[00:00:04] Speaker 07:
The case for argument this morning is 15-1177, NRA aqua products.

[00:00:11] Speaker 07:
Mr. Barney, you've saved 10 minutes for rebuttal.

[00:00:16] Speaker 12:
Please proceed.

[00:00:23] Speaker 04:
May it please the court, James Barney, on behalf of aqua products.

[00:00:27] Speaker 04:
Section 316E of the IPR statute contains 27 words.

[00:00:32] Speaker 04:
And focusing just on the text of those 27 words, two things are clear.

[00:00:36] Speaker 04:
First, the word shall is mandatory and non-discretionary.

[00:00:40] Speaker 04:
So to the extent there is a quote, proposition of unpatentability, in an interparties review instituted under this chapter, there is no dispute that the petitioner shall bear that burden by preponderance of the evidence.

[00:00:52] Speaker 04:
The statute permits no discretion on that point.

[00:00:54] Speaker 04:
Second, the word unpatentability is a broad term that applies to both issued claims and pending claims.

[00:01:01] Speaker 04:
So for instance, during prosecution, application claims are referred to as either patentable or unpatentable.

[00:01:08] Speaker 04:
Issued claims can likewise be referred to as patentable or unpatentable.

[00:01:12] Speaker 04:
And in fact, section 318 of the IPR statute uses patentable and unpatentable in referring to both issued claims and proposed amended claims.

[00:01:23] Speaker 04:
Now compare that.

[00:01:24] Speaker 04:
with section 315 of the IPR statute, which deals with district court and ITC proceedings.

[00:01:30] Speaker 04:
There, Congress used the terms validity and invalidity when referring to claims of issued patents.

[00:01:36] Speaker 03:
But doesn't that just underscore the point that when it comes to agency proceedings, whether it's normal examination or re-examination or these proceedings, Congress has always understood that the question at hand is patentability versus unpatentability.

[00:01:53] Speaker 03:
And Congress is also making clear that when you're dealing with the exact same question for an issued patent claim in district court, it's validity or invalidity.

[00:02:03] Speaker 03:
So the assertion that the usage of the term patentability doesn't

[00:02:10] Speaker 03:
the statute doesn't really for me carry the day the question really is what does it mean to be a proposition of unpatent ability and is it really the petitioner that has the burden of carrying the proposition of unpatent ability when These amended claims were not part of the proceeding in the first instance I think that's the assumption that you want us to make and I'd like you to explain why I

[00:02:35] Speaker 03:
that assumption is a necessary conclusion.

[00:02:38] Speaker 04:
Certainly, your honor.

[00:02:38] Speaker 04:
To go back to your first point, there is no evidence that the term invalidity is only used to refer to district court proceedings and unpatentability is only used to refer to patent office proceedings.

[00:02:51] Speaker 04:
In fact, the opposite is true.

[00:02:54] Speaker 04:
First of all, in the AIA itself, in section 18 of the AIA, which is an uncodified

[00:03:03] Speaker 04:
sunsetting provision dealing with CBMs, Congress specifically used the word invalidity when referring to issued claims that are subject to a CBM procedure.

[00:03:13] Speaker 04:
That's a patent office procedure.

[00:03:14] Speaker 04:
And so Congress most certainly does and has used the term invalidity even in patent office procedures, as well as if you look at the legislative history.

[00:03:23] Speaker 04:
And this statute took 10 years of deliberations before it was finally enacted, spanning five separate Congresses.

[00:03:29] Speaker 04:
And if you look at the legislative history of the statute, what you see is that in earlier versions of what became 316E, Congress did use the word invalidity.

[00:03:38] Speaker 04:
And they put the burden on the petitioner to prove propositions of invalidity by a preponderance of the evidence.

[00:03:45] Speaker 04:
But that all changed in 2010 with the manager's amendment, where they did two things.

[00:03:50] Speaker 04:
They added subsection, or what became, 316A9, which gives the patent office

[00:03:56] Speaker 04:
rulemaking authority with respect to motions to amend, but at the same time they did that, Congress changed the word invalidity in 316E to unpatentability.

[00:04:05] Speaker 04:
And that shows that Congress uses that word intentionally to differentiate it from invalidity.

[00:04:10] Speaker 04:
They intentionally broadened out the burden in 316E at the same time they gave rulemaking.

[00:04:14] Speaker 03:
Before you move on, could you go back to my question of why is it that

[00:04:18] Speaker 03:
the petitioner bears the burden of a proposition of unpatentability when it's the patent owner that, through a motion to amend, is the one that's proposing substitute claims.

[00:04:28] Speaker 03:
In other words, it's the patent owner, as I see it, that's trying to inject into the process, in the middle of the process, these brand new claims that had not been considered that were not part of the original patent.

[00:04:41] Speaker 04:
Sure, Your Honor.

[00:04:42] Speaker 04:
The statute, 316E,

[00:04:44] Speaker 04:
Again, uses the word shall.

[00:04:46] Speaker 04:
So whatever a proposition of unpatentability is, we know that the petitioner shall bear that burden.

[00:04:52] Speaker 04:
In an IPR instituted under this chapter, and that same phraseology is used throughout the IPR statute to indicate things that occur after institution.

[00:05:03] Speaker 12:
Can I ask you this very specific version of that?

[00:05:07] Speaker 12:
When the petitioner says you, the patent owner, are wrong in asserting that your substitute claim does not introduce new matter, is that a proposition of unpatentability?

[00:05:24] Speaker 04:
Your Honor, I would characterize

[00:05:27] Speaker 04:
I would characterize that.

[00:05:29] Speaker 12:
In your brief, you come awfully close to saying that on the question of new matter, which is a patentability 112 question, the patent owner has the burden of persuasion.

[00:05:42] Speaker 12:
Is that your position?

[00:05:43] Speaker 12:
And if so, doesn't that create the gap in 316E for saying 316E probably doesn't apply to all propositions of unpatentability?

[00:05:54] Speaker 04:
I wouldn't call it a burden of persuasion, Your Honor.

[00:05:56] Speaker 04:
I would call that part of the patent owner's burden of production.

[00:05:59] Speaker 12:
Somebody has to, the board has to decide that it either is or there is not new matter.

[00:06:05] Speaker 12:
Correct.

[00:06:05] Speaker 12:
That's, if it's, it is a written description question, a factual question, there therefore must be an evidentiary burden of persuasion.

[00:06:13] Speaker 12:
Who has it?

[00:06:14] Speaker 04:
The, the by statute under 316

[00:06:17] Speaker 04:
D, the patent owner has the burden, I would say the burden of production, to show that the amendment doesn't add new matter.

[00:06:28] Speaker 09:
Why?

[00:06:29] Speaker 09:
The reissue statute has identical language in it.

[00:06:32] Speaker 09:
Section 102 is called conditions of patentability, the title to the section.

[00:06:37] Speaker 09:
102, 103, and 112 provide, especially 112, analogous

[00:06:43] Speaker 09:
provisions of limitations on patentability.

[00:06:46] Speaker 09:
In no place does the burden rest on the patent owner to either come forward with evidence when you file a reissue application, Mr. Barney.

[00:06:54] Speaker 09:
Do you have an obligation to affirmatively establish to the PTO that you're not adding new matter, or do you submit it and it's the burden on the Patent Office to evaluate that condition of the patentability of the new claims like all others?

[00:07:07] Speaker 04:
I agree with that point, Your Honor.

[00:07:09] Speaker 04:
I agree.

[00:07:11] Speaker 04:
I wouldn't call it a burden of persuasion.

[00:07:12] Speaker 04:
The statute says that a proposed amendment cannot add new matter or be broader.

[00:07:19] Speaker 04:
And so those are reasons why a proposed amendment can be denied.

[00:07:24] Speaker 04:
I don't think I would call it a burden of persuasion on the patent owner.

[00:07:27] Speaker 04:
The patent owner has to move and has to show what the amendment is, but it's up to the board to decide whether or not that proposed amendment has added new matter or

[00:07:38] Speaker 04:
is broader than the original claims.

[00:07:41] Speaker 00:
So why isn't this a simple distinction between the burden of production, the burden of coming forward, and the final burden of proof?

[00:07:51] Speaker 00:
Certainly a movement, somebody who moves to amend the claims needs to explain why, as for any motion, that's why I do have to say why I made this motion, and this is why it ought to be granted.

[00:08:05] Speaker 00:
Not as a matter of the ultimate burden of

[00:08:08] Speaker 00:
proof persuasion, but as a matter of the initial burden on any movement, the burden of production, the burden of coming forward to put the matter before the tribunal.

[00:08:21] Speaker 00:
Isn't that what we're talking about?

[00:08:23] Speaker 04:
Yes, Your Honor, that's correct.

[00:08:24] Speaker 04:
316D, a motion under 316D is a motion to propose substitute claims.

[00:08:31] Speaker 04:
And if that motion is granted, if that relief is granted, the proposed substitute claims are added to the IPR proceeding.

[00:08:39] Speaker 04:
The mechanism to get those claims added to the IPR proceeding is to file a motion.

