Sacrificing Patent Term to Salvage Past Damages: Using Terminal Disclaimers to Change Claim Construction Standard During Inter Partes Review

Authored by Michelle Carniaux and Michael E. Sander

One of the more significant differences between litigating patent validity in an inter partes review proceedings over a district court, is that a different claim construction standard applies. In an inter partes review proceeding, claims are given the “broadest reasonable construction” (“BRC”). 37 C.F.R. § 42.100(b). The patent office uses the BRC standard because in patent office proceedings, patent owners may amend their claims to read on to existing technology and, the BRC standard “reduce[s] the possibility that, after the patent is granted, the claims may be interpreted as giving broader coverage than is justified.” In re Reuter, 670 F.2d 1015, 1019 (C.C.P.A. 1981).

However, expired patents are a different story. Expired patents are often valuable because a patent owner may be able to obtain monetary damages for infringements that occurred during the term of the patent (up to six years prior to filing a complaint or counterclaim for infringement). However, since expired patent claims may not be amended, there is less of a concern that an expired patent can be posthumously used to improperly cover emerging technology. As a result, the patent office construes claims in expired patents similar to the way a district court would construe them by applying the principles set forth in Phillips v. AWH Corp, 415 F. 3d 1303 (Fed. Cir. 2005). See, e.g., IPR2013-00064, No. 11, at 10 (P.T.A.B. Apr. 30, 2013). Many believe that the application of the district court standard of claim construction results in narrower constructions, making it easier for a patent owner to defend its patent against invalidity.

In one inter partes review proceeding, a patent owner is attempting to change the claim construction standard applied to its claims. See IPR2013-00242 (P.T.A.B.). In granting the petition for IPR, the Board applied the BRC standard to the claims since the patent was not expired (and not expected to expire until after the final written decision). However, about one month before the oral hearing, the patent owner filed a terminal disclaimer to disclaim the remaining term of its patent. Now, the patent owner is arguing that that the patent should be treated like an expired patent, thus a district court claim construction analysis should be applied to its claims. The patent owner wants the IPR proceeding terminated (or the hearing delayed) since the Board applied a different standard when it granted the IPR petition and the petitioner did not address invalidity using a district court claim construction analysis.

In its April 14, 2014 Order, the Board noted “[p]ursuant to 37 C.F.R. § 42.3(a), ‘[t]he Board may exercise exclusive jurisdiction within the Office over every involved . . . patent during the proceeding, as the Board may order.” The Board stated that this is “an issue of first impression,” and has asked the parties to brief what actions the Board should take with respect to the terminal disclaimer and with respect to the proceeding in general, taking into account the late stage of the proceeding and the fact that all substantive briefing has been completed. Id. at 3.

In its brief on the issue, the petitioner argued:

Should the Board agree with [the patent owner], it will be creating a tool to alter claim construction at late stages in post-grant proceedings, to render prior discovery meaningless, and to disrupt trial dates and statutory deadlines. Nothing would stop a patent owner from disclaiming the remaining life of a patent, at the eleventh hour, in a desperate effort to salvage some claims.

If the Board sides with the patent owner, it may lead to other patent owners sacrificing patent term to salvage past damages.