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The PTO Argues Placing The Burden Of Persuasion On The Patent Owner To Demonstrate Patentability Of The Proposed Claims Is Not Contrary To 35 U.S.C. § 316(e)
November 10, 2016

The Federal Circuit granted Aqua Product Inc.’s en banc rehearing request on August 12, 2016.  See the blog posted August 24, 2016, entitled “Will the PTO Change their Motion to Amend Practices?”  In its order granting rehearing, the Federal Circuit requested the parties to address the following questions:

(a) 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)?  (“First Question”)

(b) 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? (“Second Question”)

The PTO filed its supplemental brief (“PTO Br.”) on rehearing, which addresses the above questions, on October 26, 2016.

With respect to the First Question, the PTO argued that it may place the burden of persuasion on the patent owner to demonstrate patentability of the proposed claims because the Director is delegated the authority to establish “standards and procedures” for amendments under 35 U.S.C. § 316 (a)(9), reproduced below. (PTO Br. 1-2)  

            35 U.S.C. § 316 (a) REGULATIONS.--The Director shall prescribe regulations—

(9) setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;

With respect to the Second Question, the PTO argued that it may place the burden of persuasion and/or production on either party, or on the PTO itself.  (PTO Br. 2)

In connection with the PTO’s arguments, Appellant Aqua Products contended that 35 U.S.C. § 316(e) (reproduced below) overrides § 316(a)(9). 

35 U.S.C. § 316(e) EVIDENTIARY STANDARDS.--In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence.

In response to Aqua Products’ arguments, the PTO raises several points as follows. 

            A.         Chevron deference

The PTO asserts that regulations issued by the PTO under a statutory grant of rulemaking authority are entitled to deference unless based on an unreasonable construction of the statute. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).  (PTO Br. 7).  The PTO asserts that the USPTO’s interpretation on placement of a burden of proof for a motion to amend is reasonable and is entitled to Chevron deference for the reasons below. (PTO Br. 8-9)

First, the PTO asserts that pursuant to 35 U.S.C. § 316(a)(9), the PTO is authorized “to establish not only the procedures, but also the relevant standards, for motions to amend.” (PTO Br. 10).  The PTO further asserts that the PTO’s designation of a burden of proof for motions to amend is within the scope of § 316(a)(9). (Id.)

Second, the PTO asserts that § 316(e) makes no reference to claim amendments or 35 U.S.C. §316(d) (governing a motion to amend). (PTO Br. 14).   The PTO further asserts that “[i]t is only § 316(a)(9), rather than § 316(e), that is expressly directed to motions to amend.”  (Id.).   

Third, the PTO asserts that placing the burden on the patent owner is consistent with motion procedures in judicial and administrative proceedings where the moving party has the burden of proving that it is entitled to the requested relief.  (PTO Br. 17-19).  The PTO further points out that the PTO’s rules for inter partes review are consistent with interference practice. (PTO Br. 18).    

Fourth, the PTO asserts that “the drafting history of the AIA confirms the reasonableness of [PTO]’s interpretation.” (PTO Br. 19).  The PTO asserts that the record “never contemplated that § 316(e)’s assignment of the burden of proof in the proceeding would govern motions to amend.” (PTO Br. 20).       

            B.         Response to Aqua Products’ Arguments

The PTO asserts that “§ 316(e) speaks only to the petitioner’s burden of proving the unpatentability of existing claims; it does not specify who has the burden of proving the patentability of new, never-before-examined substitute claims.”  (PTO Br. 22)(emphasis in original).  The PTO further notes that “a motion to amend a patent does not involve the petitioner’s ‘proposition of unpatentability’; instead, it involves the patent owner’s proposition of the patentability of the proffered claims.”  (Id.).  The PTO concludes that placing the burden of proving such a proposition of patentability on the party filing the motion is consistent with the “ordinary default rule.” (PTO Br. 23).  Furthermore, the PTO points out Aqua Products’ and the amici’s “inability to agree on what procedures § 316(e) mandates.” Ambiguity in the procedures required by § 316(e) permits the PTO to employ “its express authority to set standards to assign appropriate burdens of proof for motions to amend.” (PTO Br. 25-27).   

Oral argument for this case is set for December 9, 2016.  It will be interesting to see the Federal Circuit’s interpretation of § 316(e), i.e., whether the Federal Circuit finds no ambiguity and interprets § 316(e) as placing the burden entirely on a petitioner for existing and proposed claims, or finds ambiguity in § 316(e) and/or gives Chevron deference to the PTO’s current practice of placing on movants the burden of proof for motions to amend.   

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