Rules of Practice To Allocate the Burden of Persuasion on Motions To Amend in Trial Proceedings Before the Patent Trial and Appeal Board, 56401-56406 [2019-22768]

Download as PDF Federal Register / Vol. 84, No. 204 / Tuesday, October 22, 2019 / Proposed Rules Utilizing EDCP, DHS would require approximately 20,778 additional work hours in the first year, 41,556 hours in the second year, and 62,333 hours in the third year to collect the additional samples. Using average compensation for U.S. Customs & Border Protection employees stationed along the southern border, the total cost to DHS with the EDCP software would be about $5.1 million in the first three years. If future implementation decisions or changes in the volume of apprehensions ultimately resulted in annual submission of a number of additional DNA samples less than or greater than 748,000, required work hours and resulting costs would be reduced or increased correspondingly. The FBI would also need to provide additional DNA-sample collection kits, at a per-kit cost of $5.38, in sufficient numbers to collect samples at the volumes described above. For example, assuming a three-year phase-in period with an additional third of the eligible population added in each successive year, the additional sample-collection kit costs to the FBI would be $1,341,413 to collect 249,333 samples in the first year, $2,682,827 to collect 498,667 samples in the second year, and $4,024,240 to collect 748,000 samples in the third year. The FBI will provide to DHS, without charge, the same services that it provides to other Federal agencies that collect DNA samples, including assistance with regard to training, DNA-sample collection kits, postage to return the collected samples, analysis of samples, inclusion in CODIS, and handling resulting matches. Executive Order 13132—Federalism This regulation will not have substantial direct effects on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism assessment. Executive Order 12988—Civil Justice Reform This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988. Unfunded Mandates Reform Act of 1995 This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not VerDate Sep<11>2014 16:25 Oct 21, 2019 Jkt 250001 56401 significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. DEPARTMENT OF COMMERCE Small Business Regulatory Enforcement Fairness Act of 1996 [Docket No. PTO–P–2019–0011] This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996. 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, or innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets. Rules of Practice To Allocate the Burden of Persuasion on Motions To Amend in Trial Proceedings Before the Patent Trial and Appeal Board List of Subjects in 28 CFR Part 28 Crime, Information, Law enforcement, Prisoners, Prisons, Probation and parole, Records. Accordingly, for the reasons stated in the preamble, part 28 of chapter I of title 28 of the Code of Federal Regulations is proposed to be amended as follows: PART 28—DNA IDENTIFICATION SYSTEM 1. The authority citation for part 28 is revised to read as follows: ■ Authority: 28 U.S.C. 509, 510; 34 U.S.C. 12592, 40702, 40703; 10 U.S.C. 1565; 18 U.S.C. 3600A; Public Law 106–546, 114 Stat. 2726; Public Law 107–56, 115 Stat. 272; Public Law 108–405, 118 Stat. 2260; Public Law 109–162, 119 Stat. 2960; Public Law 109–248, 120 Stat. 587; Public Law 115–50, 131 Stat. 1001. § 28.12 [Amended] 2. Amend § 28.12: a. In the introductory text of paragraph (b) by removing ‘‘1.1(p)’’ and adding in its place ‘‘1.2’’; ■ b. At the end of paragraph (b)(2) by removing the semicolon and adding in its place ‘‘; or’’; ■ c. At the end of paragraph (b)(3) by removing ‘‘; or’’ and adding in its place a period; and ■ d. By removing paragraph (b)(4). ■ ■ Dated: October 15, 2019. William P. Barr, Attorney General. [FR Doc. 2019–22877 Filed 10–21–19; 8:45 am] BILLING CODE 4410–19–P PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 Patent and Trademark Office 37 CFR Part 42 RIN 0651–AD34 United States Patent and Trademark Office, Department of Commerce. ACTION: Notice of proposed rulemaking. AGENCY: The United States Patent and Trademark Office (‘‘USPTO’’ or ‘‘Office’’) proposes changes to the rules of practice in inter partes review (‘‘IPR’’), post-grant review (‘‘PGR’’), and the transitional program for covered business method patents (‘‘CBM’’) (collectively ‘‘post-grant trial’’) proceedings before the Patent Trial and Appeal Board (‘‘PTAB’’ or ‘‘Board’’) to allocate the burdens of persuasion in relation to motions to amend and the patentability of substitute claims proposed therein. DATES: Comment Deadline Date: The Office solicits comments from the public on this proposed rulemaking. Written comments must be received on or before December 23, 2019 to ensure consideration. ADDRESSES: Comments should be sent by electronic mail message over the internet addressed to: MTABurden2019@uspto.gov. Comments may also be sent by electronic mail message over the internet via the Federal eRulemaking Portal at http:// www.regulations.gov. See the Federal eRulemaking Portal website for additional instructions on providing comments via the Federal eRulemaking Portal. All comments submitted directly to the USPTO or provided on the Federal eRulemaking Portal should include the docket number (PTO–P– 2019–0011). Comments may also be submitted by postal mail addressed to: Mail Stop Patent Board, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313– 1450, marked to the attention of ‘‘Lead Administrative Patent Judge Christopher L. Crumbley or Lead Administrative Patent Judge Susan L. C. Mitchell, PTAB Notice of Proposed Rulemaking 2019.’’ Although comments may be submitted by postal mail, the Office prefers to receive comments by electronic mail message to more easily SUMMARY: E:\FR\FM\22OCP1.SGM 22OCP1 56402 Federal Register / Vol. 84, No. 204 / Tuesday, October 22, 2019 / Proposed Rules share all comments with the public. The Office prefers the comments to be submitted in plain text, but also accepts comments submitted in searchable ADOBE® portable document format or MICROSOFT WORD® format. Comments not submitted electronically should be submitted on paper in a format that accommodates digital scanning into ADOBE® portable document format. The comments will be available for public inspection at the Patent Trial and Appeal Board, located in Madison East, Ninth Floor, 600 Dulany Street, Alexandria, Virginia. Comments also will be available for viewing via the Office’s internet website, https:// go.usa.gov/xXXFW, and on the Federal eRulemaking Portal. Because comments will be made available for public inspection, information that the submitter does not desire to be made public, such as address or phone number, should not be included in the comments. FOR FURTHER INFORMATION CONTACT: Christopher L. Crumbley, Lead Administrative Patent Judge, or Susan L. C. Mitchell, Lead Administrative Patent Judge, by telephone at (571) 272–9797. SUPPLEMENTARY INFORMATION: Executive Summary Purpose: The proposed rules would amend the rules of practice for IPR, PGR, and CBM proceedings that implement provisions of the LeahySmith America Invents Act, Public Law 112–29, 125 Stat. 284 (2011) (‘‘AIA’’) providing for trials before the Office. Pursuant to the AIA, during the course of an IPR, PGR, or CBM, a patent owner may file a motion to amend the patent by cancelling any challenged patent claim or by proposing a reasonable number of substitute claims for each challenged claim. 35 U.S.C. 316(d)(1), 326(d)(1). Previously, relying on a general rule that a movant bore the burden of proof with respect to motions before the Board (37 CFR 42.20(c)), the Office placed the burden of showing the patentability of proposed substitute claims on the patent owner moving to amend a patent in a trial proceeding. On October 4, 2017, the United States Court of Appeals for the Federal Circuit issued an en banc decision in Aqua Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc) (‘‘Aqua Products’’), in which a majority of the judges concluded that the Office had not adopted a rule allocating the burden of persuasion with respect to the patentability of proposed substitute claims. In light of Aqua Products, as well as public comment provided in VerDate Sep<11>2014 16:25 Oct 21, 2019 Jkt 250001 response to a Request for Comments (See 83 FR 54319), the Office proposes to issue specific rules applicable to motions to amend. The proposed rules assign the burden of persuasion in relation to the patentability of proposed substitute claims to the petitioner, but permit the Board to exercise its discretion to reach a determination regarding patentability of proposed substitute claims even when a petitioner does not carry its burden of persuasion, when supported by the record and when in the interests of justice. The proposed rules also assign the burden of persuasion in relation to certain statutory and regulatory requirements for a motion to amend (i.e., 35 U.S.C. 316(d) or 326(d); 37 CFR 42.121(a)(2), (a)(3), (b)(1), (b)(2), or 42.221(a)(2), (a)(3), (b)(1), (b)(2)) to the patent owner, but permit the Board to exercise its discretion to determine that the motion to amend complies with the statutory and regulatory requirements of those sections even when the patent owner does not carry its burden of persuasion, when supported by the record and when in the interests of justice. The Office anticipates that the Board will exercise such discretion only in rare circumstances, as discussed herein. The proposed rules are consistent with Aqua Products and also with current Board practice as described in the precedential Board decision Lectrosonics, Inc. v. Zaxcom, Inc., Cases IPR2018–01129, 01130 (P.T.A.B. Feb. 25, 2019) (Paper 15), and as such do not reflect a change from current practice. The proposed rules would thus clarify the rules of practice for amending claims in an IPR, PGR, or CBM to specify that the petitioner