Burden of persuasion on Petitioner for IPR amendments


On October 4, 2017, the United States Court of Appeals for the Federal Circuit issued its much-anticipated decision in Aqua Products, Inc. v. Matal, addressing en banc whether the patent owner has the burden of proving patentability with respect to submitted amended claims during an inter partes review (IPR) proceeding. Previous panels of the Federal Circuit had ruled that the burden of persuasion to demonstrate patentability was with the patent owner, not with the challenger. Sitting en banc, the Federal Circuit issued a narrow ruling saying that the burden of persuasion must remain at all times on the petitioner, including with respect to demonstration of unpatentability of amended claims.

The ruling of the court was described to be “narrow” by Judge O’Malley, who wrote for the majority in announcing the limited decision. There was no consensus among the Judges with respect to the judgment that should be reached and the rationale that should be employed, which meant very little of what was actually written in the five opinions and some 135 pages was actually precedential. This lack of consensus would explain why it took the Federal Circuit ten months after the oral arguments in this case to issue a decision.

Judge O’Malley did, however, explain that the majority of the Federal Circuit found the statute on this point to be ambiguous and, therefore, no deference was given to any interpretation of the United States Patent and Trademark Office (USPTO) under Chevron, U.S.A., Inc. v. Natural Resources Defense Counsel, Inc., 467 U.S. 837 (1984). Chevron is the much-discussed and often-criticized Supreme Court case that gives great deference to agency interpretations of statutes. When a statute is ambiguous, however, no such Chevron deference is given to agency interpretations.

Obviously, much more detailed analysis will be required to parse this decision in the coming days and weeks. There are likely to be at least some ramifications relating to the Supreme Court’s consideration of the constitutionality of IPR procedures in Oil States, and it seems inevitable that there will be an appeal of this decision.

For now, suffice it to say that the precedential ruling, while quite narrow, does say that the PTAB must assess proposed substitute claims in inter partes review without placing the burden of persuasion on the patent owner. The Federal Circuit has also specifically directed the PTAB to follow this practice in all IPRs unless and until the Office engages in “notice and comment” rulemaking. And at that point, the Federal Circuit would determine whether any potential “fix” the Office comes up with passes muster.

For the first-take reaction of a panel of patent experts, please see: Industry Reaction to Federal Circuit Aqua Products Decision.

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