[00:08:45] Speaker 04:
But the only thing that needs to be shown in the motion is, what is the amendment?

[00:08:50] Speaker 04:
What amendment are you making?

[00:08:52] Speaker 04:
And the board can decide whether that amendment is broadening or adds new matter.

[00:08:56] Speaker 10:
Do you agree that 316E is limited

[00:09:00] Speaker 10:
to addressing the burden of persuasion and does not apply to the burden of production?

[00:09:09] Speaker 04:
Yes, Your Honor.

[00:09:10] Speaker 04:
I think 316E goes to the ultimate burden of persuasion on the issue of unpatentability.

[00:09:18] Speaker 04:
Their courts and agencies have often inserted burdens of production as a matter of managing litigation.

[00:09:28] Speaker 04:
That doesn't change the ultimate burden of persuasion.

[00:09:31] Speaker 04:
And so I think what 316E is speaking to is the ultimate burden of persuasion.

[00:09:36] Speaker 03:
Is it your view that under 316A-9, the agency has the authority to place burdens of production on the patent owner with its motion to amend that's beyond those that are currently listed in Rule 121?

[00:09:59] Speaker 04:
Your Honor, I believe that the statute would allow the PTO to draft rules placing a burden of production on the patent owner as long as, in doing so, it does not place the ultimate burden of persuasion on the patent owner.

[00:10:12] Speaker 04:
And 121A2I is an example of that.

[00:10:17] Speaker 03:
So just hypothetically,

[00:10:19] Speaker 03:
If the agency, I understand your position is the burden of persuasion is on the petitioner, but if the agency had issued through rule making the requirements set forth in master image and amended rule 21 in that way and said these are the sorts of things that

[00:10:39] Speaker 03:
A patent owner needs to explain in a motion to amend C and then all the requirements in the master image.

[00:10:48] Speaker 03:
Would that, in your view, be something within their power to do?

[00:10:53] Speaker 03:
Again, we're talking about burden of production, not burden of persuasion.

[00:10:56] Speaker 04:
Right.

[00:10:57] Speaker 04:
I don't think they would be permitted to do that under the statute, because they would then essentially be forcing the patent owner to make out a prima facie case of patentability over what could be vast quantities of prior art master image

[00:11:09] Speaker 04:
It has several categories of prior art, but if you're dealing with something like a pharmaceutical patent, that could be hundreds of references.

[00:11:15] Speaker 10:
And I don't think... Why do they lack authority to do that?

[00:11:18] Speaker 04:
Because of 316E, Your Honor.

[00:11:19] Speaker 10:
316E mandates... Wait, that's what they just agreed, that 316E is dealing with the burden of persuasion.

[00:11:26] Speaker 04:
But that's what master image requires.

[00:11:28] Speaker 04:
Master image requires the patent owner.

[00:11:30] Speaker 10:
I think you may have misunderstood James' question.

[00:11:32] Speaker 04:
I apologize.

[00:11:32] Speaker 10:
I think he's not asking you about the burden of persuasion.

[00:11:36] Speaker 10:
He's asking whether there is authority to do what idle, free, and master image did with respect to the burden of production only.

[00:11:47] Speaker 04:
Right.

[00:11:47] Speaker 04:
I think that if you have a burden of production, I mean, you can call it a burden of production, but if what you're requiring the patentee to do

[00:11:54] Speaker 04:
is to actually come forward with evidence to persuade the board that you are prima facie, patentable over a whole series of different pieces of prior art.

[00:12:04] Speaker 04:
That's not a burden of production.

[00:12:05] Speaker 04:
That's a burden of persuasion.

[00:12:07] Speaker 04:
A burden of production doesn't have to persuade anybody.

[00:12:09] Speaker 04:
A burden of production just requires you to come forward with evidence.

[00:12:13] Speaker 11:
And once that- What do you call it, a burden of submission?

[00:12:17] Speaker 00:
That the burden of coming forward is always on the movement.

[00:12:21] Speaker 00:
Doesn't change the ultimate burden of proof.

[00:12:24] Speaker 00:
Rather than the burden of production, I think we really are talking about the burden of coming forward.

[00:12:29] Speaker 00:
But unless you come forward sufficiently, it looked to me in going back through the record that there's very little discussion about this motion practice.

[00:12:41] Speaker 00:
And it looks as if everybody assumed that standard motion practice would apply.

[00:12:46] Speaker 00:
And standard motion practice does have a burden certainly of coming forward to the point

[00:12:52] Speaker 00:
where your motion is not dismissed for whatever.

[00:12:55] Speaker 00:
All the reasons motions can be dismissed without looking at the merits.

[00:13:01] Speaker 00:
My perception is that this is what they had in mind.

[00:13:05] Speaker 00:
Nothing more elaborate, nothing fancier.

[00:13:08] Speaker 00:
You are the movement.

[00:13:09] Speaker 00:
You've got a burden if you make a motion, if you want your motion to be entertained.

[00:13:14] Speaker 00:
Is that your understanding?

[00:13:16] Speaker 04:
That is my understanding, Your Honor.

[00:13:17] Speaker 04:
Again, a motion under 316D

[00:13:20] Speaker 04:
is a motion to propose amended claims and the criteria for being able to propose amended claims.

[00:13:26] Speaker 04:
Now remember, when that relief is granted, even the PTO agrees that those proposed amended claims do not just automatically issue a certificate.

[00:13:35] Speaker 04:
The word added appears in 318A.

[00:13:40] Speaker 04:
When you propose amended claims, if they meet the criteria that Congress has established, which is that they're non-broadening and they add new matter,

[00:13:49] Speaker 04:
Those amended claims are added to the IPR.

[00:13:52] Speaker 04:
The mechanism by which that happens is by motion.

[00:13:54] Speaker 04:
So yes, you do have a motion, a burden to come forward because you're the movement.

[00:13:58] Speaker 04:
So you have to identify what the amended claims are.

[00:14:01] Speaker 04:
But you don't have a burden of persuasion to show that those amended claims are patentable.

[00:14:05] Speaker 04:
That occurs later after those claims are added to the IPR.

[00:14:10] Speaker 04:
Once they become part of the IPR,

[00:14:12] Speaker 04:
We then look at 316E, which says, in an IPR instituted under this chapter, the petitioner shall bear that burden of proving unpatentability.

[00:14:20] Speaker 07:
Does anything you're arguing suggest that the petitioner, in that circumstance, if we were to agree with you, and we would say that the petitioner has the burden of persuasion with respect to motions for men, does anything limit or cabin the petitioner

[00:14:36] Speaker 07:
from using grounds other than those and bringing in other prior art, you know, kind of the idol free.

[00:14:42] Speaker 07:
I know you object to that because the burden was on the patent owner to differentiate between all kinds of prior art.

[00:14:48] Speaker 07:
But there's not, I guess, can I assume that there's nothing you would point to that would say that the petitioner in those circumstances would be limited in terms of what they could bring forward?

[00:14:58] Speaker 04:
I'm not aware of anything that would limit the petitioner from bringing in art from outside the proceedings and logically they would have to because if you add a limitation then of course that may implicate references that were not the references upon which the IPR was instituted.

[00:15:12] Speaker 04:
So yes, they can bring in references from outside, but it is the petitioner's burden.

[00:15:15] Speaker 09:
Well, you say they can bring in references from outside.

[00:15:17] Speaker 09:
Don't you mean the PTO has been delegated the authority by the statute to decide in that circumstance what can happen?

[00:15:23] Speaker 09:
The current set of statutory and regulatory enactments don't seem to cover that issue.

[00:15:29] Speaker 09:
So you're saying, yes, they can bring it in.

[00:15:31] Speaker 09:
Doesn't the PTO have to decide, since they have substantive and procedural rulemaking authority,

[00:15:36] Speaker 09:
what they think is appropriate, and then once they do, that's what has to be followed?

[00:15:40] Speaker 04:
Yes, Your Honor.

[00:15:40] Speaker 04:
I didn't speak clearly enough.

[00:15:42] Speaker 04:
I don't see anything that would preclude them from doing that.

[00:15:44] Speaker 04:
I don't see anything in the rule that requires that.

[00:15:47] Speaker 04:
I don't see anything that precludes it.

[00:15:48] Speaker 04:
So there would have to be some sort of substantive rule.

[00:15:50] Speaker 01:
Of course, by definition, the amendment claims are narrow.

[00:15:53] Speaker 01:
So there would probably not necessarily be new prior law, because it would be the same prior law that would be applicable to the broader claims.

[00:16:03] Speaker 04:
It depends, Your Honor, if you add a limitation that just is something, a new limitation that doesn't appear in any of the references.

[00:16:10] Speaker 04:
It's possible the petitioner may know of some other reference that does have that limitation that they would want to then bring in.

[00:16:15] Speaker 04:
But I agree with Judge Moore that the current rules that were made via the notice and comment rulemaking don't seem to require that.

[00:16:25] Speaker 04:
But I don't see anything in the statute that would preclude it.

