On Wednesday, July 8, 2015, the Federal Circuit in a contentious 6-5 vote denied en banc review of its first opinion in connection with PTAB decision in an IPR proceeding, In re Cuozzo Speed Technologies, LLC.

As previously discussed, Cuozzo appealed the PTAB’s invalidation of three claims of U.S. Patent No. 6,778,074 on the grounds that the PTAB in its IPR decision improperly applied the “broadest reasonable interpretation” standard on claim construction, a standard that is traditionally applied to patent prosecution. A 2-1 panel for the Federal Circuit affirmed the application of this standard in view of the fact that the USPTO has been using this standard for more than a century and the majority’s conclusion “that Congress implicitly adopted the broadest reasonable interpretation standard in enacting the AIA.” The court also found that this was further supported by the statute giving the PTO Director the ability to establish the standards for establishing and governing inter partes review.

The Federal Circuit’s decision not to review this decision en banc was met with strong dissents from Chief Judge Prost and Judge Newman.

Judge Prost, joined by the four other dissenting judges, argued that the same standard applied by district courts should be applied to IPR proceedings because Congress intended to create a proceeding “bearing the efficiency and finality of district court adjudications of patent validity.” Judge Prost pointed out that the Federal Circuit’s predecessor, the Court of Customs and Patent Appeals, previously explained that “the broadest reasonable interpretation standard is a useful tool, prior to patent issuance, for clarifying the metes and bounds of an invention during the back-and-forth between the applicant and examiner when claims are not yet in their final form.” With IPR proceedings, on the other hand, “there is no back-and-forth between the patentee and examiner…To the contrary, an IPR is a curtailed, trial-like proceeding…” As a result:

Given the absence of examinational hallmarks justifying the broadest reasonable interpretation standard in other contexts, and the similarities to district court litigation, it is unclear to us why the district court standard should not apply.

Judge Newman wrote a separate dissent highlighting the concerns raised by industry in amicus curiae briefs, pointing out that:

They advise the court that ‘the PTO’s decision to use the BRI Rule is inconsistent with the AIA and sound patent policy.’

They state: ‘The lack of certainty as to the meaning (and therefore value) of a patent is costly to the inventive community and discourages innovation; it adversely affects patent licensing, design-around activities, and other critical business decisions, contrary to the goals of the AIA.’

They observe that the ‘application of different standards in the PTO and judicial proceedings also means that each proceeding’s claim construction has no estoppel effect for subsequent proceedings, further encouraging gamesmanship[.]’

Judge Newman concluded that given the “public interest in technological advance, and the national interest in a vigorous economy served by growth, employment, creativity, and trade”, en banc rehearing on this issue was warranted.

Gibbons P.C. will continue to monitor developments in the Federal Circuit’s review of IPR proceedings.

Christopher H. Strate is a Director in the Gibbons Intellectual Property Department.