en banc, held that the issue of whether a petitioner is time-barred from filing an IPR petition  under 35 U.S.C. § 315(b) is in fact reviewable.[i]

This case arose when the patent owner alleged that an IPR petition was time barred based on the petitioner being privy with parties sued over the patent more than a year before the petition was filed. The IPR was instituted and a final written decision was published.

Congress granted the Director of the USPTO, subject to certain requirements, the sole discretion in whether to institute an IPR.  It is the extent of that discretion that the Court clarified on Wednesday. The Court honed in on two sections of the AIA—§§ 314 and 315. Section 314(a) authorizes the Director to institute an IPR if there is a “reasonable likelihood” that the petitioner will prevail with respect to at least one claim challenged in the petition. Section 315(b) on the other hand is a statutory time bar provision that limits a petitioner’s ability to successfully pursue an IPR proceeding if the “petitioner, real party in interest, or privy of the petitioner” was served with a complaint alleging infringement of the patent more than one year before the IPR petition was filed. The question answered by the court was whether § 314(d), which deems the Director’s decision to institute an IPR “under this section” final an nonappelable, extends to the time bar set out in § 315(b). According to the court, § 314(d) does not extend to § 315(b), but it is unclear if other determinations may soon be reviewable.

In concluding that the time bar determination is appealable, the Court highlighted the “fundamentally different” analysis of § 314 and § 315. On one hand, § 314(a) relates to a substantive analysis of the merits—a “preliminary patentability determination.” On the other hand, § 315(b) is a “condition precedent to the Director’s authority to act.” In other words, § 315(b) is precondition that if met grants the Director the authority to make a determination under § 314(a). According to the Court, the lack of a clear indication that Congress intended to bar appeals related to § 315(b) gave way to “the strong presumption in favor of judicial review of agency actions.”

This decision, although limited to time bar appeals, opens the door for other challenges to the Director’s “sole discretion.” Based on the Court’s heavy reliance on the language of § 314 being directed to preliminary patentability determinations, it is possible that the Court may be amenable to further appeals that do not relate directly to the “patentability merits of the claims.” Other AIA threshold requirements that may be challenged include the requirement that petitioner name all interested parties in the case and the AIA estoppel provisions.

[i] The case is Wi-Fi One LLC v. Broadcom Corp., Nos. 15-1944, 15-1945, and 15-1946 (Fed. Cir. Decided January 8, 2018).

It was a busy year for patent litigation across the broad, including the U.S. Patent and Trademark Office Patent Trial and Appeals Board (PTAB), U.S. District Courts (USDC), Court of Appeals for the Federal Circuit (CAFC), and the Supreme Court of the United States (SCOTUS). A quick look at the number of patent litigation cases filed over the years, particularly the last five years, show that while there has been a decrease in the number of cases filed with the USDC, the filings with the PTAB and CAFC saw a significant increase.

Total Number of Patent Litigation Cases 2008 to 2017

USDC patent case counts include cases addressing the infringement, validity, or enforceability of a U.S. patent that are pending in a U.S. district court or the Court of Federal Claims. This encompasses cases flagged with Nature of Suit (“NOS”) 830 in the PACER system as well as other cases that are known to meet the above criteria. Transferred, consolidated, coordinated, or bifurcated actions may contribute to the number of cases counted.

PTAB cases include applications to the PTAB for inter partes reviews and post-grant reviews pursuant to 35 U.S.C. § 6(a)(4), as reported in the PTAB’s Patent Review Processing System (“PRPS”). The term does not include proceedings conducted pursuant to 35 U.S.C. § 6(a)(1)-(3) such as appeals of adverse decisions of examiners, appeals of reexaminations, or derivation proceedings. Data obtained from Docket Navigator analytics.

