En banc Federal Circuit holds that Petitioner has the burden to prove unpatentability for amended claims added during IPR
In Aqua Products, Inc., v. Matal, 2015-1177, Oct. 4, 2017, the en banc Federal Circuit cut against the grain of current PTAB proceeding and held that the petitioner in an inter partes review proceeding has the burden to prove unpatentability for amended claims.
The patent owner in a patent office trial may file one motion to amend the patent. See 35 U.S.C. 316(d), 326(d). However, the Patent Trial and Appeals Board had previously required the patent owner to prove that an amended claim is patentable. Last year, a panel of the Federal Circuit found that the Board was justified in placing the burden to establish patentability of proposed substitute claims on the patent owner because substitute claims have never been examined. See Nike, Inc. v. Adidas AG, 812 F.3d 1326 (Fed. Cir. 2016).
The Board has rarely granted requests to amend the claims. The Federal Circuit in Aqua Products noted that the only six of the first 118 motions to amend were granted. See Aqua Products at p. 12. In view of these low odds, many patent owners have chosen not to file motions to amend.
Six of the eleven judges that participated in the Aqua Products decision agreed that the petitioner in an inter partes review proceeding has the burden to prove unpatentability for amended claims. See Aqua Products, at page 5, opinion of the court by O’Malley, in which Newman, Lourie, Moore, and Wallach join. Dyk and Reyna, concurred in the result only. The judges agreed on little else.
Five of the eleven judges, O’Malley, Newman, Lourie, Moore, and Wallach, found that the statute “unambiguously requires the petitioner to prove all propositions of unpatentability, including for amended claims.” See Aqua Products at page 5. 35 U.S.C. § 316(e) recites:
(e) EVIDENTIARY STANDARDS.—In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.
The five judges pointed to, among several other reasons, the fact that the 316(e) evidentiary standard “immediately follows the subsection discussing the requirements for amended claims in IPRs” (i.e., 35 U.S.C. 316(d)) to support their view that the statute is unambiguous as to the petitioner having the burden of proving unpatentability of amended claims. See Aqua Products at page 28.
The six other judges disagreed, finding that the statute was ambiguous. Four of these judges, Taranto, Prost, Chen, and Hughes, disagreed with the holding and would have found that Chevron deference allows the Director to decide that the burden of persuasion falls on the patent owner.
The other two judges, Dyk and Reyna, found that the statute was ambiguous, but believed that Chevron deference does not apply because the Board has not promulgated a regulation consistent with the Administrative Procedures Act. See Aqua Products, opinion by Reyna, joined by Dyk (also joined by Prost, Taranto, Chen, and Hughes as to Part III. only) at pages 8-11. The Board had not established that the burden of persuasion any regulation. Instead, the Board specified that the burden of persuasion is on the patent owner in dicta found in the Board’s Idle Free decision.
After the Aqua Products decision, patent owners may be more willing to file a motion to amend.
John M. Bird is a partner in the Washington, DC Office of Sughrue Mion PLLC. His focus is on the protection and enforcement of designs and a wide range of electrical and mechanical technologies, including analytical/measurement systems, medical devices, HVAC systems, printers/copiers, telecommunications systems, data recording mediums, semiconductor fabrication, bearings, welding processes, sports equipment, footwear, and various automobile components, such as tires, transmissions, engines, fuel-injection systems, motors, lamps, steering systems, connectors/wiring, valves, and control/monitoring systems.
See his full biography here.
Nidec Motor Corporation v. Zhongshan Broad Ocean Motor Co., Ltd. (Federal Circuit 2016-232, August 22, 2017)
By David Emery
In a concurring opinion by Judge Timothy Dyk (joined by Judge Wallach), Judge Dyk expressed that there are “serious questions as to the Board’s (and Director’s) interpretation of the relevant statutes and current practices” when expanding Board panels. Nidec Motor Corporation v. Zhongshan Broad Ocean Motor Co., Ltd. (Federal Circuit 2016-232, August 22, 2017)(concurring opinion, p. 2)
The concurring opinion addressed two issues: joinder and expanded administrative panels. While both issues were raised by the appellant Nidec, the Court did not decided these issues, which were moot because the PTAB’s invalidity judgement was affirmed on grounds not implicating joinder or the expanded panel.
