Federal Circuit Identifies Questions For Evaluating New Claims In IPR proceedingsApril 11, 2022

On March 24, 2022, in Hunting Titan, Inc. v. DynaEnergetics Europe GmbH, the  Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed the Patent Trial and Appeal Board’s (“PTAB”) decision finding the claims of the US Patent No. 9,581,422 (“the ‘422 patent”) to be unpatentable as anticipated. The Federal Circuit also affirmed the decision of the Precedential Opinion Panel (“POP”) to grant the patent owner’s motion to amend the ‘422 patent to introduce new claims during inter partes review (“IPR”) proceedings. However, the Federal Circuit’s holding was narrow and left unanswered several open questions regarding the PTAB’s role in evaluating the patentability of new claims introduced during an IPR proceeding.

DynaEnergetics Europe GmbH (“DynaEnergetics”) owns the ‘422 patent. The ‘422 patent is directed to a “perforating gun” used in oil drilling. Hunting Titan, Inc. (“Hunting Titan”) petitioned for IPR, asserting unpatentability of original claims 1-15 of the ‘422 patent on grounds of anticipation and obviousness. The PTAB instituted IPR proceedings. DynaEnergetics moved to amend the ‘422 patent “to add new claims 16–22, in the event the [PTAB] were to find original claims 5–11 unpatentable.” Hunting Titan opposed the motion to amend based only on obviousness grounds and did not make any argument that proposed substitute claims 16-22 were anticipated by the prior art.

The PTAB found original claims 1-15 to be unpatentable as anticipated by a prior art reference. The PTAB also found proposed substitute claims 16-22 to be unpatentable as anticipated by the same reference, even though Hunting Titan did not argue that proposed substitute claims 16-22 were unpatentable on anticipation grounds. Therefore, the PTAB denied DynaEnergetics’ motion to amend. Subsequently, DynaEnergetics requested POP review of the denial of its motion, and the POP granted the request. The POP found that the PTAB “may advance a ground of unpatentability that a petitioner does not advance against substitute claims proposed in a motion to amend”. However, the POP acknowledged that the relevant case law did not address the circumstances in which the PTAB “should advance such a ground of unpatentability in relation to substitute claims proposed in a motion to amend.” The POP opined that “only under rare circumstances should the need arise for the [PTAB] to advance grounds of unpatentability to address proposed substitute claims that the petitioner did not advance.” The POP further noted that “there may be circumstances where certain evidence of unpatentability has not been raised by the petitioner but is readily identifiable and persuasive such that the [PTAB] should take it up in the interest of supporting the integrity of the patent system, notwithstanding the adversarial nature of the proceedings.”

It was argued by Hunting Titan and supporting amici that “the public interest w[ould] be harmed by the issuance of substitute claims that the … PTO knows to be unpatentable” if the PTAB cannot sua sponte raise the relevant ground for unpatentability in this case. The POP argued that the public interest is preserved “by a well-functioning adversarial system.” Further, the POP argued that this case did not fall into the category of potentially issuing claims that the United States Patent and Trademark Office (“USPTO”) knows to be unpatentable because the USPTO “d[id] not have sufficient information on the record of this case . . . to make requisite findings on anticipation.” The POP further held that this case was not a rare circumstance in which the PTAB should sua sponte raise a ground of unpatentability. Thus, the POP granted DynaEnergetics’ motion to amend, and Hunting Titan appealed the POP’s decision.

Regarding the proposed substitute claims, the Federal Circuit noted that it finds the POP’s “reasoning behind its decision to confine the [PTAB]’s discretion to sua sponte raise patentability issues to only rare circumstances” to be “problematic”. Particularly, the Federal Circuit noted that the POP overlooks the purpose of IPR proceedings, which is “to reexamine an earlier agency decision and ensure ‘that patent monopolies are kept within their legitimate scope.’” Despite the Federal Circuit’s concern regarding the POP’s reasoning, the Federal Circuit noted that the POP’s conclusion as applied to the instant case, is not inconsistent with the relevant case law. On appeal, Hunting Titan failed to argue that the POP abused its discretion and misapplied the readily identifiable evidence exception, thus forfeiting that argument. Therefore, the Federal Circuit affirmed the POP’s decision to grant the motion to amend only on the narrow ground that the POP based its decision on a lack of readily available and persuasive evidence and Hunting Titan failing to challenge this basis on appeal.

Several open questions raised in the instant case still exist. For example, the Federal Circuit noted that it did not opine “on the … limitations that the [POP] placed on the [PTAB]’s ability to advance patentability issues not raised by a petitioner, and whether those limitations are consistent with 35 U.S.C. § 318.” Additionally, the PTAB noted that it did “not decide whether the [PTAB] has an independent obligation to determine patentability of proposed substitute claims.” Thus, the patent community is left waiting for a future case in which these questions can be answered.

Judge Prost penned a concurrence criticizing the POP’s standard “for when it is (and isn’t) appropriate for the Board to sua sponte raise patentability issues as to new claims”. Judge Prost argued that the standard is contrary to Congress’ intent in creating IPR proceedings, inconsistent with relevant case law, and ultimately is unreasonable. Judge Prost also took issue with a regulation enacted by the USPTO in which this “readily identifiable and persuasive” standard is to be applied in all situations where new claims are added via a motion to amend in an IPR proceeding, even in the event that the motion is unopposed.

Joseph M. Hallman is a Patent Attorney in the Mechanical and Electrical Patent Practice Group at McKee, Voorhees & Sease, PLC. For additional information please visit www.ipmvs.com or contact Joseph directly via email at joseph.hallman@ipmvs.com