A recent Federal Circuit case demonstrates the complexity of resolving difficult claim construction issues in multiple agency and court proceedings.  In Knowles Electronics v. Cirrus Logic the Federal Circuit declined to apply its own prior claim interpretation of the same term of the same claims of the same patent.

U.S. Patent No. 6,781,231 (“the ’231 patent”) entitled “Microelectromechanical System Package with Environmental and Interference Shield,” was issued to Knowles Electronics, LLC (“Knowles”) in 2004.  The ’231 patent discloses microelectromechanical system (“MEMS”) packages comprising a substrate, a microphone, and a cover accommodating the microphone. The MEMS packages shield the microphone from an interference signal or an environmental condition,  and improve over the prior art’s drawbacks associated with manufacturing these housings, such as lead time, cost, and tooling.

Independent claim 1 is illustrative of the invention and recites:

A microelectromechanical system package comprising: a microelectromechanical system microphone;
a substrate comprising a surface for supporting the microelectromechanical microphone;
a cover comprising a conductive layer having a center portion bounded by a peripheral edge portion; and
a housing formed by connecting the peripheral edge portion of the cover to the substrate, the center portion of the cover spaced from the surface of the substrate to accommodate the microelectromechanical system microphone, the housing including an acoustic port for allowing an acoustic signal to reach the microelectromechanical system microphone wherein the housing provides protection from an interference signal.

Three inter partes reexaminations were filed by Cirrus Logic, Inc. (“Cirrus”) against the ’231 patent and were later merged. (U.S. Control. Nos. 95/000,509, 95/001,251, and 95/001,363).  Ultimately claims 1-4 and 23-27 were reexamined and rejected based on anticipation in view of van Halteren (WO 01/414497 A1) and for lack of written description.  Knowles appealed the rejections to the Patent Trial and Appeal Board (PTAB).

On appeal to the PTAB, different claim construction arguments were proffered by Knowles, including one that the PTAB should adopt an interpretation of “package” in the preamble based on a prior decision in an International Trade Commission (ITC) proceeding which was considered and upheld by the Federal Circuit in MEMS Tech. Berhad v. Int’l Trade Comm’n, 447 F. App’x 142 (Fed. Cir. 2011).  Under this definition, Knowles maintained, van Halteren would not anticipate the claims.

But the PTAB declined to apply the Federal Circuit’s prior decision construing the same term of the same claims of the same patent, concluding that the Board was not bound by the district court’s claim constructions.  PTAB Op. *12 (citing In re Trans Tex. Holdings Corp., 498 F.3d 1290, 1301 (Fed. Cir. 2007) (“We conclude that the Board was not bound by the district court’s claim construction. . . .”)).  The PTAB affirmed the examiner and upheld the rejections.

After a failed request for rehearing, Knowles appealed the decision to the Federal Circuit. Knowles argued “[t]he [PTAB] should have read MEMS Technology and concluded that a ‘package’ requires a ‘self-contained unit[’] . . . and that this unit must be ‘mountable.’”   Knowles’ position was that the PTAB has an obligation to “evaluate a previous judicial interpretation of disputed claims and to determine whether it is consistent with the [BRI] of the term.”

The panel majority (Judges Wallach and Chen) did not consider whether the PTAB was bound to apply the Federal Circuit’s decision in MEMS Technology, but explained that it not agree that the PTAB’s claim construction conflicts with MEMS Technology:

In MEMS Technology, we upheld the International Trade Commission’s construction of the term “package” in the ’231 patent’s preamble to mean “a self-contained unit that has two levels of connection, to the device and to a circuit (or other system).” 447 F .App’x at 159; see id. (affirming the ITC’s rejection of an anticipation claim because the disputed prior art “does not disclose first and second levels of electrical connection”).

Thus, the claim construction in MEMS Technology did not require that a package be mounted via surface or through-hole mounts, such that even if we were to look to MEMS Technology, we would find no inconsistency with the PTAB’s construction of the claim term “package” here.

Consequently, the panel majority affirmed the PTAB’s decision on unpatentability.

Judge Newman dissented:

I write in concern for perpetuation of the erroneous position that the PTAB need not apply the prior final judicial decision of the same issue of the same claims of the same patent. [] This error not only produces an incorrect result in this case, but will further impart uncertainty to proceedings under the America Invents Act. The purpose whereby the PTAB was created as an agency tribunal, in order to provide stable law and economical determination of patent validity, is negated when final adjudication in a court of last resort may be ignored, and the issue litigated afresh in the agency tribunal.

Judge Newman invoked B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1303, 1305–06 (2015) for the proposition that a prior judicial decision resolving the same issue is accorded preclusive effect not only in subsequent court proceedings but also before an administrative agency, subject only to the established equitable and due process exceptions to preclusion.  She faulted the PTAB for adopting the opposite position and the majority for ignoring that part of the PTAB’s decision:

However, the PTAB stated that “precedent makes clear that the USPTO is not bound in reexamination proceedings by claim constructions produced by a court.” PTAB Op. *12. While precedent has previously addressed the effect of a prior district court claim construction on a subsequent PTO proceeding, never before has a final claim construction by this court been held not to be preclusive.

Here the claim construction was decided by the Federal Circuit, as a matter of law, in MEMS Technology Berhad v. International Trade Commission, 447 F. App’x 142 (Fed. Cir. 2011). No equitable or due process exception to issue preclusion is here asserted; thus preclusion should apply. The majority declines to discuss this question, which is presented on this appeal. By this silence, my colleagues are reinforcing this incorrect position. I respectfully dissent.

Judge Newman observed that the majority based its decision partly on the Power Integrations case.  She distinguished the instant case (involving a decision from the Federal Circuit) from Power Integrations, because Power Integrations involved only a district court decision, thereby allowing the Board not to be bound to a district court claim construction.

These decisions are complex because there are two claim construction standards at play (BRI v. the narrower Phillips district court construction), different deciding bodies (PTO, district court, PTAB, ITC, and Federal Circuit), and different proceedings (district court trial, appellate review, ex parte examination, ex parte reexamination, inter partes reexamination, inter partes review, ex parte and inter partes appeals).  With these differences there are no easy analyses and distinct and definitive lines of issue preclusion are hard to draw.