In re Aqua Products: In a Divided Decision, En Banc Federal Circuit Holds That Petitioner Must Prove All Propositions of Unpatentability, Including for Amended Claims

11 min

On October 4, 2017, a divided en banc Federal Circuit issued several opinions addressing the burden of proof pertaining to a motion to amend claims in inter partes review (“IPR”) proceedings. While none of the opinions garnered a full majority in all respects, the leading opinion authored by Judge O’Malley held that “in the absence of any required deference, the most reasonable reading of [35 U.S.C. § 316] is one that places the burden of persuasion with respect to the patentability of amended claims on the petitioner.” In doing so, the Federal Circuit overruled its prior decisions addressing motions to amend in IPR proceedings, to the extent that those decisions conflict with this ruling. Judge O’Malley was joined by Judges Newman, Lourie, Moore and Wallach, and Judges Dyk and Reyna concurred in the result.

While the leading opinion asserts that “§ 316(e) unambiguously requires the petitioner to prove all propositions of unpatentability, including for amended claims,” which would not trigger Chevron deference, that position did not garner a majority. The concurring opinion did not find the AIA unambiguous on this issue, leading to a deeper analysis concerning whether the PTO had promulgated a proper rule that placed the burden of proving patentability on the patentee, which would be entitled to Chevron deference. With this division, Judge O’Malley acknowledged that the ruling was “narrow” and that “[t]he 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.” In addition to the leading opinion, the en banc Court generated four additional opinions, which were joined in full or in part by other Judges.


Aqua Products, Inc. (“Aqua Products”) is the owner of U.S. Patent No. 8,273,183, which discloses and claims an automated swimming pool cleaner. In response to an infringement suit, Zodiac Pool Systems, Inc. (“Zodiac”) filed an IPR petition with the Patent Trial and Appeal Board (“PTAB”), in which it challenged the patentability of certain claims of the ’183 patent. Following institution, Aqua Products defended the patentability of the original claim and filed a motion to amend setting forth three substitute claims.

Zodiac opposed the motion to amend on various grounds. The PTAB ultimately found the challenged claims unpatentable and denied the motion to amend. In its analysis, the PTAB determined that the substitute claims satisfied the formal requirements of § 316(d) regarding claim scope and formalities for presenting the motion. However, the PTAB ruled that Aqua Products had failed to prove patentability of the substitute claims over the prior art of record. Thus, the PTAB found that Aqua Products had satisfied the patent owner’s burden of production (by complying with § 316(d)), but failed to satisfy the burden of proof.

On appeal, Aqua Products argued that the plain language of 35 U.S.C. § 316(e) places the burden of proving any proposition of unpatentability on the petitioner. The initial panel rejected Aqua Products’ argument. Writing for the panel, Judge Reyna held that existing Court precedent precluded revisiting the issue of whether the PTAB may require a patentee to demonstrate patentability of substitute claims over the art of record. The panel also rejected Aqua Products’ assertion that the PTAB erred by failing to consider the entirety of the record when determining the patentability of the proposed substitute claims.

On August 12, 2016, the Federal Circuit vacated the panel decision and ordered rehearing en banc. The Federal Circuit requested that the parties file supplemental briefing directed to the following questions:

(a) When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?

(b) When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

The Leading En Banc Opinion

The leading opinion walked through various bases for believing that Congress intended for the burden to be placed on the petitioner for proving unpatentability of all claims, whether original or amended. Judge O’Malley noted that both Congress and the Supreme Court have emphasized the importance of a patent owner’s right to propose claim amendments during an IPR proceeding. The leading opinion also noted that the claim construction standard for IPRs is predicated on the availability of claim amendments, but that patent owners largely have been prevented from making amendments. Additionally, the opinion discussed the legislative history for earlier versions of the AIA, which contemplated language that may have, if adopted, put the burden on the patentee, but ultimately excluded such language in favor of language that focused on the burden of the petitioner.

