Wishes do come true. The U.S. Patent and Trademark Office (USPTO) is proposing a rule that would align the standard the Patent Trial and Appeal Board (PTAB) uses in interpreting claims in inter partes review (IPR), post-grant review and covered-business method proceedings with that of the courts.
Currently, PTAB uses the "broadest reasonable interpretation" standard, which some patent holders complain is too broad and not that reasonable, Courtenay Brinckerhoff, a partner at Foley & Lardner LLP, told BioWorld.
The courts, on the other hand, follow an ordinary language standard set out by the Federal Circuit in Phillips. Under that standard, "the 'words of a claim are generally given their ordinary and customary meaning,' which is 'the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention,'" the USPTO said, citing the Federal Circuit case.
Having one consistent standard – preferably that of the courts – has been high on the wish list for innovators in the biopharma and med-tech sectors, as they have seen key patents invalidated by PTAB based on its broad interpretation.
PTAB's broader reading opens a claim to more prior art than the courts' narrower interpretation, Brinckerhoff explained. Consequently, a patent claim that has stood up under court scrutiny can be struck down by PTAB – a fact that's helped earn the board the reputation of a patent killer, with an invalidation rate of more than 60 percent.
Because of the difference in interpretation standards, "a patent claim could be found unpatentable in an [IPR] on account of claim scope that the patent owner would not be able to assert in an infringement proceeding," according to a USPTO notice scheduled for publication in Wednesday's Federal Register.
At the heart of the USPTO's proposed amendment is the need to "implement a fair and balanced approach, providing greater predictability and certainty in the patent system," the agency said.
The proposal delivers on USPTO Director Andrei Iancu's speech last month at the U.S. Chamber of Commerce Patent Policy Conference. Stressing the need to restore balance and predictability, especially in the IPR process, Iancu said, "We do want the IPR system to effectively address invalid claims, but at the same time, we don't want to throw out the baby with the bathwater." (See BioWorld, April 13, 2018.)
To strike the right balance, he said the USPTO was examining how and when it institutes IPRs, the standards it follows during the proceedings and its conduct of the overall proceedings.
No thumb on the scale
Changing the standard PTAB uses will allow the IPR system to operate better, Kevin Noonan, a partner with McDonnell Boehnen Hulbert & Berghoff LLP, told BioWorld, but he said he would rather Congress specify the change in a statute. When it's an agency rule, it's subject to the whims of the USPTO director.
But for now, at least, the proposed rule shows that the USPTO is "not trying to put a thumb on the scale for either side" in patent challenges, Noonan said.
Part of the America Invents Act (AIA), IPRs were conceived as a shorter, less expensive alternative to litigation in winnowing out "bad" patents. In implementing the IPR procedure, the USPTO adopted the broadest reasonable interpretation standard on the grounds that the law allowed patent holders to amend their claims as needed, much like patent holders do in the EU, Noonan said. The end result would be narrow claims specific to the invention, rather than the overly broad claims that are the trademark of a "bad" patent – or so everyone thought.
However, that rationale hasn't played out in real life, as PTAB has been reticent to allow amended claims. And the 12-month clock Congress imposed on the procedures isn't conducive to multiple amendments, Noonan said.
Instead of being used as an alternative to litigation, IPRs often are an add-on after a court validates a claim. If implemented, the proposed amendment would allow PTAB to consider prior claim construction rulings from a civil action or International Trade Commission proceeding in making its determination, which could discourage double dipping when a challenger is unhappy with a court decision.
By restricting the prior art that would be considered, the proposed standard could move the needle toward PTAB validating more claims, Brinckerhoff said, but she doesn't expect it would change the volume of IPRs filed. And it wouldn't necessarily keep challengers from trying the IPR route after failing to invalidate a claim in court – they just would need a new basis for the challenge.
As Iancu suggested in his comments last month, the proposed rule likely is not the last change brewing at the USPTO. Brinckerhoff noted that more guidance on entering amended claims could be in order, and the agency will need to implement last month's Supreme Court ruling in SAS Institute Inc. v. Iancu. (See BioWorld, April 25, 2018.)
In that 5-4 decision, the court held that the AIA requires PTAB to decide the patentability of all claims challenged in an IPR that's instituted instead of the pick-and-choose policy – or "partial institution" – it's been following. Brinckerhoff said time will show whether the SAS decision impacts the number of IPRs PTAB institutes in the future.
Comments on the proposed rule are due by July 8.