The PTAB's New Claim Construction Standard: Will the Real Impact Please Stand Up

On this point, patent owners should be careful not to expect that the USPTO will fully embrace the Phillips standard's oft-cited doctrine that claims be construed in a manner that preserves validity. The USPTO's commentary states that "[t]he doctrine of construing claims to preserve their validity has been limited to cases in which 'the court concludes, after applying all the available tools of claim construction, that the claim is still ambiguous.' [Phillips, 415 F.3d at 1327] (quoting Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 911 (Fed. Cir. 2004))." 83 Fed. Reg. 51,343 (Oct. 11, 2018). In fact, the commentary suggests that this doctrine would be applied in "rare circumstances." 83 Fed. Reg. 51,343; 51,353 ("extremely rare cases in which the courts applied the doctrine").

Consequently, the new rules likely will not cause radically different claim constructions or final determinations. Nevertheless, tempered expectations should not breed complacency. The more significant impact may derive from the second issue — the interplay between constructions decided by the Patent Trial and Appeal Board (PTAB) and federal courts. While the USPTO's comments on the new rules downplay the effect on the actual constructions, they also take aim at the issue of different claim construction arguments being offered by the same party in different fora. The USPTO gave weight to public commentary that described "the possibility of differing constructions for the same claim term [as] troubling, especially when claim construction takes place at the same time in parallel district court proceedings and USPTO proceedings." 83 Fed. Reg. 51,342 (Oct. 11, 2018). For that reason, the stated purpose of the new rules is, in part, to "help achieve the goal of increasing judicial efficiency and eliminate arguments relating to different standards across fora." Id., at 51,346.

Indeed, the PTAB will now take into account the "prior claim construction determination" from federal courts. 37 C.F.R. 42.100. Simultaneously, the USPTO expressed the hope that adoption of the new standard will "increase[] the likelihood that courts may consider the PTAB's construction for a given patent." 83 Fed. Reg. 51,349 (Oct. 11, 2018). Yet, the USPTO stopped short of suggesting a preclusive effect of a claim construction in one forum on the construction in another, even rebuffing "suggestions that the PTAB must necessarily defer to prior claim constructions." Id., at 51,355. The USPTO indicated only that it would give such prior decisions proper weight, considering factors such as "whether the prior claim construction is final or interlocutory." Id., at 51,355. Nevertheless, the USPTO acknowledged more binding implications of using the same standard as the district courts, noting that "[i]ssue preclusion, collateral estoppel, and res judicata must each be premised on, among other things, a final court judgment." Id., at 51,355.

The U.S. Supreme Court has already addressed the topic of issue preclusion arising from an agency decision. See, B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015). In that case, the Court held that a decision by the USPTO's Trademark Trial and Appeal Board can lead to issue preclusion in a district court. For such estoppel to attach, the decision must be final, between the same parties, and essential to the judgment. B&B Hardware, at 1302-03. The Court reasoned that because both the agency and the district court used the same "standard," issue preclusion would attach, even if the exact factors considered were not identical. B&B Hardware, at 1306-07. The ruling clearly puts estoppel concerns front and center for AIA trials, given that many AIA trials have parallel district court actions involving the same parties.

As to when a decision becomes final for purposes of issue preclusion, circuit courts have generally agreed that the ultimate decision of a tribunal triggers estoppel, such that issue preclusion attaches during any appeal. See, Pharmacia & Upjohn Co. v. Mylan Pharms., Inc., 170 F.3d 1373, 1381-82 (Fed. Cir. 1999) (articulating that most circuits agree that an appeal's pendency does not affect the finality of the holding of the trial court). Interestingly, at least one PTAB decision has declined to apply issue preclusion where appeal rights "have not been exhausted." SDI Technologies, Inc., v. Bose Corp., IPR2014-00343, Paper 32, at p. 8 (P.T.A.B. June 11, 2015).

Conclusion

With a uniform claim construction standard for both AIA trials and federal court cases, the most significant development of the new rules may prove to be the weight arguments and decisions in one forum have in another. This development warrants careful coordination of arguments among fora. Until now, practitioners have found it rather easy to present different positions on claim construction with the safety net of "different standards" to protect cross-contamination. Now, inconsistent arguments will garner more attention, and we may see a race to a "final" decision on construction in one forum.

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Justin Oliver is partner at Venable Fitzpatrick (formerly of Fitzpatrick, Cella, Harper & Scinto). Justin frequently lectures on the subject of AIA proceedings and has been counsel in over 70 such proceedings.