bears the burden of showing that the proposed substitute claims are unpatentable by a preponderance of the evidence, and would address instances where a petitioner does not oppose an amendment or does not meet its burden of persuasion in this regard, for example, where the petitioner ceases to participate in the proceeding or declines to oppose the patent owner’s motion to amend. The proposed rules also would specify that the patent owner bears the burden of showing, by a preponderance of the evidence, that a motion to amend complies with certain statutory and regulatory requirements, and would address instances where a patent owner does not meet its burden of persuasion in this regard. In instances where a party does not meet its burden, the Board may, in the interests of justice, justify a determination regarding the patentability of amended claims based on the record as a whole. PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 Costs and Benefits: This rulemaking is not economically significant under Executive Order 12866 (Sept. 30, 1993). Background On September 16, 2011, the AIA was enacted into law (Pub. L. 112–29, 125 Stat. 284 (2011)), and within one year, the Office implemented rules to govern Office practice for AIA trials, including IPR, PGR, CBM, and derivation proceedings pursuant to 35 U.S.C. 135, 316 and 326 and AIA sec. 18(d)(2). See Rules of Practice for Trials Before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decisions, 77 FR 48612 (Aug. 14, 2012); Changes to Implement Inter Partes Review Proceedings, PostGrant Review Proceedings, and Transitional Program for Covered Business Method Patents, 77 FR 48680 (Aug. 14, 2012); Transitional Program for Covered Business Method Patents— Definitions of Covered Business Method Patent and Technological Invention, 77 FR 48734 (Aug. 14, 2012). Additionally, the Office published a Patent Trial Practice Guide to advise the public on the general framework of the regulations, including the structure and times for taking action in each of the new proceedings. See Office Patent Trial Practice Guide, 77 FR 48756 (Aug. 14, 2012); see also Office Patent Trial Practice Guide, August 2018 Update, 83 FR 39989 (Aug. 13, 2018); Office Patent Trial Practice Guide, July 2019 Update, 84 FR 33925 (July 16, 2018). In prescribing these regulations, the Office considered ‘‘the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted’’ as required by statute. 35 U.S.C. 316(b), 326(b). The Office also considered the public comments carefully and responded to the comments in these final rules. Among the final rules, the Office promulgated § 42.20(c), which states that a ‘‘moving party has the burden of proof to establish that it is entitled to the requested relief.’’ 37 CFR 42.20(c). Previously, the Board interpreted the burden of proof requirement of § 42.20(c) to apply to motions to amend filed pursuant to 35 U.S.C. 316 and 326, including the requirement to show that the proposed substitute claims were patentable over the prior art of record. MasterImage 3D, Inc. v. RealD Inc., Case IPR2015–00040 (P.T.A.B. July 15, 2015) (Paper 42) (‘‘MasterImage’’). Under MasterImage, which was subsequently made precedential, the patent owner in a proceeding, as the moving party in a E:\FR\FM\22OCP1.SGM 22OCP1 Federal Register / Vol. 84, No. 204 / Tuesday, October 22, 2019 / Proposed Rules motion to amend, bore the burden of showing that the proposed substitute claims were patentable. Id. On October 4, 2017, the United States Court of Appeals for the Federal Circuit issued its en banc decision in Aqua Products, addressing the burden of persuasion regarding the patentability of substitute claims presented in a motion to amend. The lead opinion of the decision explains that, in the absence of rulemaking, the USPTO may not place the burden of persuasion on the patent owner to show that proposed substitute claims are patentable. The only legal conclusions that support and define the judgment of the court are: (1) The PTO has not adopted a rule placing the burden of persuasion with respect to the patentability of amended claims on the patent owner that is entitled to deference; and (2) in the absence of anything that might be entitled deference, the PTO may not place that burden on the patentee. Id. at 1327 (O’Malley, J.). A separate opinion joined-in-part by a majority of the en banc court observed that ‘‘it is well settled that regardless of which party bears the ultimate burden of persuasion, the movant bears a burden of production’’ and that ‘‘the Patent Office has adopted regulations that address what a patent owner must submit in moving to amend the patent.’’ Id. at 1340–41 (Reyna, J., concurring in part) (citing 37 CFR 42.20(a), 42.22(a), 42.121(a)(2)(i)). The opinion explains that these regulations require a patent owner to ‘‘assist[ ] the Board to perform its statutory obligation to ‘issue a final written decision with respect to the patentability of . . . any new claim added under section 316(d).’’’ Id. at 1341 (omission in original) (quoting 35 U.S.C. 318(a)). In view of the Federal Circuit’s decision in Aqua Products, on November 21, 2017, the Office issued formal guidance through a memorandum from the Chief Administrative Patent Judge, explaining that, in light of the Aqua Products decision, the Board will no longer place the burden of persuasion on a patent owner with respect to patentability of any proposed substitute claims presented in a motion to amend. See Guidance on Motions to Amend in view of Aqua Products, https://go.usa.gov/ xQGAA (‘‘Guidance Memo’’). The Guidance Memo also notes that a motion to amend must continue to satisfy the requirements of 37 CFR 42.121 or 42.221 (e.g., provide a reasonable number of substitute claims and written description support in relation to each substitute claim), as applicable, that all parties continue to have a duty of candor under 37 CFR VerDate Sep<11>2014 16:25 Oct 21, 2019 Jkt 250001 42.11, and that the page limits, type, and timing of briefs remain unchanged. Id. On December 22, 2017, the Federal Circuit issued a related decision in Bosch Auto. Serv. Solutions, LLC v. Matal, 878 F.3d 1027 (Fed. Cir. 2017) (‘‘Bosch’’). In that decision, because the petitioner had settled with the patent owner who had proposed substitute claims, the Federal Circuit remanded the case to the Board to evaluate the patentability of the proposed substitute claims. Id. (‘‘[W]here the challenger ceases to participate in the IPR and the Board proceeds to final judgment, it is the Board that must justify any finding of unpatentability by reference to the evidence of record in the IPR.’’) (alteration in original) (quoting Aqua Products, 872 F.2d at 1311 (O’Malley, J.)). In view of the decisions by the Federal Circuit regarding motion to amend practice and procedure in AIA trials, the Board de-designated as precedential MasterImage, as well as dedesignating as informative a prior decision of the Board in Idle Free Sys., Inc. v. Bergstrom, Inc., Case IPR2012– 00027 (P.T.A.B. June 11, 2013) (Paper 26), decisions in which the Board panels stated that ‘‘[t]he burden is not on the petitioner to show unpatentability, but on the patent owner to show patentable distinction over the prior art of record and also prior art known to the patent owner.’’ Id. at 7; see also MasterImage at 2 (quoting Idle Free). Concurrently, the Board designated an order issued in Western Digital Corp. v. SPEX Techs., Inc., Cases IPR2018–00082, 00084 (P.T.A.B. Apr. 25, 2018) (Paper 13) (‘‘Western Digital’’) as informative to provide an example of how panels can handle several aspects of the motion to amend practice under the Aqua Products and Bosch precedent. With respect to the burden of persuasion, the Western Digital order explained that under the current state of the law ‘‘the burden of persuasion will ordinarily lie with the petitioner to show that any proposed substitute claims are unpatentable’’ and that the ‘‘Board itself may justify any finding of unpatentability by reference to evidence of record in the proceeding.’’ Id. at 4. On March 7, 2018, the Board designated as precedential an order in Lectrosonics, Inc. v. Zaxcom, Inc., Cases IPR2018–01129, 01130 (P.T.A.B. Feb. 25, 2019) (Paper 15) (‘‘Lectrosonics’’), and de-designated Western Digital. This order provides guidance regarding statutory and regulatory requirements for a motion to amend in light of Federal Circuit case law. For example, the order notes that, prior to considering the PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 56403 patentability of any substitute claims, the Board first must determine whether the patent owner has met the statutory and regulatory requirements set forth in 35 U.S.C. 316(d) and 37 CFR 42.121, such as, that the motion proposes a reasonable number of substitute claims and that the amendments do not broaden the scope of the claims. Id. at 4–5. The order also sets out that ‘‘the burden of persuasion ordinarily will lie with the petitioner to show that any proposed substitute claims are unpatentable by a preponderance of the evidence.’’ As discussed in more detail below, the proposed rules herein allocate the burden of persuasion regarding the patentability of proposed substitute claims in a motion to amend as set forth in Lectrosonics and Western Digital. On October 29, 2018, the Office published a ‘‘Request for Comments on Motion To Amend Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board’’ in the Federal Register (‘‘Request for Comments’’), seeking public comment on various aspects of the Board’s amendment practice. 