In the aftermath of the Oil States and SAS Supreme Court decisions, the PTO’s proposal to adopt the Phillips standard for claim construction brings a small measure of relief for universities and research institutions. The “broadest reasonable interpretation” claim construction standard currently used by the PTAB in deciding IPRs may open the instituted claims to challenge by a larger body of prior art. In contrast, the Phillips “ordinary and customary meaning” standard used by district courts and the FTC may place more limits on the body of available prior art, and ultimately result in fewer patent claims being found invalid. Considering this discrepancy between the two claim construction standards, the PTO’s proposed shift to the Phillips standard is welcome news to patent owners, including universities and research institutions looking to license their rights. As the proposed shift in claim construction at the PTAB may lessen the risk of invalidation by an IPR proceeding, universities and research institutions may find more potential licensees willing to come to the negotiating table.
That being said, the proposed switch to the Phillips claim construction standard would have a much greater positive impact for universities and research institutions if it were accompanied by some of the changes proposed in the STRONGER Patents Act Bill recently introduced in the House of Representatives. While the STRONGER Patents Act would also adopt the Phillips standard for claim construction in IPR proceedings before the PTAB, the Bill also proposes a presumption of validity for previously issued claims, a clear and convincing evidence burden of proof, a limitation on those with standing to file a petition for IPR, and a restriction on the ability of the PTO to institute an IPR of a claim that has already been challenged in a previous IPR. Granting the patent owner the benefit of the normally afforded presumption of validity, together with the adoption of the district court clear and convincing evidence standard would provide further hurdles to patent invalidation, and potentially diminish any hesitation by prospective licensees to enter into a license agreement. And limiting standing only to those facing real or imminent infringement suits, in conjunction with a restriction on the institution of multiple IPRs of the same claim(s) provides would-be licensees with a measure of control and predictability that may enable them to enter confidently into the profitable licensing agreements that universities and research institutions strive for.
To read more of Lauren Schneider’s comments in the latest issue of Technology Transfer Tactics, please click here.