[00:16:28] Speaker 11:
Let me walk you back to the question I asked you, which didn't

[00:16:32] Speaker 11:
go anywhere, and that is supposing you call it a burden of submission.

[00:16:36] Speaker 11:
Any PAD owner submitting any document or proposal to the board necessarily has certain obligations.

[00:16:48] Speaker 11:
Go ahead.

[00:16:49] Speaker 04:
Well, I agree.

[00:16:51] Speaker 04:
I may not be understanding your question.

[00:16:52] Speaker 04:
Are you asking me if... I'm not asking.

[00:16:55] Speaker 11:
I'm commenting, but what I'm saying is that when you make a submission to the board,

[00:17:02] Speaker 11:
it's going to be adequate as an attorney, you're under certain obligations, just as you would be in filing a pleading in court.

[00:17:14] Speaker 11:
And by filing that submission, you are providing certain information to the board.

[00:17:22] Speaker 11:
That always happens.

[00:17:24] Speaker 11:
Yes, Your Honor.

[00:17:25] Speaker 11:
And if it doesn't, it goes nowhere.

[00:17:28] Speaker 04:
That's right.

[00:17:29] Speaker 04:
So I think that is exactly analogous or

[00:17:33] Speaker 04:
Perhaps a better explanation of what this burden of production is.

[00:17:36] Speaker 04:
You have to come forward with evidence.

[00:17:37] Speaker 04:
If you don't put your amended claims in, then you're not going to get amended claims, because you haven't come forward with anything.

[00:17:44] Speaker 10:
Wait, wait.

[00:17:44] Speaker 10:
You have to do more than just bring in the amended claims, right?

[00:17:47] Speaker 10:
Do you have a burden of production to bring in evidence to support their patentability?

[00:17:53] Speaker 04:
Your Honor, I don't believe that's true under 316E.

[00:17:56] Speaker 04:
316D says that you have to make a motion to propose amended claims.

[00:18:01] Speaker 04:
So you have to explain to the patent office what the amended claims are.

[00:18:04] Speaker 04:
You have to show where the amendment is.

[00:18:07] Speaker 04:
That's what you have to do as the movement.

[00:18:09] Speaker 04:
You have to put those amended claims forward.

[00:18:11] Speaker 10:
All you have to do is to put in the amended claims, and that's it?

[00:18:14] Speaker 04:
Well, they don't automatically issue, Your Honor.

[00:18:16] Speaker 04:
They get added to the, if they are non-broadening.

[00:18:20] Speaker 10:
Is that all you have to do is to bring in the amended claims?

[00:18:22] Speaker 10:
You don't have to support them in any way with evidence?

[00:18:25] Speaker 04:
Well, you have to show that they're non-broadening.

[00:18:27] Speaker 04:
There has to be enough in your motion

[00:18:30] Speaker 04:
that it's clear that the amendment is non-broadening and adds new matter.

[00:18:34] Speaker 04:
That's it.

[00:18:35] Speaker 04:
And it has to respond.

[00:18:36] Speaker 00:
I'm sorry.

[00:18:36] Speaker 04:
And the Patent Office has added an extra statutory requirement that you have to show that they are responsive to at least one ground of unpatentability at issue in a trial, which again is just a procedural burden of production.

[00:18:49] Speaker 04:
Even the Patent Office has agreed.

[00:18:51] Speaker 04:
That's merely procedural.

[00:18:52] Speaker 04:
Doesn't mean you have to prevail on those grounds of unpatentability.

[00:18:55] Speaker 04:
You don't even have to address all grounds of unpatentability.

[00:18:58] Speaker 04:
You just have to show that it's relevant to at least one.

[00:19:00] Speaker 04:
That prevents patent owners from using the amendment process to address issues that really shouldn't be before the board, such as 101 issues and 112 issues.

[00:19:09] Speaker 03:
So getting back to an earlier question I asked, if the PTO amended its regulations to say one of the requirements in the content of the motion to amend is for the patent owner to explain or address

[00:19:25] Speaker 03:
the prior art of record in the IPR proceeding.

[00:19:28] Speaker 03:
Let's say there's ten references in the IPR proceeding.

[00:19:31] Speaker 03:
And the PTO says, with your motion, you have to address these ten references.

[00:19:37] Speaker 03:
Would that be impermissible under their authority to issue regulations to standards and procedures for a motion to amend?

[00:19:46] Speaker 04:
Your Honor, I think that would depend on the exact wording of the regulation.

[00:19:49] Speaker 04:
The way you just described it, requiring the patent owner simply to address certain things, to comment on certain things, that may not go afoul of the statute as long as it's clear that that's not a burden of persuasion.

[00:20:02] Speaker 04:
And that the petitioner can't simply sit back and do nothing and then have that proposed amendment denied merely because the patent owner didn't do enough in its explanation.

[00:20:14] Speaker 04:
A burden of production is not a burden of persuasion.

[00:20:17] Speaker 04:
So yes, you can require the patent owner, I think, to address certain things as long as the burden of persuasion remains on the petitioner.

[00:20:26] Speaker 07:
And if there is no petitioner?

[00:20:28] Speaker 07:
If the petitioner has settled out or gone bankrupt or whatever or is not covered by the amendments or could care less, even though others might be, what happens then?

[00:20:38] Speaker 04:
As long as the amendment, according to the statute, as long as the amendment is non-broadening and adds no new matter, that amendment should issue as a matter of course.

[00:20:48] Speaker 09:
Wait, what do you mean it should issue?

[00:20:50] Speaker 09:
318 says that the patent office has the obligation to assess the patentability

[00:20:55] Speaker 09:
of either the originally challenged claims or amended claims.

[00:21:00] Speaker 09:
The amendment doesn't just, when you say the amendment issues, you don't mean the claim issues with the amendment in it automatically without the Patent Office doing its own review at that point.

[00:21:09] Speaker 04:
The Patent Office has to make a determination, Your Honor, but the determination is an adjudication.

[00:21:13] Speaker 04:
We know that the IPR procedure is a constrained proceeding.

[00:21:18] Speaker 04:
So even with issue claims,

[00:21:20] Speaker 04:
Although they call it a determination of patentability, we know they're not looking at 101.

[00:21:24] Speaker 04:
We know they're not looking at 112.

[00:21:26] Speaker 04:
We know they're not looking at anything other than printed prior art under 102103.

[00:21:29] Speaker 09:
You're not suggesting, are you, that the patent office would then automatically have to issue a claim whenever a petitioner pulls out at the statute expressly in 317?

[00:21:40] Speaker 09:
allows for a petitioner to pull out in the office to make the decision as to whether to dismiss or to go forward and decide the patentability of the claims.

[00:21:47] Speaker 09:
Isn't that what the statute allows for?

[00:21:49] Speaker 04:
My point, Your Honor, is that when you get to 318A and the patent office has to make that determination of patentability, the only thing the office has to make the determination of patentability is the arguments that the litigants put forth.

[00:22:02] Speaker 04:
And if the petitioner has dropped out or hasn't put forth a counter-argument against that amended claim, and if the amended claim otherwise meets their

[00:22:10] Speaker 04:
requirements of 316D, the non-broadening asthma new matter.

[00:22:15] Speaker 04:
Maybe matter, of course, is not the right terminology.

[00:22:18] Speaker 08:
But just like in a district court, if the other side makes no argument and... But if the record before the Patent Office, even in the absence of additional argument, is sufficient for the Patent Office to determine that it's unpatentable under one of the grounds asserted, 102 or 103, the Patent Office would still have the right to do that, right?

[00:22:37] Speaker 04:
I'm not sure you're right.

[00:22:38] Speaker 04:
I don't believe so.

[00:22:39] Speaker 08:
Well, didn't the Supreme Court Enquozo specifically refer to the burden either being on the petitioner or the PTO?

[00:22:46] Speaker 10:
Well.

[00:22:47] Speaker 08:
It contemplated that where the petitioner drops out, the PTO may have the ultimate burden, but the PTO can still reach that conclusion based on the record evidence before it.

[00:22:58] Speaker 04:
Your Honor, I'm going to have to rely on the PTO, because in their brief on the second question of what happens when a petitioner drops out, the PTO agreed with us that if 316E places the burden on petitioners to prove a proposition of unpatentability, a universal burden, when that petitioner drops out, the Patent Office, according to their brief,

[00:23:20] Speaker 04:
doesn't have the ability to raise an issue.

[00:23:23] Speaker 01:
The statute doesn't provide for reexamine for the board to the new examination and look for a new prior audit.

[00:23:31] Speaker 04:
That's correct, Your Honor.

[00:23:32] Speaker 04:
The IPR procedure is not an examinational procedure.

[00:23:35] Speaker 04:
It's an adjudicatory procedure, just like it does have.

[00:23:39] Speaker 04:
Cuozzo said, yes, there are certain aspects of it that are different than a purely adjudicatory procedure.

[00:23:44] Speaker 04:
For instance, the Patent Office can intervene on appeal.

[00:23:47] Speaker 04:
But with respect to that determination of patentability,

[00:23:50] Speaker 04:
Congress intended for that to be only a limited determination of patentability.

