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On August 9, 2016, the United States Court of Appeals for the Federal Circuit issued a decision in In re: CSB-System International, Inc., No. 2015-1832. The issue before the Federal Circuit was whether the Patent Trial and Appeal Board (the Board) construed claim terms from CSB’s U.S. Patent No. 5,631,953 for determining patentability using the proper legal standard for claim construction.

Under U.S. practice, the courts typically use the so-called Philips standard when construing claims for the purpose of determining validity. The Philips standard is stricter than the broadest reasonable interpretation (BRI) standard, which is what U.S. Examiners use when examining a patent application. The BRI standard also applies during reexamination proceedings of unexpired patents. This is permitted because the patent owner of an unexpired patent may amend claims to narrow their scope. As the name implies, BRI often results in a broader interpretation of the claim than does the Philips standard.

In CSB, the Board used the BRI standard when construing the claims in a reexamination proceeding. On appeal, CSB argued that the Board should have construed the claim terms under the Philips standard instead of the BRI standard.

The Federal Circuit agreed with CSB that the Board should have construed claim terms under the Philips standard of claim construction instead of the BRI standard. But, even when applying the Philips standard, the Federal Circuit still found the claims of the '953 patent to be unpatentable in view of the prior art and affirmed the Board’s decision.

This case arises from a third party requested reexamination of the '953 patent. Issued on May 20, 1997, the '953 patent is directed to a circuit arrangement for providing data from incoming telephone calls over a local area network (LAN) to personal computers (PCs).

In operation, when an incoming phone call is received from an integrated services digital network (ISDN), an intelligent telephone installation routes the call to one of the telephones interfaced with the ISDN and sends call information to an integration component. When a call is routed to a PC, the PC retrieves call information from the integration component via the LAN.

Independent Claim 1 of the '953 patent defines, in relevant portion:

  1. A circuit arrangement for integration of EDP systems in utilization of telephone systems connected to a public ISDN or Euro ISDN telephone network, the circuit arrangement comprising…

a plurality of personal computers

an integration element arranged between said intelligent telephone system and said personal computers…said integration element also sending a data record assigned an appropriate information via a third line, via a LAN connected to a LAN server by a fourth line and via a fifth line to said personal computers and receiving a data record from said personal computers again…

'953 patent col. 5, l. 52 – col. 6, l. 12 (emphases added).

During reexamination, the Examiner refused to adopt CSB's more limited construction of the terms "personal computers" and "LAN server." CSB argued that "personal computers" should be construed to exclude those which run software to emulate terminals, and that the "LAN server" requires characteristics such as providing shared services to other components on the LAN and responding to requests from clients.

The Examiner rejected Claims 1-6 as anticipated by U.S. Patent No. 5,097,528 to Gursahaney and Claims 7 and 8 as obvious over Gursahaney in combination with other prior art. CSB appealed the rejection to the Board, and on May 20, 2014, while the appeal was pending, the '953 patent expired.

In arriving at its decision, the Board applied the BRI standard, stating that it was proper because CSB had the opportunity to amend the claims while they were pending before the examiner during the reexamination proceeding.

The Federal Circuit disagreed and found that BRI does not apply when a patent expires during a reexamination because the patent owner’s ability to amend is substantially diminished. Under 37 C.F.R. § 1.530(j) "[n]o amendment may be proposed for entry in an expired patent." As in CSB’s case, a patent that expires during an appeal will not be issued with amended claims even if the patent owner amended them while before the examiner.

Turning to the disputed claim terms, the Federal Circuit did not accept CSB’s construction of "personal computers" because it did not find proper support for the construction in the '953 patent. Applying the Philips standard, the Federal Circuit agreed with the Board's view that a personal computer is defined, within the context of the '953 patent, by its hardware and computing capability, not by the software it runs at some point in time.

The Federal Circuit also rejected CSB’s construction of "LAN server" for two reasons – first, that the Board’s construction of the term was described as "agreed upon" by CSB, and second, that CSB’s arguments related to the anticipation analysis, not claim construction. Accordingly, the Federal Circuit found there to be no fundamental dispute regarding the scope of the term "LAN server," thus rendering construction of the term unnecessary.

CSB’s arguments against the prior art ultimately failed because they rested on CSB’s narrowed construction of the disputed terms, which were not adopted by the Federal Circuit. Accordingly, the Federal Circuit affirmed the Board’s decision.