SCOTUS was called upon to make important decisions ranging from patent venue laws, patent exhaustion to a U.S. manufacturer’s liability for exporting components later incorporated into an infringing product, including amendments during inter partes review. The year started with predictions as to whether the Supreme Court will consider the issue of whether IPR violates the U.S. Constitution by extinguishing private property rights through a non-Article III forum without a jury, in Oil States Energy Services LLC v. Greene’s Energy Group, LLC, and ended with predictions regarding the outcome of the oral arguments heard by the Court in November. Although faced with the issue before, the fact that Supreme Court decided to hear the issue now is not surprising given the increasing number of IPRs being filed with the PTAB and a slow decrease in the number of IPR petitions being instituted (coupled with increase in the number of IPR petitions being denied).

Institution Rates from FY13 to FY18 (Source: PTAB)

The number of post-grant proceedings filed in the technologies related to Electrical/Computer & Mechanical are much higher than those filed in the Bio/Pharma and Chemical technology areas. However, the rate at which the petitions are instituted is similar in each of the technology areas.

Institution Rates by Technology 09/16/2012 to 11/30/2017(Source: PTAB)

Also, the post- and pre-institution settlement rates have remained the same for the last two years, which are noticeably lower as compared to two years prior to that and significantly lower (at least for post-settlements) compared to five years ago. Although it may be tempting to associate this decrease in settlements to the predictions of Oil States’ challenge for the constitutionality of IPR proceedings, it would not be appropriate to do so given that the issue has been discussed previously.

Pre-Institution Settlements (Source: PTAB)

Post-Institution Settlements (Source: PTAB)

The Supreme Court’s decision in Oil States could have a major impact on the patent world, and is clearly the center of attention as the new year begins. Certainly, the decision in TC Heartland has proved to be a game-changer in patent filings. According to a recently published report by Fried, Frank, Harris, Shriver & Jacobson LLP, a substantial difference was noticed in the patent infringement filings from May 2017 to September 2017 when compared to the same period in 2016 in at least two of the top ten District Courts. The patent filings in the Eastern District of Texas, which is considered a plaintiff-friendly jurisdiction, decreased from 39.61% in 2016 to 15.04% in 2017; while the district of Delaware saw a rise in the filings, which is not surprising given most companies are either based out of, or majorly operate, in Delaware.

Top 10 District Courts: Pre- and Post-TC Heartland

It is not unusual that a decision, even by the Supreme Court, sometimes tends to pose more questions than it answers. The decision in Life Technologies Corp v. Promega Corp. is certainly amongst the top in 2017, wherein the Supreme Court had to address the issue of a U.S. manufacturer’s liability for exporting components later incorporated into an infringing product. While addressing a specific dispute pertaining to diagnostic kits between the parties, the Court raised many questions without providing any guidance as to the answers for those questions. The court held that the term “substantial portion” in Section 271(f)(1) has a quantitative, not a qualitative, meaning. More specifically, the court held that the phrase “substantial portion” in the statute does not cover the supply of a single component of a multicomponent invention. One of the obvious questions this decision raises is what if the invention is a two-component invention?” Would the supply of a single component of a two components invention still be outside the scope of the statute? Given the continuing growth in international commerce, it is fair to predict that the Courts might have to address this issue sooner than later.

This year was also marked by the Supreme Court deciding on its first case related to Biologics Price Competition and Innovation Act (“BPCIA”). The Court was called upon to review an issue regarding the notice requirements of BPCIA. Although, the Court provided clear guidance that biosimilar applicants may provide 180-day notice of commercial marketing prior to the FDA’s approval of the application, it left some questions for the CAFC to decide. The Court held that the Federal law does not provide for an injunction requiring a biosimilar applicant to start the patent dance by providing its application and manufacturing information to the reference product’s sponsor under 42 U.S.C. § 262(l)(2)(A) and remanded the case to CAFC for further proceedings. In December, the CAFC held that BPCIA preempts any state law remedies for failure to comply with § 262(l)(2)(A) and concluded that applying state law would create a conflict with the careful balance struck by Congress in establishing the BPCIA.

