Challenges to issued U.S. patents have grown at an alarming rate since the advent of inter partes review (“IPR”) on September 16, 2012. IPR is a procedure introduced under the America Invents Act that allows for challenging the validity of an issued patent in the Patent Office rather than in the courts.

One of the driving forces behind the popularity of the new procedure is that the implementing rules require the Patent Trial and Appeal Board (“PTAB”) to use the “broadest reasonable construction in light of the specification of the patent” when evaluating patents whose validity is challenged. By construing the patent claims more broadly than is practiced in a court of law, the PTAB makes the patent claims more likely to read on the teachings of prior art references. The result? Claims are more likely to succumb to an anticipation or obviousness challenge.

The very first IPR, decided in November 2013 by the PTAB, has now become the first to be considered on appeal by the Federal Circuit. On February 4, the court’s 2-1 decision in Garmin v. Cuozzo Speed Technologies affirmed the PTAB in all respects, agreeing that three claims of the challenged patent were invalid for obviousness.

Cuozzo Speed Technologies held a patent for “a speedometer integrally attached to [a] colored display” that uses GPS signals to alert drivers to the speed limit at the driver’s location. The company was unsuccessful with its patent claims before the PTAB because “integrally attached” was construed to require “discrete parts physically joined together as a unit without each part losing its own separate identity.”

Cuozzo sought a broader construction that would cover a display that integrated the functions and structures of the two claimed parts in a single display structure. To the PTAB and the court, such an integral structure lacked the required attachment of two parts.

Despite Cuozzo’s insistence on a broader claim construction, it paradoxically challenged the PTAB’s use of the “broadest reasonable interpretation” (BRI) standard for construction. Cuozzo argued that BRI was applicable only in an examination before a patent examiner, not in an adjudicative IPR procedure before the PTAB where only an extremely limited opportunity to amend the claims is available.

The Federal Circuit panel in Cuozzo jumped at the chance to be the first on the court to take a position on the proper standard for claim construction in IPRs, even though the outcome of the case did not evidently hinge on that issue. Notably, the judges’ outlook on the purpose of IPRs informed their articulation of the applicable claim construction standard.

For the two judges in the Cuozzo majority, IPR is a procedure by which the PTO can undo erroneously granted patents. Historically, the PTO has — as in reexamination and reissue proceedings — applied the BRI standard to any patent whose claims could be amended. In view of this nearly 100-year history, the majority concluded that Congress impliedly called for this standard to continue to be applied in IPRs.

Even if Congress had no expectations with regard to the standard for claim construction, it had given the PTO rule-making authority to establish the standard. By confirming that BRI would be applied in IPRs, the PTO had exercised this authority. For these reasons, the majority ruled that this standard was properly applied.

Judge Newman, on the other hand, made a strong case in dissent that an IPR is actually intended to be a surrogate for district court litigation of patent validity. To serve this function, the PTAB should be applying the same standard for claim construction that would be applied in court. That standard typically relies upon the ordinary and customary meaning of the claim as understood by one of ordinary skill in the art, but also places emphasis on the patent specification, the patent claims and the prosecution history. The logic behind a unitary approach to claim construction was set forth in my article, “Claim Construction on the Verge of Transformation: The Disruptive Promise of Inter Partes Review.”

IPRs would be viewed as fairer and more complementary to litigation if they involved a standard for claim construction that is applicable in court or at least influential upon the courts. This is not possible when different standards are applied.

The claim construction battle is not over. The views of the Federal Circuit panel as to the proper claim construction standard in Cuozzo appear to be dicta — that is, collateral opinions that do not directly affect the outcome of the case and which have no binding authority. (The Court affirmed that even under the BRI standard, the claim was narrower than the construction sought by Cuozzo, so adopting a narrower claim construction standard would not change the result to Cuozzo’s benefit.) As such, panels in subsequent Federal Circuit opinions should be free to come to their own conclusions. Significantly, a precedential decision may be forthcoming if the Federal Circuit agrees to rehear this case en banc, that is, with the participation of all the judges.

Courts are not the only source of authority on this issue; legislative action is also possible. Congress is considering legislation that would require the PTAB to apply to patents subjected to IPRs the same claim construction standard that is mandated in federal district courts. Therefore, while Round 1 goes to the PTAB and to the use of “broadest reasonable interpretation,” there may well be more to come.