Federal Circuit Rules on Burden to Establish Patentability of Amended Claims

Authored by Brian S. Mudge and Dragan Plavsic

Gavel

In a recent decision, the Federal Circuit confirmed that the burden of proof shifts from petitioner to patent owner to establish patentability of substitute claims proposed in AIA post-grant proceedings. The case, Nike, Inc. v. Adidas AG, No. 2014-1719 (Feb. 11, 2016), involved an appeal of a PTAB decision denying Nike’s motion to amend claims in an IPR. In reviewing the burden of proof for claim amendments, the Federal Circuit agreed that the burden is on the patent owner to demonstrate that the substitute claims are patentable not only over the prior art already of record but also over prior art known to the patent owner. Moreover, the Federal Circuit ruled that the patent owner may satisfy its burden as to prior art not of record by meeting its duty of candor and good faith in addressing additional prior art known to the patent owner, if any.

Key Takeaways:

  • In AIA post-grant proceedings, the burden of proof is, indeed, on the patent owner to establish patentability of proposed amended claims.
  • As to prior art not of record, it is sufficient for the patent owner to satisfy the duty of good faith and candor, and address any such material art that she is aware of or, if there is no such material art, simply state that the amended claims are patentable over prior art known to the patent owner.

Case Facts. Adidas filed an IPR petition challenging Nike’s patent no. 7,347,011 (the ’011 patent), which is directed to footwear having a textile “upper” portion. The PTAB granted the petition and instituted IPR trial of claims 1–46 of the ’011 patent. In response, Nike filed a motion to amend in which it requested cancellation of claims 1–46 and proposed substitute claims 47–50. In its final decision, the PTAB granted Nike’s request to cancel claims 1–46, but denied Nike’s request to enter substitute claims 47–50. According to the PTAB, Nike not only failed to establish patentability over certain references already of record, but also failed to demonstrate that the substitute claims are patentable over prior art not of record but known to Nike. In particular, the PTAB faulted Nike for not addressing any prior art not of record but known to Nike and instead merely relying on a conclusory statement that the proposed claims were patentable over prior art not of record. Subsequently, Nike appealed the PTAB’s decision to deny the amendment, and the PTO (Director Lee) intervened to defend the PTAB’s ruling.

Burden of Proof. On appeal, Nike contended that the PTAB erroneously shifted to Nike, the patent owner, the burden of proving patentability of its proposed substitute claims. Relying on 35 U.S.C. §316(e), Nike argued that the statute places the burden on petitioner to establish unpatentability of newly proposed claims.

The Federal Circuit rejected Nike’s position. According to the court, the evidentiary standard set forth in § 316(e) that governs IPR proceedings makes clear that the burden of proof is on the petitioner to prove unpatentable those issued claims that were challenged in the petition and for which PTAB instituted review. However, the court notes that this standard does not necessarily apply to claims that were proposed by a patent owner in a motion to amend filed as part of an already instituted IPR proceeding (and not in existence at the time the petition was filed).

Rather, the court agreed with the Board’s previous “informative” Idle Free1 decision which placed the burden on the patent owner to show that new claims are patentable. Thus, the court ruled that the PTAB did not err by placing the burden on Nike to establish patentability of Nike’s proposed substitute claims over the prior art.

In support, the court cited its prior Proxyconn2 opinion, where it had discussed the Board’s Idle Free ruling with approval and explained that placing the burden on the patent owner for amended claims is appropriate given “the very nature of IPRs.” This is because IPRs are distinct from a typical PTO examination – where an examiner performs a prior art search and independently conducts a patentability analysis of all claims, whether newly proposed or previously existing. The court further noted with approval the explanation in Proxyconn that unless the patentee is required to establish patentability of substitute claims over the prior art of record, the PTO could issue an amended patent despite having prior art that undermines patentability. Thus, according to the court, allocating the burden to the patent owner ensures that proposed substitute claims are critically analyzed before they are added to the issued patent.3

Prior Art Not of Record. Nike also objected to the PTAB’s requirement that a patent owner must establish patentability of substitute claims over all prior art known to the patent owner, including prior art not of record but known to the patent owner. As mentioned above, Nike attempted to carry its burden by simply stating, in the motion to amend, that its proposed claims were patentable over prior art known to Nike, but not part of the record of the proceedings.

The court ultimately agreed that Nike’s statement, though conclusory, was sufficient to meet its burden under the circumstances here. The court discussed with approval a more recent “representative” PTAB decision in MasterImage 3D4, which clarified the requirements for motions to amend established in Idle Free. According to the court, MasterImage 3D explained that prior art known to the patent owner should be understood as no more than the material prior art that patent owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the Office under 37 C.F.R. § 42.11. Because there was no allegation (and not even a suggestion) that Nike violated its duty of candor here, the court ruled that the PTAB could not deny Nike’s motion to amend on this basis.


1Idle Free Sys., Inc. v. Bergstrom, IPR 2012-00027, 2013 WL 5947697
2Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292 (Fed. Cir. 2015)
3It appears unclear why the court expects the patent owner to analyze its own proposed amendment with a high degree of scrutiny and thoroughness when, for example, a petitioner would seemingly have a greater incentive to perform such an analysis critically. In any event, however, a petitioner does have the opportunity to oppose a motion to amend, and in so doing it appears that the petitioner may cite new art – not already of record – in an attempt to defeat the motion to amend. See, e.g., Facebook, Inc. v. EveryMD LLC, IPR2014-00242 (paper 31 May 12, 2015) at 16-17 (discussing prior art reference not cited by patent owner, but cited by petitioner in opposing the motion to amend).
4MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, 2015 WL 4383224 (PTAB July 15, 2015)