To provide some background, an initial three judge panel instituted review on one of two grounds pursued by Broad Ocean. The Board declined to institute on a second ground that relied on a translation of a foreign reference because the petitioner did not submit an affidavit attesting to the accuracy of the translation. Broad Ocean later filed a second petition, which included the affidavit, and requested that the second petition be joined with the first petition. However, the three judge panel held that the second petition was time barred pursuant to 35 U.S.C. §315(b), as it was filed 1 year after the Broad Ocean was served with a complaint. The panel found that the exception to the §315(b) bar based on joinder is limited to joinder by another party, and that the exception does not apply to joinder of a new issue by the same party.
In response, Broad Ocean filed a request for rehearing. The Board, now expanded to five Administrative Patent Judges, granted the rehearing and set aside the original panel’s decision by interpreting §315(c) to include issue joinder, in addition to the well-recognized party joinder. Nidec appealed the invalidity determination, the joinder decision and the PTAB’s use of an expanded panel.
The concurring opinion by Judge Dyk first addressed the PTAB’s joinder interpretation. Addressing the interplay between sections (b) and (c) of §315, it was noted that section (c) does not explicitly allow a joinder of new issues. In further dicta, the opinion reflected doubt that Congress would have intended that petitioners could introduce “time-barred” issues into a timely petition.
Interestingly, the opinion also characterized the expansion as a “practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision.” While the Director proffered that this expansion is to “secure and maintain uniformity of the Board’s decisions,” the concurring opinion casts doubt on whether panel expansion is the appropriate mechanism to obtain uniformity.
Federal Circuit No. 2016-1599 (Fed. Cir. May 11, 2017)
In Aylus Networks, Inc. v. Apple Inc. (Fed. Cir. No. 2016-1599, May 11, 2017), the Federal Circuit held that statements made by a patent owner during an IPR proceeding, whether before or after an institution decision, can be considered for claim construction and relied upon to support a finding of prosecution disclaimer.
The Federal Circuit explained that because prosecution disclaimer is applied to i) pre-issuance prosecution, ii) reissue applications and ii) reexamination applications, “[i]t follows that we should apply the doctrine in IPR proceedings before the PTO. Extending the prosecution disclaimer doctrine to IPR proceedings will ensure that claims are not argued one way in order to maintain their patentability and in a different way against accused infringers.”
The patent at issue is directed to a method of controlling and delivering media content from a media server (MS) to a media renderer (MR) utilizing a wide area IP Multimedia Subsystem (IMS) network for control. Specifically, the claims (claims 2 and 21 depending from claims 1 and 20, respectively) at issue describe an embodiment where a control point (CP) is located in a wide area network via a service provider and a control proxy point (CPP) is located within a user premise thereby the method invokes the CPP logic and the CP logic to cooperatively negotiate media content delivery if one of the MS and MR are not in communication with an user endpoint (UE) via a local wireless network while the method invokes the CPP logic if the MS and MR are both in communication with the UE.
In the court below, the district court construed the limitation of the claims 2 and 21 at issue to require that only the CPP logic is invoked to negotiate media content delivery between the MS and the MR, in contrast to claims 1 and 20 which require both the CP and CPP to negotiate media content delivery. In construing the limitation of claims 2 and 21, the district court relied on statements made by Aylus in its preliminary responses to Apple’s petitions for IPR of the ’412 patent, finding the statements “akin to prosecution disclaimer.”
The Federal Circuit held that because the patent owner (Aylus) explained that the claims at issue “require that only the control point logic (or only the control point proxy logic) be invoked if it is determined that neither (or both) the MS or the MR are in communication with the UE via the local wireless network” during their preliminary response in the IPR proceeding, prosecution disclaimer indeed applies and agreed with the district court’s claim construction.
Mr. Chon is a member of the firm’s Electrical/Mechanical Patent group. Mr. Chon’s practice focuses on the preparation of the Mechanical patent applications as well as the prosecution of these applications before the U. S Patent and Trademark Office.
