Judge Jimmie V. Reyna of the U.S. Court of Appeals for the Federal Circuit
Judge Jimmie V. Reyna of the U.S. Court of Appeals for the Federal Circuit (Photo: J. Albert Diaz/ALM)

From almost the first America Invents Act trial in 2013, patent owners have complained that the Patent Trial and Appeal Board is too stingy with motions to amend patent claims.

The U.S. Court of Appeals for the Federal Circuit sounded poised to come to their rescue Friday. Six members of the court sitting en banc seemed receptive to patent owner arguments that they should not bear the burden of proving their amended claims are patentable.

“There’s nothing in the regulation that says that once a patent owner moves to amend claims, then they assume a burden of patentability,” Judge Jimmie Reyna told U.S. Patent and Trademark Office Solicitor Nathan Kelley during an hourlong argument. Instead, Reyna suggested, the burden should remain with the petitioner seeking to invalidate the patent.

Judges Kimberly Moore, Alan Lourie and Pauline Newman also had Kelley on the defensive, as did Judges Kathleen O’Malley and Richard Taranto to a lesser extent. With Judge Kara Stoll recused, it sounded as if they might be able to form a majority.

If that’s how it plays out, patent owners will have a broader path for salvaging patent claims during inter partes review. The PTO has expressed concern that putting the burden on petitioners could force the PTAB to bless invalid claims if the petitioner doesn’t vigorously contest them.

The biotechnology and pharmaceutical industries have lined up as amici curiae with patent owner Aqua Products Inc., while technology industry associations and companies, including Samsung Electronics Co. and SAP America Inc., are supporting the PTO. The original petitioner in the case, Zodiac Pool Systems Inc., has dropped out of the case, leaving the PTO to defend the rule.

The proceeding at issue involves automated swimming pool cleaners that use filtered water for propulsion. After the PTAB instituted inter partes review proceedings against Aqua Products, the company amended its claims to specify that its devices have four wheels and that its jets point downward. The PTAB found in conclusory fashion that even the amended claims would not be patentable, according to the Federal Circuit’s panel opinion.

The AIA provides that patent owners may make one motion to amend, so long as the amended claims are narrower than the original claims and don’t introduce new matter.

Finnegan, Henderson, Farabow, Garrett & Dunner partner James Barney argued Friday that no further burden should be imposed beyond that. He pointed to AIA §316(e), which states, the petitioner “shall have the burden of proving a proposition of unpatentability” in an inter partes review.

“The word shall is mandatory and nondiscretionary,” Barney told the court. “The petitioner can’t simply sit back and do nothing and then have that amendment denied.”

For the last year and a half, the Federal Circuit has deferred to PTAB decisions that place the burden on the patent owner. Chief Judge Prost, who wrote the first Federal Circuit decision affirming that rule, sounded wary of abandoning it Friday.

“If the petitioner has settled out or gone bankrupt or is not covered by the amendments and could care less, even though others might be, what would happen then?” she asked.

Barney argued that parties to an inter partes review often settle midtrial, letting patent owners hold onto claims that the PTAB had found likely to be invalid. Under pressure from O’Malley, Barney conceded that the PTAB could deny an amended claim based on evidence a petitioner submitted before dropping out of a case.

The PTO’s Kelley argued that an agency rule properly places the burden on patent owners, and that the Federal Circuit should defer to its interpretation of that rule. Alternatively, he argued that the PTAB’s own precedential decision on motions to amend had the force of a rule, because it has been subjected to a vote of all 250 PTAB judges and reviewed by PTO Director Michelle Lee.

But Lourie said AIA §316(e) holds just the opposite. “This seems like a very simple proposition,” he told Kelley.

Taranto said his research found 127 inter partes reviews in which the PTAB ruled on a motion to amend. In all but one the petitioner had opposed. “Is this a real problem, a theoretical problem or what?” he asked.

Kelley said those oppositions don’t always grapple meaningfully with patentability issues, but most of the judges didn’t sound moved.

“I’m concerned that we’re making this practice just so complicated that nobody can understand it,” Newman said. “Instead of making it simpler than district court litigation, we’re making it much more complicated.”

