In Microsoft Corp. v. Proxyconn, Inc., — F.3d —, 2015 WL 3747257 (Fed. Cir. June 16, 2015), the Federal Circuit once again affirmed that the broadest reasonable interpretation (“BRI”) standard of claim construction applies in IPRs, providing further guidance on applying the standard. It also approved of the Board’s requirement on motions to amend claims that the Patent Owner must demonstrate that its substitute claims are patentable over the prior art of record.

The Federal Circuit stated that Patent Owner Proxycon’s argument that the BRI standard should not apply in IPRs was foreclosed by its decision in In re Cuozzo Speed Techs., LLC, 778 F.3d 1271 (Fed. Cir. 2015). In Cuozzo, the Court held that the PTO properly adopted the BRI standard in IPRs (see our post on that case here). (The Federal Circuit has since issued an opinion on rehearing in the Cuozzo case, again holding the same. In re Cuozzo Speed Technologies, LLC, — F.3d —, 2015 WL 4097949, at *8 (Fed. Cir. July 8, 2015)).

The Court, however, cautioned that the Board may not construe claims “so broadly that its constructions are unreasonable under general claim construction principles.” To pass muster, the Court warned, the construction must “reasonably reflect” the plain language of the claim and the disclosure in the specification. The Board should, the Court suggested, also consult the patent’s prosecution history. Applying these principles, the Court held that the Board’s constructions of certain terms were unreasonably broad and vacated the Board’s unpatentability findings on that basis.

The Court next turned to the Patent Owner’s motion to amend the claims. The Board had denied the Patent Owner’s motion to amend for failure to meet its burden under Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 26 (Jun. 11, 2013), in which the Board interpreted 37 C.F.R. § 42.20(c) as requiring the Patent Owner, inter alia, to show patentable distinction of the substitute claims over the prior art of record. The Board denied the motion to amend because the Patent Owner did not distinguish its substitute claims over a particular reference.

On appeal, the Patent Owner argued that the Board impermissibly relied on Idle Free and the particular reference at issue in denying the motion to amend. According to the Patent Owner, the Board was precluded from relying on the particular reference by 37 C.F.R. § 42.121(2)(a)(i), which states that “[a] motion to amend may be denied where . . . [t]he amendment does not respond to a ground of unpatentability involved in the trial.” The Patent Owner argued that the Board did not rely on the particular reference in instituting review of the claims sought to be amended. Notably, however, the Board did rely on the reference in instituting review of other related claims.

In affirming the Board’s denial of the motion to amend, the Federal Circuit held that § 42.121(a)(2)(i) is not an exhaustive list of grounds for denying a motion to amend. The Court approved of Idle Free’s interpretation of § 42.20(c) to the extent it requires the Patent Owner to establish that its substitute claims are patentable over the prior art of record—including art that was not cited against the original claim in the institution decision. In a footnote, however, the Court made clear that it was not tasked with “decid[ing] whether every requirement announced by the Board in Idle Free constitutes a permissible interpretation of the PTO’s regulations.”