Judge O’Malley next turned to the relevant PTO rules. While the PTO asserted that 37 C.F.R. §§ 42.20 (generally referring to the burden of a “moving party”) and 42.121 (setting forth the procedures for submitting a motion to amend) place the burden of persuasion on a patent owner to demonstrate patentability, the Court disagreed. Judge O’Malley explained that the PTO imposed the burden of proof through two IPR decisions (Idle Free and MasterImage). Those interpretations of the statute are not set forth in the actual regulations, and thus were not subject to the notice-and-comment rulemaking requirements.

With this framework in place, the opinion turned to a Chevron analysis, which considers two questions—(1) did Congress directly speak to the precise question at issue; and, if not, (2) did the agency resolve the question using a permissible construction of the relevant statute.

The judges on the leading opinion would have resolved the matter with the first step of Chevron, ruling that “Congress explicitly placed the burden of persuasion to prove propositions of unpatentability on the petitioner for all claims, including amended claims.” Specifically, § 316(d)(1) provides patent owners with the right to file a motion to amend in an IPR proceeding, and does not impose any burden of proof regarding the patentability of the proposed amended claims. Judge O’Malley also rejected the PTO’s argument that because substitute claims are introduced via a “motion,” the burden of persuasion must fall on the patent owner as the moving party. As explained in the leading opinion, the statutory language only described a threshold burden for introducing substitute claims into the proceeding. If the judges on the leading opinion had their way, the patentee would need only satisfy the statutory criteria set forth in § 316(d) and any reasonable procedural obligations imposed by the PTO Director, to enter the amendment into the IPR proceeding—at which point the burden would be on the petitioner to prove unpatentability of the amended claims. The leading opinion also rejected the notion that this scheme would result in the issuance of “untested” amended claims, as amended claims must necessarily be narrower in scope than the original claims.

While those that joined the leading opinion would end the Chevron analysis at step one—finding the AIA unambiguous on this issue—there was no majority support for finding clarity in the statute. This lack of agreement necessitated step two of the Chevron analysis—determining whether deference should be given to any PTO interpretation of §§ 316(d) or (e). On this point, a majority agreed that the PTO has not adopted any rules or regulations governing the burden of proof in the context of motions to amend. The opinion stated that 37 C.F.R. §§ 42.20 and 42.121 do not address patentability determinations, and further, the Idle Free and MasterImage IPR decisions are not entitled to Chevron deference. Thus, the majority concluded that the PTO failed to make any proper determination on the ambiguity of either § 316(d) or § 316(e). With that finding, no basis existed to accord deference to the PTO’s interpretation of those sections.

With no deference warranted, the Court applied a de novo review of § 316 and determined that “the burden of proving the unpatentability of all claims in an IPR—both original and amended—is on the petitioner.”

This conclusion would seem to allow for the PTO to issue rules adopting its interpretation of § 316, which could be accorded deference if challenged in a later case. However, the leading opinion suggested that even if the PTO were to engage in formal agency rulemaking to establish its interpretation, it may not have the statutory authority to do so, as setting a different “burden of proof” was arguably outside the scope of Congress’ direction to the PTO in § 316(a)(9) to establish “standards and procedures.” This view was not expressed by a majority, but also was not entirely rejected by every judge that did not join the leading opinion.

The leading opinion also touched upon the second question of whether the PTAB may sua sponte raise patentability challenges to a proposed amended claim. Because the record did not present that precise question, the Court declined to address this question. However, Judge O’Malley did address the question of whether the PTAB may base patentability determinations concerning the amended claims solely on the face of the motion to amend, without regard to the remainder of the IPR record. The opinion held that final substantive decisions (such as the patentability of proposed amended claims) must be based on the entirety of the record. An agency’s refusal to consider evidence bearing on an issue before it is “by definition, arbitrary and capricious.” Thus, the PTAB’s rejection of Aqua Products’ proposed amended claims without consideration of the full IPR record provided an independent basis for vacating the PTAB’s decision and remanding for further consideration.

