MasterImage 3D, Inc. and MasterImage 3D Asia, LLC v. RealD Inc.

In an order perhaps indicating that the tide is turning for patent owners seeking to amend claims in inter partes review (IPR), an expanded panel of the Patent Trial and Appeal Board (PTAB or Board) provided clarification as to what is required of patent owners when seeking to amend claims. This order reinforces at least one recent decision by the Board and also statements by the director to the effect that the Patent Trademark Office will be relaxing the practical requirements for amending claims in IPR proceedings. MasterImage 3D, Inc. and MasterImage 3D Asia, LLC v. RealD Inc., Case IPR 2015-00040 (PTAB, July 15, 2015) (Lee, APJ.).

MasterImage 3D and its foreign affiliate filed an IPR petition challenging RealD’s patent directed to a polarization conversion system and method used for projecting images for 3D viewing. Agreeing that the petitioner had met its threshold showing, the Board instituted review of nine of the 20 challenged claims.

Two business days before its Patent Owner Preliminary Response and Motion to Amend were due, RealD requested a conference call with the Board. During the call, the parties and the Board discussed the requirements articulated by the Board in the Idle Free Systems v. Bergstrom, decision on motion to amend (IP Update, Vol. 17, No. 1), a decision previously designated as informative by the Board. Following the call, the expanded panel of the Board issued its order, expressly clarifying some of the language of the informative Idle Free decision.

The Board provided three points of clarification of its statement in Idle Free to in order to demonstrate patentability of proposed substitute claims over the prior art, “[t]he burden is not on the petitioner to show unpatentability, but on the patent owner to show patentable distinction over the prior art of record and also prior art known to the patent owner.” (Emphasis in original.) According to the Board, the reference in Idle Free to “prior art of record” should be understood as referring to “any material prior art in the prosecution history of the patent,” “any material art of record in the current proceeding, including art asserted in grounds on which the Board did not institute review” and “any material art of record in any other proceeding before the Office involving the patent.”

The Board further explained that “prior art known to the patent owner” in the context of Idle Free 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.” Since claim amendments made during an IPR can only narrow the scope of challenged claims, the Board also reasoned that when considering its duty of candor and good faith in connection with a proposed amendment, “Patent Owner should place initial emphasis on each added limitation.”

Practice Note: The order in this case echoes the recent final decision in REG Synthetic Fuels LLC v. Neste Oil Oyj (IP Update, Vol. 18, No. 7) and like that case indicates a response by the Board to criticism by patent owners about the severe requirements imposed in early proceeding to successfully amend claims during IPRs. The Board’s stance here is more permissive than was the case in the final written decision in Idle Free, where the patent owner’s Motion to Amend was rejected for not meeting the “burden of proof in demonstrating patentability of the proposed substitute claims over the prior art in general.” With this new clarification, the Board seems to have reframed the burden placed on patent owners seeking to amend claims—a not-insubstantial change.