83 FR 54319. Among the questions on which the Board sought public input were the following, directed to the allocation of the burden of persuasion: 15. Should the Office engage in rulemaking to allocate the burden of persuasion regarding the patentability of proposed substitute claims in a motion to amend as set forth in the Western Digital order? What are the advantages or disadvantages of doing so? 16. If the Office continues to allocate the burden as set forth in the Western Digital order, under what circumstances should the Board itself be able to justify findings of unpatentability? Only if the petitioner withdraws from the proceeding? Or are there situations where the Board itself should be able to justify findings of unpatentability when the petitioner remains in the proceeding? What are the advantages or disadvantages? Id. at 54325.1 In response to the October 2018 Request for Comments, the Office received 49 comments as of December 21, 2018 (the closing date for comments), from intellectual property 1 The October 2018 Request for Comments was published before Western Digital was superseded by Lectrosonics, and thus refers only to the Western Digital order. Both orders are identical in their discussion of the burden of persuasion. Therefore, Questions 15 and 16 of the Request for Comments, and the public comments provided thereto, are equally pertinent to the current Board precedent of Lectrosonics. E:\FR\FM\22OCP1.SGM 22OCP1 56404 Federal Register / Vol. 84, No. 204 / Tuesday, October 22, 2019 / Proposed Rules organizations, trade organizations, other organizations, and individuals. See https://go.usa.gov/xyeFy (collected responses to Request for Comments).2 3 Approximately 25 of the commenters provided specific responses to Questions 15 and 16 of the Request for Comments. In response to Question 15, the majority of commenters were in favor of the Office engaging in rulemaking to allocate the burden of persuasion as set forth in Western Digital (as discussed in more detail below). Only three commenters believed rulemaking was unnecessary (either because the Board could simply continue to apply its own precedent, or because the statute already allocates the burden of persuasion). A minority of commenters stated that the Office should engage in rulemaking, but that the burden of persuasion should be placed on the patent owner. Additionally, in response to Question 15, some commenters suggested that even if the Office promulgates rules to place the burden of persuasion on the petitioner on the issue of patentability of the proposed substitute claims, the patent owner continues to bear the burden to show that the motion to amend complies with the statutory requirements of 35 U.S.C. 316(d) or 326(d) (for example, that the amendment may not enlarge the scope of the claims), as well as the regulatory requirements of 37 CFR 42.121 or 42.221 (for example, that the motion set forth the support for the amendment in the original disclosure of the patent). In response to Question 16, the majority of responsive comments stated that the Board should be able to justify findings of unpatentability in any circumstance, for example, even when the petitioner remains in the proceeding. Two commenters responded that the Board should never be able to assume the burden of 2 The October 2018 Request for Comments also sought comments on a proposed amendment procedure in post-grant trial proceedings that included the Board providing preliminary nonbinding guidance on the merits of a motion to amend, and an opportunity for a patent owner to revise its motion to amend thereafter. The Office recently addressed that portion of the Request for Comments separately in a ‘‘Notice Regarding a New Pilot Program Concerning Motion To Amend Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board.’’ 84 FR 9497 (Mar. 15, 2019). 3 In response to the October 2018 Request for Comments, the Office also received comments and questions relating to reissue or reexamination as an alternative vehicle for claim amendments. The Office recently addressed those comments and questions separately in a ‘‘Notice Regarding Options for Amendments by Patent Owner Through Reissue or Reexamination During a Pending AIA Trial Proceeding (April 2019).’’ 84 FR 16654 (Apr. 22, 2019). VerDate Sep<11>2014 16:25 Oct 21, 2019 Jkt 250001 persuasion on unpatentability itself, and three commenters believed that the Board should be permitted to justify findings of unpatentability of proposed substitute claims itself only in certain circumstances, for example, when a petitioner ceases to participate in a proceeding. The Office appreciates the public input provided in response to the Request for Comments and has reviewed the individual responses thoroughly. In light of the generally positive support for rulemaking to allocate the burden of persuasion as set forth in the Western Digital order (and subsequently made precedential in Lectrosonics), and in the interest of providing greater clarity, certainty, and predictability to parties participating in trial proceedings before the Board, the Office now issues proposed rules allocating the burden of persuasion. The rules would specify that the burden of persuasion as to patentability of substitute claims proposed in a motion to amend is on the petitioner. In addition, the rules would specify that the burden of persuasion is on the patent owner to show that the motion complies with the requirements of 35 U.S.C. 316(d) or 326(d) (requiring that a motion to amend propose a reasonable number of substitute claims, and that substitute claims do not enlarge scope of the original claims of the patent or introduce new matter), as well as 37 CFR 42.121(a)(2), (a)(3), (b)(1), and (b)(2), or 42.221(a)(2), (a)(3), (b)(1), and (b)(2) (indicating, for example, that a motion to amend must set forth written description support and support for the benefit of a filing date in relation to each substitute claim, and respond to grounds of unpatentability involved in the trial). Irrespective of the burdens of persuasion discussed above, however, the rules also would specify that the Board may, in the interests of justice, exercise its discretion to grant or deny a motion to amend for any reason supported by the evidence of record. Thus, in instances where a party has not met its burden in relation to a motion to amend or any substitute claims proposed therein, the Board may, in the interests of justice, reach a determination regarding patentability, based on the entirety of the evidence made of record in the proceeding. The Office anticipates that the Board will exercise this discretion only in rare circumstances. Any evidence relied on to support a determination regarding patentability will be made of record in the proceeding by the parties or the Board. For instance, the Board may, in the interests of justice, exercise its PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 discretion to determine that a motion to amend complies with the statutory and regulatory requirements of 35 U.S.C. 316(d) or 326(d) and 37 CFR 42.121(a)(2), (a)(3), (b)(1), and (b)(2), or 42.221(a)(2), (a)(3), (b)(1), and (b)(2), even if a patent owner does not expressly address or establish every requirement in its briefing. The Office expects that the Board will do so only in circumstances where there is easily identified and persuasive evidence that the motion complies with the statutory and regulatory requirements, and only where the petitioner has been afforded the opportunity to respond to that evidence. The Board will rely on evidence of record when making such a determination. Furthermore, as supported by the majority of the comments received in response to Question 16, under the proposed rules, the Board may exercise its discretion to reach a determination regarding patentability in instances where a petitioner does not oppose the amendment or does not meet its burden of persuasion in relation to any proposed substitute claim. The proposed rules limit such instances to those in which the interests of justice warrant the Board reaching a determination regarding patentability. Such instances may include, for example, situations where the petitioner has ceased to participate in the proceeding altogether (for example, as a result of settlement) or where the petitioner remains in the proceeding but does not oppose the motion to amend. The interests of justice also may, for example, support the Board exercising its discretion to deny a motion to amend when the petitioner opposes the motion to amend and has failed to meet the burden of persuasion, but where there is easily identified and persuasive evidence of unpatentability in the record. In such situations, the proposed rules would grant the Board discretion regarding whether to make any determination of unpatentability that is supported by the evidence of record, even if the ground of unpatentability has not been advanced by the petitioner. The Office expects that the Board will do so only in rare circumstances, and only where the patent owner has been afforded the opportunity to respond to that evidence and related grounds of unpatentability. Ordinarily, in cases where the petitioner has participated fully and opposed the motion to amend, the Office expects that the petitioner will bear the burden of persuasion and there will be no need for the Board to independently justify a determination of unpatentability. E:\FR\FM\22OCP1.SGM 22OCP1 Federal Register / Vol. 84, No. 204 / Tuesday, October 22, 2019 / Proposed Rules Discussion of Specific Rules The USPTO proposes to amend 37 CFR part 42 as follows: Section 42.121: § 42.121 is proposed to be amended by adding a new subsection (d) to state that a patent owner bears the burden of persuasion to show that a motion to amend complies with certain statutory and regulatory requirements, but that the petitioner bears the burden of persuasion to show that any proposed substitute claims are unpatentable. The new subsection (d) also states that in cases where a party does not meet its burden, the Board may, in the interests of justice, exercise its discretion to grant or deny a motion to amend for any reason supported by the evidence of record. Section 42.221: § 42.221 is proposed to be amended by adding a new subsection (d) to state that a