The Cuozzo v. Garmin case, discussed in our blog in January, has been decided in favor of the U.S. Patent and Trademark Office (USPTO). A divided panel decided 2-1 to uphold the USPTO’s claim construction standard used by the Patent Trial and Appeal Board (PTAB) in the new inter partes review proceedings under the America Invents Act (AIA). See, In re: Cuozzo Speed Technologies LLC, CAFC Case Number 2014-1301, Opinion dated February 4, 2015.

The majority decision, written by Judge Timothy Dyk, concludes that Congress authorized the “broadest reasonable interpretation” (BRI) standard for inter partes review (IPR), post-grant review (PGR) and covered business method (CBM) proceedings, even if the statute did not define what claim construction standard should be used.

The majority opinion, in which Judge Raymond Clevenger joined Judge Dyks, found that the adoption of the BRI standard did not exceed the USPTO’s authority. “There is no indication that the AIA was designed to change the claim construction standard that the USPTO has applied for more than 100 years,” according Judges Dyks and Clevenger.

As the name suggests, the BRI rule gives the PTAB the ability to interpret each element of a claim as broadly as reasonably possible so long as the interpretation is not contradicted by the patent specification. The impact of such broad interpretations is that claim language can “read on” prior art that otherwise might not be relevant if the claim element is given its ordinary meaning.

The Federal Circuit panel majority concluded that AIA reviews are “not materially different” from other USPTO proceedings and agreed with USPTO position that the patent owner’s ability to amend claims justified application of the BRI standard:

“Although the opportunity to amend is cabined in the IPR setting, it is thus nonetheless available. The fact that the patent owner may be limited to a single amendment, may not broaden the claims, and must address the ground of unpatentability is not a material difference.”  In re Cuozzo Speed, Slip opinion at page 16.

Judge Pauline Newman dissented from the majority opinion, urging instead that the PTAB apply the same claim construction standard as district courts. According to Judge Newman, the majority’s decision “precludes achieving review of patent validity in inter partes review comparable to that of the district courts, where validity is determined based on the correct claim construction, not an artificially ‘broadest’ construction.”

We may not have heard the last word from the Federal Circuit on this issue. As we noted previously in our blog, the same issue is before a different panel of CAFC judges in another pending appeal. Versata v. SAP concerns the very first “covered business method” (CBM) review proceeding (CBM2012-00001) conducted by the USPTO and is on appeal by the Patent Owner, Versata, of the Patent Trial and Appeal Board (PTAB) decision to invalidate certain challenged claims. See, Versata Development Group, Inc., v. Sap America, Inc. and Sap AG, CAFC Case Number 2014-1194.

Like Couzzo’s challenge to the application of the BRI standard to IPR ruling, Versata has challenged the application of the BRI standard to CBM review proceedings.

Interestingly, the third-judge panel that will rule on Versata’s appeal is not the same panel as the one that ruled in the Cuozzo case. In fact, the only common judge is Judge Newman – the judge who dissented from the majority in the Cuozzo case and sharply criticized the use of the BRI standard in the new AIA proceedings.

Should the Versata panel be inclined to rule differently on the BRI standard, en banc consideration of this issue by all of the CAFC judges will be all but assured before we have an answer. And, of course, the U.S. Supreme Court may ultimately weigh on – or Congress may provide answer.

The day after the Cuozzo decision was handed down, a bipartisan group of congressmen introduced a bill dubbed the “Innovation Act” (H.R. 9, February 5, 2015) that would require the USPTO to construe claims in post-issuance reviews (IPR/PGR/CBM) in the same manner as would be done by a district court and “in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”