Mr. Chon was previously employed with Pratt & Whitney, a United Technology Corporation Company, and he has more than 10 years of aerospace industry experience in engineering, strategy / business development and operations. His roles have included Joint Strike Fighter F-135 Senior Engineer, Commercial Engines (CE) Technology Licensing Specialist, CE Joint Ventures and Partnerships Specialist and Operations Export Compliance Manager.
Mr. Chon is an inventor listed on several patents in the art of gas turbine airfoil design.
On June 12, 2017, the Supreme Court granted certiorari to review whether the America Invents Act’s provisions on inter partes review (IPR) violate the Seventh Amendment right to jury by extinguishing patent claims through a non-Article III court. Oil States Energy Services LLC v. Greene’s Energy Group LLC.1 The USPTO’s authority to decide IPRs does not stem from Article III of the Constitution. Rather, this authority is firmly rooted in Article I. Article I gives Congress the authority “To promote the Progress of Science and useful Arts, by securing for limited Times to Writers and Inventors the exclusive Right to their respective Writings and Discoveries.” In other words, Article I grants Congress the power to make patent laws. The IPR provision comprises a major part of Congress’ most recent patent legislation, the America Invents Act.
In a short time, the USPTO, via its Patent Trial and Appeal Board (PTAB) has reviewed thousands of IPR petitions and has effectively invalidated several thousand patent claims. Given the importance of patent rights, aggrieved Patent Owners have already raised this constitutionality challenge — without success.
In 2015, the Federal Circuit issued a detailed decision indicating that IPRs do not violate the Seventh Amendment right to jury trial. MCM Portfolio v. Hewlett Packard.2 There, the aggrieved Patent Owner also sought Supreme Court review of the constitutionality question. However, the Supreme Court declined.
Notably, in MCM Portfolio, the Federal Circuit explained the public rights doctrine and its applicability to patents and IPR administrative proceedings, and the inapplicability of the Seventh Amendment in such situations. The Federal Circuit noted:
We followed Supreme Court precedent that affirmed the “constitutionality of legislative courts and administrative agencies created by Congress to adjudicate cases involving “public right.” [ ] We found that “the grant of a patent is primarily a public concern. Validity is often brought into question in disputes between private parties, but the threshold question usually is whether the PTO, under the authority assigned to it by Congress, properly granted the patent.”
. . . .
The Supreme Court has stated that “the Seventh Amendment is generally inapplicable in administrative proceedings, where jury trials would be incompatible with the whole concept of administrative adjudication and would substantially interfere with [the agency’s] role in the statutory scheme.
In the current case, Patent Owner Oil States spends a significant amount of its briefing explaining the “common law,” or in equity origins of patent law, as opposed to legislative basis of IPRs. Patent Owner must adopt this position to have its case fit the Seventh Amendment criteria for a mandatory jury trial.
Not surprisingly, Respondent Greene’s Energy Group relies on the Federal Circuit decision and rationale of MCM Portfolio.
The Supreme Court will likely render its opinion in Spring 2018.
As an additional note, Patent Owner Oil States also requested the higher court to review multiple questions on the PTAB’s conduct of proceedings in the underlying case. These procedural issues include 1) the PTAB’s requirements on Patent Owners for amending patent claims during an IPR and 2) the application of the correct claim construction under “broadest reasonable interpretation.” Given that the Federal Circuit simply affirmed the PTAB decision without a written opinion, it seemed unlikely that the Supreme Court would take up review of these detailed administrative issues, and it did not do so.
1 (Docket 16-712)
2 812 F. 3d 1284 (Fed. Cir. 2015) cert. denied (Docket 15-1330).
Susan P. Pan
Email: email@example.comMs. Pan specializes in patent portfolio building for large and small companies, including patent preparation, prosecution and appeals. Ms. Pan’s legal expertise also extends to multi-party complex patent litigation before several U.S. federal district courts, the U.S. International Trade Commission, and the U.S. Federal Trade Commission. Ms. Pan counsels clients in patent licensing and valuation, taking into account probabilities of infringement and invalidity.
