American Intellectual Property Law Association
What is the Proper Standard
for Claim Construction
in the new AIA post grant proceedings? –
Fed. Circuit Appeals by Versata and Couzzo
Tom Engellenner, Pepper Hamilton, LLP
Presentation to the IP in Japan Committee
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AIPLA Mid-Winter Institute
January, 2014
AIPLA1
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Claim Construction Tug of War
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Broadest
Reasonable
Interpretation
V.
Ordinary And
Customary
Meaning
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AIPLA2
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Claim Construction Tug of War
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Origins of the Broadest Reasonable Interpretation
Standard at the USPTO
The Phillips standard used by federal courts and the
ITC for claim construction
Versata v. SAP – First appeal of Covered Business
Method decision by the Patent Trial & Appeal Board
Couzzo v. Garmin – First appeal of an Inter Partes
Review by the PTAB
Appellant’s Arguments
Government (Intervenor) Arguments
Views presented by Amica
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AIPLA3
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Broadest Reasonable Interpretation
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 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 consistent with the
specification as understood by one of ordinary
skill in the art.
 The impact of such a broad interpretation is that
claim language can “read on” prior art that
otherwise might not be relevant if the claim
element is given its ordinary meaning.
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AIPLA4
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Broadest Reasonable Interpretation
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“[The BRI standard] ensures that the public can
clearly understand the outer limits applicants and
patentees will attribute to their claims. And since
applicants and patentees have the opportunity to
amend their claims when working with the USPTO,
they are able to resolve ambiguities and
overbreadth through this interpretive approach,
producing clear and defensible patents at the
lowest cost point in the system.” (emphasis added)
-- (USPTO Director’s blog, June 19, 2012.)
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AIPLA5
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Broadest Reasonable Interpretation
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Use of the BRI is a long standing USPTO policy:
approved as an examination standard for patent
applications in 1932 (In re Horton, 58 F.2d 682)
approved as the standard for reissue applications in
1981 (In re Reuter, 651 F.2d 751).
approved of the standard for reexaminations in 1984
(In re Yamamoto, 740 F.2d 1569).
However, the Federal Circuit has been careful not to
call BRI a claim construction standard but instead
referred to it as an “examination expedient.”
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AIPLA6
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The Phillips Standard
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A different standard is applied to issued patents by the
federal courts – the so-called Phillips rule that requires
judges and juries to give each element of a claim its
“ordinary and customary meaning” as understood
by the skilled artisan.
-- (Phillip v AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005)
Analysis focuses on inventor’s intent gleamed from:
Intrinsic evidence: applicant’s own definition, other
claims and specification and prosecution history
Extrinsic evidence: dictionaries, journal articles, experts
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AIPLA7
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AIPLA Position
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“The Board should use a Phillips/Markman-style
claim construction standard in review proceedings
because the challenged claims are issued and cannot
be freely amended.”
-- AIPLA Comments on PTAB Trial Proceedings
October 16, 2014
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AIPLA8
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Versata and Couzzo
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
Versata v. SAP concerns the very first “covered
business method” (CBM) review proceeding
(CBM2012-00001) conducted by the USPTO and
is an appeal by the Patent Owner, Versata, of the
Patent Trial and Appeal Board (PTAB) decision to
invalid certain challenged claims.
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Cuozzo v. Garmin concerns the first inter partes
review (IPR) proceeding (IPR2012-00001) and
likewise is an appeal from a PTAB decision finding
Couzzo’s claims invalid.
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Versata
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 Versata’s case concerns claims
of USP 6,553,350, directed to
methods and apparatus for
pricing products.
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 The claims recited the use of
“pricing information” that was
stored in a data source and
sorted against a hierarchy of
product groups and purchasing
organizations to determine a
price of a product.
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AIPLA
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Versata
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 The claims had actually been the lynchpin of a suit
brought by Versata against SAP in the federal district
court for the eastern district of Texas
 A Texas jury found the claims not invalid and infringed
and awarded over $350 million dollars in damages!
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AIPLA
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Versata and the BRI Standard
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 The federal district court found the claim term “pricing
information” was a technical feature construed it to
involved use of “denormalized numbers” and, hence, the
claims were not preempting an abstract idea.
 The PTAB refused to adopt the District Court’s
construction of “pricing information” as “denormalized
numbers” and instead more broadly interpreted the term
to mean any “information about pricing.”
 Under this broad interpretation, the PTAB found the
claims lacked any technological feature and, hence,
were invalid as claiming an abstract idea.
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AIPLA
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Cuozzo
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 Couzzo’s patent was directed a system for displaying
both a drivers speed and the actual speed limit using
map databases and GPI technology.
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AIPLA
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Cuozzo
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 The PTAB interpreted the term “integrally attached” to
require that the “speedometer” and the “speed indicator”
be separate elements, During the IPR, Couzzo tried to
amend the claim at issue to recite a single LCD that
performed both functions.
