On April 1, 2016, the United States Patent and Trademark Office published final rules in the Federal Register that relate to post grant proceedings. These new final rules went into effect on May 2, 2016, and amend the existing PTAB trial practice rules pertaining to inter partes review (IPR), post grant review (PGR), covered business method (CBM) review, and derivation proceedings brought into being by provisions of the America Invents Act (AIA).
In a nutshell, these new rules change existing practice by allowing new testimonial evidence to be submitted with a patent owner’s preliminary response, adding a Rule 11-type certification for papers filed in a proceeding, allowing a claim construction approach that emulates the approach used by a district court following Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) for claims of patents that will expire before entry of a final written decision, and replacing the current page limit with a word count limit for major briefing. These final rules are the culmination of a process started two years ago. For more information on the changes taking effect, please see Patent Office amends PTAB Trial Practice Rules.
Many had hoped that the Office would make it easier for patent owners to successfully amend patent claims in post grant proceedings, but the Office stood firm.
In the Notice of Proposed Rulemaking, the Office explained the impractical nature of having the Board do a patent search to consider substitute claims given the statutory structure of AIA proceedings, which must take place with special dispatch.
The Office explained that in Idle Free Systems, Inc. v. Bergstrom, Inc., Case IPR2012– 00027 (PTAB June 11, 2013), the PTAB explained that in a motion to amend, ‘‘[t]he burden is not on the petitioner to show unpatentability, but on the patent owner to show patentable distinction over the prior art of record and also prior art known to the patent owner.’’ The Office subsequently clarified this statement, and specifically, addressed the meaning of the terms ‘‘prior art of record’’ and ‘‘prior art known to the patent owner,’’ and how the burden of production shifts to the petitioner once the patent owner has made its prima facie case for patentability of the amendment. See MasterImage 3D, Inc. v. RealD Inc., Case IPR2015–00040, slip op. at 1–3 (PTAB July 15, 2015).
Therefore, a patent owner must argue for the patentability of the proposed substitute claims over the prior art of record, which includes the following:
- Any material art in the prosecution history of the patent;
- any material art of record in the current proceeding, including art asserted in grounds on which the Board did not institute review; and
- any material art of record in any other proceeding before the Office involving the patent.
The Patent Owner must also distinguish over any art provided in light of a patent owner’s duty of candor, and any other prior art or arguments supplied by the petitioner, in conjunction with the requirement that the proposed substitute claims be narrower than the claims that are being replaced. Although not mentioned in the Federal Register Notice, it is worth remembering that the Federal Circuit recently ruled that a patent owner has no duty to submit prior art not of record and the failure to submit prior art not of record alone is insufficient to show a breach of the duty of candor. See Nike v. Adidas: Federal Circuit refines PTAB motion to amend practice.
In addition, the decision in MasterImage clarified how the burden of production shifts between the parties with regard to a motion to amend. ‘‘With respect to a motion to amend, once Patent Owner has set forth a prima facie case of patentability of narrower substitute claims over the prior art of record, the burden of production shifts to Petitioner. In its opposition, Petitioner may explain why Patent Owner did not make out a prima facie case of patentability, or attempt to rebut that prima facie case, by addressing Patent Owner’s evidence and arguments and/or by identifying and applying additional prior art against proposed substitute claims. Patent Owner has an opportunity to respond in its reply. The ultimate burden of persuasion remains with Patent Owner, the movant, to demonstrate the patentability of the amended claims.’’ MasterImage, slip op. at 3 (citing Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, 1307 (Fed. Cir. 2015)).
The Office did not see any reason to depart from Idle Free or MasterImage. Notwithstanding, the Office did observe that depending on the amendment, it is possible that a petitioner may not have an interest in challenging patentability of any substitute claims. Therefore, to ensure patent quality and to protect the public interest, the Patent Office says the burden of persuasion remains on the patent owner in order to ensure that there is a clear demonstration on the record that the proposed substitute claims are patentable, given that there is no opportunity for separate examination of these newly proposed substitute claims in these adjudicatory-style AIA proceedings.
Tags: CBM, IPR, new rules, patent, Patent Office, patent trial and appeal board, patents, PGR, post grant proceedings, PTAB, USPTO
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