The CAFC also had its share (65% of its docket) of intellectual property law cases, including 29% resulting from appeals from the District Court decisions and 33% resulting from appeals from the PTAB.

Appeals Filed, by Category for FY 2017 (Source: CAFC)

A review of filings over the last 10 years reveals that the number of appeals filed with the Federal Circuit resulting from the PTAB have risen significantly in the last 4 years.

Appeals Filed, by Category for FY 2006 to FY 2017 (Source: CAFC)

This increase in the appeals resulting from PTAB is consistent with the number of petitions for post-grant proceedings filed with the PTAB. It will be interesting to see how the trend, particularly in inter-partes review filings, will change once the Supreme Court issues its final written decision.

In an unprecedented move by the U.S. Patent and Trademark Office (USPTO), the Patent Trials and Appeals Board (PTAB) has permitted the filing of amicus briefs on whether the Saint Regis Mohawk Tribe (“Tribe”) should be permitted to terminate the inter partes review of Allergan’s patents contested in IPR2016-00127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, and IPR2016-01132. Allergan assigned the patents challenged in these IPRs to the Tribe, while retaining an exclusive license in exchange for ongoing payments. As a sovereign entity, the Tribe seeks to terminate the IPR challenges of these patents, a move which the PTAB had ruled in 2016 shielded the University of Florida Research Foundation as a sovereign entity from IPRs. See Covidien LP v University of Florida Research Foundation Inc., IPR2016-01274, Paper 21 (PTAB Jan. 25, 2016). Amicus briefs of no more than 15 pages are due to be filed by December 1, 2017, and the Petitioners and Tribe are each authorized to file a single response to any amicus brief by December 15, 2017.

This maneuvering has caught the attention of many, including members of Congress and the district court specifically addressing the validity of these patents. In response to a bipartisan committee investigating the Allergan-Tribe deal, Senator McCaskill has already drafted a bill to block tribal claims of sovereign immunity, which could otherwise preclude USPTO review of patents assigned to tribes. Court of Appeals for the Federal Circuit Judge William Bryson, sitting by “designation” in the Eastern District Court of Texas, expressed concerned that Allergan sought to “rent” sovereign immunity from the Tribe. On the other hand, heralded as an innovative defense, patent attorneys now seek such a defense to patent challenges before the USPTO. The Saint Regis Mohawk Tribe has reportedly already taken ownership of patents from SRC Labs and is in discussion with another technology company.

Interestingly, the district court under Judge Bryson recently found four of the six patents invalid, a decision which will likely be appealed to the CAFC. However, the PTAB nevertheless will need to answer, inter alia, the question of  whether the Tribe’s right as a sovereign immunity will shield the Allergan patents from IPRs. Due to additional parties joining as Petitioner and the complicated issues surrounding this challenge, the PTAB has extended a deadline to render its final decision in the IPR from December 8, 2016, to April 6, 2018.

The America Invents Act (“AIA”) provides for post grant challenges of U.S. patents in the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. One type of AIA proceeding, Inter Partes Review (“IPR”), came into effect in September 2012, and provides a process for relatively quick determination of invalidity of challenged patent claims based on published prior art. [1] IPR decisions rendered in the past five years have created a body of law addressing a variety of issues related to invalidity challenges before the PTAB. In a recent IPR proceeding, a novel strategy has arisen that posts an interesting question of first impression, whether the assignment of a patent involved in an IPR proceeding to a U.S. Indian tribe can avoid an IPR proceeding based on a sovereign immunity defense. The present blog post summarizes the new issue that the PTAB will be required to decide in the IPR. Continue Reading Indian Tribal Sovereign Immunity Asserted in an IPR

shutterstock_553962622On April 26, 2016, the Federal Circuit denied a petition for rehearing en banc, filed by Merck and Cie. The Federal Circuit maintained that the “substantial evidence” review standard applies for an appeal from an IPR proceeding.1 Judge O’Malley, with whom Judges Wallach and Stoll concurred in the denial of the petition, stated that in light of §§ 7 and 144 of Title 35, “we review Board decisions ‘on the record of an agency hearing provided by statute,’ and that we should therefore review Board fact-finding for ‘substantial evidence.’”2 The court explained its decision to deny the petition, “[i]n light of In re Gartside, [it] has reviewed all of the Board’s factual findings including those in IPRs, for substantial evidence.”3

