The Federal Circuit previously clarified that a petitioner’s burden to prove unpatentability never shifts to the patent owner.  See Dynamic Drinkware, LLC v. Nat’l Graphics, Inc.  On Monday, the Federal Circuit’s In re Magnum Oil Tools International, Ltd. decision clarified that the burden of production likewise never shifts from the patent challenger to the patentee. 

The IPR had an interesting procedural background.  McClinton Energy Group filed a petition for IPR challenging the validity of Magnum Oil Tool’s patent.  IPR was instituted, and after trial and the completion of briefing, the board issued a final written decision holding all challenged claims unpatentable as obvious.  Subsequently, McClinton and Magnum entered into a settlement agreement, wherein McClinton agreed not to participate in any appeal of the final written decision in the underlying IPR.  McClinton filed a request to withdraw from the appeal, which the Federal Circuit granted.  After McClinton’s withdrawal, the Patent Office intervened. 

On appeal, the Patent Office argued that “upon institution of an IPR, the Board necessarily finds that the Petitioner has demonstrated a ‘reasonable likelihood of success,’” and that “this finding operates to shift the burden of producing evidence of nonobviousness to the patentee.”  The Federal Circuit disagreed, finding that “[a]pplying a burden-shifting framework here would introduce unnecessary confusion because the ultimate burden of persuasion of obviousness must remain on the patent challenger and a fact finder must consider all evidence of obviousness and nonobviousness before reaching a determination.”  (emphasis in original, quotations and citations removed).  The Federal Circuit explained that the board “has an obligation to assess the question anew after trial based on the totality of the record.”

This ruling underscores the importance of a petitioner providing a fully developed record to carry its burden of production, as well as persuasion.  For patent owners, it clarifies that it is reversible error for the board to require a patent owner to prove that it would not be obvious to combine references’ teachings to arrive at the claimed invention.