Board finds Internet advertising patent not eligible for CBM Review under Federal Circuit Secure Access and Unwired Planet standard
The Patent Trial and Appeal Board recently denied Cover Business Method (CBM) review of an Internet advertising display patent assigned to KlausTech. The petitioner, Google, argued that the claim limitation “retaining … a record of the browser identity” should be construed as financial in nature because the specification describes determining compensation for publisher websites and billing advertisers as the only reasons for the retaining the records. See Google Inc. v. KlausTech, Inc., CBM2016-00096, Paper 12 at 5-9 (PTAB April 6, 2017) (Decision Denying Request for Rehearing). However, the Board disagreed, focusing on only the language of the claims themselves:
In Garmin Int’l, Inc. v. Cuozzo Speed Tech. LLC, IPR2012-00001, (PTAB March 5, 2013), the Board set forth five factors—commonly referred to as the Garmin factors—for determining whether “additional discovery” will be granted to a party during a proceeding before the Board, such as an inter partes review (IPR) covered business method review (CBM) or post-grant review (PGR). Briefly, the five Garmin factors are:
1. More Than A Possibility And Mere Allegation;
2. Litigation Positions And Underlying Basis;
3. Information Of Which Equivalent Information Can Be Generated By Other Means;
4. Made Via Easily Understandable Instructions; and
5. Overly Burdensome To Answer.
It was known that the Patent Trial and Appeal Board (“PTAB”) rarely grants a patent owner’s motion to amend claims during inter partes review (IPR) proceedings, and there is no exception in an IPR proceeding involving Veritas Technologies LLC and Veeam Software Corporation (No. IPR2014-00090). In view of the PTAB’s recent denial, Veritas appealed to the Federal Circuit. On August 30, 2016, the Federal Circuit issued its opinion in Veritas Technologies LLC v. Veeam Software Corporation, 120 USPQ2d 1046 (Fed. Cir. 2016) finding the PTAB’s denial of Verita’s motion to amend was “arbitrary and capricious” and vacated the PTAB’s decision. Id. at 1048.
When a particular patent is involved in an inter partes review (IPR) proceeding or other post-grant review proceeding, the USPTO has wide discretion in determining whether to allow an additional proceeding to be instituted or continued. The two governing statutes are 35 U.S.C. §315(d) and 35 U.S.C. §325(d), each of which states that “the Director may determine the manner in which the . . . matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter.”
In many instances, the Patent Trial and Appeal Board (PTAB) denies institution of a subsequent IPR. In this regard, even when “a petitioner establishes a reasonable likelihood of prevailing with respect to at least one challenged claim,” the PTAB may decide against instituting the subsequent proceeding. Conopco v. Procter & Gamble, IPR 2014-00506, Paper No. 25 at page 4 (Decision Denying Request for Rehearing). Even if a subsequent proceeding regarding a particular patent is requested by a different petitioner, the PTAB has discretion to deny institution for “efficient administration.” See Unified Patents v. PersonalWeb Technologies, IPR 2014-00702, Paper No. 13.
On June 13, 2016, the Patent Trial and Appeal Board (PTAB) entered its first Final Written Decision in a Post Grant Review (PGR) proceeding. The PTAB found that the Petitioner had failed to show unpatentability based on prior art, but the PTAB agreed with the Petitioner that all claims are directed to unpatentable abstract ideas under 35 U.S.C. § 101.
US Patent No. 8,660,88 (the ‘888 patent) is directed to a system, method, and computer-readable medium for evaluating a relative market value of a cattle sale group. In the PGR, the Petitioner relied on two grounds that are not available in an Inter-Parties Review (IPR) proceeding.
The Patent Trial and Appeal Board (“the PTAB”) has a staunch reputation for rarely granting a patent owner’s motion to amend claims during inter partes review proceedings (to date, the Board has only granted six such motions to amend). However, in the matter of Shinn Fu Co. v. Tire Hanger Corp., IPR2015-00208 (decided on April 22, 2016), the PTAB granted The Tire Hanger Corporation’s (“Tire Hanger”) motion to amend the claims of its U.S. Patent No. 6,681,897 (“the ‘897 patent”). The PTAB’s decision allowed Tire Hanger to salvage invalid claims with narrowing claim amendments and provides encouragement to patent owners that more motions to amend may be granted by the PTAB in the future.