Federal Circuit Paves the Way for Easier Claim Amendments During Inter Partes Review

Written by: Benjamin E. Leace & Christopher H. Blaszkowski

In a long awaited decision, the en banc Federal Circuit ruled today that the patent owner does not bear the burden of demonstrating the patentability of any claim amendments made during an inter partes review (“IPR”).  Depending on how the United States Patent and Trademark Office (“PTO”) implements this ruling, it could be a game-changer by making it easier to make claim amendments and maintain patent validity in the highly effective post-grant proceedings provided by the AIA.

Presently, under 35 U.S.C. § 316(d), patent owners are given one chance during an IPR to propose claim amendments for overcoming the invalidity challenges in a petition.  Aqua Products comes amidst an abysmal success rate for such proposed amendments in IPRs—according to a February 2017 study, only eight motions have been granted since these procedures became available at the end of 2012.  Patent owners have consistently complained that these results stem from the heavy burden placed on the patent owner to demonstrate the patentability of any proposed amended claim.

The procedural posture of Aqua Products is not unusual.  Aqua sued Zodiac Pool Systems, Inc. in district court and Zodiac petitioned for IPR.  The Patent Trial and Appeal Board (“PTAB”) instituted IPR and, subsequently, Aqua filed a motion to substitute new claims for several of the instituted claims.  The PTAB denied this motion, finding that Aqua had otherwise complied with the regulations relating to claim amendments during IPRs, but concluding that Aqua had failed to demonstrate the patentability of the substitute claims.

Aqua appealed this denial to the Federal Circuit and, ultimately, sought a rehearing en banc when the panel upheld the PTAB conclusions and declined to address Aqua’s argument that a patent owner should not bear the burden to demonstrate the patentability of any proposed claim amendments in an IPR.

The various concurrences and dissents set forth in the 148 page en banc opinion are legion.  Indeed, Judge O’Malley notes at the outset of her opinion (a plurality with respect to the reasoning; a majority with respect to the result) that the judges could not agree on the judgment or the reasoning in support of the judgment:

Because the participating judges have different views—both as to the judgment we should reach and as to the rationale we should employ in support of that judgment, as explained below, today’s judgment is narrow.  The final written decision of the Board in this case is vacated insofar as it denied the patent owner’s motion to amend the patent. The matter is remanded for the Board to issue a final decision under § 318(a) assessing the patentability of the proposed substitute claims without placing the burden of persuasion on the patent owner.

(emphasis added.)  Thus, the holding requires Aqua’s motion to amend to be reconsidered without any burden upon Aqua to demonstrate the patentability of the proposed substitute claims.  The Federal Circuit judgment also mandates that this holding must apply to all cases going forward until the Director promulgates new rules.

For Judge O’Malley’s opinion, one fundamental premise was that “Congress deemed the patent owner’s right to amend so important that, in § 316(d), it mandated that the patent owner be permitted to amend the patent as of right at least once during the court of an IPR ….” (emphasis in original.)  Equally important from a policy perspective, the Federal Circuit also linked the PTAB’s use of the broadest reasonable interpretation as a basis for a less onerous claim amendment process.  The PTO, according to the Federal Circuit, has justified the use of the BRI standard “more than once” as appropriate given the opportunity to amend.

The Federal Circuit also considered in its analysis another statutory section of the AIA.  35 U.S.C. § 316(e) specifies the evidentiary standard for IPRs as that “the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.”

Taken together, the Federal Circuit found that 35 U.S.C. §§ 316(d) and (e) did not support the PTO regulations and the PTAB’s practice of requiring the patent owner to demonstrate the patentability of any proposed substitute claims.

Because the holding is self-described as narrow, and the viewpoints of the judges seemingly fractured, the only bright-line rule handed down by Aqua Products is that the patent owner does not bear the burden of demonstrating the patentability of claim amendments in IPRs.  Time will tell how the PTAB implements this ruling and whether it passes muster at the Federal Circuit (“the court will be tasked with determining whether any practice so adopted is valid.”).   For patent owners, this ruling should be welcome, as it signifies, at least for the foreseeable future, an increased opportunity to exit an IPR with a patentable claim.