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PTAB Grants Fourth Motion to Amend in an IPR Proceeding

For only the fourth time in its history, the Patent Trial and Appeal Board (“PTAB”) has granted a motion to amend in an inter partes review (“IPR”) proceeding, finding all substitute claims proposed by the patent owner patentable. In REG Synthetic Fuels LLC v. Neste Oil OYJ, IPR2014-00192 (the “‘192 IPR”), a 3-judge panel issued an order on June 5 that could be interpreted as moving away from prior PTAB decisions applying a strict standard for amending claims under 35 U.S.C. § 316(d) in an IPR proceeding. See ‘192 IPR, Paper 48. While these previous decisions have required patent owners to demonstrate that proposed substitute claims are patentable not only over the prior art of record, but also all prior art known to the patent owner, the REG v. Neste decision seems to focus almost exclusively on whether the proposed substitute claims are patentable over the prior art of record.

Petitioner REG Synthetic Fuels LLC (“REG”) challenged the patentability of U.S. Patent No. 8,278,492 (the “‘492 Patent”) owned by Neste Oil OYJ’s (“Neste”). Neste’s ‘492 Patent is directed to a process for manufacturing range hydrocarbons from bio oils and fats, also referred to as “biodiesel.” The ‘492 Patent discloses a two-step process where a feed stream is diluted with a hydrocarbon to create biodiesel. The inventors sought to remedy the problem of heat dissipation during deoxygenation by adding sulfur to the feed stream.

During the course of the IPR proceeding, the parties agreed that each individual element recited in original claims 1-24 of the ‘492 Patent was known in the art but disagreed as to whether a skilled artisan would have combined certain references to reach the claimed combination. In its final written decision, the PTAB panel found original claims 1-24 unpatentable, concluding that it would have been obvious to combine at least two of the cited references. Notably, it also indicated that the prior art recognized the additional advantage of adding sulfur to the feed stream, the novel element of the ‘492 Patent.

Along with its Patent Owner Response, Neste filed a motion to amend that proposed four substitute claims (1 independent and 3 dependent) under 35 U.S.C. § 316(d). The proposed claims added new limitations not found in original claims 1-24. In determining whether Neste’s proposed substitute claims were patentable, the PTAB reiterated that Neste had the burden of proof as to patentability. While the PTAB stated that Neste was not required to prove that the claims are patentable over every item of prior art known to a person of skill in the art, it was required to explain why the claims are patentable over the prior art of record in the IPR proceeding. The PTAB did note, however, that Neste had a duty of candor to the Patent Office that “required that it discuss any relevant prior art not of record but known to it.”

In arguing that Neste had failed to meet its burden of showing patentability, REG argued that the substitute claims should be denied because Neste had failed to address all relevant prior art known to the patent owner, citing to ScentAir Tech., Inc. v. Prolitec Inc., IPR2013-00179, slip op. at 27-30 (PTAB June 26, 2014). The PTAB distinguished ScentAir on the basis that the prior art references cited by REG were not relevant to any issue raised by Neste’s Motion to Amend and, in fact, were relevant to Neste’s teaching away argument.

The PTAB thus granted Neste’s motion to amend and allowed the substitute claims, finding that Neste’s new limitation of “a total feed comprising 5,000-8,000 w-ppm sulphur calculated as element sulphur” added to claim 25 (substitute for invalid original claim 1) increased the sulfur levels above those considered beneficial in the art: “The record before us does not establish persuasively that there was any art-recognized benefit to using a concentration of sulfur over 4431 w-ppm … [a]bsent any indication of a benefit to be obtained from adding even greater amounts of sulfur, the skilled artisan would have no reason to make the modifications … necessary to result in the [proposed] claimed invention.”

Prior to the decision in REG v. Neste, the PTAB had only granted three motions to amend in IPR proceedings. This had caused much public debate and calls for reforms by both the PTAB and Congress. In response, the PTAB recently introduced a package of “quick fixes” that included expanding the page limit from 15 to 25 pages for motions to amend to ease the burden on patent holders. The PTAB is also considering several other changes in a forthcoming second rules package to further reduce the patent holder’s burden with respect to motions to amend. Congress has also introduced provisions in the proposed STRONG PATENTS Act that would make it easier to amend patents, among other patent reforms. Moreover, the seeming relaxed standard applied by the panel in REG v. Neste may also mark a turning point in motions to amend and signal the beginning of new opportunities for patent owners to survive an IPR proceeding by proposing new and patentable claims.

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Brad M. Scheller is an experienced patent litigator and strategic counselor to start-up ventures and established businesses in the mechanical and electrical arts, with a focus in EV and battery technologies and advising clients on patent portfolio growth, management and enforcement. He represents clients before the United States Patent and Trademark Office and as lead counsel in federal district court and appellate litigation across the country.