Breaking: Federal Circuit Affirms, Reverses, and Vacates in Part PTAB Decision in Microsoft v. Proxyconn

Authored by Michelle Carniaux and Michael E.Sander

This morning, the Febreaking news red square grunge textured isolated stampderal Circuit issued its second substantive decision on an appeal of a final IPR decision, and its first remanding back to the Board, in Microsoft Corp. v. Proxyconn, Inc. See Microsoft Corp. v. Proxyconn, Inc. 2015-1542, 2015-1543 (Fed. Cir. June 16, 2015); see also IPR2012-00026, IPR2013-00109. In its decision, the Federal Circuit re-affirmed that the broadest reasonable interpretation claim construction standard applies in IPR proceedings. 2015-1542 at 6 (citing In re Cuozzo Speed Techs., LLC, 778 F.3d 1271 (Fed. Cir. 2015)). The Federal Circuit also made clear that it reviews the Board’s conclusions of law de novo and its finding of fact for substantial evidence. Id. at 2 (citation omitted). Accordingly, consistent with Teva Pharmaceuticals U.S.A., Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), in reviewing the Board’s claim construction determinations, the Court reviews the Board’s claim constructions de novo and its underlying factual determinations involving extrinsic evidence for substantial evidence. Id. at 5-6.

In this case, since “the intrinsic record fully determines the proper construction,” the Court reviewed the Board’s claim constructions de novo.” Id. at 7. After considering the Board’s constructions, the Court vacated the Board’s determination of unpatentability of eight claims, and remanded the proceeding, because the determination was based on an “unreasonably broad construction” of certain terms. Id. at 9-10, 12. The Federal Circuit also affirmed the Board’s determinations as to four other claims.

The Court also reviewed the Board’s decision to deny Proxyconn’s motion to amend. Proxyconn challenged the Board’s authority to deny their motion to amend over prior art that was not “one of the references over which the [Board] had instituted review,” which is not one of the reasons to deny a motion to amend listed in the Board’s regulations. Id. at 21; 37 C.F.R. § 42.121(a)(2). Proxyconn argued “that § 42.121(a)(2) provides a complete list of the bases for which the Board can deny a motion to amend.” Id. at 22. The Board argued that their position was supported by their interpretation of the rule in the Board’s earlier Idle Free decision, which listed additional reasons to deny a motion to amend. Id. at 19-20 (citing Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027 (PTAB June 11, 2013)). The Federal Circuit warned that “[a] fluid, case-based interpretation by the PTO of its own regulations risks leaving interested members of the public in a state of uncertainty.” Id. at 24. However, the Court nevertheless affirmed the Board, finding that the “Board has reasonably interpreted these provisions.” Id. at 26.

In a footnote, the Court stressed that the current case “does not call on us to decide whether every requirement announced by the Board in Idle Free constitutes permissible interpretation of the PTO’s regulations.” Id. at 25 n. 4. Interestingly, the Court stated that its opinion does not address “Idle Free’s requirement that the patentee … show patentable distinction over all ‘prior art known to the patent owner.’” Id. We wonder if this is a hint that the Federal Circuit disagrees with this requirement.