On September 26, 2017, in In re Smith International, Inc., the Federal Circuit reversed the PTAB’s decision affirming an examiner’s final rejection in an ex parte reexamination. During the ex parte reexamination, the examiner rejected claims 28-36, 39-46, 50, 79-81 and 93-99 of U.S. Patent No. 6,732,817 (“’817 patent”) as anticipated or obvious in light of the prior art. The claims of the ‘817 patent are directed towards a downhole drilling tool used in oil and gas operations. Specifically, the main issue in the PTAB’s decision and ultimately the main issue before the Federal Circuit dealt with the claim construction of the term “body.”

Claim 28 provides “An expandable downhole tool for use in a drilling assembly positioned within a wellbore having an original diameter borehole and an enlarged diameter borehole, comprising: a body; and at least one non-pivotable, moveable arm having at least one borehole engaging pad adapted to accommodate cutting structures or wear structures or a combination thereof and having angled surfaces that engage said body to prevent said arm from vibrating in said second position; wherein said at least one arm is moveable between a first position defining a collapsed diameter, and a second position defining an expanded diameter approximately equal to said enlarged diameter borehole.

During the ex parte reexamination, the patent owner argued that the examiner’s rejections were improper because of an incorrect construction of the term “body.” The patent owner argued that the examiner’s construction of the term overlooked the fact that the tool’s “body” is distinct from other parts of the tool, and also overlooked what a person of ordinary skill in the art would have understood the term to mean. See 2016 Pat. App. LEXIS 3764 at 3.

In reexaminations, when construing claim terms, the PTAB applies the broadest reasonable interpretation to the terms in light of the specification and language of the claims. Here, the PTAB disagreed with the patent owner, stating that although the patent describes a “body” as a discrete element, it does not define the term and the patent owner has not acted as its own lexicographer. The PTAB affirmed the examiner’s construction of “body” as a broad term, stating that “it is not at all unreasonable for the ‘body’ as used in the claims without reference to any of the other specific components of the downhole tool, to be a generic term used to encompass all of the various structures included in the downhole tool other than those also specifically recited.” See 2016 Pat. App. LEXIS 3764 at 6-7. After adopting the examiner’s construction, the PTAB also affirmed the examiner’s findings of anticipation and obviousness.

On appeal, the Federal Circuit disagreed with the PTAB’s holding and reversed. The Federal Circuit concluded that the PTAB’s construction of the term “body” was unreasonably broad, stating that even under the broadest reasonable interpretation standard, the PTAB “cannot construe the claims so broadly that its constructions are unreasonable under general claim construction principles.” See Opinion at 12. The Federal Circuit reasoned that there is no dispute that the specification describes and refers to “body” as a component distinct from others and as such, the PTAB’s interpretation was erroneous.

According to the Federal Circuit, the correct analysis for providing a claim term with its broadest reasonable interpretation is an “interpretation that corresponds with what and how the inventor describes his invention in the specification, i.e., an interpretation that is consistent with the specification.” See Opinion at 13. The court makes clear that the analysis is not whether the specification precludes a broad reading of the term adopted by the examiner, nor is it simply choosing an interpretation that is not inconsistent with the specification. See Id.

The Federal Circuit found that the PTAB’s reasoning that the patent owner did not act as its own lexicographer and that the specification did not define the term was flawed. The court reasoned that if it were to follow the PTAB’s logic, any description amounting to less than an express definition or disclaimer would lead to the claims terms being construed by the “broadest possible interpretation,” which is not the standard. See id. Applying the correct claim construction standard, the Federal Circuit concluded that “body” is a component distinct from the other components recited in the claims. Because the PTAB’s findings of anticipation and obviousness were based on an incorrect claim construction, the Federal Circuit held that the PTAB’s findings were not supported by substantial evidence and therefore reversed them.

As a result of the Federal Circuit’s reversal, in the future, the PTAB may be inclined to interpret claim terms more narrowly. If so, patent owners may be affected in that it may become easier for a patent owner to argue against petitioners and examiners contesting the validity of their patents. On the other side, petitioners may face more of a hurdle when attempting to prove anticipation or obviousness in post-grant proceedings based on a broad claim construction.