Posts Tagged: "In re Aqua Products Inc."

On November 21, 2017, the USPTO’s Chief Administrative Patent Judge David P. Ruschke issued a memorandum to the Patent Trial and Appeal Board (PTAB) providing guidance on motions to amend claims during trial proceedings before the PTAB. This was done in light of the Federal Circuit’s en banc decision in Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) on October 4, 2017… Judge Ruschke has reversed the PTAB’s practice of placing the burden of persuasion on the patent owner rather than the inter partes review (IPR) petitioner: “In light of the Aqua Products decision, the Board will not place the burden of persuasion on a patent owner with respect to the patentability of substitute claims presented in a motion to amend,” the Ruschke memo reads.

After a panel of the Federal Circuit affirmed the Board’s decision, in Aqua Products v. Matal, Aqua requested an en banc rehearing. The USPTO Director Joseph Matal joined the appeal on behalf of the USPTO. At issue was whether the Board could place the burden of proof for patentability of amended claims on the patent owner in an IPR, and the Board’s underlying interpretation of the relevant statutes, specifically § 316(d) governing claim amendments and 35 U.S.C. § 316(e) allocating the burden of proof in an IPR… With respect to the burden of proof, the burden of persuasion for patentability of amended claims in an IPR proceeding is placed on the petitioner, not the patent owner. However, considering Judge Reyna’s concurrence, patent owners might still have the burden of production; depending on future cases.

First-take reaction to Aqua Products v. Matal from a distinguished panel of experts. Todd Dickinson: “I don’t think that I’ve ever seen such a collection of procedural somersaults and arcane discussion masquerading as an appellate opinion. ” Russell Slifer: “it would be wise for the USPTO and the PTAB to consider limiting all Board decisions wholly to the record developed during the proceeding. Eliminate the opportunity for a panel to issue a sua sponte reason for unpatentability.” Ashley Keller: “One could be forgiven for wondering if the Republic is truly well served entrusting such a tribunal with exclusive jurisdiction over patent appeals.” John White: “This decision puts neon highlights around what is wrong with the PTAB process as it pursues the political outcome of ridding the system of ‘troublesome’, aka: ‘commercially valuable’, patents.” Plus much more.

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… Judge O’Malley explained 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).

More than six months have passed since the en banc rehearing in Aqua Products without a decision from the Federal Circuit. It could be an indication that the court is working on handing down a ruling that would greatly alter PTAB practices relating to motions to amend. In the alternative, it could be an indication that there’s a split in opinion and Federal Circuit is still making up its mind on the matter with multiple separate opinions being prepared and circulated. Interestingly, an article on In re: Aqua Products published last August by The National Law Review noted that, in its decision to grant Aqua’s petition for en banc rehearing, the Federal Circuit asked an additional question of law: who holds the burden for persuading PTAB or producing evidence to challenge the patentability of claims amended by a patent owner. That by itself could be an indication that Federal Circuit is interested in ruling in favor of patent owners in this case.

Overall, a significant number of the eleven judges present for argument hinted through their questioning that they thought the PTO’s rulemaking was problematic…. The PTO’s position is that the burden of proof allocated by § 316(e) is not applicable to motions to amend and therefore it may regulate the burden of proof on such motions based on the authority granted to it in § 316(a)(9). Judge Reyna jumped in almost immediately during the PTO’s argument to question the validity of the PTO’s rulemaking. In his view, there is no validly promulgated PTO regulation that places the burden of persuasion for motions to amend on the patent owner.

On December 9, 2016, the en banc Federal Circuit will hear argument in In re Aqua Products, Inc. on an issue that has long been troubling patent owners involved in inter partes reviews (“IPR”)—the difficulty of amending patent claims before the Patent Trial and Appeal Board (“PTAB”)… The Federal Circuit granted a petition for rehearing en banc to consider whether the burden of persuasion allocated to the patentee by the PTAB for motions to amend is permissible under the statutory scheme.[5] Notably, the Federal Circuit’s rehearing order specifically identifies 35 U.S.C. § 316(e), which provides that in an IPR “the petitioner,” not the patent owner, “shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.” The Federal Circuit also will consider whether the PTAB can raise sua sponte challenges to patentability, much the way an examiner would, if the IPR petitioner fails to do so.