Change in Claim Construction Standard Provides Greater Appellate Opportunity

Some months back the Patent Trial & Appeal Board (PTAB) proposed dropping the broadest reasonable interpretation (BRI) in favor of the so-called “Phillips construction” of the courts. That final rule package, while expected to have been issued by now, is hung up in the Office of Management & Budget (OMB) for regulatory review. (While described in the proposed rule as a change that was not deemed “significant,” should OMB disagree, the final rules will be delayed until the necessary regulatory hoops can be navigated). Nevertheless, whether in 2018 or 2019, it is clear that the agency intends to move PTAB trial proceedings away from BRI to the Phillips standard.

While this change may not move the needle very much for PTAB trials, it should provide enhanced appellate opportunity.

In 2016, while the Cuozzo appeal was pending before the Supreme Court, the Federal Circuit emphasized in PPC Broadband Inc., v. Corning Optical Communications RF, L.L.C. that an assessment of claim construction under a reasonability standard is different from an assessment under a “correctness” standard. That is, in PPC, the Federal Circuit volunteered that the BRI construction it affirmed would have been deemed incorrect under Phillips. The Court explained that while it did not find the PTAB’s construction unreasonable, it did not deem it to be the “correct” construction.

[C]laim construction in IPRs is not governed by Phillips. Under Cuozzo [earlier CAFC decision], claims are given their broadest reasonable interpretation consistent with the specification, not necessarily the correct construction under the framework laid out in Phillips. Here, the Board’s construction is not unreasonable.

That is, when applying a “reasonability standard” the Court is constrained from applying a more subjective assessment of “correctness.” In that respect, a BRI determination — despite the de novo review of claim construction determinations by the Federal Circuit — limits the ability of the court to inject its own judgement as it might otherwise do under Phillips. A similar difference can be found in the clearly erroneous standard of review as compared to the substantial evidence standard. The substantial evidence standard determines whether the decision could reasonably have been made, not whether it was correctly made (i.e., clearly erroneous).

The difference between “reasonable” and “correct” may not drive a difference in the majority of PTAB appeals, but it does, nevertheless, provide an incremental advantage to appellants once the reasonability of BRI is supplanted by the correctness lens of Phillips.