This Inter Partes decision invalidating a patent(s) was reversed by a CAFC decision today. This is from the summary.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE: MAGNUM OIL TOOLS
INTERNATIONAL, LTD.,
Appellant
______________________
2015-1300
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board, in No. IPR2013-
00231.
______________________
Decided: July 25, 2016
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Notwithstanding the Board’s failure to explain why a
skilled artisan would have been motivated to swap out the
deformable release device 30 of Lehr, Magnum also
correctly notes that McClinton failed to articulate why a
skilled artisan would have sought to combine Lehr with
Cockrell and Kristiansen. Cockrell and Kristiansen do
not disclose setting tools. In contrast to Lehr, which
discloses a setting tool, Cockrell is hydraulically set.
Cockrell ’516 patent, at col. 7, ll. 3-8. And Kristiansen is
set with a charge. Kristiansen ’052 patent, at col. 7, ll. 50-
58. McClinton did not address these specific differences
in how the prior art references are set, despite the fact
that the claimed inventions of the ’413 patent are each
directed to an i the claimed invention, the Board had no basis
for its conclusion that McClinton had met its burden of
proving by a preponderance of the evidence that the
claimed invention would have been obvious. See KSR,
550 U.S. at 418.
To satisfy its burden of proving obviousness, a petitioner
cannot employ mere conclusory statements. The
petitioner must instead articulate specific reasoning,
based on evidence of record, to support the legal conclusion
of obviousness. Id. In its petition, McClinton merely
argued in conclusory fashion that “[t]he same analysis”
for Alpha also applied to Lehr, without further explanation.
JA 117-18. The Board had no basis apart from this
and similar conclusory statements to find a motivation to
combine Lehr with the other prior art references, Cockrell
and Kristiansen. Because such conclusory statements
cannot satisfy the petitioner’s burden of demonstrating
obviousness, the Board did not have sufficient evidence on
which to base its legal conclusion of obviousness.
Finally, we address the PTO’s assertion that the
Board did not err in making an obviousness argument on
behalf of McClinton based on the primary reference Lehr
because this argument “could have been included in a
properly-drafted petition.” Intervenor Br. at 34 (citing
Cuozzo, 793 F.3d at 1275). It is the petitioner that bears
the burden of proof in IPRs, however. See 35 U.S.C. §
316(e) (“In an inter partes review instituted under this
chapter, the petitioner shall have the burden of proving a
proposition of unpatentability by a preponderance of the
evidence.”) (emphasis added). It is true that the entire
IPR process is one designed as an “efficient system for
challenging patents that should not have issued.” Cuozzo
Speed Techs., 2016 U.S. LEXIS 3927, at *29 (quoting H.R.
Rep. No. 112-98, pt. 1, at 39-40 (2011)). But it is still a
system that is predicated on a petition followed by a trial
in which the petitioner bears the burden of proof. Given
IN RE: 26 MAGNUM OIL TOOLS INTERNATIONAL
that framework, we find no support for the PTO’s position
that the Board is free to adopt arguments on behalf of
petitioners that could have been, but were not, raised by
the petitioner during an IPR. Instead, the Board must
base its decision on arguments that were advanced by a
party, and to which the opposing party was given a
chance to respond. SAS Inst., Inc. v. ComplementSoft,
LLC, No. 2015-1347, 2016 U.S. App. LEXIS 10508, at *20-
21 (Fed. Cir. June 10, 2016) (“An agency may not change
theories in midstream without giving respondents reasonable
notice of the change and the opportunity to present
argument under the new theory.”) (interpreting 5
U.S.C. § 554(b)(3)) (quoting Belden Inc. v. Berk-Tek LLC,
805 F.3d 1064, 1080 (Fed. Cir. 2015) (internal quotations
omitted). Here, “t was [petitioner’s] burden to demonstrate
both ‘that a skilled artisan would have been motivated
to combine the teachings of the prior art references
to achieve the claimed invention, and that the skilled
artisan would have had a reasonable expectation of success
in doing so.’” Intelligent Bio-Sys., Inc. v. Illumina
Cambridge, Ltd., 821 F.3d 1359, 1367-68 (Fed. Cir. 2016)
(citing, inter alia, Kinetic Concepts, Inc. v. Smith & Nephew,
Inc., 688 F.3d 1342, 1360 (Fed. Cir. 2012)). Thus,
while the PTO has broad authority to establish procedures
for revisiting earlier-granted patents in IPRs, that
authority is not so broad that it allows the PTO to raise,
address, and decide unpatentability theories never presented
by the petitioner and not supported by record
evidence.
V. CONCLUSION
As explained above, the Board erred in shifting the
burden of proof on obviousness in this IPR from the
petitioner, McClinton, to the patent owner, Magnum. The
Board further failed to articulate a sufficient rationale for
why a skilled artisan would have sought to combine the
asserted prior art to achieve the claimed invention. The
Board’s decision was premised on a legally incorrect
IN RE: MAGNUM OIL TOOLS INTERNATIONAL 27
standard for assessing obviousness, and the Board’s
factual findings regarding the alleged motivation to
combine lacked substantial evidence. Accordingly, we
reverse the Board’s decision.
REVERSED
nsert allowing for the release of a setting
tool. See, e.g., ’413 patent, at col. 13, l. 57-col. 14, l. 7. In
light of McC
linton’s failure to explain why a skilled artiIN
RE: MAGNUM OIL TOOLS INTERNATIONAL 25
san would have sought to combine the prior art references
to achieve
