Dissent Finds Burden of Unpatentability Rests with Petitioner for Amended Claims

Back in July, the USPTO's Patent Trial & Appeal Board (PTAB) issued an informative decision in Masterimage 3D. Inc. v. RealD Inc. (IPR2015-00040) (here). InMasterimage, the Board explained that a patent owner moving to amend before the PTAB bears the burden of distinguishing its amended claims over prior art of record and also prior art known to the patent owner. In doing so the Board defined the scope of "prior art of record" and "prior art known to the patent owner."  The Board defined prior art of record as:  

  1. any material art in the prosecution history of the patent;    
  2. any material art of record in the current proceeding, including art asserted in grounds on which the Board did not institute review; and    
  3. any material art of record in any other proceeding before the Office involving the patent.

Last week, in Prolitec, Inc., v. Scentair Technologies, Inc, the Federal Circuit considered whether this "prior art of record" burden was appropriate. 

In finding the showing appropriate, the Court explained (here):

We conclude that the PTO’s approach is a reasonable one at least in a case, like this one, in which the Board’s denial of the motion to amend rested on a merits assessment of the entire record developed on the motion, not just on the initial motion itself. The Board’s position— that the patentee’s burden on a motion to amend includes the burden to show patentability over prior art from the patent’s original prosecution history—is not in conflict with any statute or regulation. Moreover, it is not unreasonable to require the patentee to meet this burden. The prior art references cited in the original patent’s prosecution history often will be the closest prior art and will already have been reviewed by the patentee. Evaluating the substitute claims in light of this prior art helps to effectuate the purpose of IPRs to “improve patent quality and limit unnecessary and counterproductive litigation costs.”                                                        

.                .               .                .                   .

[I]n the combination of its motion and its reply brief supporting the motion, Prolitec simply failed to support adequately its assertion of patentability over Allred (cited in the prosecution history) and Benalikhoudja (the key IPR prior art), even after ScentAir had called attention to Allred in opposing the motion to amend. 

The dissent takes issue with the PTAB's refusal to enter the amendment.  That is, while the amended claims may not have proven distinguishable over the art, the entry of the amendment should have been granted on procedural grounds (which would have at least disposed of the claim construction dispute of the un-amended claims):

Of primary concern is the PTO’s treatment of the statutory provisions for claim amendment in these postgrant proceedings. The panel majority holds that the PTAB properly refused entry of an amendment, although Prolitec complied with all of the statutory and regulatory requirements. The amendment would have narrowed the claims, potentially avoiding a dispositively adverse claim construction.                                                                          .                .               .                .                   . 

PTO regulations authorize denial of a claim amendment that complies with the statute, but only when:           

(i) The amendment does not respond to a ground of unpatentability involved in the trial; or           

(ii) The amendment seeks to enlarge the scope of the claims of the patent or introduce new subject matter.                                                                                         

 .                .               .                .                   . 

When a proposed amendment would resolve a dispositive aspect of claim breadth, refusal to enter the amendment is contrary to both the purpose and the text of the America Invents Act.

The dissent continues on to question whether the motion to amend "burden" as construed by the PTAB conflicts with the statutory burden of proving unpatentability under 35 U.S.C. § 316(e), asserting:

That statutory prescription applies [of 316(e)] whether the “proposition of unpatentability” is for amended or unamended claims. However, the PTAB disregards this statutory requirement by placing on the patentee the burden of proving patentability for a proposed amended claim.                          

.                .               .                .                   . 

The America Invents Act does not authorize or suggest such a shift in the statutory burden. The PTO, in its Intervenor’s brief, invokes the practice of district court litigation and argues that if the patentee files a motion, it bears the burden of establishing entitlement to grant of the motion. However, this generalization is inapplicable when there are explicit statutory burdens that set a different standard.  

The Act requires the PTAB to analyze the patentability of “any new claim added under section 316(d),” 35 U.S.C. § 318(a), again reflecting the statutory directive that the new claim should be added, provided that it qualifies under the statute. The PTAB then determines patentability of the added claim in accordance with the statutory burdens. The statute places the burden of proving invalidity (unpatentability) on the petitioner. As explained by Senator Kyl, “inter partes reexamination is converted into an adjudicative proceeding in which the petitioner, rather than the Office, bears the burden of showing unpatentability.” 137 Cong. Rec. S1360, S1375 (daily ed. Mar. 8, 2011). The Act makes no distinction between original and amended claims in inter partes review. 

My colleagues on this panel depart from the statute in removing from the petitioner the burden of showing unpatentability of amended claims.

The dissent makes an interesting point.  

If the PTAB were to adopt the view (likely via new legislation) that the burden to enter an amendment is satisfied as long as the amendment is directed to a trial ground, and not enlarging the scope of the claims, patentability determinations could be off-loaded to petitioners. Frankly, as amendment is rare in most PTAB cases due to the intervening rights created, shifting this requirement to petitioners would not be an undo burden.  Any competent amendment opposition would include such unpatentability arguments in any event (as seems to have been the case here).  If every amendment (not enlarging scope or unrelated to the trial grounds) were entered by the PTAB, amended claims could simply be denied on the merits as appropriate.  Perhaps more importantly, the amendment/BRI controversy at the PTAB could be put the rest once and for all, saving the agency unnecessary grief.