The U.S. Court of Appeals for the Federal Circuit is increasingly scrutinizing the handling of Motions to Amend in Inter Partes Review (IPR) proceedings at the Patent Trial and Appeal Board (“PTAB,” or the “Board”). One case on this issue, In re Aqua Products, Inc., is currently pending before the full Federal Circuit. The court recently granted a petition for rehearing en banc to consider two questions:

  1. When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?
  2. When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim; if so, where would the burden of persuasion, or a burden of production, lie?

Appellant Aqua Products, Inc. filed its petition for rehearing en banc after losing its appeal. Writing for the panel in deciding that appeal, Circuit Judge Reyna affirmed the Board’s decision in IPR2013-00159 to deny Aqua Products’ motion to amend its claims, thereby reaffirming the rule in IPR proceedings that a patent owner wishing to win a motion to amend is charged with the burden of showing that the proposed claim amendments would make the claims patentable over the known prior art. See Idle Free Sys. Inc. v. Bergstrom, Inc., IPR2012-00027, 2013 WL 5947697 (PTAB June 11, 2013). Aqua Products’ successful petition for rehearing now sets the stage for the Federal Circuit to reconsider the standard set forth in Idle Free.

In another recently-issued decision on this issue, using its authority to set aside an action by PTAB that it deemed “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law,” the Federal Circuit recently vacated the denial of a Motion to Amend brought during Inter Partes Review by a patent owner wishing to modify the claims of its challenged patent. Writing for the 3-judge panel, Circuit Judge Taranto found the Board’s action in denying the motion as “arbitrary and capricious,” vacated the ruling, and remanded it to the Board for reconsideration.

The case originated in Inter Partes Review of U.S. Patent No. 7,024,527 before the PTAB, wherein the validity of several claims were challenged by Veeam Software Corp. as being unpatentable over the prior art. After the PTAB decided to institute review of the claims, apparently hoping to hedge against a damagingly broad claim construction, the patent owner, Veritas Technologies, LLC, (Symantec Corp. at that time) filed a conditional Motion to Amend, adding two new claims, to be considered in the event the Board construed the existing claims so broadly as to find them invalid. In the Final Written Decision that later issued, the PTAB found the existing claims unpatentable as obvious in light of the prior art and resolved a critical claim-construction dispute in favor of Veeam, finding that the challenged claims were entitled to a construction broader than that desired by Veritas. The Board also denied the motion to amend; Veritas then appealed the Board’s findings to the Federal Circuit.

In first reviewing the PTAB’s claim construction and final ruling on claim patentability, the Federal Circuit found that the PTAB correctly applied the broadest reasonable interpretation standard as currently used in claim construction before the Board, and properly invalidated the challenged claims. However, the panel did not approve of the PTAB’s sole ground for denying the motion to amend – namely, that Veritas failed to discuss separately whether each newly-added feature was separately known in the prior art. Instead, the Board found Veritas merely discussed the newly-added feature in combination with other known features and felt that Veritas hadn’t carried its burden.

However, the panel looked beyond the Board’s position and showed how Veritas met its burden by specifically identifying the parts of Veritas’s motion where it discussed whether the newly-added features were in the prior art.  In the end, the panel branded the Board’s action as “arbitrary and capricious” and vacated the Board’s decision.

These cases tend to indicate the Federal Circuit is more closely scrutinizing the Board’s handling of Motions to Amend; as such, the Federal Circuit’s continued treatment of decisions on this issue in the months to come bears watching. The Federal Circuit’s decision to stay the petition for rehearing en banc in Prolitec, Inc. v. ScentAir Technologies, Inc., 807 F.3d 1353 (Fed. Cir. 2016) pending resolution of the issues of the In re Aqua Products, Inc. rehearing and its strong criticism of the Board’s approach in Veritas tends to indicate that the court may comprehensively address the Board’s approach to motions to amend in the In re Aqua Products, Inc. rehearing.

The cases discussed above are In re Aqua Products Inc., Fed. Cir. 2015-1177 (August 12, 2016) (found here) and Veritas Technologies LLC v. Veeam Software Corp., Fed. Cir. 2015-1894 (August 30, 2016) (found here).

Oral arguments in In re Aqua Products, Inc.  are set for December 9, 2016.