USPTO Publishes Final Rule Adopting Phillips Standard at PTAB

By Gene Quinn
October 10, 2018

Earlier this morning the United States Patent and Trademark Office (USPTO) published a final rule in the Federal Register changing the claim construction standard applied during inter partes review (IPR), post-grant review (PGR), and covered business method (CBM) review proceedings before the Patent Trial and Appeal Board (PTAB). This final rule replaces the broadest reasonable interpretation standard the USPTO has used to interpret claims since AIA administrative trial proceedings came online effective September 16, 2012 with the Phillips standard, which is the same claim construction standard used to construe patent claims in patent infringement litigation in federal district courts. According to the USPTO, a total of 374 comments were received in response to the May 9, 2018, Notice of Proposed Rulemaking (NPRM).

“The change to a universal post-issuance claim construction standard is positive for the overall patent system, but I don’t think we will see a resultant change in IPR decisions,” said Russell Slifer, partner with Schwegman Lundberg & Woessner, and former Deputy Director of the USPTO. “I don’t believe the claim construction standard has been the primary contributor to PTAB decisions.”

“Director Iancu is to be commended for being responsive to the wide majority of parent practitioners who have raised concerns that the PTAB procedures were unfairly tilted against patent owners,” said Robert Stoll, partner with Drinker Biddle, and former Commissioner for Patents at the USPTO. Hopefully this will be an iterative process until the proper balance is clearly achieved.

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The federal district courts have interpreted patent claims using the Phillips standard, which gains its name from the claim construction standard articulated by the United States Court of Appeals for the Federal Circuit in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc). When creating the first set of regulations applicable to Administrative Trial Proceedings conducted by the PTAB, the USPTO elected to have the PTAB apply the broadest reasonable interpretation standard, which is the standard applied by patent examiners to determine whether a patent claim should issue in the first instance.

Use of BRI to interpret and subsequently invalidate patent claims already issued has been the source of much criticism. While it makes sense for a patent examiner to logically stretch claims to their reasonable limits prior to awarding the patent, having two different standards for interpreting claims for the purpose of invalidity led to gaming the system and treated previously examined and issued patent claims, which the statute says are supposed to be presumed valid, and essentially treated them equivalent to unexamined patent claims.

Under the final rule, when construing a claim term in an IPR, PGR, or CBM, the PTAB will now also take into consideration any prior claim construction determination that has been made in a civil action, or a proceeding before the International Trade Commission, if that prior claim construction is timely made of record in that IPR, PGR, or CBM. As strange as it may sound, this is also a departure from current practice. Currently, the PTAB does not need to consider any prior claim construction. With different standards, the argument goes, what a different tribunal may have ruled would not necessarily be of any concern to the PTAB. This has lead to inconsistent rulings, and claims that have been finally adjudicated as valid by the Federal Circuit because the challenge emanated from the ITC and then when the same claims were challenged on the same prior art they were finally adjudicated as invalid by the Federal Circuit. See Are all Claims Invalid? 

The madness leading to patent claims being both finally adjudicated as valid and invalid by the Federal Circuit will not necessarily stop because the burden remains lower at the PTAB. The statute  requires only a preponderance of evidence to invalidate patent claims in a challenge at the PTAB, while clear and convincing evidence is required in federal courts and at the ITC to invalidate claims. Still, all tribunals using the same claim construction standard moving forward can only help. Statutory reform requiring clear and convincing evidence to invalidate patent claims in proceedings at the PTAB is still a necessity.

“While only time will tell, I expect court construction under Phillips will mean that fewer patent claims will be invalidate in AIA reviews than under BRI,” said Chief Judge Paul Michel, retired Chief Judge of the United States Court of Appeals for the Federal Circuit. “That is because constructions will be narrower than before, reducing the span of relevant prior art references and the force of relevant ones.  And,  APJs may rely more on expert testimony than on their own assessment of how the ordinary artisan would understand claim scope.  In most cases the APJs on the panel are not themselves the ordinary artisans in the actual field of technology of the patent claims, so such reliance on those who are should make the constructions more accurate and rigorous and, I think, narrower.  In any event, the unseemly spectacle of courts upholding claims that the PTAB later invalidates should be ended or at least greatly reduced.  In addition, the earlier construction will be more useful to the later tribunal because the standard will be the same.  Possibly, the frequency of stays in district court will be reduced, reducing the excessive delays in enforcement and the expenses of both parties.  The USPTO should be commended for making this adjustment.”

