Sharply Divided Federal Circuit Confirms that PTO Can Broadly Construe Claims During Inter Partes Reviews

by Dennis Crouch

In re Cuozzo Speed Tech (Fed. Cir. 2015)

The Federal Circuit simultaneously released two decisions in this appeal of the first inter partes review proceeding before the Patent Trial and Appeal Board (PTAB).  The first decision is a revised panel opinion holding:

  1. that the court lacks “jurisdiction to review the PTO’s decision to institute IPR;”
  2. that the PTO acted within its statutory rulemaking authority in determining that patent claims subject to an IPR should be given their “broadest reasonable interpretation” and thus that the PTAB’s broad claim construction and subsequent obviousness determination were proper; and
  3. that the Board properly denied Cuozzo’s motion to narrow its claims in order to avoid the prior art.

Judge Dyk wrote the majority opinion joined by Judge Clevenger; and Judge Newman dissented on almost all points.  [I have not fully reviewed the revised opinion, but the holding does not appear to differ significantly from the original that I discussed here. DC]

In the second decision, the en banc court rejected Cuozzo’s petition for en banc rehearing on the Broadest-Reasonable-Interpretation (BRI) standard for administrative review claim construction.  The vote was at the slimmest of margins: Six-to-Five with Chief Judge Prost, and Judges Newman, Moore, O’Malley, and Reyna voting for en banc review and Judges Lourie, Dyk, Wallach, Taranto, Chen, and Hughes voting no.  Oddly, four of the six judges voting “no” to the en banc review request still felt the need to write an opinion explaining the law.

The BRI supporters write:

Congress conveyed rulemaking authority to the PTO to prescribe regulations, inter alia, “establishing and governing inter partes review,” 35 U.S.C. § 316(a)(4), and the PTO has adopted the broadest reasonable interpretation standard for IPR proceedings, 37 C.F.R. § 42.100(b). In the absence of evidence of congressional intent to abrogate the [historically grounded] broadest reasonable interpretation standard, we should not act to adopt a different standard based on our own notions of appropriate public policy. If the standard is to be changed, that is a matter for Congress. There are pending bills which would do just that.

Dissenting from the en banc denial, Chief Judge Prost (joined by four colleagues) writes:

In adjudicatory proceedings, claims [must be] given their actual meaning, not their broadest reasonable interpretation.

Challenging the grant-of-authority argument, the minority suggests that the rulemaking authority was procedural authority, not substantive authority — and that the standard for claim construction is extremely substantive.  “In our view, these subsections are consistent with Congress’s previous grants of authority to prescribe procedural regulations.”

[Read the En Banc Denial Opinions]

This decision is obviously important since many of the obviousness arguments in the pending IPRs depend upon the PTO broadly construing the claim scope.  The immediate take-home is the message that Patentees had better win their case at the PTAB rather than looking to the Federal Circuit for reversal.  In the background, the judicial split and administrative-law aspects of the decision suggest that it is ripe for Supreme Court review.


About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

67 thoughts on “Sharply Divided Federal Circuit Confirms that PTO Can Broadly Construe Claims During Inter Partes Reviews

  1. Patent protection is dead (or in its death throes). Patent practitioners are being vilified. Successful infringement plaintiffs are being threatened with death. What was once a gentlemen’s practice base on scientific inquiry is now a sad false reflection of what it once was. It has finally been politicized for corporate benefit. Patent Law is what the CAFC says it is at the moment.

    Long live copyrights.

    1. Richard,

      That will not suffice for a number of reasons:

      1) copyright protection is for a different aspect than patent protection. The expressive versus the utilitarian just are not comparable.

      2) copyright too is under attack. There is only a false sense of security for that bit of “peace for our times.”

      1. Well, I hear you. I have shunned business method applications, and have in the past concentrated on mechanical apparatus applications. Now, even meritorious applications are being denied on the most frivolous of grounds. It’s about branding and trade secrets. Copyrights help protect the code. So sad, too bad.

  2. There is no need for BRI in the first place. The standard is and should always be for every purpose what a person of reasonable skill in the art would believe. We don’t have a BRI standard for private contracts or for torts. No one goes around asking if the cow sold was pregnant. No one goes around asking whether Mr. Sensitive would be afraid of imminent bodily harm of assault. Only science majors split hairs like this BRI nonsense. Everyone else lives in a real world where you don’t your kicks from mental perturbation. Just use the POSA standard for all phases of prosecution and enforcement and get over this charade.

