In Re: Smith International, Inc.
871 F.3d 1375 (Fed. Cir. 2017)
Authored by Jane Thomas
Statement of Facts: Smith International, Inc. (“Smith”) owns the U.S. Patent 6,732,817 (“the ’817 patent”) titled “Expandable Underreamer/Stabilizer” which is directed to a downhole drilling tool for oil and gas operations. Smith, 871 F.3d at 1377. “The ’817 patent was originally granted with 73 claims. In 2012, Smith’s corporate parents, Schlumberger Holdings Corp. and Schlumberger N.V. (together “Schlumberger”), sued Baker Hughes, Inc. (“Baker Hughes”) in the United States District Court for the Southern District of Texas for, inter alia, infringement of the ’817 patent.” Smith, 871 F.3d at 1378. In response, Baker Hughes requested and received an ex parte reexamination of specific claims of the ’817 patent by the United States Patent and Trademark Office (“USPTO”). Additionally, in 2016, Smith also filed suit against Baker Hughes alleging infringement of the ’817 patent.
The Patent examiner completing the reexamination allowed certain new claims, rejected certain claims as anticipated by International Publication No. WO 00/31371 (“Eddison”), found that certain claims were obvious over Eddison in view of U.S. patent 6,059,051 (“Jewkes”), and found that other claims were obvious over Eddison, Jewkes, and European Publication No. EP 0 246 789 (“Wardley”).
Procedural History: Smith appealed the examiner’s rejections to the United States Patent and Trademark Office Patent and Trial Appeal Board (“PTAB”). PTAB affirmed all the examiner’s rejections. In reexaminations, the Board gives claim terms their broadest reasonable interpretation in light of the claim language and specification. PTAB affirmed the examiner’s interpretation of the term “body” as a broad term that can encompass other components because it does not have any structural specificity by itself. PTAB interpreted that the term “body” was included within the claims without further limiting features and that the specification also did not define the term which permitted the examiner’s broad reading of the term. PTAB concluded that Smith’s additional arguments relied on incorrect claim construction. Smith appealed the PTAB’s decision to the Federal Circuit.
Question Presented: First, whether PTAB’s claim construction of the term “body” in the ’817 patent was accurate. Second, whether PTAB erred in evaluating the anticipation and obviousness determinations.
Holding: The court reversed PTAB’s decision, finding that PTAB’s construction of “body” was unreasonably broad and that the challenged claims were not unpatentable as obvious.
Reasoning: Judge Lourie, joined by Judges Reyna and Hughes, authored the Federal Circuit’s opinion. The court determined that, since all the claims included the term “body,” the decision about what this term means would be dispositive of all the claims. Smith argued that PTAB’s broad construction of “body” as a generic term encompassing all the tool’s internal components was unreasonable, especially because the specification described what the “body” was. The USPTO responded that PTAB had given the term “body” the broadest reasonable interpretation and that substantial evidenced supported the Board’s findings. The court followed judicial precedent that the standard of giving claims their broadest reasonable interpretation is acceptable, insofar as it does not give claims a legally incorrect interpretation. Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1298 (Fed. Cir. 2015). The court agreed with Smith that the ’817 patent specification consistently described and referred to the body as a component distinct from the other components. The opinion stated that the correct inquiry in giving a claim term its broadest reasonable interpretation in light of the specification is an interpretation that corresponds with what and how the inventor describes his invention in the specification. PTAB argued that the specification in the ’817 patent did not define the claim term in dispute, which meant that the broad interpretation was reasonable. The court dismissed this argument, stating that this logic would mean that, if the specification did not include an express definition or disclaimer, then the broadest possible interpretation of a claim term would be employed even if other descriptions in the specification indicated a narrower definition. The court concluded that the “body” in the ’817 patent claims was a component distinct from other identified components in the specification. Finally, the court also concluded that the findings made by PTAB regarding Eddison were not supported by substantial evidence because these findings relied on incorrect claim construction. The court reversed all of PTAB’s rejections of the appealed claims because PTAB’s construction of the term “body” was unreasonably broad.