[00:23:53] Speaker 04:
It's not the same thing as an examiner saying it's patentable, because nobody's done a search, nobody's looking at 101, nobody's looking at 112, nobody's looking at anything other than printed publications under 102 and 103.

[00:24:04] Speaker 04:
So it's a very constrained analysis.

[00:24:06] Speaker 04:
Congress understood that.

[00:24:07] Speaker 04:
They knew that this determination of patentability was not the end-all be-all, meaning this claim can never be challenged again.

[00:24:14] Speaker 04:
It simply means that based on what was presented in this limited proceeding,

[00:24:18] Speaker 04:
There is a determination that the petitioner didn't carry its burden.

[00:24:20] Speaker 08:
Even if I agree with you on that proposition, which I'm not saying whether I do or don't, but even if I do, it is still possible that a petitioner could decide to drop out despite having already made a sufficient showing of unpatentability, right?

[00:24:38] Speaker 04:
I apologize.

[00:24:38] Speaker 04:
I didn't understand your hypothetical.

[00:24:39] Speaker 04:
But yes, if the petitioner had put evidence on record and then drops out,

[00:24:45] Speaker 04:
then I would agree that the PTO, the board could certainly look at what was already brought into the record of the proceeding.

[00:24:50] Speaker 04:
I apologize if I didn't understand your hypothetical.

[00:24:53] Speaker 12:
Mr. Barrett, can I ask you, do you have any information about how often the situation that has been of some concern in our thinking about this and our opinions around these namely,

[00:25:06] Speaker 12:
A motion to amend not opposed by the petitioner.

[00:25:10] Speaker 12:
I did some Westlaw research.

[00:25:12] Speaker 12:
I found one and only one.

[00:25:13] Speaker 12:
Do you have some information about that?

[00:25:15] Speaker 04:
Only anecdotal, Your Honor, that it's fairly rare that most times the petitioner stays in the case and challenges amendments.

[00:25:23] Speaker 04:
And that certainly was the situation in our case.

[00:25:25] Speaker 04:
Zodiac challenged our amendment.

[00:25:26] Speaker 04:
So we don't fit into that rare category.

[00:25:30] Speaker 04:
And also, more to your point,

[00:25:32] Speaker 04:
with respect to this sort of policy concern about this one particular problem.

[00:25:38] Speaker 04:
That has to be counterbalanced against the fact that the IPR statute allows the Patent Office to dismiss IPRs after institution on the basis of private settlement.

[00:25:49] Speaker 04:
And the Patent Office does that on a routine basis.

[00:25:52] Speaker 04:
And when the Patent Office dismisses instituted IPRs, it is literally leaving in place claims that it believed at the time of institution were likely invalid.

[00:26:00] Speaker 04:
And those claims have the presumption of validity and the full scope and no intervening rights associated with them.

[00:26:07] Speaker 04:
In contrast, a much better procedure is allowing those claims to issue in amended form, because at least then they're narrower in scope and they have intervening rights.

[00:26:15] Speaker 04:
It's going to be a huge protection for a lot of potential infringers.

[00:26:19] Speaker 07:
We're well into your rebuttals, so I'm going to suggest that you might want to sit down.

[00:26:22] Speaker 07:
And let's hear from the government.

[00:26:29] Speaker 02:
Thank you.

[00:26:29] Speaker 02:
May it please the court?

[00:26:30] Speaker 02:
Good morning, your honors.

[00:26:31] Speaker 02:
In Section 316A9 of Title 35, Congress, through the American Events Act, extended to the United States Patent and Trademark Office

[00:26:42] Speaker 02:
a type of rulemaking authority.

[00:26:43] Speaker 02:
It had never extended before.

[00:26:45] Speaker 05:
And that was the authority.

[00:26:47] Speaker 05:
That authority that Congress extended was to prescribe regulations, correct?

[00:26:52] Speaker 06:
Yes.

[00:26:53] Speaker 05:
And under the AIA, there's a clear definition as to what constitutes a regulation.

[00:27:00] Speaker 05:
And there's a difference between a regulation and an order.

[00:27:04] Speaker 05:
Are you aware of that distinction?

[00:27:06] Speaker 02:
I'm not sure under the AIA, Your Honor.

[00:27:08] Speaker 02:
Under the APA, I'm sorry.

[00:27:10] Speaker 02:
Of course, I understand the distinction between a rule and an order.

[00:27:14] Speaker 02:
But Your Honor, in this case, we have a rule.

[00:27:16] Speaker 05:
So is idle free an order?

[00:27:18] Speaker 05:
Am I correct in that that's an order under the APA?

[00:27:22] Speaker 02:
By the board.

[00:27:23] Speaker 02:
That's correct, Your Honor.

[00:27:24] Speaker 05:
Right.

[00:27:25] Speaker 05:
See, you really don't have a rule that addresses the issue that's before the court today.

[00:27:30] Speaker 02:
Your Honor, we disagree with that.

[00:27:32] Speaker 02:
We do have a rule.

[00:27:34] Speaker 05:
You have an order that's interpreted

[00:27:36] Speaker 05:
other regulations or other rules, which you don't have.

[00:27:40] Speaker 05:
The PTO did not promulgate an express regulation, such as it did for under 361E.

[00:27:47] Speaker 05:
There is no express regulation with respect to the duty of a patent owner having to prove penalty of IPR claims, amended claims.

[00:27:59] Speaker 02:
There is, Your Honor, and it's Rule 4220.

[00:28:00] Speaker 02:
4220 places the burden on a movement for any motion to be placed

[00:28:06] Speaker 09:
on whoever moves that motion, and in the case of a motion to amend... In the enactment of regulation 42, picking up on, I think, a very good question by my colleague, did the PTO articulate an interpretation at some point, at any point in the course of enacting that regulation of 316E, or did it at least apparently ignore that statutory provision altogether?

[00:28:28] Speaker 09:
If your honor is looking for something that connects 42 22 emotion to a man like Interpretation of the statute somewhere where did the PTO offer a Chevron?

[00:28:39] Speaker 09:
Entitled deference interpretation of 316e where can I find that?

[00:28:44] Speaker 02:
Well your honor our position at a threshold matter is that 316e does not apply to this situation There you know aqua products and it's supporting amici have raised different constructions is your answer that nowhere is your answer nowhere

[00:28:57] Speaker 09:
Where, if anywhere, did the PTO proffer an interpretation of 316E to which I need to give deference?

[00:29:06] Speaker 02:
Your Honor, we would say our promulgation of Rule 4220.

[00:29:09] Speaker 02:
And when we promulgated 4220, we specifically linked it to motions to amend.

[00:29:14] Speaker 09:
In that instance, we would say... But E isn't about motions to amend.

[00:29:17] Speaker 09:
E is about the evidentiary standard.

[00:29:19] Speaker 09:
And as we've all noted, it doesn't mention motions to amend.

[00:29:22] Speaker 09:
This is a simple question.

[00:29:24] Speaker 09:
Is there anywhere in any rulemaking or decision proffered by the agency that articulates an interpretation of 316E that would be entitled to shepherd deference?

[00:29:35] Speaker 09:
Not can I infer one from the fact that you enacted a regulation.

[00:29:38] Speaker 09:
Is it discussed anywhere at any point by the agency?

[00:29:42] Speaker 02:
It's discussed in the briefing before this court, Your Honor.

[00:29:44] Speaker 02:
And the briefing before this court

[00:29:46] Speaker 02:
explains how it is the United States Patent and Trademark Office got to the rule we got to and why it is 4220 was promulgated the way it was.

[00:29:54] Speaker 02:
And this is just not an ex-post rationalization.

[00:29:58] Speaker 02:
When we promulgated 4220, we specifically pointed to motions to amend and the need for a movement to carry on.

[00:30:05] Speaker 05:
But your regulation on motions to amend doesn't pose an obligation on the movement.

[00:30:12] Speaker 05:
But it doesn't go as far as you're saying it does.

[00:30:16] Speaker 05:
There's nothing in the regulation that says that once a patent owner moves to a man of claims, then that they assume a burden of patentability.

[00:30:26] Speaker 02:
Your Honor, what 4220 says pretty clearly in 4220C is that the movement bears the burden of persuasion.

[00:30:34] Speaker 02:
The movement bears the burden.

[00:30:35] Speaker 05:
Well, it says that.

[00:30:36] Speaker 05:
But the remainder of the regulation also says that that burden is to show that the amended claims do not go beyond the, that it's within the scope of the instituted claims.

[00:30:48] Speaker 05:
And it also has, it can only follow one motion.

[00:30:53] Speaker 05:
So there is a burden that the regulation that 4220 refers to, but I don't see anything in the regulation that places a burden on the patent owner that you're claiming it does.

[00:31:09] Speaker 05:
You interpret it.

[00:31:10] Speaker 05:
The interpretation you're putting before this court was pursuant to idol free, wasn't it?

[00:31:18] Speaker 05:
I mean, that's your interpretation.