  3. Ned,

    The majority is incorrect in the above FC case. Under the holding of City of Arlington v. FCC a federal agency may determine it’s know breath of jurisdiction. In City of Arlington, the majority and the dissent fundamentally disagree about what the source of authority needs to be in order to warrant Chevron deference. Justice Scalia, writing for the majority, said that if Congress has granted an agency general rulemaking authority within a statute that is enough to warrant deference to an agency for any part of the statute. In the City of Arlington case, Scalia explains that Chevron deference applies because “Congress has unambiguously vested the FCC with general authority to administer the Communications Act through rulemaking and adjudication, and the agency action at issue was promulgated in the exercise of that authority.” Chief Justice Roberts, writing for the dissent, argues that a court needs to find that Congress granted an agency specific authority before applying Chevron deference. He explains that the question in Chevron was “whether Congress had ‘delegated authority to the agency to elucidate a specific provision of the statute by regulation.” The City of Arlington decision seems to have removed many restraints from agencies, granting agencies increased power to decide what Congress has authorized them to do.

    1. Jonathan, are we not confusing delegation with whether in a particular case the agency decision was within the scope of its authority? This is like saying while an agency may adopt rules, it still must follow those rules.

      Congress clearly delegated the determination of what was a CBM to the PTO. The PTO punted, as noted by the Feds. But the issue of whether 101 is with the purview of a CBM is not something that was delegated to the PTO, but was a matter of statutory construction.

  4. A necessary order – to keep the CAFC from facing the reality that the IPR procedure – renders CAFC ‘decisions’ merely advisory.

    1. iwasthere, and congress has no power to collaterally attack judgments.

      The Supreme Court will not be amused.

  5. The “Patents Post Grant” blog today makes the following observation on this decision [and the pending legislation]:

    “Phillips may be different from the BRI in name only. The BRI analysis focuses the meaning of a claim term on the supporting specification, as would be understood by one of skill in the art — Phillips does the same. A BRI analysis accords claim terms their plain meaning, as would be determined by one of skill in the art — Phillips does the same. To the extent that there is any demarcation in the two analyses it is the fact that a pure BRI analysis arguably places less weight on prosecution history (intrinsic record). Yet, as emphasized recently in Tempo Lighting Inc.,v. Tivoli LLC., (CAFC 2014), the USPTO must also consider prosecution history (at least for previously closed records). Thus, at the end of the day, the analyses are practically the same.”

    1. P.S. I would suggest adding to this debate the issue of “disclaimers” of scope in the prosecution of the application [or related applications] for the subject patent claims that are are based on attorney arguments or claim amendments that are not actual claim limitations, especially if not based on specification definitions of claim terms. They are not that frequently argued, but do occur. See e.g., Omega Eng’g Inc. v. Raytek Corp., 334 F.3d 1314, 1323 (Fed. Cir. 2003) and Microsoft Corp. v. Multi-Tech Systems, Inc., 357 F.3d 1340, 1349 (Fed. Cir. 2004), More commonly, disclaimers are found in the specification itself, and should apply to either claim scope test. E.g., Astrazeneca AB v. Mutual Pharm. Co., 384 F.3d 1333 (Fed. Cir. 2004) (where specification limited its description of the invention to surfactant solubilizers and criticized nonsurfactant solubilizers); SciMed Life Sys. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1337 (Fed. Cir. 2001) (distinguishing prior art based on advantages of coaxial lumens over non-coaxial dual lumens); Cultor Corp. v. A.E. Staley Mfg. Co., 224 F.3d 1328, 1331 (Fed. Cir. 2000) (explicit reference in specification to invention as process limited to citric acid catalyst “effected a disclaimer of the other prior art acids”).

      Also note that the en banc In re Phillips seems to take a rather strict and narrow view of what is required for effective or “clear” disclaimers. 415 F.3d at 1316. Also, note the argument that this complicates the pubic “notice” function of the claims themselves.

      1. BTW there is yet another argument made against changing IPR’s from their present BRI claim construction [which I do not have any personal view on]. Namely that this change is “likely to hurt patentees more than it helps them.” As understood, this argument is that if Congress makes the claim construction test in IPRs the same as for the D.C. it will be much harder for the patent owner to argue the IPR claim scope determination is not entitled to much greater weight when the defendant subsequently moves for S.J. for non-infringement in the parallel D.C. litigation. [Because the IPR claim scope determination would now be the same issue decided between the same parties on the same patent claims, with now the also same legal basis.]

        1. That view is clearly wrong Paul, and no sane person would – or should – believe it.

          Face it friend, your cheerleading days are drawing to a close.

    2. Paul, read in re Morris. That is what the PTO actually does — goes with the dictionary definition — the one that reads on the prior art — unless the patent owner shows that that meaning is inconsistent with the specification by reason of a definition or consistent usage.

