Update: Overruled in part by Aqua Products, Inc. v. Matal.  In a subsequent order, the court vacated the portions of the panel’s and the PTAB’s decisions concerning the patent owner’s motion to amend, and remanded the case to the PTAB for proceedings consistent with the Aqua Products decision.

In December 4, 2015, the Federal Circuit affirmed in a split opinion the Board’s final written decision in ScentAir Techs., Inc. v. Prolitec, Inc., IPR2013-00179, finding that the two claims of Prolitec’s U.S. Patent No. 7,712,683 (“’683 patent”) were unpatentable and denying Prolitec’s motion to amend.  Although several issues were addressed by the Board and Federal Circuit, perhaps of most interest is the court’s conclusion that the Board properly denied Prolitec’s motion to amend because Prolitic did not demonstrate patentability of the substitute claim over prior art of record during prosecution of the patent. 

This blog has previously highlighted several decisions related to the Board’s and Federal Circuit views on motions to amend: In this blog entry, we highlighted that motions to amend can be successful where newly added claim limitations can be shown to be patentable over the art of record and what was known to one of ordinary skill, and that the Patent Owner need not argue patentability over all known prior art references.  Subsequently, this blog entry noted that the aforementioned PTAB ruling appears to be a relaxation from the Board’s final decision in Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027, which states that the burden covers the prior art of record “and also prior art known to the patent owner.”  Additionally, this blog entry highlights the Federal Circuit’s positions concerning motions to amend, noting that a patentee must distinguish the claims it moves to substitute from prior art underlying the instituted grounds for the IPR.

The ’683 patent only has two independent claims directed to an apparatus used in air fresheners.  The Board found that the two claims of the ’683 patent were anticipated by WO2004/080604A2 (“Benalikhoudja”). Contingent in-part on that finding, Prolitec sought (through a motion to amend) to replace claim 1 with new claim 3 which effectively substituted the term “permanently joined” for “mounted” in claim 1.  ScentAir opposed Prolitec’s motion and asserted that a patent by Allred, which was of record in the  prosecution of the ’683 patent, teaches “permanently joining” of a diffusion device.  On reply, Prolitec did not dispute that Allred teaches a permanent bonding but asserted that Allred lacks other (unspecified) features recited in claim 3 (that Prolitic sought to substitute).  The Board denied Prolitec’s motion to amend, finding that Prolitec failed to demonstrate that the proposed claim is patentable over, for example, Benalikhoudja in view of Allred.

…the Federal Circuit stated that “prior art of record” includes “any material art in the prosecution history of the patent” and that the denial of the motion to amend rested on a merits assessment of the entire record developed on the motion, not just on the initial motion itself…

On appeal, Prolitec initially argued that the Board placed the burden on the Patent Owner to show patentability of the proposed claim amendments in contravention of 35 U.S.C. § 316(e). After briefing had concluded but before oral argument, however, the Federal Circuit issued an opinion in Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292 (Fed. Cir. 2015), that effectively resolved this argument against Prolitic.  At oral argument, Prolitec argued (1) that it did not have the burden to establish patentability over prior art references cited in the patent’s original prosecution history because the references are not prior art of record in the IPR, and (2) the Board failed to consider Prolitec’s arguments in its reply brief that Allred does not disclose features recited in claim 3.  In affirming the Board’s decision, however, the Federal Circuit stated that “prior art of record” includes “any material art in the prosecution history of the patent” and that the denial of the motion to amend rested on a merits assessment of the entire record developed on the motion, not just on the initial motion itself:

“The Board’s position—that the patentee’s burden on a motion to amend includes the burden to show patentability over prior art from the patent’s original prosecution history—is not in conflict with any statute or regulation.  Moreover, it is not unreasonable to require the patentee to meet this burden. The prior art references cited in the original patent’s prosecution history often will be the closest prior art and will already have been reviewed by the patentee. Evaluating the substitute claims in light of this prior art helps to effectuate the purpose of IPRs to “improve patent quality and limit unnecessary and counterproductive litigation costs.”

In her dissent, Judge Newman noted that the AIA places the burden of proof on the petitioner whether the “proposition of unpatentability” is for amended or unamended claims, and the Board and majority disregard this statutory requirement by placing on the patentee the burden of proving patentability for a proposed amended claim:

“The statute places the burden of proving invalidity (unpatentability) on the petitioner. As explained by Senator Kyl, “inter partes reexamination is converted into an adjudicative proceeding in which the petitioner, rather than the Office, bears the burden of showing unpatentability.” 137 Cong. Rec. S1360, S1375 (daily ed. Mar. 8, 2011). The Act makes no distinction between original and amended claims in inter partes review.”

Although this decision provides additional guidance from the Federal Circuit as to the requisite considerations that make up a successful motion to amend during an IPR proceeding, the dissenting opinion makes it clear that Patent Owners are still behind the eight ball when it comes to burden of proof.