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Patentability of Amended Claims in IPR Is Petitioner's Issue, Not Patentee's Burden

The Patent Trial and Appeal Board improperly requires a patent owner in an inter partes review (IPR) to show that proposed amended patent claims are patentable before a motion to amend those claims will be granted, according to a 7-4 decision of the en banc Federal Circuit. Aqua Products, Inc. v. Matal, Fed. Cir., No. 2015-1177, 10/4/2017. 

In 148 pages, the deeply divided the Court produced five opinions, none of which garnered sufficient votes to serve as the opinion of the Court. Judge O’Malley’s 68-page opinion, which was joined by four judges (Newman, Lourie, Moore and Wallach), concluded 5-6 that the statute unambiguously prohibited imposing on the patentee a burden of showing patentability, requiring no deference to the PTAB rule under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984). However, the opinion picked up two additional votes of Judges Dyk and Reyna, who concurred in the result based on an alternative rationale conceding the ambiguity of the statute but nonetheless denying deference to the PTAB rule.

Thus, under that alternative rationale, the Court held 7-4 that the statute requires petitioner to prove unpatentability, and that no deference is due the PTAB rule because the PTO failed to point to a statutory interpretation supporting the PTAB requirement in a regulation to which the Court must defer.

Judge O'Malley conceded that Section 316(a)(9) gives the PTO Director authority to issue regulations that allow patent owners "to move to amend the patent," and that Section 316(d) spells out some details on such motions. However, she pointed out that the only showing required is under Section 316(d)(3), which states that proposed amendments may not enlarge the scope of the claims or introduce new matter. The core requirement on patentability, Judge O'Malley explained, is found at Section 316(e), which states that a proposition of unpatentability must be shown by the petitioner by a preponderance of the evidence. This requirement applies to amended claims as well as to those original claims cited in the decision to institute the IPR, she maintained.

Although her opinion discusses at length why there should be no Chevron deference to the PTO's statutory and regulatory interpretation, Judge O'Malley concludes that very little in her opinion or the others has precedential effect. 

The only legal conclusions that support and define the judgment of the court are: (1) the PTO has not adopted a rule placing the burden of persuasion with respect to the patentability of amended claims on the patent owner that is entitled to deference; and (2) in the absences of anything that might be entitled deference, the PTO may not place that burden on the patentee. All the rest of our cogitations, whatever label we have placed on them, are just that--cogitations. Even our discussions on whether the statute is ambiguous are mere academic exercises.

Judge Moore agreed with Judge O'Malley but wrote a separate concurring opinion to argue that Chevron deference does not apply to opinions of the PTAB.

Judge Reyna's opinion argued that the statute is ambiguous, that the PTO position is not supported by law, and that the PTO did not properly issue a rule under the Administrative Procedure Act.

Judge Taranto's dissenting opinion argued that the statute is ambiguous, that the PT​O properly determined that the patent owner bears the burden of showing the patentability of proposed amended claims, and that the PTO's determination is owed Chevron deference.

Judge Hughes' opinion, joining Judge Taranto's dissent, argued that the PTO's interpretation of its own regulation implementing the statute is entitled to deference under Auer v. Robbins, 519 U.S.  452 (1997), and that agency authority to issue "regulations" is not confined to material that appears in the Code of Federal Regulations.

To read the opinions in the case, click here.​