Standardized: USPTO Adopts Federal Court Phillips Claim Construction Standard at PTAB

October 16, 2018

In a final rule package recently published by the US Patent and Trademark Office, the agency conformed the standard for construing unexpired claims under certain Patent Trial and Appeal Board proceedings to the Phillips standard used in district courts and at the International Trade Commission, creating a unified process across all potential forums. After November 13, 2018, it will no longer be a viable option for accused infringers to take the common approach of offering slightly differing constructions at the PTAB and in district court or the ITC based on the differences in the claim construction standards being applied in each forum.

On October 10, 2018, the US Patent and Trademark Office (USPTO) published a final rule package officially conforming the standard for construing unexpired claims in inter partes review (IPR), post-grant review (PGR), and covered business method (CBM) proceedings from the current broadest reasonable interpretation (BRI) standard to the Phillips[1] standard used by district courts and the International Trade Commission (ITC). The standard change is effective November 13, 2018. While it is too early to predict the impact the change will have on Patent Trial and Appeal Board (PTAB) proceedings, it should at least make it more difficult for parties to take inconsistent positions in proceedings before the PTAB, the federal district courts, and the ITC, and it may impact litigation and filing strategies as well.

Using the Phillips standard is not new to the USPTO, which currently interprets claims in expired patents under Phillips.[2] Construing a claim “in accordance with the ordinary and customary meaning of such a claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent” opens the door to additional relevant extrinsic evidence. Further, the USPTO will be guided by other principles articulated by the Federal Circuit regarding Phillips, such as the doctrine of construing claims to preserve their validity.[3] Assuming that the PTAB does not increase the word-count limits for briefs, practitioners will need to make judicious use of their resources. Administrative patent judges (APJs) will continue to provide preliminary claim constructions at institution and provide final constructions when entering final written decisions. Currently, it appears that the PTAB will not adopt a fully separate claim construction proceeding, instead relying on the current practice of addressing the preliminary claim constructions and additional evidence at oral hearing.

Because the standard will be consistent across forums, the rule amendment also allows the USPTO to consider any prior claim construction determination concerning a term of the involved claims in a civil action or ITC proceeding that is timely made of record in an IPR, PGR, or CBM proceeding. While the USPTO is not bound by a district court or ITC claim construction order (that hasn’t been adopted on appeal by the Federal Circuit), the reverse may not be true. Given the US Supreme Court’s analysis in B&B Hardware, in a post-SAS[4] environment, preclusion may apply after a final determination since the “parties cannot escape preclusion simply by litigating anew in tribunals that apply . . . one standard differently.”[5] Most importantly, the common approach of offering (slightly) differing constructions for unpatentability at the PTAB and noninfringement in district court will no longer be a viable option for accused infringers. Filing an IPR/CBM/PGR petition before the November 13 effective date will be critical in preserving this option for petitioners, so we can expect a rush of new petitions over the next 30 days.

Given SAS’s impact on institution rates, along with potential claim construction preclusion, district courts may be more willing to grant stays of litigation while the PTAB proceeding goes forth—particularly courts that don’t have heavy patent dockets. TC Heartland[6] has increased patent filings in venues that don’t have established practices or familiarity with the nuances of patent litigation. Under the prior standard, if even a single claim survived PTAB review applying BRI, the district court would have to perform claim construction under Phillips. Now, especially for district judges that don’t perform claim construction on a regular basis, allowing a panel of APJs to perform the heavy lifting and conserve judicial resources may be appealing. However, timing is going to be a factor. While some courts will grant a stay on the filing of an IPR petition, others will wait until an institution decision. In those cases, a district court may reach a claim construction hearing and issue an order prior to the one-year bar. Filing a petition with the USPTO as early as possible after being accused of infringement is still the recommended strategy for accused infringers. For patent owners, a uniform process across all potential forums will prevent extended litigation and limit the accused infringer (the PTAB petitioner) to a single bite at the invalidity apple.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the author Dion M. Bregman or any of the following lawyers from Morgan Lewis’s post-grant proceedings team:

Joshua M. Dalton

Century City
Andrew V. Devkar

Jason C. White

C. Erik Hawes
Rick L. Rambo

Orange County
Kenneth Cheney

Louis W. Beardell, Jr.

San Francisco
Brent A. Hawkins

Silicon Valley
Andrew J. Gray IV
Michael J. Lyons

Washington, DC
Jeffrey G. Killian, Ph.D.
Robert Smyth, Ph.D.

[1] Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc).

[2] See Wasica Fin. GmbH v. Cont'l Auto. Sys., Inc., 853 F.3d 1272, 1279 (Fed. Cir. 2017) (noting that “[t]he Board construes claims of an expired patent in accordance with Phillips . . . and [u]nder that standard, words of a claim are generally given their ordinary and customary meaning”).

[3] See Phillips, 415 F.3d at 1327-28.

[4] SAS Inst. Inc. v. Iancu, 584 U.S. __ (Apr. 24, 2018).

[5] See B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1307 (2015) (discussing analogous proceedings before the Trademark Trial and Appeal Board).

[6] TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).