A significant majority of comments received by the USPTO supported the proposed change, but there were some who were uncomfortable with the retroactive application of the rule. In response to these concerns, the USPTO decided not to make the final rule retroactively apply.  Instead, the Phillips standard will apply only to IPR, PGR, and CBM petitions filed on or after the effective date of the final rule, which is November 13, 2018. While I am ordinarily not a fan of retroactive changes in rules and law based on parties having relied and acted accordingly, the further perpetuation of a dual standard only allows continued mischief and madness. It makes no sense to have different standards for the same exact legal question in different fora. That was a bad idea in September 2012, and it remains a bad idea in October 2018.

I suppose at least now we will see whether those challenging patents believe the BRI standard is advantageous. For the past six years we have listened to attorneys who represent challengers say that whether you apply BRI or Phillips is a difference without distinction. If there is a filing spike over the next month, which I suspect there will be, that argument will be shown to be specious. “I also expect a spike in petition filings just before the transition,” Slifer said.

But in some cases, there is no doubt that the whether BRI or Phillips is applied will not make a big difference. “Practically speaking in most cases BRI and Phillips claim construction in PTAB AIA proceedings are not materially different,” said Steve Kunin, partner with Maier & Maier, and former Deputy Commissioner of Patent Examination Policy at the USPTO, “I see the the real impact will be in district court proceedings when the patent owner is arguing for a narrow claim construction and can now point to the AIA trials as supporting the position.”

UPDATED Wednesday, October 10, 2019 at 10:06pm adding quotes from Chief Judge Michel and Steve Kunin. 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 15 Comments comments. Join the discussion.

  1. Pro Say October 10, 2018 12:39 pm

    Great move for all current and future inventors; and America; Mr. Director — a big thank you!

  2. Patent Investor October 11, 2018 8:16 am

    Pro Say,

    I’d say more for the future inventors than the current inventors. Leastwise those whose patents are still being prosecuted under the BRI standard even though the PTO has basically admitted it isn’t the correct standard. I’m no lawyer, but there seems to me to be a legal/fairness problem in such action. Either it is the proper standard for review or it is not.

  3. Eric Berend October 11, 2018 8:40 am

    A concrete step in right direction (that of legal veracity rather than the specious folly of a dual standard). Improves regard of the USPTO, for those who can bring themselves to deal with the cesspool there.

    For some of us, however, we will never deal with the USPTO while their infringer-assigned kangaroo quasi-court exists. The GIANT LIE of the very word “Trial” in the title of the “PTAB”. A modest rescission of the swindle upon the patent holder from the start that is BRI, is a beginning – but far from a field leveler.

    To think, that it took over six years and a regime change to struggle to merely this nominal “reform” (!). How about genuine ALJ’s instead of captive-for-Apple infringer-agents masquerading as neutral arbiters of administrative trials? You know, the way it is already established for EVERY OTHER AREA of Federal administrative equivalence to due process. Oh – too much, huh?

    Not good enough. While PTAB and 101-Nose-of-Wax shenanigans exist, infringer-selected Federal Judges sit on the CAFC, and the AIA is the law of the land, I will never disclose, and my inventions will remain secret and die with me.

  4. Pro Se October 11, 2018 8:40 am

    For those of us who claims were mauled by the PTAB, with me personally losing a handful of claims that would have survived under (proper procedure) Philips, there’s a feeling of a Guinea Pig scenario having played out.

    Mine and well as others, values destroyed as collateral damage while the government “figures it out”. No Retro.. Let’s forget the carnage of yesterday, oh “suck it up”.

    While this is great for new inventors, for me, my valuable life work, and helping to carry the hard times at the PTAB under the erroneous BRI standard, mostly surviving 14 IPR filings with “missing limbs” so the USPTO could justify with a statistic that the BRI damage wasn’t wiping out “all” patents – America has always treated its “veterans” without much reward.

    All of my biggest infringement battles have happened, billions down the toilet.

  5. B October 11, 2018 10:38 am

    This is the most sane, most fair thing the USPTO had done in a decade.

    Thank you Andrea Iancu.

  6. Josh Malone October 11, 2018 7:18 pm

    Pro se, did you settle your infringement case? You should fight it out. It is not possible that a PTAB decision applying BRI could be binding on a district court action that gives claims their plain and ordinary meaning. You should have fought it out. See Blonder-Tongue. That none of the 1,600 patentees betrayed by the USPTO have plead this yet is astounding.

  7. Pro Se October 11, 2018 7:25 pm

    Hey Josh: all of the IPRs I beat institution except 1, which is a litigation now post IPR, but I had to drop claims to keep that case on, and I did it before the SCOTUS ruled SAS (thank God).

    The claims I was forced to drop to keep the case going, did well in Markman and know would have avoided institution under Phillips.

  8. Josh Malone October 11, 2018 7:48 pm

    But you were not forced to drop the claims you lost in PTAB. You agreed to drop them. And then you waived your right to appeal them. Judge Newman has teed this up for the Supreme Court in several dissents. After Oil States and Kavanaugh it is unlikely the Supreme Court will allow PTAB to bind an Article III court under the “reconsideration” of a “public franchise right”. No way can it retroactive.

