The Inter Partes Review (“IPR”) proceeding, part of the America Invents Act, sets up a streamlined procedure for any party (“petitioner”) to challenge the validity of the claims of an issued patent, not in a court, but in the US Patent Office, generally at a much lower cost when compared to federal court. An IPR is based on prior art patents and publications that the petitioner argues show that the claimed invention is not novel or is obvious. At the outset, in order for an IPR to be instituted, the petitioner must show a “reasonable likelihood” that it would prevail on a challenge to the validity of at least one claim of the patent. Once the petitioner meets this initial burden of proof, the inter partes “trial” of the patent claims can proceed before the Board.During the trial phase, both petitioner and patent owner can take limited depositions and develop evidence in support of its position as to the validity or invalidity of a patent claim at issue. When validity of a patent claim is a close question, as is often the case, the outcome might turn on which party carries the burden of proof on invalidity. (The burden of proof is viewed as having two components: a burden of persuasion, and a burden of production of evidence.) Further, an outcome can also turn on whether at some point the burden shifts to the other party. So it becomes important to identify who carries the burden as this could be outcome-determinative. How the Patent Office assigns the burdens of proof and of production might have been a significant factor in the high rates of patent claims that have been found invalid to date. The Federal Circuit has recently weighed in on the issue, and the subtle but meaningful ruling could have a significant effect in reducing the number of patent claims ruled invalid. (See In re Magnum Oil Tools Int’l, Ltd., (2016 U.S. App. LEXIS 13461, 119 U.S.P.Q.2D (BNA) 1541 (Fed. Cir. July 25, 2016). This appeal to the Federal Circuit arose from an IPR that was decided in favor of the petitioner, and the patent owner appealed the invalidity of the claims. When the petitioner then withdrew due to a settlement with the patent owner, the Director of the Patent Office then intervened to defend the Board’s ruling of invalidity in the appeal. The patent owner did not appeal the Board’s institution of the IPR, but instead attacked the finding of invalidity that was based on a shifting of the burden of proof to the patent owner. The Director countered that once an IPR was instituted, the Board was justified in shifting of the burden to the patent owner to produce evidence of patentability of the claims. Putting aside the complexities of the factual details of the case, the legal issues boil down quite simply to:
- In an IPR, who has the burden of persuasion on the invalidity of a patent claim and what is the standard?
- In an IPR, does the burden of persuasion of invalidity shift to the patent owner when a petitioner has made a prima facie case of invalidity?
- In and IPR, who has the burden of production of evidence, and under what conditions does the burden shift to the other party?