Judge O’Malley, stated that the substantial evidence standard of review is seemingly inconsistent with the purpose and content of the America Invents Act (“AIA”). Indeed, according to Judge O’Malley, “[t]o the extent IPR proceedings were intended to replace district court litigation, it would make sense for this court to review factual findings by the Board in these new IPR proceedings under the same standard we employ when reviewing factual findings of district judges – for clear error.”4 However, Judge O’Malley recognized that the court is bound by the Supreme Court precedent in Dickinson v. Zurko5, and its own precedent in In re Gartside.6 Before Dickinson, the Federal Circuit had a “settled practice of reviewing factual findings of the board’s patentability determinations for clear error.”7 In Dickinson, the Supreme Court disagreed, “conclud[ing] that [5U.S.C. § 706 of the APA] does apply [to Board findings], and the Federal Circuit must use the framework set forth in that section.”8

The opinion further stated that the failure to change the standard of review at Federal Circuit is inconsistent with what Congress sought to accomplish by creating IPR proceedings;9 and, unless and until the Congress or the Supreme Court sees fit to expressly change the standard of review, the Federal Court will continue to review factual findings of the Board for substantial evidence.10 Judge O’Malley explained “when authorizing IPR proceedings under the AIA . . . Congress viewed IPR proceedings as cost-efficient substitutes for litigation in federal district courts” and, therefore, it makes sense for the Federal Circuit to review factual findings by PTAB under the AIA with the same standard employed when reviewing factual findings of district judges.11 However, the Court acknowledged, “[b]ecause Congress failed to expressly change the standard of review employed by this court in reviewing Board decisions when it created IPR proceedings via the AIA, we are not free to do so now.”12

The opinion also distinguished inter partes reexamination (which were reviewed under the standard of substantial evidence) from IPR proceedings, and explained that “Congress … enacted substantive and procedural changes that brought IPR proceedings in line with district court in meaningful ways.”13

Judge Newman, consistent with her dissent in the December 2015 decision,14 reiterated that (i) the precedence does not prohibit objective review of PTAB decisions15, (ii) the substantial evidence standard does not conform to the statutory plan,16 and (iii) the PTAB proceeding is a trial between private parties, and requires commensurate review.17 The dissent further stated that the purpose of AIA to provide a substitute for district court proceedings is “thwarted” if on appeal the Federal Circuit simply looks for substitutional evidence on the side of the PTAB decision.18

Given that (i) at least four Federal Circuit judges do not seem to think that the Court’s application of, and failure to change, the substantial evidence standard of review is consistent with the AIA, and (ii) three of the four Judges clearly call on Congress and/or the Supreme Court to address the issue of standard of review to be applied by the Federal Circuit judges, it will be interesting to see whether Merck pursues its petition to alter the standard of review to the Supreme Court.

1 Merck & Cie v. Gnosis S.P.A. et al., Case No. 2014-1779 (Fed. Cir., Apr. 26, 2016).
2 Id. at 3.
3 Id.
4 Id. at 4.
5 Dickinson v. Zurko, 527 U.S. 150 (1999).
6 In re Gartside, 203 F.3d 1305, 1313 (Fed. Cir. 2000).
7 In re Zurko, 142 F.3d 1447, 1458 (Fed. Cir. 1998) (en banc).
8 Dickenson, 527 U.S. at 152.
9 Merck & Cie at 6.
10 Id. at 7.
11 Merck & Cie at 3.
12 Id. at 2.
13 Id. at 5.
14 Merck & Cie v. Gnosis S.p.A., 808 F.3d 829 (Fed. Cir. 2015).
15 Merck & Cie (Fed. Cir., Apr. 26, 2016) at 11-12.
16 Id. at 12-14.
17 Id. at 14-15.
18 Id. at 15.

