October 29, 2019
What Do We know?
1. On October 22, 2019, the PTAB issued a notice of proposed rulemaking (“Notice”) to allocate the burdens of persuasion on motions to amend in post grant trial proceedings (inter partes reviews, post-grant reviews, and covered business method reviews). Proposed Rulemakin
2. The proposed rules, consistent with current practice, will require patent owners to bear the burden of persuasion to show statutory and regulatory compliance. The requirements include submission of a reasonable number of proposed substitute claims that do not enlarge claim scope or introduce new matter, have written description support, and are responsive to grounds of unpatentability raised in the post grant trial proceeding. 35 U.S.C. §§ 316/326(d) and 37 C.F.R. §§ 42.121/42.221(a), (b).
3. The proposed rules, consistent with current practice, will require petitioner to bear the burden of persuasion to show unpatentability of the proposed substitute claims.
4. The proposed rules will provide that “where a party does not meet its burden, the Board may, in the interests of justice, exercise its discretion to grant or deny a motion to amend for any reason supported by the evidence of record.” Proposed Rulemaking, 56405 col. 1 (emphasis added).
5. Comments are due no later than December 23, 2019.
Observations and Practice Tips:
1. PTAB’s allocation of the burdens of persuasion is consistent with Federal Circuit and Supreme Court precedent. See Aqua Products, Inc. v. Matal, 872 F.3d 1290, 1296 (“[T]he most reasonable reading of the AIA is one that places the burden of persuasion with respect to the patentability of amended claims on the petitioner.”); see also Bosch Automotive Service Sol’ns, LLC v. Matal, 878 F.3d 1027, 1040 (Fed. Cir. 2017) (corrected March 28, 2018); SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1357 (2018).
2. The most significant provision is PTAB’s formal statement of discretionary authority to determine patentability of amended claims “even when a petitioner [or patent owner] does not carry its burden of persuasion.” Proposed Rulemaking, 56402 col. 2. In essence, PTAB can override a failure of proof by one of the parties “when supported by the record and when in the interests of justice.” Id.
3. PTAB’s assertion of discretionary authority makes sense when a petitioner ceases to participate (e.g., due to settlement), which is consistent with Federal Circuit precedent. See Aqua Products, 872 F.3d at 1311 (when a petitioner ceases to participate, “it is the Board that must justify any finding of unpatentability by reference to the evidence of record.”).
4. PTAB’s first ever Preliminary Guidance on a patent owner’s motion to amend recently underscored PTAB’s approach. See Mylan Pharms. v. Sanofi-Aventis, IPR2018-01679 Paper 55 (PTAB Oct. 16, 2019) (“Petitioner (or the record) has shown a reasonable likelihood that the proposed substitute claims  are unpatentable.”) (emphasis added).
5. But what about when a petitioner remains in the proceeding. Does the PTAB have authority to determine proposed substitute claims unpatentable when a petitioner fails to oppose the motion to amend or fails to satisfy it’s burden of persuasion? The Supreme Court’s admonition in SAS Institute, “the petitioner’s contentions, not the Director’s discretion, define the scope of the litigation all the way from institution through to conclusion,” suggests otherwise. See SAS Inst., 138 S. Ct. at 1357.
6. The public benefits if unpatentable claims are rejected by the Board based on a review of the complete record, such as for lack of subject matter eligibility, or failure to comply with written description, enablement, or definiteness requirements. See Lectrosonics, Inc. v. Zaxcom, Inc., IPR2018-01129 Paper 15, 5-6 (PTAB Feb. 25, 2019) Precedential (such discretionary determinations “are not precluded by rule or statute”). SAS Institute, however, suggests limitations on the exercise of such discretion.
7. In Sirona Dental Systems v. Institut Straumann, 892 F.3d 1349, 1357 (Fed. Cir. 2018), the Federal Circuit remanded PTAB’s pre-Aqua Products denial of patent owner’s motion to amend. Patent owner objected to the Board’s decision as improperly rejecting the proposed substitute claims based on a combination of references not raised by Petitioner. Citing the Supreme Court’s SAS Institute decision, the Federal Circuit directed the Board to consider “whether it may consider combinations of references not argued by the petitioner in opposing the motion to amend claims, and, if so, what procedures consistent with the APA are required to do so.” Keep an eye out for the PTAB decision on remand, which was argued April 30, 2019.