During an inter partes review (IPR) proceeding concerning Aqua Products, Inc.’s (Aqua) U.S. Patent No. 8,273,183 (the ‘183 patent), the Patent Trial and Appeal Board1 denied Aqua’s motion to amend certain ‘183 patent claims. In May 2016, a Federal Circuit panel affirmed the PTAB’s decision, finding that the PTAB did not abuse its discretion in denying Aqua’s motion to amend. On October 4, 2017, the Federal Circuit issued an en banc decision vacating and remanding the panel decision.2
Until now, the PTAB has placed on patent owners the burden of proving the patentability of substitute/amended claims filed in a motion to amend during an IPR proceeding.3 In the IPR proceeding that led to the Federal Circuit’s Aqua Products, Inc. v. Matal decision, the PTAB determined that Aqua did not meet its burden and denied Aqua’s motion to amend. Arguing that the PTAB improperly placed the burden of proving patentability on the patent owner, rather than placing the burden on the petitioner (i.e., the party filing a petition requesting inter partes review) to prove unpatentability of the amended claims, Aqua appealed.
Far from reaching a consensus, the en banc court issued five opinions totaling 148 pages. Consequently, as the court noted, its judgment in Aqua Products, Inc. v. Matal was narrow.
Eleven judges participated in the Aqua appeal, which involved the interpretation of 35 U.S.C. § 316(e):
(e) Evidentiary standards. – In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.
Five judges determined that 35 U.S.C. § 316(e) unambiguously requires the petitioner to prove all propositions of unpatentability, including unpatentability of amended claims. However, because the majority of the court found 35 U.S.C. § 316(e) to be ambiguous on the question of whether the petitioner bears the burden of proving unpatentability of amended claims, the court undertook a Chevron analysis.4
The five judges that found 35 U.S.C. § 316(e) unambiguous went on to find that even if the statute were ambiguous, the PTAB’s construction of the statute was not a permissible one and, therefore, step two of the Chevron analysis was not satisfied, and the PTAB’s construction of 35 U.S.C. § 316(e) was owed no deference. Two other judges concurred in that result. Accordingly, a majority of the court found that: “(1) there is no considered statutory interpretation that has been undertaken by the agency [PTO] to which we must defer; and (2) in the absence of regulatory action to which we must defer, the burden of proving the unpatentability of all claims in an IPR — both original and amended — is on the petitioner.”5
So, barring a contrary decision by the Supreme Court, unless and until the PTO can meet its obligations under step two of Chevron by engaging “in notice and comment rule-making,”6 the PTAB must assess the patentability of amended claims in an IPR without placing the burden of persuasion on the patent owner. The effect will likely be that the number of proposed claim amendments allowed by the PTAB will increase.