shutterstock_464657279In Ethicon Endo-Surgery, Inc. v. Covidien LP, a majority Federal Circuit held that neither the relevant statute nor the Constitution precludes the same Patent Trial and Appeal Board panel (“Board”) from making a decision to institute an inter partes review and from also making the final determination on the validity of the claims at issue.1

Covidien filed a petition with the U.S. Patent and Trademark Office on March 25, 2013, requesting inter partes review of claims 1–14 of U.S. patent number 8,317,070 (“the ‘070 patent”) on the ground that the claims would have been obvious over the prior art. The Board granted the petition on August 26, 2013.2 In a June 9, 2014, final decision, the same panel of the Board that instituted the inter partes review rejected all of Ethicon’s arguments and found all of the challenged claims of the ’070 patent obvious under 35 U.S.C. § 103.3

Ethicon did not challenge the institution decision, but rather alleged a defect in the final decision. It argued that the final decision was invalid because it was made by the same panel that instituted inter partes review. According to Ethicon, having the same panel make the decision to institute and then later decide the merits of the inter partes review raises “serious due process concerns.”4

The Federal Circuit in confirming that it had jurisdiction, cited its recent holding in In re Cuozzo Speed Techs.5 According to the Federal Circuit, Section 314(d) provides that “[t]he determination by the Director whether to institute an inter partes review shall be final and nonappealable. Section 314(d) here plainly ‘prohibits review of the decision to institute [inter partes review] even after a final decision.’ It does not, however, preclude review of the final decision.”6

Turning to the merits, the Federal Circuit, citing several precedential cases from multiple courts including the U.S. Supreme Court, determined that there was no due process or statutory concerns in combining the functions of initial decision and final disposition in the same Board panel. According to the majority, “the inter partes review procedure is directly analogous to a district court determining whether there is “a likelihood of success on the merits” and then later deciding the merits of a case.7

The majority also disagreed with Ethicon’s argument that because Congress (1) specifically gave the Director the power to institute, (2) did not explicitly give the Director authority to delegate the institution decision to the Board, and (3) gave the Board the power to make the final determination, Congress intended to keep the functions of institution and final decision separate. According to the majority,

there is nothing in the statute or legislative history of the statute indicating a concern with separating the functions of initiation and final decision. Ethicon ignores the longstanding rule that agency heads have implied authority to delegate to officials within the agency, even without explicit statutory authority and even when agency officials have other statutory duties. Congress regularly gives heads of agencies more tasks than a single person could ever accomplish, necessarily assuming that the head of the agency will delegate the task to a subordinate officer.8

Judge Newman, dissenting, disagreed with the majority’s statement that “there is nothing in the Constitution or the statute that precludes the same Board panel from making the decision to institute and then rendering the final opinion.”9 Judge Newman believed that the statute requires that the proceedings be separated, the first decision required to be made by the Director, and the second decision made by the Board. According to Judge Newman,

the threshold determination to institute post-grant review requires the Director to find that there is more likely-than-not an error in the grant of at least one claim of the patent. When such finding is made by the Director, the newly created independent tribunal in the PTO conducts a full trial, with discovery, testimony, experts, and other trappings of district court litigation. This trial, and the ensuing Board decision, are independent of and give no deference to the Director’s decision “to institute” the proceeding.10