patent owner bears the burden of persuasion to show that a motion to amend complies with certain statutory and regulatory requirements, but that the petitioner bears the burden of persuasion to show that any proposed substitute claims are unpatentable. The new subsection (d) also states that in cases where a party does not meet its burden, the Board may, in the interests of justice, exercise its discretion to grant or deny a motion to amend for any reason supported by the evidence of record. Rulemaking Considerations A. Regulatory Flexibility Act: For the reasons set forth herein, the Senior Counsel for Regulatory and Legislative Affairs, Office of General Law, United States Patent and Trademark Office has certified to the Chief Counsel for Advocacy of the Small Business Administration that changes set forth in this notice of proposed rulemaking would not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 605(b). The changes set forth in this notice of proposed rulemaking are to set forth expressly the respective burdens of persuasion on the parties regarding a motion to amend in an AIA proceeding. These changes are consistent with relevant precedential decisions of the Board and Federal Circuit, and as such do not reflect a change from current practice. The changes do not create additional procedures or requirements or impose any additional compliance measures on any party, nor do these changes cause any party to incur additional cost. Therefore, any requirements resulting from these proposed changes are of minimal or no additional burden to those practicing before the Board. VerDate Sep<11>2014 16:25 Oct 21, 2019 Jkt 250001 For the foregoing reasons, the proposed changes in this notice of proposed rulemaking would not have a significant economic impact on a substantial number of small entities. B. Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993). C. Executive Order 13563 (Improving Regulation and Regulatory Review): The Office has complied with Executive Order 13563 (Jan. 18, 2011). Specifically, the Office has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of the rules; (2) tailored the rules to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector and the public as a whole, and provided online access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes. D. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs): This proposed rule is not expected to be an Executive Order 13771 (Jan. 30, 2017) regulatory action because this proposed rule is not significant under Executive Order 12866. E. Executive Order 13132 (Federalism): This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999). F. Executive Order 13211 (Energy Effects): This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001). G. Executive Order 12988 (Civil Justice Reform): This rulemaking meets applicable standards to minimize PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 56405 litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996). H. Executive Order 13045 (Protection of Children): This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997). I. Executive Order 12630 (Taking of Private Property): This rulemaking will not affect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988). J. Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the United States Patent and Trademark Office will submit a report containing the rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this notice of proposed rulemaking are not expected to result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets. Therefore, this rulemaking is not a ‘‘major rule’’ as defined in 5 U.S.C. 804(2). K. Unfunded Mandates Reform Act of 1995: The changes set forth in this notice of proposed rulemaking do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq. L. National Environmental Policy Act: This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq. M. National Technology Transfer and Advancement Act: The requirements of E:\FR\FM\22OCP1.SGM 22OCP1 56406 Federal Register / Vol. 84, No. 204 / Tuesday, October 22, 2019 / Proposed Rules section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions which involve the use of technical standards. N. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3549) requires that the Office consider the impact of paperwork and other information collection burdens imposed on the public. This proposed rulemaking does not involve an information collection requirement that is subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3549). This rulemaking does not add any additional information requirements or fees for parties before the Board. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to, a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number. List of Subjects in 37 CFR Part 42 Administrative practice and procedure, Inventions and patents, Lawyers. For the reasons set forth in the preamble, the Office proposes to amend part 42 of title 37 as follows: PART 42—TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD Authority: 35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311, 312, 316, and 321–326; Pub. L. 112–29, 125 Stat. 284; and Pub. L. 112–274, 126 Stat. 2456. 2. Amend § 42.121 by adding paragraph (d) to read as follows: * * * * (d) Burden of Persuasion. On a motion to amend: (1) A patent owner bears the burden of persuasion to show, by a preponderance of the evidence, that the motion to amend complies with the requirements of paragraphs (1) and (3) of 35 U.S.C. 316(d), as well as paragraphs (a)(2), (3), (b)(1), and (2) of this section; (2) A petitioner bears the burden of persuasion to show, by a preponderance of the evidence, that any proposed substitute claims are unpatentable; and 16:25 Oct 21, 2019 Jkt 250001 * * * * (d) Burden of Persuasion. On a motion to amend: (1) A patent owner bears the burden of persuasion to show, by a preponderance of the evidence, that the motion to amend complies with the requirements of paragraphs (1) and (3) of 35 U.S.C. 326(d), as well as paragraphs (a)(2), (3), (b)(1), and (2) of this section; (2) A petitioner bears the burden of persuasion to show, by a preponderance of the evidence, that any proposed substitute claims are unpatentable; and (3) Irrespective of paragraphs (d)(1) and (2) of this section, the Board may, in the interests of justice, exercise its discretion to grant or deny a motion to amend for any reason supported by the evidence of record. Dated: October 10, 2019. Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. [FR Doc. 2019–22768 Filed 10–21–19; 8:45 am] BILLING CODE 3510–16–P POSTAL SERVICE International Mailing Services: Proposed Product and Price Changes—CPI Postal ServiceTM. Proposed rule; request for comments. AGENCY: The Postal Service proposes to revise Mailing Standards of the United States Postal Service, International Mail Manual (IMM®), to reflect changes coincident with recently announced mailing services price adjustment. SUMMARY: Amendment of the patent. VerDate Sep<11>2014 Amendment of the patent. * ACTION: ■ * § 42.221 39 CFR Part 20 1. The authority citation for 37 CFR part 42 continues to read as follows: ■ § 42.121 (3) Irrespective of paragraphs (d)(1) and (2) of this section, the Board may, in the interests of justice, exercise its discretion to grant or deny a motion to amend for any reason supported by the evidence of record. ■ 3. Amend § 42.221 by adding paragraph (d) to read as follows: We must receive your comments on or before November 21, 2019. ADDRESSES: Mail or deliver comments to the manager, Product Classification, U.S. Postal Service®, 475 L’Enfant Plaza SW, RM 4446, Washington, DC 20260– 5015. You may inspect and photocopy all written comments at USPS® Headquarters Library, 475 L’Enfant DATES: PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 Plaza SW, 11th Floor N, Washington, DC by appointment only between the hours of 9 a.m. and 4 p.m., Monday through Friday by calling 1–202–268– 2906 in advance. Email comments, containing the name and address of the commenter, to: ProductClassification@ usps.gov, with a subject line of ‘‘January 2020 International Mailing Services Price Change—CPI.’’ Faxed comments are not accepted. FOR FURTHER INFORMATION CONTACT: Michelle Lassiter at 202–268–2914. SUPPLEMENTARY INFORMATION: International Price and Service Adjustments On October 9, 2019, the Postal Service filed a notice of mailing services price adjustments with the Postal Regulatory Commission (PRC), effective on January 26, 2020. The Postal Service proposes to revise Notice 123, Price List, available on Postal Explorer® at https:// pe.usps.com, to reflect these new price changes. The new prices are or will be available under Docket Number R2020– 1 on the Postal Regulatory Commission’s website at www.prc.gov. Over the course of time, country names have changed due to a variety of political or cultural reasons. By notice filed on October 9, 2019, in PRC Docket No. MC2020–7, and in collaboration with International Postal Affairs and requests made through the Universal Postal Union, the Postal Service proposed to update country names throughout mailing standards, changing Republic of Macedonia to Republic of North Macedonia and using the short name North Macedonia. This proposed rule seeks public comment on proposed updates to the IMM that are designed to implement this name change. This proposed rule also describes the price and classification changes and the corresponding mailing standards changes for the following market dominant international services: • First-Class Mail International® service • International extra services and fees. First-Class Mail International The Postal Service plans to increase prices for single-piece First-Class Mail International (FCMI) letters, postcards, and flats by approximately 4.6 percent. The price for a single-piece 1-ounce letter will increase to $1.20. The FirstClass Mail International letter nonmachinable surcharge remains $0.21. E:\FR\FM\22OCP1.SGM 22OCP1

