United States: What Proxyconn Means For Future Inter Partes Reviews

On June 16, 2015, the US Court of Appeals for the Federal Circuit decided Microsoft Corp. v. Proxyconn Inc., which is the Federal Circuit's first decision reversing an inter partes review determination by the US Patent and Trademark Office's Patent Trial and Appeal Board. Given the increased filing of IPR petitions, the intellectual property community has closely watched to see how much deference the Federal Circuit will accord the PTAB's decisions.

The Proxyconn case is thus historic insofar as it's the first time that the court has reversed a PTAB decision invalidating claims in an issued patent. This decision also provides some insights into how the Federal Circuit will review appeals from PTAB decisions in future IPR proceedings, including how to apply the "broadest reasonable interpretation" and the propriety of the judge-made rules for amending claims.

Background: The Federal Circuit's recent review of IPR decisions

By way of background, an IPR is a recently created trial proceeding created by the America Invents Act. Congress created IPR proceedings for the purpose of "providing quick and cost effective alternatives to litigation."1 In an IPR, the PTAB will consider grounds of unpatentability under §§ 102 or 103, and only based on prior art patents or printed publications. Issuance of a final written decision will normally estop a petitioner again challenging validity of patent claims in district court based on grounds that were raised or reasonably could have been raised in the IPR.

IPRs began on Sept. 16, 2012, and have grown rapidly in popularity as an alternative to district court litigation. Reasons for their popularity include the PTAB's use of the broadest reasonable interpretation ("BRI") standard for construing patents claims, which many perceive to be broader than the Phillips standard used in US district courts. The PTAB also reviews patentability under a "preponderance of the evidence" standard, which is lower than the "clear and convincing evidence" standard used in US district courts. These factors, combined with the significantly lower cost and speedier resolution of IPRs, as compared with litigation in district courts, have made IPRs attractive. So far, the Federal Circuit has decided fewer than 20 appeals from PTAB's AIA trials. This has consisted of just three precedential opinions, 15 summary affirmances, and one nonprecedential affirmance.

To date, Proxyconn, GTNX and Cuozzo are the only precedential decisions reviewing the PTAB's decisions in these recently created post-grant trials conducted by the PTAB. In Cuozzo, the Federal Circuit ruled that the PTAB correctly uses the BRI standard in construing patent claims in IPR proceedings, rather than a Phillips claim construction analysis used in district court.2 In GTNX, the Federal Circuit made clear that the court will not review the PTAB's decision whether to institute an IPR.3 Rather, the Federal Circuit will confine its review to the PTAB's final written decisions as to patentability. Id.

Until the Federal Circuit's recent decision in Proxyconn, all of the court's other decisions had affirmed the PTAB's rulings. This pattern of uniform affirmances by the Federal Circuit, at least before Proxyconn, contributed to the widely held perception that IPRs are a more favorable forum for challengers than for patent owners. In Proxyconn, the Federal Circuit provided some guidance regarding how to apply BRI and the requirements for motions to amend.

Proxyconn's observations about how to apply "broadest reasonable interpretation"

First, in Proxyconn, the Federal Circuit, citing Cuozzo, once again confirmed that the broadest reasonable interpretation standard applies to AIA trials.4 It also shed some light on how BRI should be applied in IPRs and when the PTAB's claim construction under BRI goes too far such that its constructions are unreasonable under general claim construction principles.

In Proxyconn, the Federal Circuit made clear that it will not uphold unreasonably broad constructions that are inconsistent with the proper scope of a claimed invention.5 First, in construing claims under BRI, the court explained that "claims should always be read in light of the specification and teachings in the underlying patent."6 Second, "[t]he PTO should also consult the patent's prosecution history in proceedings in which the patent has been brought back to the agency for a second review."7 Third, the Federal Circuit stated that any construction under BRI "must be consistent with the one that those skilled in the art would reach."8

In several different ways, the Federal Circuit warned that a construction under BRI can be too broad if it doesn't follow the principles above. For example, the PTAB may not "construe claims during IPR so broadly that its constructions are unreasonable under general claim construction principles."9 Further, the PTAB'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."10 Finally, "[a] construction that is 'unreasonably broad' and which does not 'reasonably reflect the plain language and disclosure' will not pass muster."11

In applying these principles, the Federal Circuit determined that a claim that generically recited "two other computers" was limited to sender/receiver computers when read in view of the specification. The court similarly held that the claim required sender/receiver computers distinct from gateway and caching computer intermediaries. On their face, the claims did not necessarily contain these requirements, but when read in light of the specification, the Federal Circuit determined they did under the BRI standard.

It is worthy of note that the Federal Circuit's criteria for construction under BRI, at least in this case, resemble those under Phillips.12 Interestingly, in Proxyconn, the Federal Circuit explained that it would have reached the same result if it had applied "the traditional claim construction framework set forth in Phillips."13 This implies that, at times, the meaning of claim terms could be the same under BRI and Phillips.

