Shifting Seas in Aqua Products as the Federal Circuit Eases the Burden of Amendment in IPR

Posted by Stuart Duncan Smith on Oct 11, 2017

To many patent owners in IPR, the prospect of a patent-saving claim amendment is all but illusory. The Board grants few motions to amend, which is one reason that few patent owners even request amendment. That may change with the Federal Circuit’s en banc decision in Aqua Products, Inc. v. Matal, which eased the patent owner’s burden of justifying an amendment, and increased the petitioner’s burden of opposing an amendment. This change affects not only the procedure of IPRs, which must now take into account the shifted burden, but also the strategy of IPRs.

Prior to Aqua Products, the Board required patent owners to prove that their proposed amendments would result in a patentable claim, a burden that few patent owners could meet. One apparent consequence of the Board placing that burden on the patent owner is that amendments are rarely allowed. The Federal Circuit in Aqua Products cited Patent Office statistics indicating that the Board denies about 95% of requests to amend claims. Those low odds of success likely dissuaded many other patent owners from even asking to amend.

The Federal Circuit’s decision in Aqua Products shifts that burden to the petitioner, but it answers few other questions. The decision includes five opinions that are a product of deep disagreement among the judges. The main decision garnered the support of just five of the eleven judges participating, and two concurrences supported just the judgment but not the main decision’s reasoning. Thus, Aqua Products offers little clarity beyond the holding that the petitioner bears the burden to prove that an amendment is inappropriate.

The shifted burden raises new strategic questions. At least until practice proves otherwise, petitioners should be aware that amendment may now be a more viable defense to IPR, and plan their cases accordingly. If the patent owner successfully amends, it could assert the new claims and argue that the petitioner is estopped from certain validity challenges. That said, amendment is not a solution in all IPRs, because amendments may limit damages in litigation to just the period after the amendment becomes effective.

The Board must now work out what, if any, changes to IPR procedures are needed to account for the Aqua Products decision. The basic question of what the patent owner must present in its motion remains up in the air. The only part of the Federal Circuit’s decision with the support of a majority of the court was the conclusion that the Board could impose an initial burden on the patent owner. However, the five judges of the main opinion of the court dismissed that section as not binding, creating an ambiguity that will have to be resolved in the future.

The Supreme Court may also review the Aqua Products decision. In Cuozzo Speed Techs., LLC v. Lee, the Supreme Court cited the possibility of amendment as a key reason that the broadest reasonable interpretation claim construction standard is appropriate and fair. There, the Supreme Court declined to evaluate whether the Board was correctly evaluating motions to amend. Given the fractured decision, Aqua Products invites the Supreme Court to address that issue head on. Further, Aqua Products’ reliance on general administrative law principles only increases the chance that the Supreme Court would grant review.

Aqua Products thus may widen the opportunity for amendment for now, yet sows the seeds of future changes.   

Topics: Patent Owners

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