US To Weaken Post-Grant Patent Reviews

Government agencies do not ordinarily relinquish power easily, or without a struggle. But these are not ordinary times in the USA. Trump appointees have pushed a variety of federal agencies – including Interior, EPA, and HUD – to surrender much of their powers. Yesterday, the USPTO joined that list, when it announced proposed new regulations that would weaken the agency’s review of existing patents.

The proposed regulations would make two changes to USPTO reviews of existing patents. First, the agency would no longer use the Broadest Reasonable Interpretation (BRI) standard to construe patent claims at issue in post-grant patent challenges. The USPTO would instead construe the claims using the narrower standard applied by US federal courts and the country’s International Trade Commission: the words of a claim are generally given their ordinary and customary meaning as understood by one with ordinary skill in the art.

This might seem like a modest change, but it’s not. “Getting rid of BRI is gigantic. That is a seismic change,” said James J. Mullen III, a partner in the law firm of Morrison & Foerster.

Compared with “ordinary and customary meaning,” BRI expanded the scope of patent claims. This made patents more vulnerable to challenges that the patents’ claims were invalid because they were anticipated by prior art. BRI thus “lead to a large number of [patent] claims being held invalid” – even though the same claims would have been found valid under ITC/court standards, said Dale Lazar, a partner in the DLA Piper law firm.

How significant is the gap between the USPTO and ITC/judicial reviews of patents? Under the USPTO’s current post-grant review, “80 percent of patents challenged have been declared invalid. Meanwhile, in federal courts, the patent invalidation rate is closer to 40 percent,” according to Innovation Alliance, an organization representing patent owners.

Getting rid of BRI thus will be a boon for patent owners. Conversely, it will make life harder for alleged infringers. For years, they have routinely defended themselves by attacking patent validity at the USPTO.

“Defendants will need to rethink their strategy,” warns Lazar. “They will have to decide if they want to present their invalidity defense to a court or to the Patent Office.”

Deferring to a Higher Authority

The proposed regulations would make a second change: In any post-grant review of a patent, the USPTO “will consider any prior claim construction” made by the courts or the ITC. Currently, the USPTO ignores claim constructions made by courts and the ITC, because those entities interpret claims more narrowly than does the USPTO. But with the USPTO adopting the same construction standard as the courts and the ITC, it is reasonable for the USPTO to take judicial and ITC interpretations into account, according to patent experts.

This is not to say that, under the proposed regulations, the USPTO will automatically adopt claim constructions made by the ITC or a federal district court. That is sensible; one federal district court does not automatically adopt a legal ruling made by a sister district court.

However, the USPTO probably will have to adopt any claim constructions made by the Federal Circuit Court of Appeals. “Since the Federal Circuit reviews [USPTO post-grant] decisions and both the Federal Circuit and the USPTO are using the same standard for claim construction, the USPTO should be pretty much bound by any Federal Circuit decision,” said Lazar. Should the USPTO fail to follow a Federal Circuit interpretation, the agency could expect its ruling to be reversed on appeal by the Federal Circuit.

Currently, the USPTO often strikes down patents that are found valid by the courts and the ITC. That should happen far less frequently under the proposed new regulations. These regulations would be “a major step” in removing inconsistent decisions from the US patent system,” said Lazar. That might be good for the country’s legal system and for patent owners, but many alleged infringers won’t be cheering.

 

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