Fed Cir Bars PTAB From Placing Burden of Persuasion on Patent Owners Proposing Substitute Claims in IPR, Absent Formal Rulemaking
Aqua Products, Inc. v. Matal, 2017 U.S. App. LEXIS 19293 (Fed. Cir. Oct. 4, 2017) (en banc: O’MALLEY (w/ Newman, Lourie, Moore, Wallach, Reyna (as to result), Dyk (as to result)); concurrence by Moore (w/ Newman, O’Malley); concurrence by Reyna (w/ Dyk, Prost (in part), Taranto (in part), Chen (in part), Hughes (in part); dissent by Taranto (w/ Prost, Chen, Hughes, Dyk (in part in other respects), Reyna (in part in other respects); dissent by Hughes (w/ Chen)) (PTAB) (5 of 5 stars)
Fed Cir vacates PTAB denial of motion to amend claims in IPR, and remands. The PTAB erred in assessing the patentability of proposed substitute claims with the burden of proof on the patent owner.
No single opinion is joined by a majority of judges sitting en banc, though a majority supported the result of Judge O’Malley’s opinion (i.e., vacatur). The five opinions differ from one another as follows:
O’Malley: Reasons that vacatur is warranted because the PTAB’s decision was incompatible with the unambiguous statutory text. The PTAB’s reasoning thus failed step one of Chevron, 467 U.S. 837 (1984). In Judge O’Malley’s view, § 316(e) unambiguously requires the IPR petitioners—not patent owners—bear the burden of proof on all issues of unpatentability, including for proposed substitute claims. Were the statute ambiguous, the result would be the same because the PTO has promulgated no regulation requiring Chevron deference and the most reasonable reading of the statute is the one given above.
With support from a majority of judges sitting en banc, the O’Malley opinion orders that the PTAB re-assess “the patentability of the proposed substitute claims without placing the burden of persuasion on the patent owner. The Board must follow this same practice in all pending IPRs unless and until the Director engages in notice and comment rule-making.” Op. at 66.
Moore: Reasons, like the O’Malley opinion, that § 316(e) is unambiguous in its assignment of the burden of proof for motions to substitute claims in IPR. Judge Moore would have further specifically held that Board decisions designated as precedential (here, MasterImage) or informative (here, Idle Free) are not entitled to Chevron deference.
Reyna: Reasons that § 316(e) is ambiguous as to who bears the burden of persuasion on a motion to amend claims in IPR, and so proceeds to Chevron step two. Judge Reyna would have held that the PTO did not promulgate regulations concerning assignment of the burden of proof sufficient to satisfy Chevron step two, and so no Chevron deference need be accorded to the PTO’s reasoning. Interpreting § 316(d) and 37 C.F.R. § 42.121 in the first instance, Judge Reyna would have held that those rules “place a default burden of production [though not of persuasion] on the patentee.” This final conclusion is joined by Chief Judge Prost and Judges Chen, Taranto, and Hughes, though they do not join Judge Reyna’s Chevron step two analysis, nor his conclusion that vacatur is warranted.
Taranto: Reasons that § 316(e) is ambiguous as to who bears the burden of persuasion on a motion to amend claims in IPR, and so proceeds to Chevron step two. Judge Taranto would have held that Chevron deference was owed, however, to the PTO’s allocation of the burden of proof per 37 C.F.R. § 42.20(c), and so would have affirmed.
Hughes: Judge Hughes joins the Taranto opinion and further reasons that 37 C.F.R. § 42.20(c) would be due Auer deference even if not Chevron deference.
Judge Stoll did not participate.
KEYWORDS: INTER PARTES REVIEW; BURDEN OF PROOF; BURDEN OF PERSUASION; EN BANC; CHEVRON; SUBSTITUTE CLAIMS