Agencies

[Federal Register Volume 84, Number 204 (Tuesday, October 22, 2019)]
[Proposed Rules]
[Pages 56401-56406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22768]


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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 42

[Docket No. PTO-P-2019-0011]
RIN 0651-AD34


Rules of Practice To Allocate the Burden of Persuasion on Motions 
To Amend in Trial Proceedings Before the Patent Trial and Appeal Board

AGENCY: United States Patent and Trademark Office, Department of 
Commerce.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The United States Patent and Trademark Office (``USPTO'' or 
``Office'') proposes changes to the rules of practice in inter partes 
review (``IPR''), post-grant review (``PGR''), and the transitional 
program for covered business method patents (``CBM'') (collectively 
``post-grant trial'') proceedings before the Patent Trial and Appeal 
Board (``PTAB'' or ``Board'') to allocate the burdens of persuasion in 
relation to motions to amend and the patentability of substitute claims 
proposed therein.

DATES: Comment Deadline Date: The Office solicits comments from the 
public on this proposed rulemaking. Written comments must be received 
on or before December 23, 2019 to ensure consideration.

ADDRESSES: Comments should be sent by electronic mail message over the 
internet addressed to: [email protected]. Comments may also be 
sent by electronic mail message over the internet via the Federal 
eRulemaking Portal at http://www.regulations.gov. See the Federal 
eRulemaking Portal website for additional instructions on providing 
comments via the Federal eRulemaking Portal. All comments submitted 
directly to the USPTO or provided on the Federal eRulemaking Portal 
should include the docket number (PTO-P-2019-0011).
    Comments may also be submitted by postal mail addressed to: Mail 
Stop Patent Board, Director of the United States Patent and Trademark 
Office, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the 
attention of ``Lead Administrative Patent Judge Christopher L. Crumbley 
or Lead Administrative Patent Judge Susan L. C. Mitchell, PTAB Notice 
of Proposed Rulemaking 2019.''
    Although comments may be submitted by postal mail, the Office 
prefers to receive comments by electronic mail message to more easily

[[Page 56402]]

share all comments with the public. The Office prefers the comments to 
be submitted in plain text, but also accepts comments submitted in 
searchable ADOBE[supreg] portable document format or MICROSOFT 
WORD[supreg] format. Comments not submitted electronically should be 
submitted on paper in a format that accommodates digital scanning into 
ADOBE[supreg] portable document format.
    The comments will be available for public inspection at the Patent 
Trial and Appeal Board, located in Madison East, Ninth Floor, 600 
Dulany Street, Alexandria, Virginia. Comments also will be available 
for viewing via the Office's internet website, https://go.usa.gov/xXXFW, and on the Federal eRulemaking Portal. Because comments will be 
made available for public inspection, information that the submitter 
does not desire to be made public, such as address or phone number, 
should not be included in the comments.

FOR FURTHER INFORMATION CONTACT: Christopher L. Crumbley, Lead 
Administrative Patent Judge, or Susan L. C. Mitchell, Lead 
Administrative Patent Judge, by telephone at (571) 272-9797.

SUPPLEMENTARY INFORMATION:

Executive Summary

    Purpose: The proposed rules would amend the rules of practice for 
IPR, PGR, and CBM proceedings that implement provisions of the Leahy-
Smith America Invents Act, Public Law 112-29, 125 Stat. 284 (2011) 
(``AIA'') providing for trials before the Office. Pursuant to the AIA, 
during the course of an IPR, PGR, or CBM, a patent owner may file a 
motion to amend the patent by cancelling any challenged patent claim or 
by proposing a reasonable number of substitute claims for each 
challenged claim. 35 U.S.C. 316(d)(1), 326(d)(1).
    Previously, relying on a general rule that a movant bore the burden 
of proof with respect to motions before the Board (37 CFR 42.20(c)), 
the Office placed the burden of showing the patentability of proposed 
substitute claims on the patent owner moving to amend a patent in a 
trial proceeding. On October 4, 2017, the United States Court of 
Appeals for the Federal Circuit issued an en banc decision in Aqua 
Prods., Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc) (``Aqua 
Products''), in which a majority of the judges concluded that the 
Office had not adopted a rule allocating the burden of persuasion with 
respect to the patentability of proposed substitute claims. In light of 
Aqua Products, as well as public comment provided in response to a 
Request for Comments (See 83 FR 54319), the Office proposes to issue 
specific rules applicable to motions to amend. The proposed rules 
assign the burden of persuasion in relation to the patentability of 
proposed substitute claims to the petitioner, but permit the Board to 
exercise its discretion to reach a determination regarding 
patentability of proposed substitute claims even when a petitioner does 
not carry its burden of persuasion, when supported by the record and 
when in the interests of justice. The proposed rules also assign the 
burden of persuasion in relation to certain statutory and regulatory 
requirements for a motion to amend (i.e., 35 U.S.C. 316(d) or 326(d); 
37 CFR 42.121(a)(2), (a)(3), (b)(1), (b)(2), or 42.221(a)(2), (a)(3), 
(b)(1), (b)(2)) to the patent owner, but permit the Board to exercise 
its discretion to determine that the motion to amend complies with the 
statutory and regulatory requirements of those sections even when the 
patent owner does not carry its burden of persuasion, when supported by 
the record and when in the interests of justice. The Office anticipates 
that the Board will exercise such discretion only in rare 
circumstances, as discussed herein. The proposed rules are consistent 
with Aqua Products and also with current Board practice as described in 
the precedential Board decision Lectrosonics, Inc. v. Zaxcom, Inc., 
Cases IPR2018-01129, 01130 (P.T.A.B. Feb. 25, 2019) (Paper 15), and as 
such do not reflect a change from current practice.
    The proposed rules would thus clarify the rules of practice for 
amending claims in an IPR, PGR, or CBM to specify that the petitioner 
bears the burden of showing that the proposed substitute claims are 
unpatentable by a preponderance of the evidence, and would address 
instances where a petitioner does not oppose an amendment or does not 
meet its burden of persuasion in this regard, for example, where the 
petitioner ceases to participate in the proceeding or declines to 
oppose the patent owner's motion to amend. The proposed rules also 
would specify that the patent owner bears the burden of showing, by a 
preponderance of the evidence, that a motion to amend complies with 
certain statutory and regulatory requirements, and would address 
instances where a patent owner does not meet its burden of persuasion 
in this regard. In instances where a party does not meet its burden, 
the Board may, in the interests of justice, justify a determination 
regarding the patentability of amended claims based on the record as a 
whole.
    Costs and Benefits: This rulemaking is not economically significant 
under Executive Order 12866 (Sept. 30, 1993).