1 Ethicon Endo-Surgery, Inc. v. Covidien LP, 2016 U.S. App. LEXIS 473 (Fed. Cir. Jan. 13, 2016).drugs/guidancecomplianceregulatoryinformation/-guidances/ucm459987.pdf;”> (hereinafter “FDA Guidance”)
2 Id. at *6
3 Id. at *7
4 Id. at *10
5 In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015).
6 Ethicon Endo-Surgery, Inc. v. Covidien LP, 2016 U.S. App. LEXIS 473, *10 (Fed. Cir. Jan. 13, 2016).
7 <span id=”seven”See, e.g., Fed. R. Civ. P. 65; Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).
8 Ethicon Endo-Surgery, Inc. v. Covidien LP, 2016 U.S. App. LEXIS 473, *17 (Fed. Cir. Jan. 13, 2016).
9 Id. at *29
10 Id.

shutterstock_439759441The Federal Circuit vacated the PTAB’s finding of nonobviousness of Verinata’s patent directed to methods of noninvasive prenatal testing, and remanded the case back to the Board.1 The Federal Circuit remanded because it couldn’t conclude whether the Board erred based on the PTAB’s opinion. The Board’s language was too vague to come to a definitive conclusion on this point. In its explanation for vacating and remanding the case, the Federal Circuit clarified the appropriate circumstances where the PTAB could limit its consideration of a prior art reference.

The PTAB is in error if it declines to consider the reference as evidence of the background understanding of skilled artisans during the relevant time frame simply because the reference had not been identified at the petition stage as one of the pieces of prior art defining a combination for obviousness.2 On the other hand, the Board does not err if it only finds that the development of the argument invoking the reference in the Petitions was inadequate.3

The Federal Circuit’s consideration of a second cited reference in the same Petition further clarifies this issue. The Petitioner, Ariosa, also challenged the Board’s decision on the separate ground that the Board erred in failing to consider some embodiments of a reference that the Board in fact relied on to institute the petition.4 The Federal Circuit disagreed with Ariosa on this point, finding that Ariosa’s Reply relied on previously unidentified portions of a prior art reference to make in its obviousness argument.5 The Board cited 37 C.F.R. 42.104(b)(5), which says that a Petition must identify “[t]he supporting evidence relied upon to support the challenge and the relevance of the evidence to the challenge raised, including identifying specific portions of the evidence that support the challenge.”6 Thus, the Petition (not the Reply) must state the relevance of a reference or identify specific portions of the evidence that support the challenge.

This decision again emphasizes the need to put all relevant evidence up front in the Petition. Failing that, the challenger should try to characterize any new evidence in its Reply as background information regarding the state of the art as of the relevant time frame.

1 Ariosa Diagnostics v. Verinata Health, Inc., No. 2012-1215, slip. op. (Fed. Cir. Nov. 16, 2016).
2 Id. at 11
3 Id. at 12
4 Id. at 16
5 Id. at 16-17
6 Id. at 17

shutterstock_281570939On September 15, 2015, the USPTO announced the “Streamlined, Expedited Patent Appeal Pilot for Small Entities.”1 This program allows small entities to expedite an ex parte appeal to the PTAB, similar to the program announced on June 19, 2015, for parties with multiple appeals pending at the PTAB.2

The first program was designed to alleviate the backlog of ex parte appeals, with the idea that much of the backlog is driven by multiple patent filers that appeal as a matter of course. This program allows appellants with multiple appeals pending before the Board to expedite review of one appeal in return for withdrawing another appeal.3 The process to participate in the “Expedited Patent Appeal Pilot” simply involves filing a petition to make special under 37 C.F.R. 41.3 to the Chief Administrative Patent Judge using Form PTO/SB/438.4 The second small entity pilot program involves a similar process again with the hope of further reducing the backlog.