Judge Moore’s Opinion 

Judge Moore issued a separate opinion, in which Judges Newman and O’Malley joined. Judge Moore joined in Judge O’Malley’s opinion and concluded that 35 U.S.C. § 316(e) places the burden of proving unpatentability of an amended claim on the petitioner. However, Judge Moore wrote separately to address the question of whether PTAB opinions are entitled to Chevron deference in this case—concluding that Congress unambiguously required the PTO to establish standards through regulations, not other means such as IPR decisions. 

Judge Reyna’s Opinion 

Judge Reyna also issued a separate opinion, in which Judge Dyk joined, and in which Chief Judge Prost and Judges Taranto, Chen and Hughes joined in part. Judge Reyna concurred with Judge Taranto’s determination that § 316(e) is ambiguous, and that § 316(a)(9) authorizes the PTO to promulgate regulations on the burden of persuasion. He also agreed that the PTO’s discussion of burdens in IPR decisions does not qualify as substantive rulemaking, although he did not believe that a full Chevron analysis was necessary to reach that conclusion. Finally, Judge Reyna concluded that § 316(d) and 37 C.F.R. § 42.121 only place a default burden of production on the patentee—i.e., meeting the burden for entry of the claims into the trial for consideration. However, he acknowledged that Chevron deference may be warranted if the PTO promulgates its interpretation through regulations under APA rulemaking procedures. 

Judge Taranto’s Dissent 

Judge Taranto issued a dissent, in which Chief Judge Prost and Judges Chen and Hughes joined, and Judges Dyk and Reyna joined in part. Judge Taranto found that the statutory language of § 316(d) did not dictate who bears the burden of proof on motions to amend, and thus the statute is sufficiently ambiguous to clear the first step of Chevron. He further determined that § 316(a) allows the PTO Director to address who bears that burden, and that § 316(e) does not unambiguously bar assigning that burden to the patentee. He supported this interpretation by examining the context in which § 316(e) is applied (i.e., the existence of a petitioner challenge to the patentability of existing claims), the related statutory provisions requiring the PTAB to adjudicate the patentability of amended claims, and what he viewed as incorrect or improper assumptions applied in the leading opinion. Judge Taranto further stated that, in his view, 37 C.F.R. § 42.20(c) properly assigns the burden of persuasion to the patent owner when filing a motion to amend, and therefore Chevron deference should apply to the PTO’s interpretation. Thus, Judge Taranto would affirm the PTAB’s decision denying the motion to amend. 

Judge Hughes’ Dissent 

Judge Hughes also issued a dissent, which Judge Chen joined. Judge Hughes joined Judge Taranto’s opinion concluding that § 316(d) does not dictate who bears the burden of proof on motions to amend, and that Chevron deference should apply to the PTO’s interpretation of the statutory language in view of its adoption of 37 C.F.R. § 42.20(c). Judge Hughes criticized the opinions of Judge O’Malley and Judge Reyna as suggesting that “specific magic words” are required before Chevron deference can be applied. Instead, Judge Hughes believes that Chevron’s step two should be limited to testing the reasonableness of the agency’s conclusions, rather than the mode of its reasoning. Judge Hughes further stated that the PTAB’s application of § 42.20(c) should be accorded Auer deference, which gives controlling weight to an agency’s interpretation of its own regulation unless plainly erroneous or inconsistent with the regulation. Lastly, Judge Hughes rejected the notion that by using the word “regulation” in the statute, Congress intended to foreclose all other means of statutory or regulatory interpretation other than formal agency rulemaking. Thus, like Judge Taranto, Judge Hughes would affirm the PTAB’s decision. 


With this mixture of five opinions, the ultimate fate of motions to amend remains unsettled. In the short term, this de novo judgment places the burden on the petitioner to prove unpatentability of amended claims. This likely will affect a number of cases with motions to amend currently in play. However, the various opinions neither preclude the PTO from issuing proper regulations that shift the burden to the patentee, nor guarantee that any new regulations would withstand scrutiny in a later case.