 The Board rejected the amendment because it would
have broadened the claim as construed. On this basis
Cuozzo has also challenged the BRI standard.
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The Versata Dilemma
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 The Versata case highlights the problem that many had
predicted would occur when two different standards are
used for claim construction.
 The Federal District Court found the claim patent
ineligible and awarded the patentee $350 million
dollars.
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 The PTAB found the same claims were not patentable
because they preempted an abstract idea.
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AIPLA
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Appeal to the Court of Appeals Fed. Circuit
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 Both Versata and Couzzo set the stage for an appeal by
challenging the application of BRI standard to post-grant
proceedings. Most of the Board’s 38-page final written
decision in its Versata decision was devoted to a
defense of the BRI standard.
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AIPLA
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Parties to the Appeals
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 Appellants (Versata & Cuozzo)
 Appellees (SAP & Garmin)
 Intervenor (USPTO)
 Amici Curiae
 Blue Chip Corporations (3M, GE, J&J, etc.)
(against the BRI standard)
 Social Media Giants (Ebay, Facebook, Google, etc.)
(for the BRI standard)
 Electronics Companies (Intel, HP, Broadcom, etc.)
(for the BRI standard)
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AIPLA
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Appellants’ Arguments
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 Both Versata and Cuozzo are arguing that PTO
exceeded its statutory authority in promulgating a
substantive rule. They cite precedents that have held
that Congress has never granted the PTO anything but
procedural rule-making authority.
 Moreover, they argue that the new post-grant
proceedings are fundamentally different from reissue
and re-exams at the PTO in the past. The appellants
point out that the new proceedings are “adjudicatory,”
therefore the judicial claim construction standard of the
Phillips case: should be applied.
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AIPLA
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Appellants’ Arguments (cont’d)
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 Moreover, they argue that opportunity to amend is
illusory. In fact, during oral argument, Couzzo’s counsel,
Timothy Salmon, pointed out that in the two years of
CBM and IPR proceedings, the PTAB has permitted
zero opposed motions to amend and only one
unopposed motion to amend.
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AIPLA
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USPTO Arguments
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 The brief by the Office of the Solicitor points out that BRI
has been the PTO rule for nearly a century.
 The USPTO position, of course, is that that the Patent
Office did act within its authority – and in any event the
AIA gave the USPTO more new powers with respect to
enacting rules governing new post-grant proceedings.
 The fact that the proceedings may be more adversarial
does not mean the standard should be changed.
Moreover, the agency argues that adversarial
proceedings are what Congress wanted.
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AIPLA
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USPTO Arguments
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 The Solicitor’s brief further repeats the agency’s mantra
that the fundamental rationale for the broadest
reasonable interpretation is that it goes hand-in-hand
with the right to amend and the Patent Owner has the
opportunity to correct unduly broad interpretations by
amendment.
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AIPLA
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Appellees and Pro-BRI Amici Arguments
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 The Appellee and pro-BRI argue that the BRI standard
promotes clarity and precision by encouraging Patent
Owners to remove ambiguities.
 They also argue that the PTO rules do afford patentees
an opportunity to amend, despite the poor track record.
 BRI standard is aligned with Congress’s goal of
providing a faster, lower cost alternative to litigation.
Under the Phillips standard, the PTO would have to hear
evidence of skill in the art, extrinsic evidence of
meaning, prosecution history, etc. adding to the
complexity of the proceedings.
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AIPLA
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Anti-BRI Amici Arguments
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 The Amicus brief submitted by the blue chip companies
who oppose the BRI standard argues to the contrary –
that the new post-grant proceedings are truly different
from all other PTO examinations because patent owners
do not have the same right to amend.
 The standard for determining the scope of claims in a
post-issuance proceeding is plainly substantive and can
be outcome-determinative. They also argue that there is
no basis in the statutory language or the legislative
history to support the promulgation of the BRI rul
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AIPLA
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Anti-BRI Amici Arguments (cont’d)
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 As for the argument that the BRI rule is the universal
standard of the USPTO, the blue chip amici counter by
noting that the agency already applies the Phillips
standard in some cases (e.g., when expired patents are
reissued or reexamined) without systemic failure.
 Moreover, these amici argued that it is simply
inconsistent with sound patent policy to have one
standard for district courts and a different one for post
grant proceedings. Such a system will inevitably lead to
incongruous results and opportunities for
gamesmanship .
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AIPLA
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The outcome?
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 Ultimately, the Federal Circuit will have to decide
whether it can live with two irreconcilable standards that
will time and time again lead to different conclusions as
to the validity of the same claims based on different
constructions by the federal trial courts and USPTO.
 A decision can be expected any day now. . .
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AIPLA
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Thank you -- ありがとうございます
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Tom Engellenner
125 High Street
Boston, MA 02110
+1-617-204-5189
engellennert@pepperlaw.com
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www.postgrant-counsel.com
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AIPLA
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