[00:31:20] Speaker 02:
Your Honor, the interpretation that fleshes out exactly how a patent owner will go about complying with its burden that we promulgated in 4220 is described in idle free.

[00:31:32] Speaker 02:
And it's also described, again, in master image, which is a precedential decision of the board, which in and of itself has sufficient normality.

[00:31:40] Speaker 05:
Those are orders.

[00:31:41] Speaker 05:
Those are not regulations.

[00:31:43] Speaker 05:
Under the APA, those are orders.

[00:31:46] Speaker 05:
And the statute says that the director shall prescribe regulations.

[00:31:52] Speaker 05:
And you have not prescribed a regulation with respect to the burden that a patent owner has when amending, other than what's already in here.

[00:32:01] Speaker 02:
Your Honor, we would disagree with that.

[00:32:03] Speaker 02:
4220 does assign the burden of proving entitlement to the motion to the movement.

[00:32:08] Speaker 02:
And I agree that 4220 goes on and says, the motion may be denied if,

[00:32:14] Speaker 02:
if it doesn't present a reasonable number of claims, if it doesn't narrow the claim, et cetera.

[00:32:19] Speaker 02:
Right.

[00:32:19] Speaker 08:
That's a threshold question, because that's really important here, is that the question of what a motion to amend effectuates.

[00:32:27] Speaker 08:
Assuming a motion to amend is satisfactory under those criteria, you don't get an amendment automatically to the claims.

[00:32:37] Speaker 08:
You get the amendment that becomes part of the IPR, subject to the unpatentability challenges.

[00:32:43] Speaker 02:
Your Honor, that's of course correct.

[00:32:45] Speaker 08:
And the way the rule... So why couldn't the rule be reinterpreted, just as it frankly on its face seems to read, which is to the extent that you're even purporting to impose a burden, it's a burden with respect to the requirements of 316D, not a burden with respect to the ultimate conclusion of patentability and whether that amendment will issue as part of a certificate.

[00:33:12] Speaker 02:
Because, Your Honor, 4220C explains that the moving party has the burden of proof to establish that it's entitled to the relief requested.

[00:33:21] Speaker 08:
But the relief requested is that I want an amendment to become part of this proceeding.

[00:33:26] Speaker 08:
The ultimate relief is that once a patentability determination is made, it may or may not, a certificate may or may not issue because 318 says it doesn't issue unless and until the board decides to go to a final decision.

[00:33:42] Speaker 02:
and unless the board determines that it's patentable.

[00:33:45] Speaker 02:
So the determination we have to make is patentability.

[00:33:48] Speaker 02:
And I agree with the court that 42-121 has some additional requirements, but it does not say a motion to amend shall be granted when it

[00:33:59] Speaker 02:
does not present an unreasonable number of claims, et cetera.

[00:34:01] Speaker 02:
Those are provisions when it can be denied.

[00:34:03] Speaker 12:
Now, but can you focus on this essentially two-step process?

[00:34:08] Speaker 12:
The motion to amend is a motion to what does 318 say?

[00:34:12] Speaker 12:
To add.

[00:34:13] Speaker 12:
Once it's added, it has to be assessed.

[00:34:16] Speaker 12:
Why does not 42.20 apply only to the first step?

[00:34:19] Speaker 12:
the motion to add.

[00:34:21] Speaker 12:
So you have the burden of showing you have to add it to the proceeding, but you don't have a burden of persuasion in the assessment of its patentability once added to the proceeding.

[00:34:29] Speaker 02:
Because, Your Honor, as an effective matter, that's not how these proceedings operate, and it's not how patent owners want them to operate.

[00:34:35] Speaker 02:
And let me explain to you why.

[00:34:38] Speaker 02:
Most of the petitions that are filed in the PTO are filed as an outgrowth of district court litigation.

[00:34:46] Speaker 02:
These patents are very valuable, and many of them are involved in litigation.

[00:34:50] Speaker 02:
If a motion to amend comes in and that claim is granted, there is intervening rights.

[00:34:55] Speaker 02:
The litigation is essentially over.

[00:34:57] Speaker 02:
There is no more dispute about the patent owner's entitlement to infringement or damages under the original claim, because the original claim is gone.

[00:35:05] Speaker 02:
So if a patent owner were to come in at day 30 after institution and say, you know what, I'd like to move to amend, and our rule said, great.

[00:35:14] Speaker 02:
cancel the claims in your patent that you want to replace, and we'll take your new claims in, and then we'll move forward with the trial on that.

[00:35:23] Speaker 02:
I agree.

[00:35:23] Speaker 02:
That's one possible way to approach this scenario.

[00:35:26] Speaker 02:
But Your Honor, I don't think anybody would be served by that.

[00:35:30] Speaker 05:
Why didn't you formulate or promulgate a regulation that's based on what you just said, told us now?

[00:35:37] Speaker 05:
I mean, you've articulated a really good foundation for a regulation that, in my view, does not exist.

[00:35:45] Speaker 05:
And you've cobbled together an order under an adjudicatory process, and you want us to adopt or look at that order as if it was a regulation.

[00:35:57] Speaker 05:
If the PTO had actually promulgated a regulation that addresses the issue, as you're putting before this Court, that's similar to E, 316E,

[00:36:10] Speaker 05:
We'd have a totally different situation before us.

[00:36:13] Speaker 05:
But the problem here is that you're asking us to look at an order that interprets something that's not in the regulation.

[00:36:23] Speaker 02:
Your Honor, it interprets the regulation.

[00:36:25] Speaker 02:
And under our, we get considerable deference in defining what that regulation means.

[00:36:30] Speaker 02:
And I totally agree.

[00:36:31] Speaker 10:
Could you explain what you're saying?

[00:36:32] Speaker 10:
Suppose that we had no regulations here.

[00:36:35] Speaker 10:
All we had was idle, free, and master image, which said what the standard is.

[00:36:41] Speaker 10:
Would you argue that those adjudicatory rulings would be entitled to Chevron deference?

[00:36:49] Speaker 02:
I would argue that, particularly in the case of Master Image, Master Image is a precedential decision by the board.

[00:36:55] Speaker 02:
It was voted on by the full board, 250 plus judges, including all the statutory members of the board, and it was also reviewed and could have been vetoed by the director of the agency.

[00:37:05] Speaker 02:
It has sufficient formality to be entitled to Chevron deference.

[00:37:08] Speaker 02:
This court itself has issued opinions extending Chevron deference to agency decisions like that.

[00:37:14] Speaker 02:
Chevron Deference does not rely on a rulemaking.

[00:37:17] Speaker 02:
More importantly, and to get to your point, Judge Dyke, if we didn't have 4220 and all we had were these decisions, we still wouldn't have a problem here.

[00:37:27] Speaker 02:
And the reason is we don't read 316E as commanding that a burden of

[00:37:35] Speaker 02:
be placed on a petitioner's proposition of unpatentability when the proposition that we're looking at is a proposition to amend a patent.

[00:37:45] Speaker 02:
In other words, we think 316E is silent about this.

[00:37:49] Speaker 02:
So even if we didn't have 4220, here's the world we would have.

[00:37:52] Speaker 10:
Could you agree that once the claim comes into the proceeding, if the motion is granted, that the burden of persuasion then rests on the petitioner?

[00:38:01] Speaker 02:
Your Honor, that's not how our trials operate.

[00:38:05] Speaker 02:
That's not how we design them.

[00:38:06] Speaker 02:
That's not how the patent owner, patent owners would want them to operate.

[00:38:10] Speaker 02:
I submit.

[00:38:11] Speaker 02:
I could be wrong, but I don't think patent owners want to start a proceeding by giving up on the claim that was challenged in the first place.

[00:38:16] Speaker 00:
I'm not so sure about that.

[00:38:18] Speaker 00:
The motion aspect for amending claims takes place during the institution phase.

[00:38:27] Speaker 00:
Isn't that right?

[00:38:28] Speaker 00:
That's what's intended, that it essentially establishes

[00:38:33] Speaker 00:
the subject matter that will then be litigated in the litigation phase.

[00:38:39] Speaker 00:
I'm concerned that we're making this practice just so complicated that nobody can understand it, that they won't really know what they can or can't do until somebody tells them after it's all over.

[00:38:50] Speaker 00:
And it looks as if you just look at it simplistically, that the idea is that if the patent owner thinks the situation can be

[00:39:03] Speaker 00:
improve one way or another by amending the claims, narrowing them.

[00:39:07] Speaker 00:
That's all that's allowed is to narrow the claims.

[00:39:10] Speaker 00:
This all takes place at the point in which it's decided or not decided.

[00:39:16] Speaker 00:
We've already crossed the bridge of whether the office can, at the end of the institution phase, say we changed our mind, we withdraw the institution, go home.

[00:39:27] Speaker 00:
So all that the amendment does is establish the subject matter that's going to be litigated.

[00:39:33] Speaker 00:
just like any other threshold motion practice would clarify or narrow or restrict or establish the subject matter to be litigated.

[00:39:44] Speaker 00:
Why is this any different?

[00:39:46] Speaker 00:
I would think that on that scenario, there's plenty of room for regulatory order to have things go in a straightforward way.