Background

    On September 16, 2011, the AIA was enacted into law (Pub. L. 112-
29, 125 Stat. 284 (2011)), and within one year, the Office implemented 
rules to govern Office practice for AIA trials, including IPR, PGR, 
CBM, and derivation proceedings pursuant to 35 U.S.C. 135, 316 and 326 
and AIA sec. 18(d)(2). See Rules of Practice for Trials Before the 
Patent Trial and Appeal Board and Judicial Review of Patent Trial and 
Appeal Board Decisions, 77 FR 48612 (Aug. 14, 2012); Changes to 
Implement Inter Partes Review Proceedings, Post-Grant Review 
Proceedings, and Transitional Program for Covered Business Method 
Patents, 77 FR 48680 (Aug. 14, 2012); Transitional Program for Covered 
Business Method Patents--Definitions of Covered Business Method Patent 
and Technological Invention, 77 FR 48734 (Aug. 14, 2012). Additionally, 
the Office published a Patent Trial Practice Guide to advise the public 
on the general framework of the regulations, including the structure 
and times for taking action in each of the new proceedings. See Office 
Patent Trial Practice Guide, 77 FR 48756 (Aug. 14, 2012); see also 
Office Patent Trial Practice Guide, August 2018 Update, 83 FR 39989 
(Aug. 13, 2018); Office Patent Trial Practice Guide, July 2019 Update, 
84 FR 33925 (July 16, 2018).
    In prescribing these regulations, the Office considered ``the 
effect of any such regulation on the economy, the integrity of the 
patent system, the efficient administration of the Office, and the 
ability of the Office to timely complete proceedings instituted'' as 
required by statute. 35 U.S.C. 316(b), 326(b). The Office also 
considered the public comments carefully and responded to the comments 
in these final rules. Among the final rules, the Office promulgated 
Sec.  42.20(c), which states that a ``moving party has the burden of 
proof to establish that it is entitled to the requested relief.'' 37 
CFR 42.20(c).
    Previously, the Board interpreted the burden of proof requirement 
of Sec.  42.20(c) to apply to motions to amend filed pursuant to 35 
U.S.C. 316 and 326, including the requirement to show that the proposed 
substitute claims were patentable over the prior art of record. 
MasterImage 3D, Inc. v. RealD Inc., Case IPR2015-00040 (P.T.A.B. July 
15, 2015) (Paper 42) (``MasterImage''). Under MasterImage, which was 
subsequently made precedential, the patent owner in a proceeding, as 
the moving party in a

[[Page 56403]]

motion to amend, bore the burden of showing that the proposed 
substitute claims were patentable. Id.
    On October 4, 2017, the United States Court of Appeals for the 
Federal Circuit issued its en banc decision in Aqua Products, 
addressing the burden of persuasion regarding the patentability of 
substitute claims presented in a motion to amend. The lead opinion of 
the decision explains that, in the absence of rulemaking, the USPTO may 
not place the burden of persuasion on the patent owner to show that 
proposed substitute claims are patentable.

    The only legal conclusions that support and define the judgment 
of the court are: (1) The PTO has not adopted a rule placing the 
burden of persuasion with respect to the patentability of amended 
claims on the patent owner that is entitled to deference; and (2) in 
the absence of anything that might be entitled deference, the PTO 
may not place that burden on the patentee.

    Id. at 1327 (O'Malley, J.).
    A separate opinion joined-in-part by a majority of the en banc 
court observed that ``it is well settled that regardless of which party 
bears the ultimate burden of persuasion, the movant bears a burden of 
production'' and that ``the Patent Office has adopted regulations that 
address what a patent owner must submit in moving to amend the 
patent.'' Id. at 1340-41 (Reyna, J., concurring in part) (citing 37 CFR 
42.20(a), 42.22(a), 42.121(a)(2)(i)). The opinion explains that these 
regulations require a patent owner to ``assist[ ] the Board to perform 
its statutory obligation to `issue a final written decision with 
respect to the patentability of . . . any new claim added under section 
316(d).''' Id. at 1341 (omission in original) (quoting 35 U.S.C. 
318(a)).
    In view of the Federal Circuit's decision in Aqua Products, on 
November 21, 2017, the Office issued formal guidance through a 
memorandum from the Chief Administrative Patent Judge, explaining that, 
in light of the Aqua Products decision, the Board will no longer place 
the burden of persuasion on a patent owner with respect to 
patentability of any proposed substitute claims presented in a motion 
to amend. See Guidance on Motions to Amend in view of Aqua Products, 
https://go.usa.gov/xQGAA (``Guidance Memo''). The Guidance Memo also 
notes that a motion to amend must continue to satisfy the requirements 
of 37 CFR 42.121 or 42.221 (e.g., provide a reasonable number of 
substitute claims and written description support in relation to each 
substitute claim), as applicable, that all parties continue to have a 
duty of candor under 37 CFR 42.11, and that the page limits, type, and 
timing of briefs remain unchanged. Id.
    On December 22, 2017, the Federal Circuit issued a related decision 
in Bosch Auto. Serv. Solutions, LLC v. Matal, 878 F.3d 1027 (Fed. Cir. 
2017) (``Bosch''). In that decision, because the petitioner had settled 
with the patent owner who had proposed substitute claims, the Federal 
Circuit remanded the case to the Board to evaluate the patentability of 
the proposed substitute claims. Id. (``[W]here the challenger ceases to 
participate in the IPR and the Board proceeds to final judgment, it is 
the Board that must justify any finding of unpatentability by reference 
to the evidence of record in the IPR.'') (alteration in original) 
(quoting Aqua Products, 872 F.2d at 1311 (O'Malley, J.)).
    In view of the decisions by the Federal Circuit regarding motion to 
amend practice and procedure in AIA trials, the Board de-designated as 
precedential MasterImage, as well as de-designating as informative a 
prior decision of the Board in Idle Free Sys., Inc. v. Bergstrom, Inc., 
Case IPR2012-00027 (P.T.A.B. June 11, 2013) (Paper 26), decisions in 
which the Board panels stated that ``[t]he burden is not on the 
petitioner to show unpatentability, but on the patent owner to show 
patentable distinction over the prior art of record and also prior art 
known to the patent owner.'' Id. at 7; see also MasterImage at 2 
(quoting Idle Free). Concurrently, the Board designated an order issued 
in Western Digital Corp. v. SPEX Techs., Inc., Cases IPR2018-00082, 
00084 (P.T.A.B. Apr. 25, 2018) (Paper 13) (``Western Digital'') as 
informative to provide an example of how panels can handle several 
aspects of the motion to amend practice under the Aqua Products and 
Bosch precedent. With respect to the burden of persuasion, the Western 
Digital order explained that under the current state of the law ``the 
burden of persuasion will ordinarily lie with the petitioner to show 
that any proposed substitute claims are unpatentable'' and that the 
``Board itself may justify any finding of unpatentability by reference 
to evidence of record in the proceeding.'' Id. at 4.
    On March 7, 2018, the Board designated as precedential an order in 
Lectrosonics, Inc. v. Zaxcom, Inc., Cases IPR2018-01129, 01130 
(P.T.A.B. Feb. 25, 2019) (Paper 15) (``Lectrosonics''), and de-
designated Western Digital. This order provides guidance regarding 
statutory and regulatory requirements for a motion to amend in light of 
Federal Circuit case law. For example, the order notes that, prior to 
considering the patentability of any substitute claims, the Board first 
must determine whether the patent owner has met the statutory and 
regulatory requirements set forth in 35 U.S.C. 316(d) and 37 CFR 
42.121, such as, that the motion proposes a reasonable number of 
substitute claims and that the amendments do not broaden the scope of 
the claims. Id. at 4-5. The order also sets out that ``the burden of 
persuasion ordinarily will lie with the petitioner to show that any 
proposed substitute claims are unpatentable by a preponderance of the 
evidence.'' As discussed in more detail below, the proposed rules 
herein allocate the burden of persuasion regarding the patentability of 
proposed substitute claims in a motion to amend as set forth in 
Lectrosonics and Western Digital.
    On October 29, 2018, the Office published a ``Request for Comments 
on Motion To Amend Practice and Procedures in Trial Proceedings Under 
the America Invents Act Before the Patent Trial and Appeal Board'' in 
the Federal Register (``Request for Comments''), seeking public comment 
on various aspects of the Board's amendment practice. 83 FR 54319. 
Among the questions on which the Board sought public input were the 
following, directed to the allocation of the burden of persuasion:
    15. Should the Office engage in rulemaking to allocate the burden 
of persuasion regarding the patentability of proposed substitute claims 
in a motion to amend as set forth in the Western Digital order? What 
are the advantages or disadvantages of doing so?
    16. If the Office continues to allocate the burden as set forth in 
the Western Digital order, under what circumstances should the Board 
itself be able to justify findings of unpatentability? Only if the 
petitioner withdraws from the proceeding? Or are there situations where 
the Board itself should be able to justify findings of unpatentability 
when the petitioner remains in the proceeding? What are the advantages 
or disadvantages?
    Id. at 54325.\1\
---------------------------------------------------------------------------

