Amendment Practice to Remain Unpopular Regardless of In Re Aqua Products Outcome

Last Friday the Federal Circuit agreed to rehear In re Aqua Products Inc. The en banc rehearing will consider amendment practices of the Patent Trial & Appeal Board (PTAB) in AIA trial proceedings. Specifically, the Court will explore where the burdens of persuasion and production properly lie for motions to amend. To date the Court has repeatedly found the burden of persuasion to rest with the patentee for motions to amend.

While it appears likely that the Court will shift burdens away from patentees seeking amended claims before the PTAB, practically speaking, such an outcome is unlikely to make much of a difference. At the end of the day, amendments will always remain highly unattractive for patentees at the PTAB.

In it’s rehearing Order (here), the Court posed 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)?

(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?

My expectation is that the CAFC will shift the burdens to the petitioner in the first instance, and where absent (settlement), the Board. Patentees will be left with some burdens as the movant, these are likely to be limited to the express requirements of the rules; such as the amendment being responsive to a trial ground, non-broadening, and submitted as a 1-for1 substitution of claims. As to the Board’s sua sponte power, I can’t imagine the Court restraining an expert agency in this regard.  

Will any of these potential changes make amendment at the PTAB attractive enough to spur filing rates above the current rates?  

To be sure, there is incremental value in relieving patentees of such burdens. But, most amendments are declined on prior art grounds. Shifting of the burdens with a preponderance of the evidence standard will barely move the needle for patentees.

More importantly, most every AIA trial proceeding is directed to a patent in active litigation, or at least heavily licensed. Patentees involved in active litigation are usually careful not to amend their claims so that their accused infringers no longer infringe, further constraining the types of amendments patent owners are willing to put forth.  Even if such an amendment could be fashioned to both maintain infringement and avoid the art, patentees remain constrained by the fear of intervening rights  

A patentee must propose neither an amendment with a change too small to be granted nor one containing a change “substantive” enough to trigger intervening rights. See Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998) (“If substantive changes have been made to the original claims, the patentee is entitled to infringement damages only for the period following the issuance of” the modified claims). This is near impossible.

The fear of intervening rights  is especially prevalent in arts where licensing entities are the most active, such as consumer electronics. (Not coincidentally, this is the bulk of PTAB AIA trial proceedings). In such quickly developing technologies, an amendment may not only give up past damages, but foreclose future damages if the technology has already advanced beyond the patented device or methodology.

Lastly, it is often pointed out that patentees amended at a greater rate in the previous inter partes reexamination proceeding; this is true. Yet, the previous reexamination model did not require substitute claims (i.e., a 1-for-1 substitution of newly added claims relative to challenged claims). Without this control, patentees often added hundreds of new claims, but rarely amended originally issued claims for the reasons noted above. These new claims often took relatively minor features and presented them in endless variations. The primary purpose was to frustrate a patent challengers ability to respond within a short time frame. That is, with only 30 days to respond to a patentee filing (non-extendable by statute), and with the estoppel risk of not addressing such claims, newly added claims were a convenient tool to make life miserable for an adversary. As can be appreciated, such claim sets also made these disputes unwieldy for the USPTO to process in an effective manner. In large part, this is why AIA amendments are limited to 1-for 1 substitution.

As In re Aqua Products Inc. will not disturb any of intervening rights, substantial evidence, substitute claim practices, or infringement concerns of patentees, the issues presented by the CAFC are largely academic ones. Practically speaking, motions to amend will remain a rare occurrence at the PTAB.