Source: https://www.foley.com/en/insights/publications/2015/06/federal-circuit-reverses-unreasonable-ptab-claim-c
Timestamp: 2019-11-13 14:31:50
Document Index: 795236850

Matched Legal Cases: ['§ 102', '§ 103', '§ 316', '§ 316', '§ 42', '§ 42', '§ 42']

Federal Circuit Reverses Unreasonable PTAB Claim Construction, Upholds Idle Free Standard for Motions to Amend | Blogs | PharmaPatents | Foley & Lardner LLP
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Federal Circuit Reverses Unreasonable PTAB Claim Construction, Upholds Idle Free Standard for Motions to Amend
23 June 2015 PharmaPatents Blog
The Federal Circuit decision in Microsoft Corp. v. Proxyconn, Inc., addressed several important issues relating to post-grant patent trials conducted by the USPTO Patent Trial and Appeal Board (PTAB), including the PTAB’s claim construction standard and the requirements for motions to amend the claims. The net result of the decision was to affirm-in-part, reverse-in-part, vacate-in-part and remand–which itself raises new questions.
The patent at issue was Proxyconn’s U.S. Patent 6,757,717. The PTAB determined that “all of the challenged claims except claim 24 were unpatentable” under 35 U.S.C. § 102 or obvious under 35 U.S.C. § 103. Since the “patent relates to a system for increasing the speed of data access in a packet-switched network,” I won’t reproduce the claim language here.
The Broadest Reasonable Interpretation
Proxyconn challenged the PTAB’s use of the “broadest reasonable interpretation” (“BRI”) standard of claim construction, and its construction of several specific claim elements. The Federal Circuit noted that Proxyconn’s main argument was “foreclosed by our decision in In re Cuozzo,” which held that “the broadest reasonable interpretation standard in IPRs ‘was properly adopted by PTO regulation.'” However, the court emphasized that that standard does not preclude review by Federal Circuit:
Even under the broadest reasonable interpretation, the Board’s construction cannot be divorced from the specification and the record evidence, and must be consistent with the one that those skilled in the art would reach. A construction that is unreasonably broad and which does not reasonably reflect the plain language and disclosure will not pass muster.
(Internal quotations and citations omitted.)
Applying these standards, the court found that the claim construction underlying the PTAB’s invalidity determinations of claims 1, 3, 10, 22, and 23 and claims 6, 7 and 9 was “unreasonably broad.”
Proxyconn also challenged the PTAB’s use of the “Idle Free” requirements to support motions to amend the claims. The Federal Circuit approved the PTAB’s reliance on Idle Free in this particular case, where the motion to amend was denied because Proxyconn had not shown patentability over one of the prior art references asserted in the IPR against different claims. However, the court stopped short of approving “all of the other requirements of Idle Free” including the requirement that the patentee “show patentable distinction over all ‘prior art known to the patent owner.’”
The court noted that the IPR statute, in 35 USC § 316(d), “provides that ‘the patent owner may file 1 motion to amend the patent’ and that such amendment ‘may not enlarge the scope of the claims of the patent or introduce new matter.'” The court also noted that § 316(a) expressly gives the USPTO “authority … to set[] forth standards and procedures for allowing the patent owner to move to amend the patent.”
The USPTO exercised this authority when it promulgated 37 CFR § 42.20 (relating to motions generally) and § 42.121 (relating to motions to amend), but these rules outline primarily procedural requirements. It is the PTAB’s decision in Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027 (PTAB June 11, 2013), that sets forth the substantive requirements that so many patent owners have been unable to satisfy.
As quoted in the Federal Circuit decision, the PTAB’s Idle Free decision requires the following in a motion to amend during an IPR proceeding:
A patent owner should identify specifically the feature or features added to each substitute claim, as compared to the challenged claim it replaces, and come forward with technical facts and reasoning about those feature(s), including construction of new claim terms, sufficient to persuade the Board that the proposed substitute claim is patentable over the prior art of record, and over prior art not of record but known to the patent owner. The burden is not on the petitioner to show unpatentability, but on the patent owner to show patentable distinction over the prior art of record and also prior art known to the patent owner. Some representation should be made about the specific technical disclosure of the closest prior art known to the patent owner, and not just a conclusory remark that no prior art known to the patent owner renders obvious the proposed substitute claims. A showing of patentable distinction can rely on declaration testimony of a technical expert about the significance and usefulness of the feature(s) added by the proposed substitute claim, from the perspective of one with ordinary skill in the art, and also on the level of ordinary skill, in terms of ordinary creativity and the basic skill set. A mere conclusory statement by counsel, in the motion to amend, to the effect that one or more added features are not described in any prior art, and would not have been suggested or rendered obvious by prior art, is on its face inadequate.
As noted by the Federal Circuit, the Idle Free decision has been designated as “informative” by the PTAB, and the PTAB frequently cite Idle Free when denying motions to amend.
In response to Proxyconn’s challenge, the USPTO argued that “it is permissible for the PTO to use adjudicative Board decisions like Idle Free, rather than traditional notice and comment rule-making, to set forth all the conditions that a patentee must meet in order to satisfy its burden of amendment under § 42.20(c).” Although the court recognized challenges to “the wisdom of the PTO’s approach,” including the risks of “leaving interested members of the public in a state of uncertainty, without ascertainable standards and adequate notice to comply,” it concluded that the USPTO had discretion to choose between rule making and adjudication. The court credited the USPTO’s argument that “adjudication is appropriate here” because the USPTO does not yet have “sufficient experience” with motions to amend “to warrant promulgation of “hard and fast” rules. Thus, the court found no abuse of discretion in the PTAB’s reliance on Idle Free, and did not find the Idle Free requirements in principle to be “plainly erroneous or inconsistent with the regulation or governing statutes.”
Turning to the case before it, the court concluded that the PTAB “acted permissibly in requiring Proxyconn to establish the patentability of substitute claims 35 and 36 over the DRP reference” that had been asserted against other claims, and affirmed the denial of the motion to amend “based on Proxyconn’s failure to do so.”
As noted above, the Federal Circuit remanded this IPR to the PTAB for further proceedings in view of its claim construction determinations. Neither the IPR statutes nor the PTAB’s own rules address remand proceedings. Thus, the PTAB will have to determine how–and how quickly–to reconsider patentability under the Federal Circuit’s construction of claims 1, 3, 10, 22, and 23 and claims 6, 7 and 9.
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