    \1\ The October 2018 Request for Comments was published before 
Western Digital was superseded by Lectrosonics, and thus refers only 
to the Western Digital order. Both orders are identical in their 
discussion of the burden of persuasion. Therefore, Questions 15 and 
16 of the Request for Comments, and the public comments provided 
thereto, are equally pertinent to the current Board precedent of 
Lectrosonics.
---------------------------------------------------------------------------

    In response to the October 2018 Request for Comments, the Office 
received 49 comments as of December 21, 2018 (the closing date for 
comments), from intellectual property

[[Page 56404]]

organizations, trade organizations, other organizations, and 
individuals. See https://go.usa.gov/xyeFy (collected responses to 
Request for Comments).2 3 Approximately 25 of the commenters 
provided specific responses to Questions 15 and 16 of the Request for 
Comments. In response to Question 15, the majority of commenters were 
in favor of the Office engaging in rulemaking to allocate the burden of 
persuasion as set forth in Western Digital (as discussed in more detail 
below). Only three commenters believed rulemaking was unnecessary 
(either because the Board could simply continue to apply its own 
precedent, or because the statute already allocates the burden of 
persuasion). A minority of commenters stated that the Office should 
engage in rulemaking, but that the burden of persuasion should be 
placed on the patent owner.
---------------------------------------------------------------------------

    \2\ The October 2018 Request for Comments also sought comments 
on a proposed amendment procedure in post-grant trial proceedings 
that included the Board providing preliminary non-binding guidance 
on the merits of a motion to amend, and an opportunity for a patent 
owner to revise its motion to amend thereafter. The Office recently 
addressed that portion of the Request for Comments separately in a 
``Notice Regarding a New Pilot Program Concerning Motion To Amend 
Practice and Procedures in Trial Proceedings Under the America 
Invents Act Before the Patent Trial and Appeal Board.'' 84 FR 9497 
(Mar. 15, 2019).
    \3\ In response to the October 2018 Request for Comments, the 
Office also received comments and questions relating to reissue or 
reexamination as an alternative vehicle for claim amendments. The 
Office recently addressed those comments and questions separately in 
a ``Notice Regarding Options for Amendments by Patent Owner Through 
Reissue or Reexamination During a Pending AIA Trial Proceeding 
(April 2019).'' 84 FR 16654 (Apr. 22, 2019).
---------------------------------------------------------------------------

    Additionally, in response to Question 15, some commenters suggested 
that even if the Office promulgates rules to place the burden of 
persuasion on the petitioner on the issue of patentability of the 
proposed substitute claims, the patent owner continues to bear the 
burden to show that the motion to amend complies with the statutory 
requirements of 35 U.S.C. 316(d) or 326(d) (for example, that the 
amendment may not enlarge the scope of the claims), as well as the 
regulatory requirements of 37 CFR 42.121 or 42.221 (for example, that 
the motion set forth the support for the amendment in the original 
disclosure of the patent).
    In response to Question 16, the majority of responsive comments 
stated that the Board should be able to justify findings of 
unpatentability in any circumstance, for example, even when the 
petitioner remains in the proceeding. Two commenters responded that the 
Board should never be able to assume the burden of persuasion on 
unpatentability itself, and three commenters believed that the Board 
should be permitted to justify findings of unpatentability of proposed 
substitute claims itself only in certain circumstances, for example, 
when a petitioner ceases to participate in a proceeding.
    The Office appreciates the public input provided in response to the 
Request for Comments and has reviewed the individual responses 
thoroughly. In light of the generally positive support for rulemaking 
to allocate the burden of persuasion as set forth in the Western 
Digital order (and subsequently made precedential in Lectrosonics), and 
in the interest of providing greater clarity, certainty, and 
predictability to parties participating in trial proceedings before the 
Board, the Office now issues proposed rules allocating the burden of 
persuasion. The rules would specify that the burden of persuasion as to 
patentability of substitute claims proposed in a motion to amend is on 
the petitioner. In addition, the rules would specify that the burden of 
persuasion is on the patent owner to show that the motion complies with 
the requirements of 35 U.S.C. 316(d) or 326(d) (requiring that a motion 
to amend propose a reasonable number of substitute claims, and that 
substitute claims do not enlarge scope of the original claims of the 
patent or introduce new matter), as well as 37 CFR 42.121(a)(2), 
(a)(3), (b)(1), and (b)(2), or 42.221(a)(2), (a)(3), (b)(1), and (b)(2) 
(indicating, for example, that a motion to amend must set forth written 
description support and support for the benefit of a filing date in 
relation to each substitute claim, and respond to grounds of 
unpatentability involved in the trial).
    Irrespective of the burdens of persuasion discussed above, however, 
the rules also would specify that the Board may, in the interests of 
justice, exercise its discretion to grant or deny a motion to amend for 
any reason supported by the evidence of record. Thus, in instances 
where a party has not met its burden in relation to a motion to amend 
or any substitute claims proposed therein, the Board may, in the 
interests of justice, reach a determination regarding patentability, 
based on the entirety of the evidence made of record in the proceeding. 
The Office anticipates that the Board will exercise this discretion 
only in rare circumstances. Any evidence relied on to support a 
determination regarding patentability will be made of record in the 
proceeding by the parties or the Board.
    For instance, the Board may, in the interests of justice, exercise 
its discretion to determine that a motion to amend complies with the 
statutory and regulatory requirements of 35 U.S.C. 316(d) or 326(d) and 
37 CFR 42.121(a)(2), (a)(3), (b)(1), and (b)(2), or 42.221(a)(2), 
(a)(3), (b)(1), and (b)(2), even if a patent owner does not expressly 
address or establish every requirement in its briefing. The Office 
expects that the Board will do so only in circumstances where there is 
easily identified and persuasive evidence that the motion complies with 
the statutory and regulatory requirements, and only where the 
petitioner has been afforded the opportunity to respond to that 
evidence. The Board will rely on evidence of record when making such a 
determination.
    Furthermore, as supported by the majority of the comments received 
in response to Question 16, under the proposed rules, the Board may 
exercise its discretion to reach a determination regarding 
patentability in instances where a petitioner does not oppose the 
amendment or does not meet its burden of persuasion in relation to any 
proposed substitute claim. The proposed rules limit such instances to 
those in which the interests of justice warrant the Board reaching a 
determination regarding patentability. Such instances may include, for 
example, situations where the petitioner has ceased to participate in 
the proceeding altogether (for example, as a result of settlement) or 
where the petitioner remains in the proceeding but does not oppose the 
motion to amend.
    The interests of justice also may, for example, support the Board 
exercising its discretion to deny a motion to amend when the petitioner 
opposes the motion to amend and has failed to meet the burden of 
persuasion, but where there is easily identified and persuasive 
evidence of unpatentability in the record. In such situations, the 
proposed rules would grant the Board discretion regarding whether to 
make any determination of unpatentability that is supported by the 
evidence of record, even if the ground of unpatentability has not been 
advanced by the petitioner. The Office expects that the Board will do 
so only in rare circumstances, and only where the patent owner has been 
afforded the opportunity to respond to that evidence and related 
grounds of unpatentability. Ordinarily, in cases where the petitioner 
has participated fully and opposed the motion to amend, the Office 
expects that the petitioner will bear the burden of persuasion and 
there will be no need for the Board to independently justify a 
determination of unpatentability.

