Since the creation of inter partes reviews (“IPRs”) under the America Invents Act, the Patent Trial and Appeal Board (“Board”) and the Federal Circuit have sought to clarify the burdens and standards of proof for petitioners and the patent holders at various stages of the proceeding.
IPRs occupy a sort of “middle ground” between patent prosecution and litigation, borrowing standards and burdens of proof from both forums. Like the United States Patent and Trademark Office (“USPTO”), the Board applies the “broadest reasonable interpretation” standard in construing patent claims.1 And, in contrast to patent litigation in the courts, there is no presumption of patent validity in IPRs. On the other hand, IPRs are quite different from patent prosecution. For example, IPRs are adversarial proceedings with motion practice and discovery, and the rules for amending claims in IPRs are far stricter than those applied during prosecution.
Further complicating this issue, many of the applicable standards for the burden of proof change once an IPR has been instituted. As illustrated in several recent cases, these shifting standards and burdens have tripped up petitioners, patent owners, and even the Board. Additionally, the Federal Circuit has weighed in on the burdens in inter partes reviews in a few key cases, and may continue to do so in the near future.
What do Petitioners Need to Show Pre-Institution?
Burden-related pitfalls present themselves early in the process on the road to institution of an IPR. Substantively, the petitioner has the burden to establish that there is a “reasonable likelihood” that the petitioner would prevail as to at least one challenged claim.2 Under 37 C.F.R. § 42.22(a), the petition must include a statement of the precise relief requested and a full statement of the reasons for the relief requested, including a detailed explanation of the significance of the evidence including material facts, the governing law, rules, and precedent.
The petitioner, however, also bears the burden of proving that the references it relies on qualify as prior art, and the Board has dismissed petitions for failing to do so.3 For example, a petitioner asserting non-patent prior art has the burden to show that the reference was published or otherwise sufficiently disseminated to the public.4 In contrast to district court proceedings (where patent holders will often concede the status of certain publications as prior art), even petitions with strong anticipation or obviousness arguments will be denied institution if they fail to establish that the references on which they rely qualify as prior art.5 For example, in L-3 Commc’n Holdings, Inc. v. Power Survey, the Board denied L-3 Communication’s petition for failing to show that the primary piece of prior art—a report that was considered by the PTO during prosecution—qualified as a “printed publication.”6
Although the petitioner carries the burden on these issues, the patent owner has a opportunity to respond to the petition; and the petitioner rarely gets an opportunity to reply substantively. Replies to a patent owner’s preliminary response require authorization from the Board, and are historically limited to procedural issues.7 A petitioner may request rehearing of a denial of institution, but new evidence is not allowed in requests absent a showing of good cause.8 Accordingly, it is important that the petitioner provide sufficient evidence and analysis to carry its burden in the original petition. This is even more important due to the rule change on May 2, 2016 allowing patent owners to include expert declarations in support of their preliminary response.9 For example, if the only expert testimony of record on a disputed issue prior to institution is that of the patent owner, it may be difficult (if not impossible) to establish a reasonable likelihood of prevailing based purely on attorney argument. Thus, it is important for petitioners to anticipate any issues that may be disputed by the patent owner’s expert in order to carry that burden.
Does the Burden Shift to the Petitioner Post-Institution?
Even after the petitioner establishes a reasonable likelihood of success and the Board institutes the IPR, the burden does not shift to the patent owner.10 Unlike prosecution, where, for example, the burden of proving non-obviousness shifts to the applicant after the USPTO establishes a prima facie case of obviousness, the burden on the IPR petitioner to prove “unpatentability by a preponderance of the evidence” never shifts.11
The Federal Circuit recently re-affirmed this framework in In re Magnum Oil Tools.12 In that case, the USPTO, intervening in the appeal of the Board’s final decision after the petitioner withdrew, argued that once the Board finds that the petitioner has demonstrated a “reasonable likelihood of success” and institutes an IPR, the burden of proving nonobviousness shifts to the patentee.13 In essence, the USPTO argued that once the IPR is instituted, the patent owner must affirmatively disprove the grounds upon which an IPR was initiated.14 In this case, the Board’s final written decision relied on a combination of references for which the petitioner had not provided a specific motion to combine, but rather incorporated the motivation to combine for those references from a different combination of references.15 The Board observed that the patent owner failed to explain why the same motivation to not apply to both references and did not provide sufficient evidence that such a combination would be beyond one of skill in the art.16 The Federal Circuit took issue with these statements and held that it was not the patent owner’s burden to disprove the grounds asserted by the petitioner.17 The Federal Circuit reasoned that while burden-shifting makes sense as a procedural tool for allocating burdens in patent examination, the underlying logic does not apply in the adjudicatory context of an IPR.18
By failing to present particularized argument with respect to the references that the Board ultimately relied on, the petitioner in In re Magnum set itself up for failure on those grounds. This demonstrates the importance of providing particularized and well-reasoned rationale for all grounds of unpatentability, even if they are similar.
Who Bears the Burden of a Motion to Amend?
One of the few stages of an IPR where the burden is on the patent owner is in a motion to amend the claims.19 Under 35 U.S.C. § 316(d), patent owners may file one motion to amend the challenged claims by cancelling them or proposing a reasonable number of substitute claims.20 The burden is on the patent owner to set forth a prima facie case of patentability of the narrower substitute set of claims over the prior art.21
In the petitioner’s opposition, the petitioner may explain why the patent owner did not make a prima facie case of patentability or attempt to rebut that prima facie case, for example by providing additional evidence or arguments and/or applying additional prior art to the proposed substitute claims.22 The patent owner has an opportunity to respond to the opposition.23 Although there is a back-and-forth between the parties, the ultimate burden of persuasion to demonstrate the patentability of the proposed amended claims remains with the patent owner.24 The burden placed on the patent owner has proven almost impossible to satisfy, resulting in a success rate of only 5 percent for motions to amend.25
A Federal Circuit panel had the opportunity to consider shifting this burden in Nike v. Adidas, where Nike argued that, because the petitioner has the burden of proving unpatentability under § 316 (e), the petitioner should bear the burden of showing unpatentability for motions to amend.26 Reading § 316(e) together with § 316(a)(9), however, the Federal Circuit concluded that the standard of § 316(e) does not necessarily apply to claims that were not in existence at the time a petition is filed, such as newly offered substitute claims proposed by a patent owner in a motion to amend filed as part of an already instituted IPR proceeding.27
Despite the Nike case, the law is still not settled on this issue. The Federal Circuit granted an en banc petition in August in In re Aqua Products, asking the parties for briefing on who should bear the burden of proof for a motion to amend.28 The Federal Circuit also asked the parties to brief whether the Board may raise sua sponte challenges to patentability of the amended claims if the petitioner fails to challenge the proposed claims, or if the petitioner’s challenge is inadequate.29 This en banc decision has the potential to shift the landscape of IPRs and make motions to amend a more viable option for patent owners. Oral argument is scheduled for December 9, 2016.
Petitioners and patent owners should be mindful of the burdens at each stage of IPRs, and how those burdens differ from patent prosecution and litigation. Petitioners should double check that their petition establishes that any non-prior art references qualify as prior art and should try to anticipate any expert testimony that the patent owner may submit with their preliminary response. Patent owners should be aware of the high burden they face in filing motions to amend. Finally, all parties should keep an eye on the In re Aqua Products case and other developing cases, as the courts continue to refine the balance of burdens of proof in IPRs.