CAFC Rules Petitioner has Burden of Proof to Demonstrate Unpatentability of Patent Owner’s Amended Claims in an Inter Partes Review

On October 4, 2017, the U.S. Court of Appeals for the Federal Circuit (CAFC) sitting en banc, ruled that the petitioner has the burden of persuasion with respect to demonstrating unpatentability of amended claims proposed by the patent owner in an inter partes review (IPR). Aqua Products v. Matal, 872 F.2d 1290, 124 USPQ2d 1257 (Fed. Cir. 2017). In an earlier panel decision, the CAFC had affirmed the final decision of the Patent Trial and Appeal Board (PTAB), allocating the burden of proof on the patentee. In re Aqua Products, 823 F.3d 1369, 118 USPQ2d 1776 (Fed. Cir. 2016). The en banc decision changes the practice at the PTAB, which had been approved in CAFC panel decisions, that required the moving party, i.e., a patent owner submitting amended claims, to prove that the amended claims are patentable.

The decision of the en banc court consists of five separate opinions, illustrating the deep divisions of the court on this issue. Four of the eleven judges dissented, with Judge Stoll not participating. Patent owners will still have the initial burden of production in making and supporting a motion to amend in an IPR. However, the Board can no longer require a patent owner to demonstrate patentability of the amended claims. Instead, once the moving party (patent owner) provides the information under the rules to justify a motion to amend, the petitioner will have the burden of proving unpatentability of the amended claims. The Board must now follow this allocation of burdens in all pending IPRs unless and until the Director of the USPTO engages in notice and comment rulemaking. In the meantime, the U.S. Supreme Court will rule on the constitutionality of IPRs in the first instance, with a decision expected in the spring of 2018. Oil States Energy Services, LLC v. Green’s Energy Group, LLC, Sup. Ct. Dkt. 16-712. The Supreme Court heard oral arguments on November 27, 2017.