[[Page 56405]]

Discussion of Specific Rules

    The USPTO proposes to amend 37 CFR part 42 as follows:
    Section 42.121: Sec.  42.121 is proposed to be amended by adding a 
new subsection (d) to state that a patent owner bears the burden of 
persuasion to show that a motion to amend complies with certain 
statutory and regulatory requirements, but that the petitioner bears 
the burden of persuasion to show that any proposed substitute claims 
are unpatentable. The new subsection (d) also states that in cases 
where a party does not meet its burden, the Board may, in the interests 
of justice, exercise its discretion to grant or deny a motion to amend 
for any reason supported by the evidence of record.
    Section 42.221: Sec.  42.221 is proposed to be amended by adding a 
new subsection (d) to state that a patent owner bears the burden of 
persuasion to show that a motion to amend complies with certain 
statutory and regulatory requirements, but that the petitioner bears 
the burden of persuasion to show that any proposed substitute claims 
are unpatentable. The new subsection (d) also states that in cases 
where a party does not meet its burden, the Board may, in the interests 
of justice, exercise its discretion to grant or deny a motion to amend 
for any reason supported by the evidence of record.

Rulemaking Considerations

    A. Regulatory Flexibility Act: For the reasons set forth herein, 
the Senior Counsel for Regulatory and Legislative Affairs, Office of 
General Law, United States Patent and Trademark Office has certified to 
the Chief Counsel for Advocacy of the Small Business Administration 
that changes set forth in this notice of proposed rulemaking would not 
have a significant economic impact on a substantial number of small 
entities. See 5 U.S.C. 605(b).
    The changes set forth in this notice of proposed rulemaking are to 
set forth expressly the respective burdens of persuasion on the parties 
regarding a motion to amend in an AIA proceeding. These changes are 
consistent with relevant precedential decisions of the Board and 
Federal Circuit, and as such do not reflect a change from current 
practice. The changes do not create additional procedures or 
requirements or impose any additional compliance measures on any party, 
nor do these changes cause any party to incur additional cost. 
Therefore, any requirements resulting from these proposed changes are 
of minimal or no additional burden to those practicing before the 
Board.
    For the foregoing reasons, the proposed changes in this notice of 
proposed rulemaking would not have a significant economic impact on a 
substantial number of small entities.
    B. Executive Order 12866 (Regulatory Planning and Review): This 
rulemaking has been determined to be not significant for purposes of 
Executive Order 12866 (Sept. 30, 1993).
    C. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563 (Jan. 18, 
2011). Specifically, the Office has, to the extent feasible and 
applicable: (1) Made a reasoned determination that the benefits justify 
the costs of the rules; (2) tailored the rules to impose the least 
burden on society consistent with obtaining the regulatory objectives; 
(3) selected a regulatory approach that maximizes net benefits; (4) 
specified performance objectives; (5) identified and assessed available 
alternatives; (6) involved the public in an open exchange of 
information and perspectives among experts in relevant disciplines, 
affected stakeholders in the private sector and the public as a whole, 
and provided on-line access to the rulemaking docket; (7) attempted to 
promote coordination, simplification, and harmonization across 
government agencies and identified goals designed to promote 
innovation; (8) considered approaches that reduce burdens and maintain 
flexibility and freedom of choice for the public; and (9) ensured the 
objectivity of scientific and technological information and processes.
    D. Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs): This proposed rule is not expected to be an 
Executive Order 13771 (Jan. 30, 2017) regulatory action because this 
proposed rule is not significant under Executive Order 12866.
    E. Executive Order 13132 (Federalism): This rulemaking does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    F. Executive Order 13211 (Energy Effects): This rulemaking is not a 
significant energy action under Executive Order 13211 because this 
rulemaking is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy. Therefore, a Statement of 
Energy Effects is not required under Executive Order 13211 (May 18, 
2001).
    G. Executive Order 12988 (Civil Justice Reform): This rulemaking 
meets applicable standards to minimize litigation, eliminate ambiguity, 
and reduce burden as set forth in sections 3(a) and 3(b)(2) of 
Executive Order 12988 (Feb. 5, 1996).
    H. Executive Order 13045 (Protection of Children): This rulemaking 
does not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (Apr. 
21, 1997).
    I. Executive Order 12630 (Taking of Private Property): This 
rulemaking will not affect a taking of private property or otherwise 
have taking implications under Executive Order 12630 (Mar. 15, 1988).
    J. Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the 
United States Patent and Trademark Office will submit a report 
containing the rule and other required information to the United States 
Senate, the United States House of Representatives, and the Comptroller 
General of the Government Accountability Office. The changes in this 
notice of proposed rulemaking are not expected to result in an annual 
effect on the economy of 100 million dollars or more, a major increase 
in costs or prices, or significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States-based enterprises to compete with foreign-based 
enterprises in domestic and export markets. Therefore, this rulemaking 
is not a ``major rule'' as defined in 5 U.S.C. 804(2).
    K. Unfunded Mandates Reform Act of 1995: The changes set forth in 
this notice of proposed rulemaking do not involve a Federal 
intergovernmental mandate that will result in the expenditure by State, 
local, and tribal governments, in the aggregate, of 100 million dollars 
(as adjusted) or more in any one year, or a Federal private sector 
mandate that will result in the expenditure by the private sector of 
100 million dollars (as adjusted) or more in any one year, and will not 
significantly or uniquely affect small governments. Therefore, no 
actions are necessary under the provisions of the Unfunded Mandates 
Reform Act of 1995. See 2 U.S.C. 1501 et seq.
    L. National Environmental Policy Act: This rulemaking will not have 
any effect on the quality of the environment and is thus categorically 
excluded from review under the National Environmental Policy Act of 
1969. See 42 U.S.C. 4321 et seq.
    M. National Technology Transfer and Advancement Act: The 
requirements of

[[Page 56406]]

section 12(d) of the National Technology Transfer and Advancement Act 
of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking 
does not contain provisions which involve the use of technical 
standards.
    N. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3549) requires that the Office consider the impact of 
paperwork and other information collection burdens imposed on the 
public. This proposed rulemaking does not involve an information 
collection requirement that is subject to review by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3549). This rulemaking does not add any additional 
information requirements or fees for parties before the Board.
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to, a penalty for 
failure to comply with a collection of information subject to the 
requirements of the Paperwork Reduction Act unless that collection of 
information displays a currently valid OMB control number.

List of Subjects in 37 CFR Part 42

    Administrative practice and procedure, Inventions and patents, 
Lawyers.

    For the reasons set forth in the preamble, the Office proposes to 
amend part 42 of title 37 as follows:

PART 42--TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

0
1. The authority citation for 37 CFR part 42 continues to read as 
follows:

    Authority: 35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311, 312, 316, 
and 321-326; Pub. L. 112-29, 125 Stat. 284; and Pub. L. 112-274, 126 
Stat. 2456.


0
2. Amend Sec.  42.121 by adding paragraph (d) to read as follows:


Sec.  42.121  Amendment of the patent.

* * * * *
    (d) Burden of Persuasion. On a motion to amend:
    (1) A patent owner bears the burden of persuasion to show, by a 
preponderance of the evidence, that the motion to amend complies with 
the requirements of paragraphs (1) and (3) of 35 U.S.C. 316(d), as well 
as paragraphs (a)(2), (3), (b)(1), and (2) of this section;
    (2) A petitioner bears the burden of persuasion to show, by a 
preponderance of the evidence, that any proposed substitute claims are 
unpatentable; and
    (3) Irrespective of paragraphs (d)(1) and (2) of this section, the 
Board may, in the interests of justice, exercise its discretion to 
grant or deny a motion to amend for any reason supported by the 
evidence of record.

0
3. Amend Sec.  42.221 by adding paragraph (d) to read as follows:


Sec.  42.221  Amendment of the patent.

* * * * *
    (d) Burden of Persuasion. On a motion to amend:
    (1) A patent owner bears the burden of persuasion to show, by a 
preponderance of the evidence, that the motion to amend complies with 
the requirements of paragraphs (1) and (3) of 35 U.S.C. 326(d), as well 
as paragraphs (a)(2), (3), (b)(1), and (2) of this section;
    (2) A petitioner bears the burden of persuasion to show, by a 
preponderance of the evidence, that any proposed substitute claims are 
unpatentable; and
    (3) Irrespective of paragraphs (d)(1) and (2) of this section, the 
Board may, in the interests of justice, exercise its discretion to 
grant or deny a motion to amend for any reason supported by the 
evidence of record.

    Dated: October 10, 2019.
Andrei Iancu,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2019-22768 Filed 10-21-19; 8:45 am]
 BILLING CODE 3510-16-P