Duty of Candor Controls “Prior Art Known to Patent Owner”
UPDATE: This decision is now designated as “Informative” (here)

Last week, an expanded panel of the Patent Trial & Appeal Board (PTAB) clarified the required showings necessary to a successful motion to amend. Of note, the expanded panel included Deputy Chief Nathan Kelly as well as Vice Chief Scott Boalick. In the decision, Masterimage 3D. Inc. v. RealD Inc. (IPR2015-00040) (here), the Board clarified the meaning of the Idle Free phrase: “prior art of record and also prior art known to the patent owner.

As outlined in Idle Free Systems v. Bergstrom Inc., (IPR2012-00027), amendment during an AIA trial proceeding is by motion. As such, the burden is on the movant to demonstrate entitlement to the patentability of amended claims. One aspect of Idle Free that movants have struggled to digest is the metes and bounds of “prior art known to Patent Owner.” In MasterImage, the Board clarified that the “prior art known to Patent Owner” is linked to the art that would trigger the Patent Owner’s Duty of Candor.

More specifically, the Board explained the Idle Free language: “prior art of record and also prior art known to the patent owner” by distinguishing between record art, and that which would necessarily be produced under the Duty of Candor. 37 C.F.R. § 42.11.

With respect to “prior art of record…” the Board explained this information as follows:

The reference to “prior art of record” in the above-quoted text, as well as everywhere else in Idle Free, should be understood as referring to:
          a. any material art in the prosecution history of the patent;
          b. any material art of record in the current proceeding, including art asserted in grounds on which the Board did not institute review;
          c. any material art of record in any other proceeding before the Office involving the patent.

As to the more open ended language “prior art known to the Patent Owner,” the Board clarified this language as:

The reference to “prior art known to the patent owner” in the above quoted text, as well as everywhere else in Idle Free, 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, in light of a Motion to Amend.     .    .     . [W]hen considering its duty of candor and good faith under 37 C.F.R. § 42.11 in connection with a proposed amendment, Patent Owner should place initial emphasis on each added limitation. Information about the added limitation can still be material even if it does not include all of the rest of the claim limitations.

This decision tracks Director Lee’s blog comments on possible changes to PTAB amendment practices. Back in March, Director Lee explained:

Additionally, regarding motions to amend, we are contemplating proposed changes to emphasize that a motion for a substitutionary amendment will always be allowed to come before the Board for consideration (i.e., be “entered”), and for the amendment to result in the issuance (“patenting”) of amended claims, a patent owner will not be required to make a prior art representation as to the patentability of the narrowed amended claims beyond the art of record before the Office. Of course, the duty of candor and good faith requires the patent owner to make of record any additional prior art material to patentability known by the patent owner. These contemplated changes would be intended to more noticeably limit the burden on the patent owner, even though the patent owner is the party moving for the change in the patent.

In short order, the Board has now lessened the burdens on Patent Owners (above), expanded page limits for motions to amend, added appendix options to further free up pages, and provided (via rule change in a few weeks) a more robust amendment framework. (Given the clarification of MasterImage, it is expected that the forthcoming rule package will only address entry as a matter of right.).

Would-be PTAB reformers and critics are quickly losing their “impossible PTAB amendment” mantra.