Contact Scott Graham at sgraham@alm.com.

From almost the first America Invents Act trial in 2013, patent owners have complained that the Patent Trial and Appeal Board is too stingy with motions to amend patent claims.

The U.S. Court of Appeals for the Federal Circuit sounded poised to come to their rescue Friday. Six members of the court sitting en banc seemed receptive to patent owner arguments that they should not bear the burden of proving their amended claims are patentable.

“There’s nothing in the regulation that says that once a patent owner moves to amend claims, then they assume a burden of patentability,” Judge Jimmie Reyna told U.S. Patent and Trademark Office Solicitor Nathan Kelley during an hourlong argument. Instead, Reyna suggested, the burden should remain with the petitioner seeking to invalidate the patent.

Judges Kimberly Moore, Alan Lourie and Pauline Newman also had Kelley on the defensive, as did Judges Kathleen O’Malley and Richard Taranto to a lesser extent. With Judge Kara Stoll recused, it sounded as if they might be able to form a majority.

If that’s how it plays out, patent owners will have a broader path for salvaging patent claims during inter partes review. The PTO has expressed concern that putting the burden on petitioners could force the PTAB to bless invalid claims if the petitioner doesn’t vigorously contest them.

The biotechnology and pharmaceutical industries have lined up as amici curiae with patent owner Aqua Products Inc., while technology industry associations and companies, including Samsung Electronics Co. and SAP America Inc. , are supporting the PTO. The original petitioner in the case, Zodiac Pool Systems Inc., has dropped out of the case, leaving the PTO to defend the rule.

The proceeding at issue involves automated swimming pool cleaners that use filtered water for propulsion. After the PTAB instituted inter partes review proceedings against Aqua Products, the company amended its claims to specify that its devices have four wheels and that its jets point downward. The PTAB found in conclusory fashion that even the amended claims would not be patentable, according to the Federal Circuit’s panel opinion.

The AIA provides that patent owners may make one motion to amend, so long as the amended claims are narrower than the original claims and don’t introduce new matter.

Finnegan, Henderson, Farabow, Garrett & Dunner partner James Barney argued Friday that no further burden should be imposed beyond that. He pointed to AIA §316(e), which states, the petitioner “shall have the burden of proving a proposition of unpatentability” in an inter partes review.

“The word shall is mandatory and nondiscretionary,” Barney told the court. “The petitioner can’t simply sit back and do nothing and then have that amendment denied.”

For the last year and a half, the Federal Circuit has deferred to PTAB decisions that place the burden on the patent owner. Chief Judge Prost, who wrote the first Federal Circuit decision affirming that rule, sounded wary of abandoning it Friday.

“If the petitioner has settled out or gone bankrupt or is not covered by the amendments and could care less, even though others might be, what would happen then?” she asked.

Barney argued that parties to an inter partes review often settle midtrial, letting patent owners hold onto claims that the PTAB had found likely to be invalid. Under pressure from O’Malley, Barney conceded that the PTAB could deny an amended claim based on evidence a petitioner submitted before dropping out of a case.

The PTO’s Kelley argued that an agency rule properly places the burden on patent owners, and that the Federal Circuit should defer to its interpretation of that rule. Alternatively, he argued that the PTAB’s own precedential decision on motions to amend had the force of a rule, because it has been subjected to a vote of all 250 PTAB judges and reviewed by PTO Director Michelle Lee.

But Lourie said AIA §316(e) holds just the opposite. “This seems like a very simple proposition,” he told Kelley.

Taranto said his research found 127 inter partes reviews in which the PTAB ruled on a motion to amend. In all but one the petitioner had opposed. “Is this a real problem, a theoretical problem or what?” he asked.

Kelley said those oppositions don’t always grapple meaningfully with patentability issues, but most of the judges didn’t sound moved.

“I’m concerned that we’re making this practice just so complicated that nobody can understand it,” Newman said. “Instead of making it simpler than district court litigation, we’re making it much more complicated.”

Contact Scott Graham at sgraham@alm.com.