PTAB Decision Highlights Little Used Claim Amendment Process in America Invents Act Patent Challenges


On June 5, 2015, the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (PTO) issued a final written decision in an inter partes review (IPR) proceeding concerning U.S. Patent No. 8,278,492, a patent directed to a bio-diesel manufacturing method. (REG Synthetic Fuels LLC v. Neste Oil OYJ, IPR2014-00192) The decision was significant because it represented a rare instance in which the PTAB has permitted a patentee to amend its claims in an AIA post-grant proceeding. It is also significant because it signals, perhaps, a slight easing of the PTAB's stringent requirements for permitting such claim amendments.

When Congress enacted the America Invents Act (AIA) in 2011, it radically changed the process for post-grant administrative review of issued patents. By replacing the highly unpredictable and often interminable "inter partes reexamination" (IPRx) process with the streamlined IPR proceeding, Congress created an effective and low cost alternative to the full blown jury trial for challenging patent validity. In an IPR, patent validity is determined by a panel of technically trained administrative judges who constitute the PTAB. Today it is the rare patent infringement lawsuit that is not also accompanied by an ancillary post-grant proceeding before the PTAB.

But in creating this streamlined procedure, Congress eliminated some of the procedural safeguards that had benefited patentees under the prior IPRx regime. Among the most controversial of the changes was the elimination of the patent owner's ability to amend their claims as of right. In an IPRx, a patentee whose issued claims were found to be no longer patentable in view of newly discovered prior art could still salvage their patent by drafting a potentially unlimited number of narrower claims that purported to distinguish that art. The burden was put on the patent examiner, or the challenger, to find new prior art that would defeat those new claims. See 35 U.S.C. § 314(a) (pre-AIA).

By contrast, in an IPR, a patentee must request permission to file a claim amendment, and will be permitted to do so under highly constrained circumstances. In particular, the PTO's regulations preemptively allow only a one-for-one replacement of existing claims with new claims, and place the burden on the patentee to affirmatively demonstrate that the claims are patentable before the amendment will be allowed. See 37 C.F.R. 42.121. Moreover, the PTAB ruled early on in its existence that it was the patentee's burden to distinguish not only the prior art that formed the basis of the IPR, but all prior art known to the patentee. See Idle Free Systems, Inc. v. Bergstrom, Inc., Case IPR2012-00027, slip op. at 7 (PTAB June 11, 2013) (Paper 26); see also Microsoft Corp. v. Proxyconn, Inc., (Fed. Cir. June 16, 2015) (approving the PTAB's imposition of burdens set out in Idle Free Systems.). As a result, patent owners in only a handful of IPRs have been successful in attempting to amend their claims.

The difficulty of meeting this burden was illustrated by the PTAB's decision in ScentAir Tech., Inc. v. Prolitec, Inc., Case IPR2013-00179, slip. op. at 27—30 (PTAB June 26, 2014) (Paper 60). In that case, the patentee sought to amend one of its claims — directed to a liquid diffusion device — to distinguish the prior art that the PTAB had found to make its original claim unpatentable. In doing so, it distinguished the new claim from the prior art that had been cited by the challenger, but failed to address other art that had been identified during the original prosecution of the patent. When that additional art was brought to the PTAB's attention by the challenger, the PTAB found that it was inconsistent with the patent owners explanation of why its new claim was different from the prior art at issue in the IPR. In particular, it disclosed a limitation that the patentee had argued was absent from the prior art. Since the patent owner had not explained, in its motion, why the claims would be patentable over this new reference, the PTAB found that the patentee had not met its burden and the motion was denied.

By contrast, in the recent REG Synthetic Fuels case, the PTAB reached a different result — allowing the amendment — notwithstanding that the patentee failed to expressly address certain prior art references known to it. The original claims in that case had been challenged, and found unpatentable over a combination of specific references, primarily Jakkula and Monnier I. In addition to discussing those references, the challenger had also identified two other references, Raoulo and Prada, which were not used as part of a combination, but were cited merely to negate an argument by the patentee that the prior art taught away from using sulfur, a key feature of the claimed invention. However when the patentee moved to amend its claims and purported to distinguish the prior art in its motion, it failed to specifically address Raoulo or Prada (or a third reference with similar teaching called Plantenga), and the challenger argued that the motion to amend should be denied on that basis.

In rejecting the challenger's argument, and allowing the amendment, the PTAB reasoned that unlike the reference in ScentAir that was known to the patent owner but not distinguished, the Raoulo, Prada and Plantenga references were not alleged by the challenger to form any part of a combination of references rendering the claims obvious. Rather, these references were relevant only to the question of "teaching away", which had been discussed during, and rendered moot by, the PTAB's rejection of the original claims.  REG Synthetic Fuels LLC v. Neste Oil OYJ, IPR2014-00192, pp. 19-20.

REG Synthetic Fuels represents a slight loosening by the PTAB's claim amendment standards — the patent owner need not distinguish literally every reference known to it if the reference is not anticipatory or part of a prima facie obviousness combination — but ultimately does not move the needle very far toward a more liberal claim amendment regime. Patent owners hoping for such a change may have reasons to be optimistic however. The patent reform legislation currently pending in Congress seems likely to include some liberalization of the claim amendment standards in AIA proceedings. In addition, PTO Director Michelle Lee has indicated that the regulations governing claim amendments are likely to be revised in the near future.