[00:39:59] Speaker 00:
There are extremely tight time restraints

[00:40:03] Speaker 00:
on the entire proceeding.

[00:40:05] Speaker 00:
There were trade-offs at the threshold of which the right to amend was significant.

[00:40:12] Speaker 00:
The aspect of estoppel in the district courts without any recourse on 102 or 103 is a powerful consequence of these proceedings.

[00:40:24] Speaker 00:
And the right and opportunity to amend within reason.

[00:40:30] Speaker 00:
We haven't yet gotten to the question of

[00:40:32] Speaker 00:
why the Patent Office denies so many proposed amendments.

[00:40:37] Speaker 00:
We'll save that for another day.

[00:40:39] Speaker 00:
But here we have the question of, in fact, with a motion to amend, we still have just only the more likely than not for one claim that then puts the entire revised structure into the litigation phase.

[00:40:57] Speaker 00:
And it seems to me that this is entirely in accord with standard motion practice.

[00:41:02] Speaker 00:
That's what the Congress wants to prove our lawyers and all of the people over the 10 years of the genesis of this for sale.

[00:41:11] Speaker 00:
And I just wonder why we're making it so complicated.

[00:41:14] Speaker 01:
Following along with what Judge Newton just asked, this seems like a very simple proposition.

[00:41:20] Speaker 01:
The issue decided by the board, which we've gone on bonk on, is whether the patent owner had the burden of showing patentability

[00:41:35] Speaker 01:
316E simply says the opposite.

[00:41:40] Speaker 01:
Now, there may be all sorts of sub-questions, but on the issue that was decided by the board, doesn't E simply state the opposite?

[00:41:51] Speaker 02:
It's directed to the opposite, Your Honor, which is why it doesn't apply.

[00:41:55] Speaker 02:
And I'd like to explain that more fully, but I want to go back to Judge Newman's question for just a second, because I do agree, Your Honor,

[00:42:04] Speaker 02:
nearly everything you said except at the beginning you said something which is not quite consistent with how the statute is written and I just want to clarify that.

[00:42:13] Speaker 02:
A motion to amend is not filed during the institution phase.

[00:42:18] Speaker 02:
The institution phase is yes, the part of the proceeding where the parties go back and forth and decide what

[00:42:27] Speaker 02:
or the board decides, I should say, what the contours of that instituted IPR is going to look like if instituted.

[00:42:35] Speaker 02:
The patent owner does not have to respond at all.

[00:42:37] Speaker 02:
It's a preliminary response if they respond.

[00:42:41] Speaker 02:
And the preliminary response, a good preliminary response, is not directed, in fact, to patentability.

[00:42:46] Speaker 02:
It's directed to the shortcomings in the petition in the first place.

[00:42:50] Speaker 02:
And the reason why we allow patent owners to respond in that way is because if we institute

[00:42:56] Speaker 02:
That's when the patent owner's burden of production comes in with respect to the things we instituted on it because we don't want to put too much on a patent owner in the first place if we're not going to institute.

[00:43:07] Speaker 00:
The motion to... That's very interesting because it seems to me as a digression, but I recently saw a case in which the board said that an argument raised by the patent owner during the litigation phase would not be considered because it hadn't been mentioned.

[00:43:23] Speaker 00:
at the institution phase.

[00:43:25] Speaker 00:
That's for another session because I think we're all trying to get to the same goal of a valid, relatively simple, efficient way of resolving patentability on the most significant issues of patentability.

[00:43:45] Speaker 00:
And what concerns me is that we're, instead of making it simpler than

[00:43:53] Speaker 00:
district court litigation, we're making it much more complicated.

[00:43:57] Speaker 02:
Your Honor, respectfully, what we've done is we've made it a lot simpler than reexamination.

[00:44:03] Speaker 02:
The institution phase is not the period of the proceeding in which the motion to amend comes in.

[00:44:09] Speaker 08:
But it does come in during the course of the IPR.

[00:44:13] Speaker 08:
It's not something that comes after the fact.

[00:44:15] Speaker 08:
when the board decides whether it wants to issue a different patent with amended claims.

[00:44:20] Speaker 08:
The motion to amend is during and in the process.

[00:44:24] Speaker 08:
The 317 and 318 come after 360.

[00:44:27] Speaker 08:
You're still talking about responding to a ground of unpatentability at that point.

[00:44:32] Speaker 08:
So we're still defining the scope of the litigation at that point.

[00:44:36] Speaker 02:
Your Honor, the motion to amend comes in after the trial is instituted, after it's ongoing.

[00:44:42] Speaker 08:
During the course of the ongoing proceeding.

[00:44:44] Speaker 02:
And it comes in at the time at which a patent owner makes its formal response to the petition.

[00:44:51] Speaker 02:
It responds to the petitioner's proposals of unpatentability.

[00:44:55] Speaker 02:
And then, if they choose to avail themselves of the opportunity to make a motion to amend, they make, they being the patent owner, their own proposal.

[00:45:03] Speaker 12:
They propose to amend patent.

[00:45:05] Speaker 12:
In terms of 316E language, getting back to Judge Lurie, the motion to amend and the claims proposed are in the IPR.

[00:45:15] Speaker 12:
Your Honor, they're not in the IPR.

[00:45:16] Speaker 12:
And you used the phrase directed to, and I think you're not always the most helpful phrase in the world, but is 316, you said 316E somehow you don't think by its words covers

[00:45:29] Speaker 12:
the assessment of patentability of a proposed substitute claim.

[00:45:33] Speaker 12:
Where's the opening?

[00:45:35] Speaker 02:
Okay, thank you, Your Honor.

[00:45:36] Speaker 02:
And this gets back also to Judge Laurie's question.

[00:45:39] Speaker 02:
It's the language of 316E, the structure of 316 itself, and then additional provisions in Title 35, with respect to the language of 316E.

[00:45:47] Speaker 02:
316E

[00:45:50] Speaker 02:
refers to an IPR instituted under the chapter, and it refers to a proposition of unpatentability.

[00:45:58] Speaker 12:
And if you put all- The petitioner says this proposed claim is not patentable.

[00:46:05] Speaker 02:
Your Honor, respectfully, the most important word in what you just said is if.

[00:46:10] Speaker 02:
If the petitioner says that.

[00:46:12] Speaker 02:
That's the problem we're trying to address.

[00:46:14] Speaker 12:
If the petitioner says that.

[00:46:15] Speaker 12:
This is a little detour, but it's important to me.

[00:46:17] Speaker 12:
How often has that happened?

[00:46:19] Speaker 12:
As I say, I went on Westlaw, and I think I found 127 IPRs in which the board ruled on a motion to amend.

[00:46:27] Speaker 12:
And I found only one in which the petitioner didn't oppose, in which, of all things, the patent owner was the United States.

[00:46:33] Speaker 12:
But is this a real problem, or a theoretical problem, or what?

[00:46:39] Speaker 02:
Well your honor it depends if you mean they opposed that they raised their own position of unpatentability Because if the patent owner comes in and the patent owner is in the very best position to figure out What claim that they might be entitled to now they get one shot at?

[00:46:53] Speaker 02:
They know the record as well as anybody.

[00:46:55] Speaker 02:
They know their invention better than anybody.

[00:46:57] Speaker 12:
I'm sorry.

[00:46:58] Speaker 12:
Can you ask a sort of a numerical question?

[00:47:00] Speaker 12:
How often has it happened that when the patent owner proposes a substitute claim in the motion to amend, the petitioner or no petitioner opposes?

[00:47:11] Speaker 02:
That's very rare.

[00:47:13] Speaker 12:
I found one.

[00:47:13] Speaker 12:
Do you have any reason to think there's more?

[00:47:15] Speaker 02:
I do have reason to think there's more than one.

[00:47:17] Speaker 02:
But there's not a significantly number more.

[00:47:19] Speaker 02:
It's not enough to debate.

[00:47:21] Speaker 02:
But the point I was trying to make, Your Honor, is that just coming in and opposing is not necessarily a position of unpatentability.

[00:47:29] Speaker 02:
The patent owner has come in, and the patent owner has said, here's why my claim is patentable, because of this one feature over here, for example.

[00:47:37] Speaker 02:
This feature is the magic.

[00:47:38] Speaker 02:
This is what gets it over the prior art,

[00:47:40] Speaker 02:
This is what was invented.

[00:47:42] Speaker 02:
If the petitioner comes in and says, that's not true.

[00:47:46] Speaker 02:
That one feature doesn't get you over the prior art.

[00:47:48] Speaker 02:
Let me explain to you why.

[00:47:50] Speaker 02:
I don't know that we can categorize that as a proposition of unpatentability, because as a matter of unpatentability, it's not completely fleshed out in the first place.

[00:47:58] Speaker 02:
It is not a prima facie case of unpatentability.

[00:48:00] Speaker 02:
It is not an assessment of the Graham factors.

[00:48:03] Speaker 02:
It is a rebuttal of the patent owner's argument as to why the claim was patentable.

