It is well accepted that the broadest reasonable interpretation (BRI) standard, which the PTO employs during patent examination, and not the Phillips standard applied in district court proceedings, is generally the proper standard to be used when interpreting claims in Post-Grant proceedings such as IPRs and reexamination proceedings. However, in In Re CSB-System International, Inc., Appeal No. 2015-1832, the Federal Circuit reminded the PTAB that the BRI standard is not to be applied in all Post-Grant proceedings. Instead, the Federal Circuit reaffirmed its precedent that “when an expired patent is subject to reexamination, the traditional Phillips construction standard attaches.” (p. 8). The court further held that the Phillips standard also applies when the patent expires during reexamination.
This case is an appeal from the PTO’s ex-parte reexamination of U.S. Patent No. 5,631,953 (“the ‘953 Patent), assigned to CSB-System International, Inc. During the reexamination, the examiner construed several terms recited in the claims of the ‘953 Patent, including the terms “personal computer” and “LAN server” recited in independent claim 1, the sole independent claim. Specifically, the examiner adopted the plain meaning of the term “personal computer,” refusing to construe the term to exclude personal computers that emulate terminals, as CSB advocated. The examiner also declined to construe the term “LAN server” to require that such a server provide shared services to other components on the LAN and to respond to requests from clients, as CSB advocated. On the basis of these constructions, the examiner rejected independent claim 1, and dependent claims 2-6, as being anticipated by a reference Gursahaney, and dependent claims 7 and 8 as being obvious over Gursahaney in view of various combinations of additional references.
[w]hen a patent expires during a reexamination proceeding, the PTO should thereafter apply the Phillips standard for claim construction … regardless of whether this means that the Board applies a different standard than the examiner.
CSB appealed these rejections to the PTAB. During the pendency of the appeal, the ‘953 Patent expired. While the PTAB’s decision explicitly acknowledged the ‘953 Patent’s expiration, the PTAB nonetheless analyzed the examiner’s claim constructions using the BRI standard. The PTAB ultimately agreed with the examiner’s constructions and, in turn, affirmed the examiner’s rejections.
On appeal to the Federal Circuit, the PTO, representing the PTAB, sought to differentiate this case from In re Rambus, Inc., F694 F.3d 42 (Fed. Cir. 2012), where the Federal Circuit held that the Patent Office must apply the Phillips standard to construe claims of an expired patent during reexamination. First, the PTO argued that its use of the BRI standard was proper because CSB “had the opportunity to amend its patent claims while they were pending before the examiner in the reexamination, as the patent had yet to expire.” (p. 8). Moreover, the PTO argued that the PTAB, when reviewing an examiner’s rejection, “must scrutinize claims consistent with the standard used by the examiner in the first instance [in this case, the BRI standard], even after a patent has expired.” (p. 8-9).
The Federal Circuit disagreed and held: “When a patent expires during a reexamination proceeding, the PTO should thereafter apply the Phillips standard for claim construction … regardless of whether this means that the Board applies a different standard than the examiner.” (p. 8).
In responding to the PTO’s first argument, the Federal Circuit noted that patent owner’s opportunity for amending is “substantially diminished” when the patent expires, regardless of the stage of the reexamination. (p. 9). In support, the Court specifically pointed to 37 C.F.R. 1.530(j)¹, which prohibits the entry of proposed amendments when a patent has expired during reexamination, in combination with 37 C.F.R. 1.530(k), which together prevent the PTO from issuing, via a reexamination certificate, an amended claim once the patent has expired. This is coupled with the fact that “it is not always clear how much time a Board appeal will take and at what point a patent owner can reopen prosecution and amend its claims.” (p. 9-10). Thus, the Federal Circuit concluded that it would be inappropriate to ask “whether or not a patent owner could have amended its claims” or engage in speculation “as to whether the patent owner could in the future have an opportunity to amend its claims … .” (p. 10).
The Federal Circuit disagreed with the PTO’s second argument as well, observing that because the Phillips standard cannot produce a broader construction than the BRI standard, and will, if anything, result in a “more narrow claim scope”, there is “little chance” that the PTAB would issue new rejections based on a more narrow claim scope. (p. 9).
Interestingly, despite holding that the PTAB erred in applying the BRI standard instead of the Phillips standard, and even after correctly applying the Phillips standard, the Federal Circuit affirmed the PTAB’s rejection of claims 1-8 of the ‘953 Patent. In doing so, the court reasoned that “there is no basis for limiting the claims as narrowly as CSB argues” in order to patentably distinguish over the applied references. The court agreed with the PTAB that there is no support for construing the claim term “personal computer” in the manner proposed by CSB, i.e., to exclude personal computers that emulate terminals, or for construing the claim term “LAN servers” in the manner proposed by CSB, i.e., to require certain characteristics of a LAN server. (p. 10-11). Accordingly, the court concluded that substantial evidence supported the PTABs construction of the claim terms and affirmed the PTAB’s decision.
¹ 37 C.F.R. 1.530 governs amendments during reexamination proceedings. 37 C.F.R. 1.530(j) provides, in relevant part, that “[n]o amendment may be proposed for entry in an expired patent.”