The similarity between the BRI construction discussed by the Federal Circuit in Proxyconn and traditional Phillips construction raises many questions about the use of BRI in the future. For example, will the Proxyconn decision act to narrow the gap between a BRI construction and a US district court construction. Does the Proxyconn decision open the door for the Federal Circuit to decide later that the PTAB should use the analysis found in Phillips to determine the BRI of claim terms? Should practitioners and the PTAB use Phillips as a framework to support its claim construction analysis under BRI? Given the number of appeals at the Federal Circuit and the growing interest in using AIA proceedings to invalidate patents, there will likely be future decisions providing guidance on the application of BRI in IPR proceedings.

The Proxyconn decision issued during a time in which some criticize using BRI to construe claims in these quasi-judicial proceedings. The policy behind BRI is to ensure that claims have justifiable breath over newly applied prior art through an amendment process. The PTAB regularly denies motions to amend claims in AIA trials. This has led to legislative efforts to mandate statutorily the PTAB to use the same analysis as district courts since Phillips. This should provide another reason for both the Federal Circuit and PTAB to provide guidance on how to analyze a claim under the BRI rubric.

Proxyconn's observations about amending claims in an IPR

The Federal Circuit's decision in Proxyconn also provides some guidance as to whether the PTAB's current stern reluctance to permit claim amendments in IPRs will continue.

While there are other appeals before the Federal Circuit that requested review of the PTAB's amendment process, Proxyconn was the first to receive an opinion. Notably, in Proxyconn the Federal Circuit asked for supplemental briefing on the administrative procedure surrounding the amendment process. In particular, the Federal Circuit asked for briefing regarding the PTAB's authority to apply Idle Free Systems Inc. v. Bergstrom Inc.14 and its requirements when the rule governing motions to amend includes no such requirements.

Idle Free is an informative opinion that outlines what the PTAB requires in a motion to amend claims. First, the motion to amend should include one substitute claim for one challenged claim. Second, the substitute claim must be responsive to an alleged ground of unpatentability, must narrow the claim it replaces, and must not introduce new matter. The third condition is that the PTAB expects the patent owner to provide a showing of patentable distinction over the prior art for each substitute claim.

In Proxyconn, the Federal Court agreed with the PTO that the amendment rule "is not an exhaustive list of grounds upon which the Board can deny a motion to amend." The court agreed with the PTO that the agency, like other federal agencies, may use rulemaking or adjudication to shape the contours of its rules.

The Federal Circuit stopped short of approving the complete set Idle Free requirements. It agreed with the PTO that the PTAB may require a patent owner to show a patentable distinction over the prior art of record, which in this case was limited to the prior art that "was very much a part of the entire [IPR]."15 Because this was the issue before it in Proxyconn, the Federal Circuit dropped a footnote that the court was not addressing whether the patent owner needed to show a patentable distinction over all the prior art known to the patent owner — a major complaint of patent owners. So it remains unclear whether the "prior art of record" includes more than what was used to challenge the patent claims. It also remains unclear whether the PTAB may require a showing of patentability under §§ 101 and 112 in the motion to amend.


This article was first published in Law360 on July 13, 2015. Co-authored by Robert Kramer, Michael O'Neill, Russell Tonkovich, Peter Su and Kevin Greenleaf, Dentons.


Conclusion

Proxyconn further clarifies the BRI analysis and requirements for motions to amend. BRI will remain the standard of claim construction in IPRs. Motions to amend will likely be restricted to one-for-one substitutions. Motions to amend will also have to show at least a patentable distinction over the prior art in the petition and the petitioner's opposition to the motion to amend.

1 H.R. Rep. No. 112-98, pt. 1, at 48 (2011), 2011 U.S.C.C.A.N. 67, 78.

2 In re Cuozzo Speed Technologies LLC, 778 F.3d 1271 (Fed. Cir. 2015).

3 GTNX Inc. v. INTTRA Inc., Nos. 15-1349, -1350, -1352, -1353 (Fed. Cir. June 16, 2015).

4 Proxyconn, at 6.

5 Id.

6 Id. at 7.

7 Id.

8 Id.

9 Id. at 6.

10 Id.

11 Id. at 7.

12 Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).

13 Id. at 15, FN1.

14 IPR2012-00027, 2013 WL 5947697 (PTAB June 11, 2013).

15 Idle Free at 27.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
22 Jan 2019, Seminar, San Francisco, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

23 Jan 2019, Seminar, Los Angeles, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

24 Jan 2019, Other, New York, United States

Join Dentons’ Health Care Partner Lori Mihalich-Levin and White Collar & Government Investigations Counsel Christine Genaitis as they lead conference sessions at AHLA Academic Medical Centers and Teaching Hospitals Institute.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions