In in re Magnum Oil Tools International, the Federal Circuit rejected a crafty approach by the USPTO to shift the burden to the patentee in proving non-obviousness once the petition was instituted in a post grant review. Such a move would have made it virtually impossible for a patentee to win on obviousness once a petition was instituted. And since the PTAB is known to institute a large percentage of petitions, the proposed burden shifting would make the poor prospects for a patentee significantly worse.
The Federal Circuit correctly confirmed that in the context of an IPR, there is no burden shifting to the patentee with regard to obviousness and distinguished Dynamic Drinkware, where there was a burden shift for the specific issue of proving a claim for priority. The Court explicitly stated that "it is inappropriate to shift the burden to the patentee after institution to prove that the patent is patentable." Rather, "the petitioner continues to bear the burden of proving unpatentability after institution, and must do so by a preponderance of the evidence at trial. See 35 U.S.C. § 316(e)." The court distinguished the shifting of the burden of production with respect to obviousness in the context of prosecution as a "procedural tool of patent examination, allocating the burdens of going forward as between examiner and applicant."
The PTO's argument here represents a warning sign. It illustrates a desire by the PTO to make PTO decisions as insulated as possible from court review, and make it as easy as possible to invalidate claims on various grounds, particularly those of obviousness. Consider the PTO's reasoning that was the basis of their brief. The PTO asserted that upon institution of an IPR, the Board necessarily finds that the Petitioner has demonstrated a “reasonable likelihood of success .” Based on this, the PTO asserts that there is an implicit shift in the burden of producing evidence (of obviousness in this case) to the patentee. And because the initial institution decision is unreviewable, the PTO then hopes to make its ultimate decisions of non-obviousness virtually bullet-proof on appeal because every knows how hard it is to produce sufficient evidence of non-obviousness.
That the USPTO spent the energy to advance such a policy argument sheds light on the goals of its leadership. While the USPTO was unsuccessful on this case, the deferential Chevron standards mean that we can expect many more creative approaches in the future.