  9. Anon October 12, 2018 7:49 am

    Some intereting thoughts being exchanged, and while I agree that the move is a good move, I have to wonder if “good” is an impediment to “great” (if this is seen as “enough,” and additional needed changes are not forthcoming).

    But there are mistaken notions being advanced yet.

    For example: “and treated previously examined and issued patent claims, which the statute says are supposed to be presumed valid, and essentially treated them equivalent to unexamined patent claims.

    Whether or not the standard is mirrored to the standard of the Article III forum does NOT change the fact that a granted patent — at the point of the institution decision — IS stripped of certain sticks in the bundle of property rights (be that property either Public franchise or Private personal). The AIA as written is not “essentially” treating the granted property right without this stick in the bundle, it AFFIRMATIVELY is treating the item by TAKING that stick in the bundle of property rights.

    This very much is an administrative taking.

    It is an administrative taking without the normal protections afforded under the Constitution for Takings law.

    I caution against too much enthusiasm if this “good step” is then leveraged as “sufficient” to not bother taking a critical review of Constitutional infirmity under the Takings doctrine.

    (further, make no mistake – the law as written in the AIA still is involved with multiple fora, and even if this one aspect is aligned between the fora, the fora remain different.

  10. Anon October 12, 2018 7:56 am

    Josh @ 8,

    No way can it retroactive.

    This appears to be a too-ready acceptance of the weak dicta offered by Justice Thomas in the Oil States case.

    May I remind you that Oil States was just such a retroactive situation?

    In other words, the dicta offered was neutered by the holding of the case itself, as the Court could have sua sponte allied its “offered dicta” to the facts of that case (they are NOT constrained by “what was briefed and argued” as some have suggested).

    The problem with the dicta and the facts of the case is that those very facts as applied to the offered dicta would have had an opposite legal result.

    Any future case then that DOES apply that dicta results in (yet more) Gordian Knot conflicting Supreme Court case law.

    That’s not to say that the Court will recognize such and avoid scrivining additional nonsense (going by its history)…

  11. Josh Malone October 12, 2018 10:54 am

    Anon – I am not talking about retro-activity of the AIA. I am talking about any particular PTAB decision about a patent claim. The PTO can terminate the public franchise. All the parties that infringed (i.e., crossed the toll bridge) without paying between issuance and termination of the public franchise still owe damages. Unless the the defendant meets its burden to prove invalidity under §284. PTAB decision is merely a “reconsideration of that grant”, not an adjudication of the property right during the term of the franchise. At best it is weak evidence of invalidity under §284, it does not resolve the issue. This is especially true when the claims were misconstrued by the PTAB. See https://www.scribd.com/document/390728758.

    The infringers and the government convinced the Supreme Court to endorse the PTAB under the argument that they were correcting errors rather than solving disputes between private parties. If they are not resolving disputes between private parties, then they are not resolving disputes between private parties. Infringers and the PTAB apologists cannot have it both ways.

  12. Anon October 12, 2018 4:32 pm

    without paying between issuance and termination of the public franchise still owe damages.

    No. The reason for the termination is that the Public Franchise was improper and thus void ab initio (there is NO “property right during the term of the franchise” left – again – what you seem to want is what was there — and NOT utilized — in Oil States).

    That means NO ONE owes the patentee anything. There are NO “damages” properly available. That mere “reconsideration of the grant” has far more impact than you are allotting for.

    If they are not resolving disputes between private parties, then they are not resolving disputes between private parties.” – You are not following WHY such would be the case. Such would be the case because the dispute would be about something that has been voided ab initio. The mere “correction of error” removes the issue upon which the dispute rests, and removes it in a manner in which the Franchisee is left with nothing.

  13. Patent Investor October 12, 2018 5:35 pm

    Is it logical that the owner of every patent that has been extinguished by the PTAB due to a typical panel twisting of claim construction and claims a priority date from another patent or application can refile the old patent application as a new application?

  14. Josh Malone October 13, 2018 1:15 pm

    Anon, do you believe Judge Newman is incorrect that estoppel must pled? I cannot fathom the Supreme Court not agreeing with her on this. Plaintiffs must preserve this argument until the issue is resolved by SCOTUS – don’t be dismissing infringement claims just because you lost in the PTAB!. It is inconceivable that 5 Justices will permit the Agency to overrule the courts.
    https://www.scribd.com/document/389993910/XY-LLC-v-Trans-Ova-PTAB-Overrules-Article-III-Court-and-Jury-Judge-Newman-Dissent

  15. Anon October 13, 2018 5:53 pm

    Judge Newman is FAR too often correct — in dissent.

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