      That is hardly the way courts construe claims.

      1. That is what the PTO actually does — goes with the dictionary definition — the one that reads on the prior art — unless the patent owner shows that that meaning is inconsistent with the specification by reason of a definition or consistent usage.

        That is hardly the way courts construe claims.

        What? Courts construe claim terms exactly that way all the time and, just as with the PTO, nearly all of the time those constructions are the most reasonable ones. They’re not even contested by the parties.

      2. Ned, considering the huge numbers of Fed. Cir. reversals of claim constructions by D.C.s over the years, one would think something more definitive and predictable would be desirable for “the way courts construe claims?” Something clear that the PTAB could use in an IPR yet continue to NOT use in reissues, reexaminations, interferences, and all ex parte application appeals, since there is NOT any pending legislation to change any of those even if they are on the same patent or have the same spec parentage.

        1. What the Feds do in reversing the PTAB is to find their construction unreasonable. Usually it is because the construction of the PTAB is not consistent with the spec.

          But, under Morris, a broad construction is sustainable unless it is inconsistent with a definition or consistent usage. The courts never, ever consider in the first place the broadest construction.

    3. Mr. Morgan THANKYOU. Every analysis I have seen has simply argued that Phillips standard should be used and not BRI WITHOUT any explanation of differences. You have high lighted why that is the case and I have been making this argument for years now. People just get freaked because of the word Broadest, as though its not, to use Judge Prost’s oft used words, “the actual meaning” or others words “the one true meaning”. What on earth are they talking about and how is this distinguished from the construction done under BRI? Just to be clear, that was a rhetorical question.

    1. Likely they voted, just did not join the concurring opinion. Otherwise, with 5 dissenters, it would have gone the other way.

  6. Re: “This decision is obviously important since many of the obviousness arguments in the pending IPRs depend upon the PTO broadly construing the claim scope. ”
    Dennis, that is the argument being made, but I have yet to see any actual study of IPR decisions that support a conclusion that “many” PTAB outcomes would be different if BRI had been replaced by D.C. claim interpretations. In at least some IPRs the PTAB has even asked the parties that question.
    [That is, assuming claim interpretation based on the en banc In re Phillips decision, not the more extreme views of some Fed Cir. panel members of claim scope that would be so narrow as to actually be worse for patent owners, by making infringement much easier to avoid even though making it easier to avoid loss of claims in an IPR].

    1. I think Newman’s dissent has a much more realistic characterization of the difference between the BRI (prosecution) standard and Phillips (litigation) claim constructions.

      Moreover, I don’t know that the claim scope for infringement would be limited to how the PTO construes the claim. I think the arguments would be very focused on the arguments presented in the petition.

      1. We should also keep in mind that at this point we are dealing with a Fed. Cir. that has been hand picked by big corporations to weaken patents. I am not sure it is fair any longer to look at this as a special purpose court. The experience of the court is inadequate to deal with the issues presented.

  7. I think there was another issue here regarding whether or not the IPR could be decided on grounds not raised in the petition.

  8. Dennis,

    There’s at least one noteworthy change in the panel opinion:

    “We do not draw that conclusion from any finding that Congress has newly granted the PTO power to interpret substantive statutory ‘patentability’ standards.” (p. 18.)

    The original opinion stated:

    “Although we have previously held that 35 U.S.C. § 2(b) does not grant substantive rulemaking authority to the PTO . . . the AIA granted new rulemaking authority to the PTO. These provisions expressly provide the PTO with authority to establish regulations setting the ‘standards’ for instituting review and regulating IPR proceedings. The broadest reasonable interpretation standard affects both the PTO’s determination of whether to institute IPR proceedings and the proceedings after institution and is within the PTO’s authority under the statute.” (p. 17-18.)

    This is relevant to the substantive-procedural debate you identified in the en banc opinion (and to academic debates re. the PTO’s rulemaking authority under the AIA).

    1. Section II.A of the majority is revised in some places. The dissent is revised too. I can’t tell how much of it’s substantive and how much of it’s just drafting, but that’s where the changes are

  9. See the extensive discussion of this same issue and case below in comments on the blog on the Judge Stoll appointment

  10. “Oddly, four of the six judges voting “no” to the en banc review request still felt the need to write an opinion explaining the law.”

    Lulz. In other words they just don’t want to go through the motions.

    1. I don’t think it’s that odd at all. The dissenters wrote their opinions, which were persuasive enough that 4 judges in the majority felt they needed to write a rebuttal, or they would look bad.

      As I mentioned elsewhere, I think their rebuttal looks pretty thin, but 6 votes still wins.

