New AIA Rules Implement Hunting Titan and Preserve a Dual Role for the PTAB
On December 21, 2020, the US Patent and Trademark Office (Office) published final rules in the Federal Register, implementing the decision in Hunting Titan, Inc. v Dynaenergetics Europe GMBH as follows regarding motions to amend in inter partes review (IPR) and post-grant review (PGR) proceedings:
The patent owner bears the burden of persuasion to show, by a preponderance of the evidence, that a motion to amend complies with statutory and regulatory requirements.
The petitioner bears the burden of persuasion to show, by a preponderance of the evidence, that proposed substitute claims are unpatentable.
The Patent Trial and Appeal Board (PTAB) may, in the interests of justice, exercise its discretion to grant or deny a motion to amend, but only for reasons supported by readily identifiable and persuasive evidence in the proceeding. Where the PTAB so exercises its discretion, the parties will receive notice, and will be given an opportunity to respond.
Early in the life of IPR and PGR proceedings under the America Invents Act (AIA), patent owners moving to amend claims had the burden of proof to show that proposed substitute claims were patentable. There were no Office rules imposing that burden, however. In Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017), the Federal Circuit held that in the absence of Office rules, the patent owner could not be assigned that burden. In response, the Office issued formal guidance, no longer placing the burden of persuasion on a patent owner regarding patentability of any proposed substitute claims.
In Nike, Inc. v. Adidas AG, 855 F.3d 45 (Fed. Cir. 2020), the Federal Circuit held that the PTAB should retain the ability to examine proposed substitute claims in situations in which a petitioner does not oppose a motion to amend. In retaining this ability, the PTAB should not be constrained to arguments and theories raised in a petition or in an opposition to a motion to amend. Rather, the PTAB should consider the entirety of the record before it when assessing the patentability of amended claims. The Federal Circuit also held that the PTAB may, sua sponte, identify a patentability issue for a proposed substitute claim based on the prior art of record. In that circumstance, the parties must be given notice and an opportunity to respond.
As discussed in an earlier blog post, on July 6, 2020, the PTAB, through a Precedential Opinion Panel (POP), issued its decision in Hunting Titan, addressing the Federal Circuit holdings in Nike and Aqua Products. The POP held that it is the petitioner’s job to frame the issues in an adversarial AIA proceeding, not only in a petition but also in opposing a motion to amend. This holding meant that the petitioner was given the burden of showing that proposed substitute claims in a motion to amend are unpatentable. The patent owner retained the burden to show that proposed substitute claims met statutory and regulatory requirements.
In Hunting Titan, the POP also held that the Board may, in certain rare circumstances, raise a ground of unpatentability that a petitioner did not advance, or insufficiently developed, against substitute claims proposed in a motion to amend. In such circumstances, the adversarial process fails to provide the Board with potential arguments relevant to granting or denying a motion to amend. If the PTAB does exercise its discretion to raise a new ground of unpatentability, due process requires that the patent owner receive notice and an opportunity to respond.
Hunting Titan in the Rules
The new rules – 37 C.F.R. §§ 42.121(d) (IPR) and 42.221(d) (PGR) – implement the Hunting Titan decision regarding burdens of proof and PTAB exercise of discretion. In discussing exercise of discretion, comments from the Office in the Federal Register address two situations regarding patentability of substitute claims. In one situation, the petitioner has ceased to participate in the proceeding or chooses not to oppose a motion to amend. In another situation, neither party has raised certain evidence regarding unpatentability, but the evidence is so readily identifiable that the PTAB should take it up, notwithstanding the adversarial nature of AIA proceedings.
The Office comments also address PTAB exercise of discretion regarding patent owner compliance with statutory and regulatory requirements in a motion to amend. Where a patent owner does not expressly address or establish compliance with every such requirement, but evidence of compliance with those requirements is sufficiently identifiable and persuasive, the PTAB also may take this up, again notwithstanding the adversarial nature of AIA proceedings.
Petitioners would like the PTAB to examine issued and proposed substitute claims in IPR and PGR proceedings, notwithstanding the PTAB’s status as an adjudicatory body and not an examining body. The new rule leaves open the possibility that the PTAB may undertake an examination function in certain circumstances, but the PTAB’s reliance on the adversarial process will make those circumstances rare. The burden will remain on petitioners to frame the issues in IPR and PGR proceedings, including with respect to oppositions to motions to amend. It is reasonable to expect that the PTAB will limit its examining function to circumstances in which the adversarial process fails. Only where that failure is clear, however – either when the parties clearly missed something, or a party decides to cease participating – will the PTAB be likely to take the opportunity to exercise discretion.