Microsoft Corporation v Proxyconn, Inc, No 14-1542 (Fed Cir 2015)

Microsoft appealed a decision from the U.S. Patent Trial an Appeal Board (“the Board”) that invalidated several claims of its U.S. Patent No. 6,757,717 (“the ‘717 patent”), a patent directed toward a system for increasing the speed of data access in a packet-switched network. [3] Aside from revisiting issues of anticipation and obviousness of the challenged claims, the appeal raised two important points of law. First, Microsoft challenged the “broadest reasonable interpretation standard” (“BRI”) being the standard for claim construction in Inter Partes Review (IPR) proceedings, [6] rather than the “ordinary and customary meaning” standard of construing claims in an issued patent. The U.S. Court of Appeals for the Federal Circuit (“the Court”) upheld the BRI standard. [6] Second, in upholding the Board’s decision to dismiss Proxyconn’s motion to make substitutions to two of its claims, the Court affirmed the rule that any newly substituted claims must be demonstrated to be patentable over the prior art of record. [19]

The Broadest Reasonable Interpretation Standard Applies in IPRs

As a threshold issue, Proxyconn challenged the Board’s use of the BRI standard of claim construction, arguing that the standard should not be applied during IPRs in light of the patentee’s limited ability to amend its claims. [6] The Court cited In re Cuozzo Speed Techs., LLC, 778 F 3d 1271 (Fed Cir 2015) as authority that bound it to the opposite conclusion. [6] The Court was sure to reign in any notion that this standard might be too broad: “Even under the broadest reasonable interpretation, the Board construction… ‘must be consistent with the one that those skilled in the art would reach’”. [7]

Revisiting the Invalidated Claims

The Board decision had invalidated almost all of the challenged claims. Claims 1, 3, 6, 7, 9-12, 14, 22 and 23 lacked novelty, and claims 1, 3, and 10 were additionally obvious. The only challenged claim that the Board left valid was claim 24. [5] On appeal, the Court vacated several of the Board’s findings.

The Court found that the Board erred regarding claims 6, 7, and 9 when it made an unreasonably broad construction of the phrase “gateway . . . between at least two other computers.” [9-10] The Board had thought that “two other computers” could include the system’s caching computer, but the Court thought this to be too broad since other parts of the specification described the caching computer and the “two other computers” as being distinct. For example, claim 6 recites a system comprising a gateway, a caching computer, and “two other computers”. [8-9]

For similar reasons, the Court found that the Board erred when it interpreted the terms “sender/computer” and “receiver/computer” to include the intermediary gateway and caching computers in claims 1, 3, 10, 22, and 23. [11]

Also regarding claim 22, Microsoft challenged the Board’s construction of the term “searching” as it relates to searching for data within a digital digest, [12] arguing that in this context “search” equates to “check for” which involves comparing only two individual values. [13] The Court agreed with the Board’s construction, which was that, in the context of the description, a “search” means the action of searching is to be performed on an entire network cache memory. [14]

Claim 24 remained valid because the only challenge against it was the “searching” argument above, which was not successful. [13]

The Court also upheld the Board’s determination that claims 11, 12, and 14 were anticipated. In particular, the step of receiving a response signal from the receiver computer was anticipated by a piece of prior art known as “DRP”. [17] The DRP reference is of great importance to the issue of Proxyconn’s dismissed motion to amend, discussed below.

Strict Amendment Requirements in IPRs

In a fitting illustration of the patentee’s limited ability to amend its claims in an IPR, the Court upheld the Board’s denial of Proxyconn’s motion to amend claims 1 and 3 of the ‘717 patent by substituting new claims 35 and 36 respectively. [5]

Of great significance here is that Claims 1 and 3 were originally only challenged before the Board by the “Santos”, “Yohe” and “Perlman” pieces of prior art. [11] However, Proxyconn’s motion to amend was rejected because Proxyconn did not establish patentability of the substituted claims over the “DRP” reference. [5]

The Court cited Idle Free Systems, Inc v Bergstrom, Inc, IPR2012-00027, 2013 WL 5947697 (PTAB June 11, 2013) as being informative on the issue. [19] In that case it was decided that patent owners making amendments to challenged claims have the burden to persuade the Board that the proposed substitute claim is patentable over the prior art of record, and over the prior art not of record but known to the patent owner. [19] In Proxyconn’s situation, DRP was a piece of prior art of record, but Proxyconn did not establish patentability over it. [21, 24]

The Court justified this rule as being necessary in the IPR process since once the U.S. Patent and Trademark Office grants a patentee’s substituted claims the claims are not subject to further examination. [26] During an IPR, a patent owner may file only a single motion to amend the patent, and the amendment may not enlarge the scope of the claims. [18] It seems that the rule prevents newly amended claims from slipping past the prior art of record during the IPR process. The Court further justified the rule’s application to this case since the DRP reference was already very much a part of the proceeding, so could have distinguished the substitute claims from DRP, but chose not to. [27]

The DRP reference was not the only reason Proxyconn’s amendment was dismissed, however. The Court upheld the Board’s finding that Proxyconn also failed to establish a prima facie case for the substituted claims more generally. [21] Listing the requirements, the Board stated that  Proxyconn should have construed the newly added terms, identified the closest prior art, the level of skill in the art, how a skilled artisan would have viewed the new elements in the claims, and shown that the claims were patentable generally over the art. [22] It seems Proxyconn’s failure to distinguish its proposed new claims from the DRP reference was just one example of how it did not establish the patentability of the new claims more generally.

Commentary

The two important takeaways from this case are that the standard for claim construction during IPRs is the “broadest reasonable interpretation” standard and that making amendments to claims during an IPR can be a difficult thing to achieve. Any new claim language needs to be justified as being patentable over the prior art of record, and in fact theoretically any “prior art known to the patent owner” more generally. [19] This may seem a high bar to reach on a motion to amend, but it may be the only way to preserve the expedited nature of the IPR process.