Since going into effect on September 16, 2012, inter partes review (IPR) has become a widely-used mechanism for challenging the validity of patents. One reason for the popularity of IPR could be that the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) applies the “broadest reasonable interpretation” (BRI) standard to construe a challenged patent’s claim terms in IPR proceedings, and a finding of invalidity is generally more likely when a patent claim is construed under this BRI standard as compared to the narrower Phillips standard applied in federal district court patent litigation.
The PTAB’s use of the BRI standard is controversial. Some have argued that it is unfair to patent owners and that the PTAB should instead apply the Phillips standard, which gives patent claims their “ordinary and customary meaning” from the perspective of one of ordinary skill in the art at the time of the invention.
On July 8, in In re Cuozzo Speed Tech, LLC, No. 2014-1301, slip op. (Fed. Cir. July 8, 2015), the Federal Circuit confirmed the PTAB’s practice of applying the BRI standard in IPR proceedings by voting 6 to 5 to reject Cuozzo’s request for an en banc re-hearing regarding whether the PTAB should instead apply the claim construction standard used in federal district court patent litigation. The majority held that the PTO’s adoption of the BRI standard was a proper use of the authority granted to the PTO by Congress to prescribe regulations governing IPR. Id. at 2 (citing 35 U.S.C. § 316(a)(4)). The majority noted that the BRI standard has been applied in other types of PTO proceedings involving unexpired patents. Id. at 1. The majority abstained from expressing an opinion regarding whether it would have been more appropriate for the PTO to adopt the Phillips standard, instead concluding that “we should not act to adopt a different standard based on our own notions of appropriate public policy.” Id. at 2. The majority concluded that changing the standard is a matter for Congress. Id.
The dissenting judges argued that the district court claim construction standard should apply because Congress intended IPR proceedings to be a substitute for district court litigation. Dissent Op. at 1. Additionally, the dissent argued that the use of the BRI standard is justified only in PTO proceedings in which the scope of a patent’s claims can readily be tailored through amendment. Id. at 3-6. The dissent argued that because the right to amend claims in IPR proceedings is limited (“there is no robust right to amend”), the BRI standard should not apply. Id. The dissent also argued that the authority granted by Congress to the PTO to prescribe rules for IPR was limited to procedural rules and that claim construction standards are not procedural. Id. at 7-9.
Although the dissent’s arguments failed to win the day, the issue is not settled completely. Congress is currently considering proposed legislation including provisions that would require the PTAB to use the federal district court standard for claim construction in IPR proceedings. Additionally, some have suggested that the Supreme Court might choose to decide the issue.
Pending further action on this issue by Congress or the Supreme Court changing the claim construction standard in IPR proceedings, IPR should continue to prove to be an effective alternative to federal district court patent litigation for challenging the validity of patents. We expect to see defendants continue to turn to IPR in large numbers to challenge the validity of patents asserted against them in patent litigation.