On October 22, 2019, the USPTO published a Federal Register notice proposing changes to the rules of practice for inter partes review (“IPR”), post-grant review (“PGR”), and covered business method patents (“CBM”) (collectively “post-grant trial”) proceedings regarding burdens of persuasion for motions to amend and the patentability of substitute claims.[1]

Specifically, the Federal Register notice proposes a petitioner bears the burden to show the unpatentability of substitute claims proposed in a motion to amend; a patent owner bears the burden to show a motion to amend complies with statutory and regulatory requirements; and the Board may, in the interests of justice, make a determination regarding the patentability of substitute claims based on the record in the proceeding regardless of the burdens assigned to any party.[2]

Previously, the Board interpreted 35 U.S.C. 316(d)(1), 326(d)(1), and 37 CFR § 42.20(c) to place the burden of persuasion on the patent owner to show that the proposed substitute claims are patentable over the prior art of record.[3]  Under this interpretation, “[o]f the already small number of cases where the Board decided a motion to amend, the Board granted or granted in part only 10 percent of such motions. Some have suggested that parties have simply stopped even trying to amend the claims because they see the effort as largely futile. . . . It is not in the interest of the patent system as a whole to invalidate a patent entirely if it actually describes patentable subject matter, and appropriately-scoped claims can be drafted. Therefore, the amendment process should allow the patent owner a meaningful opportunity to draft narrower claims.”[4]  “[D]espite repeated recognition of the importance of the patent owner’s right to amend during IPR proceedings—by Congress, courts, and the PTO alike—patent owners largely have been prevented from amending claims in the context of [post-grant trial proceedings].”[5]

In the 2017 en banc decision Aqua Products, Inc. v. Matal, the Federal Circuit rejected USPTO’s burden of persuasion on the patent owner. According to Aqua Products, Inc., in light of the relevant statutory and regulatory schemes, the legislative history, and the absence of anything that might be entitled to deference, the USPTO may not place the burden on patentee.[6] “[T]he burden of persuasion is on the petitioner to prove unpatentability by a preponderance of the evidence.” “[T]hat burden never shifts to the patentee” and “applies equally to proposed substitute claims.”[7]

In response to Aqua Products, Inc., the Board designated as precedential an order in Lectrosonics, Inc. v. Zaxcom, Inc. describing the burden of persuasion that the Board applies when considering the patentability of substitute claims.[8] The Lectrosonics order explained that under the current state of the law “the burden of persuasion ordinarily will lie with the petitioner to show that any proposed substitute claims are unpatentable by a preponderance of the evidence. The Board itself also may justify any finding of unpatentability by reference to evidence of record in the proceeding, for example, when a petitioner ceases to participate . . . .”[9] Additionally, prior to considering the patentability of any substitute claims, the Board first must determine whether the patent owner has met the statutory and regulatory requirements set forth in 35 U.S.C. 316(d) and 37 CFR 42.121.[10]

The USPTO published a ‘‘Request for Comments on Motion to Amend Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board’’ in the Federal Register.[11] The majority of responses were in favor of allocating the burden of persuasion to the petitioner to show that any proposed substitute claims are unpatentable, and allowing the Board to justify any finding of unpatentability under any circumstance.[12] “Two commenters responded that the Board should never be able to assume the burden of persuasion on unpatentability itself, and three commenters believed that the Board should be permitted to justify findings of unpatentability of proposed substitute claims itself only in certain circumstances, for example, when a petitioner ceases to participate in a proceeding.”[13]

As shown in the table below,[14] the number of granted motions to amend claims declined from 2013 until 2017. Starting in 2017, it appears the number of granted motions to amend claims has slowly started to increase.

With the burden of unpatentability shifted from the patent owner to the petitioner, amending claims may not be as “futile” in the future. However, the shifted burden could be undermined by the Board’s ability to justify any finding of unpatentability “under any circumstance” “in the interest of justice.”  Although the changes to the rules of practice notes, “[t]he Office anticipates that the Board will exercise such discretion only in rare circumstances,” whether the number of granted or granted in-part motions to amend will significantly increase remains to be seen.

[1] Rules of Practice To Allocate the Burden of Persuasion on Motions To Amend in Trial Proceedings Before the

Patent Trial and Appeal Board, 84 Fed. Reg. 56401 (Oct. 22, 2019) [hereinafter 84 Fed. Reg. 56401] (to be codified at 37 CFR Part 42), https://www.federalregister.gov/documents/2019/10/22/2019-22768/rules-of-practice-to-allocate-the-burden-of-persuasion-on-motions-to-amend-in-trial-proceedings.

[2] Notice of Proposed Rulemaking on Allocation of Burdens for Motion to Amend, USPTO (Oct. 21, 2019), https://www.uspto.gov/about-us/news-updates/notice-proposed-rulemaking-allocation-burdens-motion-amend.

[3] 84 Fed. Reg. 56401, supra note 1, at 56402; see MasterImage 3D, Inc. v. RealD Inc., Case IPR2015–00040, at 2 (P.T.A.B. July 15, 2015) (Paper 42) (“The 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.”).

[4] Letter from Dr. Ron D. Katznelson, Vice Chair for Patents, IEEE-USA to Jacqueline Wright Bonilla, Acting Deputy Chief APJ Judge, Patent Board, at 2 (Dec. 21, 2018), https://www.uspto.gov/sites/default/files/documents/comment_ieee.pdf (quoting Remarks by Director Iancu at the American Intellectual Property Law Association Annual Meeting (October 25, 2018), www.uspto.gov/about-us/news-updates/remarks-director-iancu-american-intellectual-property-law-association-annual).

[5] Id. at 1-2 (quoting Aqua Prods., Inc. v. Matal, 872 F.3d 1290, 1299 (Fed. Cir. 2017) (en banc)).

[6] Aqua Prods., Inc., 872 F.3d at 1296, 1327.

[7] Id. at 1306 (citations and quotations omitted).

[8] 84 Fed. Reg. 56401, supra note 1, at 56403; Lectrosonics, Inc. v. Zaxcom, Inc., Cases IPR2018–01129, 01130 (P.T.A.B. Feb. 25, 2019) (Paper 15).

[9] Id. at 5.

[10] Id. at 4-5.

[11] 84 Fed. Reg. 56401, supra note 1, at 56403; Request for Comments on Motion To Amend Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board, 83 Fed. Reg. 54319 (Oct. 29, 2018), https://www.govinfo.gov/content/pkg/FR-2018-10-29/pdf/2018-23187.pdf.

[12] 84 Fed. Reg. 56401, supra note 1, at 56403.

[13] Id. at 56404.

[14] The data was obtained from Docket Navigator’s Motion Success Search for PTAB Final Written Decision–Motion to Amend (Substitute Claims) or PTAB Final Written Decision–Motion to Amend (Cancel Claims) on October 23, 2019.