[00:48:09] Speaker 02:
That's exactly what happened in this case.

[00:48:10] Speaker 08:
But wait, the whole contemplation here is that the motion to amend must respond to an already asserted proposition of unpatentability.

[00:48:19] Speaker 08:
That assumes that it's either 102 or 103, and it's defined prior art.

[00:48:23] Speaker 08:
So the motion has to respond to that proposition.

[00:48:27] Speaker 08:
Then the question is, does the petitioner say, yeah, that's a decent response, given that it's not obvious?

[00:48:33] Speaker 08:
Or the petitioner will say, no, you're purporting to respond, but it's still obvious under the same prior art.

[00:48:40] Speaker 08:
the way they would respond, right?

[00:48:43] Speaker 02:
Yes, Your Honor, but in that hypothetical, the patent owner complied with the requirement to respond.

[00:48:48] Speaker 08:
In other words... But it's still the same proposition of unpatentability that was asserted in the very beginning.

[00:48:54] Speaker 08:
It's still the same hierarchy, the same 102 or 103.

[00:48:57] Speaker 02:
The proposition of unpatentability has to do with the scope of the claim as a whole.

[00:49:02] Speaker 02:
If a limitation is added to a claim, and by the way, added to a claim because it's a contingent motion that the board has already determined not to be patentable, it must be because there's some patently distinct invention there.

[00:49:14] Speaker 02:
Simply narrowing a patentable claim that is determined to be unpatentable doesn't get you a patent.

[00:49:20] Speaker 02:
If we start with the proposition that something is not entitled to a patent, it makes very little sense to say, oh, but we'll assume a narrower version of that is entitled to a patent.

[00:49:30] Speaker 02:
No, there has to be some patentable.

[00:49:32] Speaker 08:
You still have to make the determination of unpatentability, but it is still the same proposition of unpatentability that started the whole IPI.

[00:49:39] Speaker 02:
Your Honor, I would completely disagree with that.

[00:49:40] Speaker 02:
It would be a totally different proposition, because it has to be somehow patentably distinct from what was determined to be unpatentable in the first place.

[00:49:48] Speaker 02:
If your invention is a light bulb with a filament and a glass ball, and someone has a filament and a glass ball, and then you come in and say, oh, I want to file a motion to amend.

[00:49:57] Speaker 02:
My filament is coated in tungsten.

[00:49:59] Speaker 02:
Well, the unpatentability or patentability of a tungsten coated filament in a light bulb is not the same proposition of patentability.

[00:50:08] Speaker 09:
I don't understand.

[00:50:08] Speaker 09:
You keep saying a claim was determined to be unpatentable.

[00:50:11] Speaker 09:
Emotions toward men don't come in at a time when the determination of unpatentability has been made.

[00:50:17] Speaker 09:
All that's been made is determination to institute at that point, right?

[00:50:21] Speaker 09:
I mean, the amendment is not always occurring after the patent office has rendered a final decision of unpatentability.

[00:50:28] Speaker 09:
Isn't it occurring?

[00:50:29] Speaker 09:
often early in the process, after the institution of the proceeding, when there in fact has been no determination of unpatentability, only a determination to institute proceedings?

[00:50:42] Speaker 02:
No.

[00:50:43] Speaker 02:
No.

[00:50:43] Speaker 02:
Motions to amend are decided in nearly every single case after the decision is made that the original claims are not patented.

[00:50:54] Speaker 09:
I didn't ask when they're decided.

[00:50:55] Speaker 09:
I asked when they're made.

[00:50:56] Speaker 09:
When is the patentee?

[00:50:57] Speaker 09:
making a motion to amend.

[00:50:59] Speaker 09:
You said a motion to amend is made after a determination of unpatentability.

[00:51:04] Speaker 09:
Yes.

[00:51:04] Speaker 09:
I stand by that.

[00:51:06] Speaker 02:
And here's why.

[00:51:08] Speaker 02:
We could bicker about made versus filed.

[00:51:10] Speaker 02:
I agree that the paper is filed in the agency at a time when nothing's really happened in the trial yet.

[00:51:16] Speaker 02:
I disagree that the motion is made at that point, because it's a contingent motion.

[00:51:21] Speaker 02:
The patent owner says, I request to move to amend

[00:51:26] Speaker 02:
to substitute these claims if my original claims are found to be unpatentable.

[00:51:32] Speaker 02:
So the patent owner themselves is saying, here's my motion.

[00:51:35] Speaker 02:
I filed it at the right time.

[00:51:37] Speaker 02:
And I would like you to take up this motion.

[00:51:40] Speaker 02:
I would like it to become an effective motion in this case for your review after you've made a determination that my original claims are unpatentable.

[00:51:48] Speaker 02:
And the reason they do it that way, Your Honor,

[00:51:50] Speaker 02:
is because they don't want intervening rights.

[00:51:52] Speaker 02:
They don't want to give up their original claim.

[00:51:54] Speaker 02:
They don't want to turn their back on the litigation and walk away.

[00:51:57] Speaker 02:
They don't.

[00:51:58] Speaker 02:
And that makes perfect sense.

[00:51:59] Speaker 02:
So as an agency that's been given very broad rulemaking authority to determine how these proceedings are going to work, we have to figure this out.

[00:52:07] Speaker 02:
How are we going to let patent owners file contingent motions that ask us not to figure out patentability until after?

[00:52:14] Speaker 05:
That goes back to the questions that I was asking.

[00:52:18] Speaker 05:
You're talking about the broad rulemaking authority that the PTO has.

[00:52:24] Speaker 05:
On Tuesday, August 14th, the PTO published in the Federal Register the final rules that it adopted.

[00:52:33] Speaker 05:
And it says in the summary, this final rule provides a consolidated set of rules.

[00:52:39] Speaker 05:
relating to board trial practice for inter-party reviews.

[00:52:43] Speaker 05:
Roseanna says this final review also provides a consolidated set of rules to implement the provisions of AIA, et cetera.

[00:52:50] Speaker 05:
So when I go and I look at the regulations that you're talking about here in this final rule, and I see something with respect to the burden that the petitioner has

[00:53:03] Speaker 05:
And I'll look for the regulation that you're arguing before this court.

[00:53:08] Speaker 05:
I don't find a regulation to that.

[00:53:11] Speaker 05:
You're telling me that idle fire is an interpretation of your rule-making authority, and that idle fire itself, that order establishes what we should look at as a rule.

[00:53:25] Speaker 05:
Now, under 316A, it says the director shall prescribe regulations.

[00:53:33] Speaker 05:
It seems to me that even there, you're limited into how you adopt or promulgate regulations.

[00:53:40] Speaker 05:
And you have to do it by way of the rules.

[00:53:44] Speaker 05:
Wouldn't it have been easier for you to go back, isn't it easier for you to go back and to simply promulgate a rule that establishes an evidentiary burden that you're putting before this court?

[00:53:56] Speaker 05:
Because that regulation does not exist.

[00:53:59] Speaker 02:
To answer your direct question, Your Honor, it is not easier to promulgate rules than it is to make a presidential decision.

[00:54:05] Speaker 02:
But more importantly, Your Honor, the question before this court today is whether or not 316E commands that the burden of proof for a motion to amend be placed on the petitioner.

[00:54:20] Speaker 02:
Rule 42.20.

[00:54:23] Speaker 05:
I see the issue is that you've issued a judicatory decision that you want us to adopt to look at as a rule for the PTO with respect to this burden.

[00:54:36] Speaker 05:
And in my view, you cannot make rules that under the APA,

[00:54:45] Speaker 05:
And under what I just read to you, the PTO cannot establish rules under the adjudicatory process.

[00:54:57] Speaker 02:
Your Honor, the rule we promulgated is 37 CFR 42.20C.

[00:55:01] Speaker 02:
42.20C states, the moving party has the burden of proof to establish

[00:55:10] Speaker 02:
that it is entitled to the requested relief.

[00:55:13] Speaker 03:
But when we look back at the Federal Register notices, it doesn't appear, to me at least, that the agency was considering the motion to amend question, which was a new novel issue for these new novel adjudicatory proceedings when it promulgated 42.20C.

[00:55:30] Speaker 03:
To me, 42.20C just looked like a generic default rule for motions that

[00:55:39] Speaker 03:
the PTO had always had with respect to interference practice, and it was simply carrying it forward.

[00:55:45] Speaker 03:
And to the extent that the PTO may have been silently considering the possibility of motions to amend to also be thrown into 42.20C, well, then there was no analysis in these Federal Register notices to explain why the statute

[00:56:03] Speaker 03:
had a gap that allowed the agency per 316A9 to step in to that gap and then conclude that it would choose to assign the burden of proof on these motions to amend to the patent owner rather than the petitioner.

[00:56:20] Speaker 03:
So I guess my first question is, am I right that the Federal Register notices in 2012 don't contemplate

[00:56:28] Speaker 03:
the specific question of motions to amend with respect to 42.20.

[00:56:35] Speaker 02:
Your Honor, I see I'm out of time.

[00:56:36] Speaker 07:
Yes.

