The Patent Trial and Appeal Board (“PTAB”) granted its sixth1 motion to amend on April 22, 2016 in Shinn Fu Co. v. The Tire Hanger Corp.2 This ability to amend during an inter partes review (IPR) has been used to justify the application of the broadest reasonable interpretation for claim construction.3 And yet, out of 1,539 completed America Invents Act trials, only 192 motions to amend have been filed, with 118 motions of those filed actually decided by the PTAB.4 Of the 118 motions to amend decided, only 2 motions to amend have been granted and 4 have been granted in part.5 The recent grant of the motion to amend in Tire Hanger and Federal Circuit precedent provides guidance to patent owners in preparing motions to amend in a manner that increases the likelihood of success.
The Standard for Granting a Motion to Amend
The ability for the Patent Owner to file 1 motion to amend in an IPR is provided for by statute in 35 U.S.C. § 316(d). However, the patent owner bears a heavy burden and in Idle Free, the PTAB first outlined the requirements for filing a motion to amend. The PTAB expects the Patent Owner: (1) in all circumstances, to make a showing of patentable distinction over the prior art; (2) in certain circumstances, to make a showing of patentable distinction over all other proposed substitute claims for the same challenged claim; and (3) in certain circumstances, to make a showing of patentable distinction over a substitute claim for another challenged claim.6
The burden is on the patent owner to show a patentable distinction of each proposed substitute claim over the prior art of record and also prior art known to the patent owner.7 A motion to amend may be denied where: (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.8 “The presumption is that only one substitute claim would be needed to replace each challenged claim, and it may be rebutted by a demonstration of need.”9
In MasterImage 3D, the PTAB clarified that the reference to “prior art of record” in Idle Free refers to: (i) any material art in the prosecution history; (ii) any material art of record in the current proceeding, including art asserted in grounds on which the PTAB did not institute review; and (iii) any material art of record in any other proceeding before the Office involving the patent.10 The PTAB also clarified that “prior art known to patent owner” should be understood as no more than the material prior art Patent Owner makes of record in the current proceeding pursuant to its duty of candor and good faith under 37 CFR § 42.11.11 The PTAB further discussed that the initial emphasis in considering its duty of candor and good faith should be placed on each added limitation.12 Once a Patent Owner sets forth a prima facie case of patentability of narrower substitute claims over the prior art of record, the burden of production shifts to Petitioner.13
The Federal Circuit has been largely deferential to PTAB decisions and has previously affirmed the PTAB’s denials of motions to amend. However, the Federal Circuit recently remanded-in-part the PTAB’s denial of the motion to amend in Nike, Inc. v. Adidas AG.14 On appeal, Nike objected to, among other things, the PTAB’s failure to consider Nike’s evidence of secondary considerations of non-obviousness in finding the proposed substitute claims unpatentable over the prior art of record.15 Regarding secondary considerations, Nike argued that reducing waste was a long-felt need in the shoe manufacturing industry and the prior art did not resolve this need.16 The PTAB’s written decision lacked a discussion, or even an acknowledgement of secondary considerations.17 The Federal Circuit noted that it has expressly stated that “when secondary considerations are present…it is error not to consider them.”18 The Federal Circuit found the PTAB is bound to fully consider properly presented evidence on secondary considerations, such as long-felt need.19 Since the decision contained no findings suggesting the PTAB weighed and rejected Nike’s evidence of long-felt need, the Federal Circuit remanded for the PTAB to examine Nike’s evidence and whether it impacts the PTAB’s analysis.20 This provides some hope to patent owners wishing to amend their claims during an IPR where secondary considerations are at issue.
The Federal Circuit also confirmed MasterImage 3D’s interpretation that “prior art known to the patent owner” should be understood as no more than the material prior art that the Patent Owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the Office under 37 C.F.R. § 42.11.21 The Federal Circuit noted that at the heart of this interpretation is whether the patent owner has submitted the necessary information to comply with its duty of candor.22 The Federal Circuit reiterated Nike’s reasoning during oral arguments for Clouding Corp. v. Unified Patents, Inc. on May 6, 2016.23 The panel emphasized that Nike clearly stated that rejecting a proposed amendment because it did not address all prior art that the patent owner knew of is not the proper standard.24 The panel discussed how the PTAB’s reasoning in the underlying inter partes review proceeding ran counter to the decision in Nike.25
Tire Hanger’s Motion to Amend
In its April 22, 2016 grant of the motion to amend in Tire Hanger, the PTAB found that Tire Hanger met its burden of showing that substitute claims 6-10 are patentably distinct over the prior art of record.26 The PTAB acknowledged that “[a]lthough not required to prove that the claims are patentable over every piece of prior art known to a skilled artisan, a patent owner is required to explain why the claims are patentable over the prior art of record.27 The duty of candor and good faith requires the patent owner to address not only the prior art of record, but also any relevant prior art known to it.28 The PTAB found that the patent owner met its duty of candor and good faith by grouping prior art references together according to their particular teachings without having to make a presentation on each and every reference giving rise to that same teaching.29 Tire Hanger addressed references in groups and the PTAB did not find fault with discussing only a representative few of a group of references given the duplicative nature.30
The PTAB acknowledged the simplicity of the claimed invention at the outset.31 But the PTAB found the purpose of the claimed method relevant to its analysis of obviousness of a method of using a known device and found a structural distinction between hangers and cradles.32 The PTAB declined to engage in a patchwork effort to obviate the combination of steps called for by substitute claims 6-10.33 The PTAB pointed out that while the claimed invention is seemingly simple, “simplicity is not inimical to patentability.”34 The PTAB found that Tire Hanger demonstrated by a preponderance of the evidence that proposed substitute claims 6-10 were patentable over the prior art of record and was entitled to entry of the substitute claims.35
While the patent owner still bears a steep burden of proving a patentable distinction of each proposed substitute claim over the prior art, the PTAB has recently clarified the bounds of this burden as the prior art of record and prior art known to the patent owner. The recent clarifications may encourage more patent owners to file a motion to amend, and lead to more successful motions to amend.36 In addition, the Board made precedential the July 2015 decision in MasterImage 3D, which clarified that prior art “known to the patent owner” meant only “the material prior art that patent owner makes of record in the current proceeding pursuant to its duty of candor and good faith,” not all prior art in existence.37
In Tire Hanger, the PTAB clarified that a patent owner need not distinguish every piece of prior art, but rather the material prior art patent owner makes of record in the proceeding pursuant to its duty of candor and good faith under 37 CFR § 42.11. Further, the PTAB in Tire Hanger clarified that a patent owner does not have to separately address each piece of prior art and may address a representative reference by grouping references together where the teachings of the group are duplicative. This can be very helpful to the patent owner, given the page limit restrictions governing motions to amend.
The Federal Circuit clarified in Nike that the PTAB must consider properly presented secondary considerations of non-obviousness in evaluating a motion to amend. In Nike, the Federal Circuit also confirmed that “prior art known to the patent owner” should be understood as no more than the material prior art that Patent Owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the Office under 37 C.F.R. § 42.11. This standard was re-emphasized during oral arguments before the Federal Circuit in Clouding Corp. and when the PTAB designated the MasterImage 3D motion to amend decision as precedential.38 These recent clarifications of the standard for evaluating a motion to amend may encourage more patent owners to file and assist patent owners in preparing motions to amend, and may lead to a higher rate of success of such motions.