Under the Streamlined, Expedited Patent Appeal Pilot for Small Entities, a petition must be filed under 37 C.F.R. 41.3 using Form PTO/SB/441 to identify the ex parte appeal sought to be made special, which must be the appellant’s only appeal pending before the Board as of September 18, 2015, and the appeal to be made special must have been docketed with the PTAB on or before September 18, 2015.5 Of course the appellant must certify that its status as a small entity or micro entity is still appropriate.6 The appellant must also agree to the disposition of all claims subject to each ground of rejection as a single group.7 Further, the appeal must not involve any claim subject to rejection under 35 U.S.C. § 112—lack of written description, enablement, or best mode, or for indefiniteness.8 Lastly, the appellant must waive any oral hearing.9

The stated goal of the small entity program is to provide a decision whether to make the appeal special within 2 months of the filing of the petition and more critically, deciding the appeal in less than 4 months from the date of the petition.10 If accomplished, this would be a striking reduction in time compared to the current pendency for appeal decisions this fiscal year, which ranges between an average of 2 to 3 years, depending on the Technology Center.11 Although, the first pilot has only been available for a short time, the USPTO published statistics on the success thus far:12 Please see the published statistics here.

The USPTO’s expedited appeal program for small entities is available for those appeals already docketed at the PTAB. Thus, the program does not appear to allow any future appellants to take advantage of an expedited appeal under this process. Presumably, the program will reduce the current backlog so future appellants also will benefit from the program, assuming that those already in the PTAB queue will take advantage of it.

1 80 Fed. Reg. 55,339 (Sept. 15, 2015), available at
2 See Expedited Patent Appeal Pilot, 80 Fed. Reg. 34,145 (June 15, 2015); USPTO, Expedited Patent Appeal Pilot,
3 Expedited Patent Appeal Pilot, 80 Fed. Reg. 34,145 (June 15, 2015).
4 Id.
5 80 Fed. Reg. 55,339 (Sept. 15, 2015). It should also be noted that the petition fee has been waived.
6 See 37 CFR 1.27 and 1.28 concerning small entity status and see 37 CFR 1.29 concerning micro entity status.
7 Id.; see 37 CFR 41.37(c)(1)(iv) concerning the treatment of claims subject to the same ground of rejection argued together as a group.
8 80 Fed. Reg. 55,339 (Sept. 15, 2015).
9 Id.
10 Id.
11 Id. at pages 20-21
12 USPTO, Expedited Patent Appeal Pilot,

shutterstock_454731811Claim construction is perhaps the single most crucial factor in most patent disputes, but it is also one of the most convoluted. Beyond all the other intricacies involved in claim construction, another wrinkle is that the U.S. has two claim construction standards: (1) the “broadest reasonable interpretation” (“BRI”) standard applied by the U.S. Patent and Trademark Office (PTO); and (2) the Phillips standard used in district court litigation.1 The PTO BRI standard, which has now been articulated in the PTO Rules implementing the AIA,2 means that patent claim scope is determined not only on the basis of claim language, but by “giving claims their broadest reasonable construction ‘in light of the specification as it would be interpreted by one of ordinary skill in the art.’”3 On the other hand, the Phillips standard used by district courts gives claim terms “the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention.”4 Importantly, the district court conducts its analysis on the entire record before the court, which may include both intrinsic evidence (the claims, specification, and prosecution history) as well as extrinsic evidence (dictionary definitions and expert testimony), whereas the Patent Trial and Appeal Board (PTAB) generally affords less weight to extrinsic evidence.5

In the instances where the same claim terms have been construed by both the PTO and the district court, the most practical effect has been the influence on the PTAB of the district court’s proceedings. Sometimes the PTAB has simply adopted a district court’s claim construction.6 In Google v. Simpleair for example, the PTAB looked at the district court’s construction of nine claim terms in the co-pending litigation and determined that each construction was “consistent with their broadest reasonable interpretation in light of the specification.”7 The PTAB thus adopted the district court’s constructions, but perhaps they were inclined to do so as both parties had requested this of the PTAB.8 Even if the PTAB does not adopt the district court’s claim construction, the patent owner’s arguments in the district court can be considered by the PTAB, as discussed more fully below, which in turn can make the PTAB a more favorable forum for the patent challenger.