      1. Yeah I mean lets be honest, the PTO is just doing exactly what it told congress it was going to do if the congress let it loose. The congress controls here. If they made a boo boo then they’re the ones to cry to.

        1. Unless not…

          The Congress can indeed share its authority – but it must be done carefully, else you can (easily) run afoul of constitutional separation of powers.

          Things that go to that “care,” include clear demarcations of level of authority and clear direction as to the appropriate contexts.

          If people are needing to guess (in the current context), that is gen er lay not a good sign that appropriate sharing has been done.

          1. Who “needed” to guess? The PTO didn’t need to guess. Director Kappos (and a lot of staff) worked closely with the congress in crafting this thing up and they knew exactly what they were getting into. And just as a reminder they’re the ones with the authority.

            1. You may very well be correct here 6 – not likely, but this is one of your better chances.

              One problem though is that the agency-by-agency review for level of authority is often driven by that particular agency’s initial authorization and creation. As we have seen (hint: Tafas), the USPTO does not have that level.

      2. I think the difference is that the statue provides for the PTO to make procedural rules and regulations while I believe claim construction is a substantive law issue not a procedural one.

  11. DC: This decision is obviously important since many of the obviousness arguments in the pending IPRs depend upon the PTO broadly construing the claim scope.

    It’s of greatest importance for patentees who only bothered to include broad disclosure in their applications and/or who failed to account for either/both the existing prior art and the possibility of “new” prior art when describing their innovations.

    Hire a good patent lawyer. Build your fallback positions into the application. Assume the worst scenarios and build in the best protection against those scenarios. Describe the invention and each of the embodiments down to the smallest detail because that detail may be the detail that saves you. If that detail isn’t “valuable” to you, then consider not filing a patent and using the money for some other useful purpose.

    None of this is new. It’s the same sound practices that competent patent attorneys have been following for eons.

    1. Everything you say here is true in principle; but in the real world, with real paying clients, it does not work this way.

      The idea that applicants will invest heavily up-front in pre-filing research and analysis, and the preparation of comprehensive patent applications, is an ideal. The reality is prep-and-pros is a race to the bottom with most applicants seeking the lowest cost pathway to an issued patent. Penny wise and pound foolish, in my view

      You are absolutely right though — it will not be long before many weigh the costs more than the potential benefits and forgo patent applications altogether and invest money elsewhere. I’m beginning to see it now (in non-computer/business methods arts).

      1. The point you reach is one that will be ignored: this battle is NOT constrained to merely one “undesired” art field. It is indeed an attack on all patents. The “Gist/Abstract” sword does NOT have limits. Coming soon to your very own backyard (eh, Paul Cole? – side joke)

  12. Ladies and Gents – the pitfalls associated with designating a claim a “public right” in action! The CAFC should enjoy whatever time it has left before it comes an infringement-only court.

  13. Recommend patentees keep continuation/divisional applications pending after receiving a granted patent to allow for amendments.

    If apply BRI, then should allow for amendments. Consider what they do in Europe for oppositions.

    The Fed Cir is turning patent law upside down.

      1. While technically true, these amendments have been so severely limited as compared with ex parte prosecution practice that they should likely be identified by a different name.

        1. Section 316(d)(1) provides that a patentee may file one motion to amend in order to …”propose a reasonable number of substitute claims,” 35 U.S.C. § 316(d)(1), though “[a]n amendment . . . may not
          enlarge the scope of the claims of the patent or introduce new matter,” id. § 316(d)(3). The PTO regulations provide that “[a] patent owner may file one motion to amend a patent, but only after conferring with the Board.” 37 C.F.R. § 42.221(a). “The presumption is that only one
          substitute claim would be needed to replace each challenged claim, and it may be rebutted by a demonstration of need.” Id. § 42.221(a)(3). The statute also provides that “[a]dditional motions to amend may be permitted upon the joint request of the petitioner and the patent owner
          . . . or as permitted by regulations prescribed by the Director.” 35 U.S.C. § 316(d)(2). “A motion to amend may be denied where” the amendment either “does not respond to a ground of unpatentability involved in the [IPR] trial” or “seeks to enlarge the scope of the claims of the patent or introduce new subject matter.” 37 C.F.R. § 42.221(a)(2).

          Where’s the severity?

          The fact is that for most of the patents tanked in IPR the amendments that are proposed are unsupportable by the specification (in this case, the disputed term was pulled out of thin air and is found nowhere in the specification!).

          What’s happening is that obvious claims that should never have been granted are being tanked and disgruntled applicants believe they have a right to re-write their disclosures around prior art that the applicant should have been aware of in the first place (and probably was, in most cases) or should at least have contemplated. Applicants never have that right.

