Changes to PTAB’s Claim Construction Standard

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On October 10, 2018, the United States Patent and Trademark Office (USPTO) announced that it will issue a final rule changing the claim construction standard for interpreting claims in inter partes review (IPR), post-grant review (PGR), and the transitional program for covered business method patents (CBM) proceedings before the Patent Trial and Appeal Board (PTAB). The final rule will apply only to IPR, PGR, and CBM petitions filed on or after the effective date of the rule. 

Currently, claims in AIA proceedings are interpreted based on the broadest reasonable interpretation (BRI) standard, which requires the PTAB to consider the “broadest reasonable meaning of [claim’s words] 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” (see In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997)). The new rule, effective as of November 13, 2018, replaces the BRI standard with the same claim construction standard that is used to construe the claim in a civil action in federal district court, i.e., Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) and its progeny. Under the Phillips standard, claims are construed by taking into account the claim language itself, the specification, the prosecution history of the patent, and relevant extrinsic evidence. The USPTO believes that minimizing the differences in claim construction standards used in different tribunals will lead to greater uniformity and predictability of the patent grant and improve the integrity of the patent system.

Indeed, the shift to the Phillips claim construction standard in AIA proceedings should result in a more consistent interpretation for claims at issue in concurrent proceedings before the PTAB and in districts courts or before the International Trade Commission (ITC). For example, prior to the rule change, the different claim construction standards have often been cited as the rationale for conducting a de novo claim construction under the standard that applied in each tribunal.  With the same standard now to be applied in all three tribunals, more deference may be given to claim terms already construed by one tribunal given the identical standard that is now to be employed in all tribunals. In fact, the recent USPTO rule change also included an amendment specifically noting that any prior claim construction made in a civil action or a proceeding before the ITC timely made of record in an AIA proceeding will be “considered.” While there are certainly cases where the PTAB adopted the district court’s constructions even with the two different standards (see, e.g., Google Inc. v. Simpleair Inc. and Kyocera Corp. v. Softview LLC), prior claim construction rulings from the district court and/or the ITC were not routinely considered by the PTAB. But, even with the required “consideration” by the PTAB, it remains unclear whether this amendment will result in more frequent adoption of prior claim construction rulings by a district court or the ITC in AIA proceedings. Optimistically, since the claim construction standard will now be identical at the PTAB, in district court, and at the ITC, the three tribunals will proceed in such a way that fully achieves judicial efficiencies on claim construction. 

It is difficult to predict exactly how the rule change will alter outcomes in AIA proceedings. It is possible that the biggest impact of the change from the BRI standard to the Phillips standard at the PTAB will be on institution rates of AIA proceedings rather than a final determination on invalidity. Decisions to institute AIA proceedings begin with claim construction and, as such, a potentially narrower construction under the Phillips standard may reduce the amount or applicability of prior art cited by a petitioner in an attempt to show that the challenged claims would be more likely than not unpatentable. However, since there is not a wide variance between the BRI standard and the Phillips standard in ordinary circumstances, we may only see a modest decline in institution rates as a result of the rule change. Furthermore, with all three tribunals now applying the Phillips claim construction standard, a prior claim construction holding by one tribunal may prevent the parties from re-litigating the claim construction issue in the other tribunal, which will result in less time and money expended arguing claim constructions in each tribunal.

That being said, the rule change does not reconcile the differences in the presumption of validity and evidentiary standard in the tribunals. In district court or before the ITC, a patent is statutorily presumed valid and a challenger must prove by clear and convincing evidence that the patent is invalid (which is the highest burden of proof in civil litigation). In contrast, there is no presumption of validity before the PTAB and a petitioner challenging validity only has to prove invalidity by a preponderance of the evidence (in other words, that the claims are more likely than not unpatentable). Thus, the new rule may have little to no effect on final determinations of invalidity by the PTAB. Indeed, we will likely continue to see higher rates of invalidity in AIA proceedings before the PTAB as compared to those in district court or before the ITC, even though the invalidity challenges will now be subject to the same claim construction standard. In any event, it will be at least a year before any effects of the rule change can be evaluated since the shift to the Phillips standard does not apply to AIA proceedings now pending before the PTAB.