On December 21, 2020, the U.S. Patent and Trademark Office published final rules in the Federal Register and set the decision in Hunting Titan, Inc. v Dynaenergetics Europe GMBH as follows regarding amendments in the Interpartes Review (IPR) and about Post-Grant Review (PGR) procedures:
- The patent proprietor bears the burden of convincing the majority of evidence to prove that a request for change meets the legal and regulatory requirements.
- The petitioner bears the burden of conviction to prove, by means of predominant evidence, that the proposed compensation claims are not patentable.
- In the interests of fairness, the Patent Litigation and Appeals Authority (PTAB) may use its discretion to approve or reject a request for change, but only for reasons supported by easily identifiable and convincing evidence in the proceedings. If the PTAB exercises its discretion, the parties will be notified and given an opportunity to respond.
At the beginning of the America Invents Act (AIA) IPR and PGR process, patent owners wishing to amend claims were required to demonstrate that the proposed replacement claims were patentable. However, there were no regulations of the Office that placed this burden. In the Aqua Prods., Inc. v. Matal case, 872 F.3d 1290 (Fed. Cir. 2017), the Federal Circuit stated that the patent owner could not be assigned this burden due to a lack of official rules. In response, the Office issued formal guidelines and no longer burdened a patentee with persuasiveness about the patentability of proposed compensation claims.
In Nike, Inc. v. Adidas AG, 855 F.3d 45 (Fed. Cir. 2020), the Federal Circuit took the view that PTAB should retain the ability to examine proposed claims for compensation in situations where a petitioner does not Application refuses to change. In order to maintain this ability, the PTAB should not be limited to arguments and theories put forward in a petition or in opposition to an amendment. Rather, the PTAB should consider the entire record when assessing the patentability of amended claims. The Federal Circuit also decided that PTAB could spontaneously identify a patentability issue for a proposed replacement claim based on the prior art. In these circumstances, the parties must be notified and given the opportunity to respond.
As discussed in an earlier blog post on July 6, 2020, the PTAB published its decision in Hunting Titan via a Precedential Opinion Panel (POP) and dealt with the Federal Circuit’s holdings in Nike and Aqua Products. The POP took the view that it was up to the petitioner to formulate the problems in a controversial AEI procedure, not only in a petition but also against an amendment. This finding meant that the petitioner had to bear the burden of proof that the claims for compensation proposed in an amendment were not patentable. The patent proprietor retained the burden of proof that the proposed compensation claims met legal and regulatory requirements.
In the Hunting Titan case, the POP also took the view that, in certain rare circumstances, the Board of Directors could raise a reason for unpatentability that a petitioner failed to raise or under-developed against claims for compensation proposed in an amendment. In these circumstances, the controversial process does not provide the Board with any potential arguments relevant to granting or rejecting an amendment. When PTAB uses its discretion to raise a new ground for unpatentability, due process requires that the patentee receive notification and an opportunity to respond.
Chasing Titan in the rules
The new rules – 37 CFR §§ 42.121 (d) (IPR) and 42.221 (d) (PGR) – implement Hunting Titan’s decision regarding the burden of proof and PTAB discretion. In discussing the exercise of discretion, the Office’s comments in the Federal Register deal with two situations regarding the patentability of compensation claims. In one situation the petitioner stopped participating in the procedure or decided against an amendment. In another situation, neither party has produced any specific evidence of unpatentability, but the evidence is so easy to identify that PTAB should take it up despite the controversial nature of the AEI proceedings.
The Office’s comments also deal with the exercise of discretion by the PTAB with regard to compliance with legal and regulatory requirements by the patent holder in an amendment request. If a patent holder does not explicitly address each of these requirements or ascertain compliance with them, but the evidence of compliance with these requirements is sufficiently identifiable and convincing, the PTAB can take up this despite the controversial nature of the AEI procedure.
The petitioners want the PTAB to examine issued and proposed compensation claims in IPR and PGR proceedings, regardless of the PTAB’s status as a judicial body and not as an examination body. The new regulation leaves open the possibility that the PTAB can take on an examination function under certain circumstances, but the trust of the PTAB in the controversial process will rarely make these circumstances. The petitioners will continue to have the burden of settling the issues in IPR and PGR procedures, including with regard to objections to amendments. It is to be expected that the PTAB will limit its review function to circumstances in which the controversial process fails. Only when this failure is clear – either when the parties have clearly missed something or one party decides to stop participating – is PTAB likely to take the opportunity to exercise discretion.