            1. patentees should ALWAYS be allowed to amend.

              That’s never going to be the rule. There will always be limits on amending. There always have been such rules.

              Can you please show me one example of an IPR where some injustice resulted from the limits on amendment currently in place? Recognize, of course, that “obvious claims tanked because patentee wasn’t allowed to re-write specification to build in support” doesn’t qualify as an injustice.

              Pretty much every claim I’ve seen that was tanked in an IPR should never have been granted in the first place. But somehow that’s never seen as an injustice (although it certainly is if you happen to be one of the many millions of people who don’t own the patent).

              1. Sure, includes some limitations but allow some amendments. The EPO allows a lot of back and forth. These IPR proceedings are basically re-opening the prosecution so patentees (applicants) should be allowed to address NEW issues raised by the Patent Office.

                1. includes some limitations but allow some amendments

                  Again: this is the current set-up.

                  Amendments are permitted. There are limitations.

        2. True Dennis, but the IPR system is already in the process of being changed by the PTO to make TIMELY claim amendments easier.
          Furthermore, I am told by IPR practitioners that a major problem with IPR claim amendments, and why most are denied, is that their patent-owner-clients and their litigators in the parallel lawsuit will not face up to their need to make prompt up-front claim amendments even after reviewing the cited prior art. They want to wait until the IPR is nearly over and their original claims are actually being rejected before finally facing up to the need to amend the claims. Such late claim amendments would, of course, effectively require doing the IPR trial over, taking another year. Thus defeating the whole purpose of IPRs which is to avoid patent litigation costs by getting a PRE-D.C. trial decision just on claim validity over prior patents and publications.

          1. a major problem with IPR claim amendments, and why most are denied, is that their patent-owner-clients and their litigators in the parallel lawsuit will not face up to their need to make prompt up-front claim amendments even after reviewing the cited prior art.

            Of course this is true. And the reason they don’t want to make the amendments is because — as always — the patentee would rather make obtuse arguments about what the claims “really mean” (without amendment) and try to thread the needle between the prior art and the allegedly infringing product that way. Later, the patentee will do everything it can to kick up dust around those arguments and begin enlarging the scope of its claims to cover everything except the prior art (which everyone will need to hire an expert to read in order to understand the scope of the claims).

            This entire IPR kerfuffle is driven by a simple fact: IPRs work very well at getting rid of junk claims. Patentees with junk claims — and let’s face it, 95% of those are computer-implemented junk of one sort or another — don’t like that because it makes them less threatening to their targets.

    1. In practice, this is exactly what real companies do. They keep a continuation going so that they can amend the claims based on a litigation or now IPR.

      The sport of kings/queens….

      1. this is exactly what real companies do. They keep a continuation going so that they can amend the claims based on a litigation or now IPR

        Of course this is true. And that’s been the case as long as continuations were in the statute. Reissues are another option.

        But you still need to have support in the original specification for your amendment. And the best way to ensure that you written all the back-up support you need is to be (1) very, very, very well aware of the prior art and what that prior art teaches; (2) understand how obviousness works and be able to anticipate the obviousness arguments that are going to be made; and (3) understand subject matter eligibility.

        Patentees in these IPRs seem to be frequently caught with their pants down. That’s not the PTO’s fault.

        1. The “system” is a bit different now, isn’t it, Fishsticks?

          This is what we’ve been trying to tell you for some time now. The reforms are coming. They aren’t going to stop until the nonsense stops and the junk is expunged from the system as opposed to constituting the majority of the patents out there.

    2. “Consider what they do in Europe [EPO] for oppositions” is not a good analogy since they allow various contingent alternative proposed claims, and it is otherwise a much simpler system, not a trial with the patent owner protection of cross-examinations of declarations filed by the opposer and a Fed. Cir. [judicial] appeal.

    3. Write valid claims to begin with. That’s the burden on the patentee. If patentees were more interested in getting valid, understandable patents than getting the broadest nonsense they can get past an examiner, they might not have so much trouble with post-grant proceedings. If your goal in examination is just to get something, anything, to waive in the face of your competitors and litigation targets, then you will continue to have problems with IPRs. OTOH, if your goal in the initial prosecution is to get only high-quality, valid patents, none of this should bother you.

    4. The Federal Circuit has always given undue deference to the panels of administrative law judges who, until they were hired by the PTO, were sitting on the other side of the PTO bar. Magically, when you hand in your shingle and start working for the government, you go from a 95% error rate to being right 95% of the time, at least as far as the CAFC is concerned when you look at reversal rates for appeals from the PTAB. Obviously, these guys need the deck stacked even more in their favor.

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