Furthermore, the PTAB’s claim construction can provide guidance to the district courts, which some jurisdictions are more willing to consider than others. For those jurisdictions willing to consider the PTAB’s construction, this could at least provide early insights for both sides.9 Additionally, the Federal Circuit has noted that “[t]he 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.”10 Therefore, a PTAB’s construction can be viewed as setting an outer bound.

Even when the PTAB and the district court take their different analytical pathways, the end result may still be the same. The Federal Circuit noted this would have been true in their first reversal of a PTAB IPR decision this past June.11 In Proxyconn, the Federal Circuit determined that the PTAB under the BRI standard erred as the unpatentability of eight of the claims was based on an “unreasonably broad construction” of certain terms.12

The BRI standard is more favorable to PTAB petitioners as more prior art may be used to invalidate the patent. Additionally, patent owners should proceed with caution in district court when advancing an infringement position that relies on a broad claim construction. Anyone may cite to the PTO “statements of the patent owner filed in a proceeding before a Federal court or the Office in which the patent owner took a position on the scope of any claim of a particular patent.”13 Thus, a patent owner may box themselves into a claim construction position that allows for more prior art in PTO proceedings assessing patentability.

Further variations in the two standards and the practical implications will become clearer as the PTAB continues its unpatentability rulings. For now, it is vital for practitioners to evaluate planned constructions under each standard early on—especially in the context of parallel proceedings.

1 Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc).
2 37 C.F.R. § 42.100(b), 200(b), 300(b) (2012); see also Microsoft Corp. v. Proxyconn, Inc., 2014-1542, -1543, slip op. at 6 (Fed. Cir. June 16, 2015) (reaffirming the BRI standard “was properly adopted by the PTO regulation.” (citing In re Cuozzo Speed Techs., LLC, 778 F.3d 1271 (Fed. Cir. 2015))).
3 Phillips, 415 F.3d at 1316 (citing In re Am. Acad. of Sci. Tech. Ctr., 367 F. 3d 1359, 1364 (Fed. Cir. 2004)); see also SAP America, Inc. v. Versata Development Group, Inc., CBM2012-00001, slip op. 7-19 (PTAB June 11, 2013) (Paper 70) (discussing the history of the broadest reasonable interpretation standard and its applicability to AIA proceedings); Manual of Patent Examining Procedure (M.P.E.P.) § 2111.
4 Phillips, 415 F.3d at 1313.
5 Id. at 1315, 1317; see also Grant Ford, Broadest Reasonable Interpretation vs. Ordinary and Customary Meaning: – Challenges Introduced by Applying Different Claim Construction Standards at the PTAB and District Courts, SUGHRUE (Sept. 11, 2014), (describing the extrinsic evidence considered by the court in Starhome GMBH v. AT&T Mobility LLC, 743 F.3d 849 (Fed. Cir. 2014) and how a different result may be reached on the intrinsic record).
6 Google Inc., v. Simpleair Inc., CBM2014-00054, slip op. 9 (PTAB May 13, 2014) (Paper 19).
7 Id.
8 Id.
9 See Andrew J. Lagatta & George C. Lewis, How Inter Partes Review Became A Valuable Tool So Quickly, LAW360 (Aug. 16, 2013 12:01 PM), http:// (describing the quick timeline for IPRs mandated under the statute, which “may have significant effects on how the parties see the merits of the infringement case and further lead to early resolution of cases”).
10 Facebook, Inc. v. Pragmatus AV, LLC, 582 Fed. App’x 864, 869 (Fed. Cir. 2014), reh’g denied (Oct. 30, 2014).
11 Microsoft Corp. v. Proxyconn, Inc., 2014-1542, -1543, slip op. at 15 n.1 (Fed. Cir. June 16, 2015) (noting that they would have reached the same result if they applied the Phillips’ framework); see also IPR2012-00026, IPR2013-00109.
12 2014-1542, -1543, slip op. at 9, 12.
13 35 U.S.C. § 301(a)(2) (2012).