By Andrew Williams --
Last year, the Federal Circuit decided the Aqua Products, Inc. v. Matal case en banc in what could be considered the epitome of a fractured decision. After 148 pages and five separate opinions, the only agreed-to result could be summed up in two conclusions: (1) that the PTO had not adopted a rule regarding the burden of persuasion, and that (2) because there was nothing that was entitled to deference, "the PTO may not place that burden on the patentee." Nevertheless, Judge Rayne's concurrence-in-part, at Part III, articulated a rule regarding the burden of production, even if there was disagreement whether it was a judgement of the Court or mere "cogitations." This conclusion was that, in the absence of a properly promulgated rule, "the Patent Office must by default abide by the existing language of inter partes review statute and regulations, § 316(d) and 37 C.F.R. § 42.121, which only allocate a burden of production to the patent owner." At the time, we did not know whether the Board would follow Judge Rayne's pronouncement. But in the interim, the picture has become clear.
The writing was on the proverbial wall when Chief Judge Ruschke issued his memorandum on November 21, 2017 entitled "Guidance on Motions to Amend in view of Aqua Products" (see "PTAB Motions to Amend Post-Aqua Products -- Chief Judge Ruschke Issues Guidance"). The tenor of his message was that there is "nothing to see here" (and that we should all just move along). He indicated that the only actual outcome from Aqua Products was that the Board will no longer "place the burden of persuasion on a patent owner with respect to the patentability of substitute claims presented in a motion to amend." As a result, the Chief Judge explained, the "practice and procedure before the Board will not change," except when the entirety of the evidence is in equipoise, in which case the motion to amend will now be granted.
The guidance did make clear that a patent owner still must satisfy the requirements of 35 U.S.C. § 316(d) and 37 C.F.R. § 42.121. In fact, perhaps tellingly, the Board has been citing to Judge's Rayne's decision at Part III in Aqua Products for this proposition. See, e.g., Apple Inc. v. Personalized Media Communications LLC, IPR2016-01529, Paper 38 at 56 (PTAB Feb. 15, 2018) ("'There is no disagreement that the patent owner bears a burden of production in accordance with 35 U.S.C. § 316(d). Indeed, the Patent Office has adopted regulations that address what a patent owner must submit in moving to amend the patent.' [Aqua Products] at 1341.") But with regard to who has the burden of persuasion, the Board appears to have taken the position that no one actually does. Instead, they have indicated that they will rule on the motion by simply looking at the entirety of the record. For example, in one of the more recent final written decisions, the Board set out what it is required to do when deciding a Motion to Amend:
Accordingly, we base our decision on the substitute claims provided in the Motion to Amend on the entirety of the record before us. Petitioner's arguments regarding the patentability of the substitute or new claims, as well as Patent Owner's Reply thereto, are considered below, after consideration of the procedural requirements of Rule 121 and 35 U.S.C. § 326(d).
Id. at 57. Again, tellingly, there is no mention of which party actually has the burden of persuasion with regard to the motion to amend. This raises the question about whether the Board could deny a motion to amend in cases where the patent owner has satisfied the requirements articulated in 35 U.S.C. § 316(d), but where the petitioner has not opposed the motion (or provided any evidence with regard to the substitute claims). Without any burden on the petitioner, this eventuality would appear to be a possibility.
Of course, not every APJ seems to be on board with this absence of an articulation as to who has the burden. As we recently reported, APJ Michael J. Fitzpatrick filed a concurrence in the Taiwan Semiconductor Manufacturing Company v. Godo Kaisha IP Bridge (IPR2016-01249) final written decision. He stated he was of the belief that the decision should explain who bears the burden(s) because future "patent owners will be left guessing what their motion to amend must contain." His solution would have been to explicitly hold that both the burden of production and the burden of persuasion be on the petitioner. With regard to the burden of persuasion, he indicated that it should be put on the petitioner "because doing so is consistent with the most relevant statutory provision and there is no applicable rule requiring otherwise." He did nevertheless acknowledge that the initial burden of production should be on the patent owner to show that the written description requirement has been met, because (among other reasons) 35 U.S.C. § 316(d)(3) states that "[a]n amendment . . . may not . . . introduce new matter." He also acknowledged that the Aqua Products did not overrule Rule 42.20(c) ("Burden of proof. The moving party has the burden of proof to establish that it is entitled to the requested relief."), and therefore the burden of production is still on the patent owner to establish that a substitute claim is responsive to an instituted ground of unpatentability.
A final interesting note about the Aqua Products case relates to the fact that the Federal Circuit's holding in Aqua Products was not that the Patent Office could not promulgate a rule assigning the burden of persuasion to patent owners. Instead, it was only that such a rule was not promulgated. Correspondingly, it is possible that the Patent Office could take use back to pre-Aqua Products days. There has been no indication from the Office that it intends to do so, but a new Director of the Patent Office has just been confirmed and sworn in, so it remains to be seen what will happen. But in an action that might have tipped the hand of the Office, the Under Secretary of Commerce for Intellectual Property and Director, U.S. Patent and Trademark Office as intervenor in the case of Bosch Automotive Service Solutions, LLC v. Matal recently filed an Intervenor's Petition for Panel Rehearing. The Office is not asking the Federal Circuit to alter its judgment in that case. Rather, it believes that the panel decision incorrectly stated the holding of Aqua Products when it said: "Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable 'by a preponderance of the evidence.' 35 U.S.C. § 316(e)." The Office reasoned that, because there were only two take-aways from the Aqua Products case (as articulated above), this reading is an impermissible extension of that holding.
The Office may have a valid point. 35 U.S.C. 316(e) reads: "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." If the above quoted language from the Bosch Automotive case is correct, then the statute is not ambiguous and the Patent Office could not promulgate a rule placing the burden of persuasion on patent owners for motions to amend. However, as the Office points out, a majority of judges in Aqua Products found that this statutory language was ambiguous. Therefore, as the Office's petition puts it:
Thus, Aqua Products simply holds that under the current landscape, the USPTO cannot place the burden of persuasion with respect to patentability of amended claims on the patentee. It recognizes, however, that it might be possible for the USPTO to do so in the future. But the panel's reading of Aqua Products could leave the mistaken impression that the panel foreclosed what Aqua Products expressly left open.
Of course, this begs the question whether the Office is currently planning on promulgating such a rule. On the one hand, it can be argued that the Office simply wants the Court to be as precise as possible, and therefore this is no indication of its intent to undo Aqua Products. However, on the other hand, why expend the energy and resources of the Office to request this small change unless it does have plans to promulgate a new rule. It remains to be seen what will happen, but it may no longer be a surprise if we see a Notice of Proposed Rulemaking from the Patent Office in the near future.
The burden of production related to no new matter already exists for amendments in prosecution and is a relatively low burden, satisfied by merely presenting with some minimal particularity the location in the application as filed that supports the amendment (reminder: in the US Sovereign, a ver batim support is not required).
Posted by: skeptical | February 23, 2018 at 06:58 AM
As to:
"However, as the Office points out, a majority of judges in Aqua Products found that this statutory language was ambiguous"
Those judges were wrong - ambiguity cannot be created by the judges trying to change the law. Sham "ambiguity" does not count.
Posted by: skeptical | February 23, 2018 at 07:00 AM