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Passed House of Representatives Bill May Affect the Burden of Persuasion for Patentability of Amended Claims in IPRs
February 07, 2017

The U.S. House of Representatives recently passed a bill that, if enacted, could make it easier for patent owners to amend their claims during post-grant proceedings such as inter partes reviews (IPR).  The proposed law would overturn the rule requiring that courts give deference to federal agencies’ interpretation of ambiguous statutes, such as the USPTO’s interpretation of the statutory provision relating to which party bears the burden on the issue of validity of amended claims.  A change in this standard of deference could in turn relate to a change in the burden of proof. 

The proposed Separation of Powers Restoration Act (as part of the larger Regulatory Accountability Act of 2017) would require courts to review de novo all agency interpretations of ambiguous statutes.  This would change the standard articulated by the Supreme Court in in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).  In Chevron, the Court required that federal agencies’ statutory interpretations  should be upheld if they are reasonable, even if they are not the interpretations that the courts would make.  The proposed law repealing the Chevron deference standard would require reviewing courts to “decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies.  If the reviewing court determines that a statutory or regulatory provision relevant to its decision contains a gap or ambiguity, the court shall not interpret that gap or ambiguity as an implicit delegation to the agency of legislative rule making authority and shall not rely on such gap or ambiguity as a justification either for interpreting agency authority expansively or for deferring to the agency’s interpretation on the question of law.”

During post-grant proceedings patent owners may move to amend challenged claims by adding new limitations in order to obtain claims that are patentable over the prior art.  However, adding such new claims has proven to be extremely difficult.  Only approximately 5% of all motions to amend claims in post-grant proceedings have been at least partially successful and led to the issuance of at least one new amended claim.  See the related blog posted May 10, 2016, “New PTAB Study Confirms Motions to Amend Largely Unsuccessful.”  The USPTO rules place the burden on the patent owner to show that the amended claims are patentable, despite the fact that 35 U.S.C. § 316(e) generally places the burden relating to patentability issues on IPR petitioners rather than patent owners.  In support of its rule placing the burden on patent owners, the USPTO relies on the explicit language in § 316(a)(9) authorizing it to set “standards and procedures for allowing the patent owner to move to amend,” and also on its administrative authority in interpreting the relevant statute.  The Chevron deference standard requires that courts give deference to the USPTO’s interpretation of the statute.

If the proposed bill is enacted and repeals the Chevron deference standard, courts would apply a de novo standard of review to the USPTO’s interpretation.  The USPTO’s rule placing the burden on patent owners is already facing significant challenges by patent owners.  (See Order granting a rehearing en banc in the case In re Aqua Products, Inc., Appeal No. 2015-1177 (Fed. Cir. August 12, 2016)). The Federal Circuit will decide shortly in Aqua Products whether or not the USTPO’s rule on a motion to amend can be maintained.  See the related blog post November 10, 2016, “The PTO Argues Placing the Burden Of Persuasion On the Patent Owner To Demonstrate Patentability Of The Proposed Claims Is Not Contrary To 35 USC § 316(e).”  The USPTO relied on the Chevron deference standard as one of its primary arguments in support of its rule on a motion to amend claims in the en banc rehearing in Aqua Products.  Overruling the Chevron deference standard will likely impact subsequent cases challenging the USPTO’s rule on a motion to amend claims.   

We will continue to monitor this legislation as it proceeds in the Senate and provide updates.

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