[00:56:37] Speaker 07:
Feel free to answer.

[00:56:37] Speaker 02:
Thank you.

[00:56:39] Speaker 02:
You're not right.

[00:56:42] Speaker 02:
Our federal registry notice specifically links 42.20 to motions to amend, and let me show you where it does that.

[00:56:50] Speaker 02:
Volume 77 at page 48, 619, which is where our commentary is on 42.20.

[00:56:59] Speaker 02:
And it says, Section 4220A provides that relief other than a petition to institute a trial must be in the form of a motion.

[00:57:07] Speaker 02:
The rule is consistent with the requirement of 35 USC 316A1 and 316D as amended, and 35 USC 326A1 and 326D, which are relevant to post-Grant Review, which provide that requests to seal a document and requests to amend the patent be filed in the form of a motion.

[00:57:27] Speaker 02:
We were specifically linking

[00:57:29] Speaker 00:
I did not interrupt, but our time is out.

[00:57:31] Speaker 00:
I want to ask, where is the notice in public comment on that regulation?

[00:57:37] Speaker 02:
Your Honor, what I just read to you from was in our final rule, which is where we respond to the public commentary.

[00:57:44] Speaker 02:
There was a notice of proposed rulemaking that had issued previous to this, which is where we gave the public notice of that rule and gave the public an opportunity to comment on it.

[00:57:53] Speaker 02:
And one last thing I'd like to say about this is that we go on in that commentary about the rule, and then we go to section 4220D, where we say that 4220D provides that the board may order briefing on any issue appropriate for final written determination.

[00:58:08] Speaker 02:
And then again, in that section, we refer back to any new claim added by amendment.

[00:58:14] Speaker 02:
So we definitely, when we promulgated 4220,

[00:58:20] Speaker 02:
We definitely had our eyes on motions to amend.

[00:58:22] Speaker 02:
This is not something we're just arguing after the fact.

[00:58:25] Speaker 03:
Real quick, can you give me the pinpoint again?

[00:58:27] Speaker 02:
Sure.

[00:58:27] Speaker 02:
It's 77 Federal Register number 157.

[00:58:31] Speaker 02:
It's dated Tuesday, August 14, 2012.

[00:58:34] Speaker 02:
And it's at page 48, 619.

[00:58:39] Speaker 02:
And the italic heading is Petition and Motion Practice.

[00:58:42] Speaker 02:
And it's in sort of the bottom right-hand corner of the page.

[00:58:45] Speaker 02:
So that is the rule we promulgated.

[00:58:47] Speaker 02:
Jadrena, that is the rule that says that the person making the motion has the burden of proof.

[00:58:53] Speaker 02:
We believe that is what answers 316E.

[00:58:57] Speaker 02:
It was not just in Idle Free.

[00:58:59] Speaker 02:
It was not just in Master Image.

[00:59:01] Speaker 02:
But it was in the rule itself.

[00:59:02] Speaker 02:
And our interpretation of that rule in Idle Free, and certainly in Master Image, is entitled to great deference by this court under our

[00:59:11] Speaker 03:
None of them mentioned 316E, though, right?

[00:59:14] Speaker 02:
Your Honor, our position is that 316E does not apply here.

[00:59:18] Speaker 02:
But even if you read 316E, we think, for the reasons we've set out in our brief, that 316E has an ambiguity in it that would give us deference anyway.

[00:59:27] Speaker 02:
But again, our starting point is not that it's ambiguous, but that it doesn't apply.

[00:59:32] Speaker 07:
Thank you.

[00:59:32] Speaker 07:
Thank you.

[00:59:33] Speaker 07:
In order to keep things even, we'll add three minutes to the time that was remaining.

[00:59:43] Speaker 04:
Thank you, Your Honor.

[00:59:45] Speaker 04:
Just a few points.

[00:59:47] Speaker 04:
With respect to 4220C, I did want to point out that in the legislative history of the statute, of course, when I was up here before, I focused on the change from invalidity to unpatentability, but there was an equally important change that occurred earlier in the legislative history.

[01:00:04] Speaker 04:
When it was originally drafted, going back to 2005 and 2006,

[01:00:08] Speaker 04:
the predecessor to 316E actually looked a little bit like 4220C.

[01:00:13] Speaker 04:
It said that the party advancing a proposition under this chapter shall have the burden of proving that proposition.

[01:00:20] Speaker 04:
So it was a very generic motion-based burden.

[01:00:24] Speaker 04:
They changed that.

[01:00:25] Speaker 04:
Congress specifically got rid of that and then went with a more specific burden and placing it on the petitioner to show a proposition of unpatentability.

[01:00:32] Speaker 04:
And so for the Patent Office to basically take this generic motion

[01:00:39] Speaker 04:
regulation and say, well, this governs all the burdens with respect to amended claims.

[01:00:44] Speaker 04:
Well, Congress already considered that and discarded it.

[01:00:48] Speaker 04:
I think we should give deference to Congress.

[01:00:51] Speaker 04:
With respect to, there was a comment that, several comments that this is good for patent owners.

[01:00:56] Speaker 04:
Patent owners want this type of rule because when they get the amendment, it's a company about intervening rights.

[01:01:02] Speaker 04:
And I think he said it effectively ends the litigation.

[01:01:04] Speaker 04:
Well, it doesn't end the litigation.

[01:01:06] Speaker 04:
It may get rid of past damages, but of course, if you have issued patents, you can use that patent going forward to seek an injunction.

[01:01:13] Speaker 04:
You can use it against other parties.

[01:01:16] Speaker 04:
So it doesn't necessarily end the litigation.

[01:01:17] Speaker 04:
And the fact of the matter is, and our client is proof of this, patent owners do want amended claims.

[01:01:23] Speaker 04:
A patent owner would much rather have an amended claim that's valid than to have their entire patent thrown out, because it would be nearly impossible to amend claims.

[01:01:31] Speaker 04:
which goes to the broader point of the balance that was struck by Congress in the AIA.

[01:01:37] Speaker 04:
This was not a one-sided legislation.

[01:01:40] Speaker 04:
Congress recognized that by passing the AIA, it was stripping rights away from patent owners.

[01:01:45] Speaker 04:
Patent owners who had obtained patents through the Patent Office, through the legal proceedings, they obtained an intellectual property right that had a presumption of validity,

[01:01:53] Speaker 04:
Often at great expense, they arrange their business fairs around that.

[01:01:57] Speaker 04:
Congress understood that by putting that intellectual property right back in jeopardy, stripping away the presumption of validity, lowering the burden down to a mere preponderance, and then allowing BRI standard, which makes it even easier.

[01:02:10] Speaker 04:
And the fact that petitioners don't even have to have constitutional standing creates a lot of jeopardy for patent owners, because they don't even have to be doing anything aggressive with their patents to find themselves in an IPR proceeding.

[01:02:21] Speaker 04:
IPRs can be brought merely to drive down the stock price of a patent holding company to create investment opportunities.

[01:02:27] Speaker 04:
And Congress understood that, which is why they put in the amendment procedure to provide a relatively simple and easy way for patent owners to amend claims, so that even if their original claim is proven to be invalid, they still have an opportunity to obtain a narrower valid claim.

[01:02:46] Speaker 04:
With respect, and I don't know if this got fully fleshed out, so I merely want to make sure that Judge Lurie, that your question got answered with respect to 316E.

[01:02:55] Speaker 04:
There was some discussion about whether it was an opposite burden.

[01:02:59] Speaker 04:
And I just want to make clear, in case there's any confusion, that the agency cannot pass a regulation that

[01:03:08] Speaker 04:
does anything to eliminate the burden on a petitioner to show a proposition of unpatentability in an instituted IPR.

[01:03:16] Speaker 04:
That is just clear.

[01:03:17] Speaker 04:
But that is exactly what the PTO has done by placing the burden on patent owners to show patentability, because those are two sides of the same coin.

[01:03:25] Speaker 04:
By placing the burden on the patent owner to show patentability, you are necessarily alleviating the petitioner from having to show unpatentability of that same claim, which is why it violates Section 316E.

[01:03:38] Speaker 04:
And then the last point that I would like to make with respect to contingent motions.

[01:03:41] Speaker 04:
First of all, not all motions have to be contingent.

[01:03:44] Speaker 04:
But even if they are contingent, at the time that the relief is granted, which is when the contingency occurs, that amended claim is still added to the IPR.

[01:03:56] Speaker 04:
That's what 318A says.

[01:03:58] Speaker 04:
The amended claim is added.

[01:04:00] Speaker 04:
And there may be a question of when that timing is, but there's no question that at some point the amended claim is added to the IPR.

[01:04:06] Speaker 04:
And 316E makes absolutely clear that a claim that's in an IPR, that the burden flows to the petitioner to show unpatentability.

[01:04:15] Speaker 04:
Subject to any questions your honors may have, I have nothing else.

[01:04:18] Speaker 07:
Thank you.

[01:04:19] Speaker 07:
We thank the parties and the cases submitted that the clues are proceeding for this meeting.

[01:04:26] Speaker ?:
All rise.