In affirming a decision of the Board of Patent Appeals and Interferences (the Board) the U.S. Court of Appeals for the Federal Circuit made clear that during reexamination of a patent, the USPTO is not bound by a district court’s claim construction order issued in a proceeding to which the USPTO was not a party. In re Trans Texas Holdings Corp., Case Nos. 06-1599, -1600 (Fed. Cir., Aug. 22, 2007) (Dyk, J.).
In Trans Texas, the patentee requested reexamination of two patents, both of which related to a system of inflation-adjusted deposit and loan accounts. During reexamination, the patentee argued that the USPTO was bound by a claim construction rendered by a district court in an earlier infringement proceeding that was settled and dismissed before trial. The USPTO, which was not a party to that proceeding, rejected all the claims of both patents as obvious over the prior art. In affirming the rejection, the Board held that the USPTO was not bound by the district court’s claim construction order because a different claim construction standard, interpreting claims according to "their broadest reasonable interpretation consistent with the specification," applied during reexamination. Additionally, the Board concluded that the district court’s claim construction was not "necessary to the judgment rendered in the previous action" in light of the pre-trial settlement and dismissal. The patentee appealed.
The patentee argued that the Board should have given preclusive effect to the district court’s claim construction. The Federal Circuit rejected this argument, noting that because the USPTO was not a party to the earlier litigation, the patentee could not satisfy one of the requirements of issue preclusion: that the party defending against preclusion had a full and fair opportunity to litigate the issues. Accordingly, the USPTO was not bound by the district court’s construction.
The patentee also argued that the Board erroneously rejected its proposed claim construction. However, the Federal Circuit agreed with the USPTO position that "[c]laims are given their broadest reasonable interpretation, consistent with the specification, in reexamination proceedings." Under this standard, the Board properly construed the claims at issue and affirmed the Board’s holding.
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