MasterImage 3D v. RealD (IPR2015-00040): Clarifying the Idle Free Motion-to-Amend Burden

MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (entered July 15, 2015), is a short order from an expanded panel that included the Deputy Chief and Vice Chief Administrative Patent Judges. Issued after a conference call about the patent owner’s planned motion to amend, it clarified the most criticized sentence in Idle Free v. Bergstrom. The Board designated the order precedential, and it governed motions to amend until the Board changed course in 2018–2019.

Background

RealD requested a conference under 37 C.F.R. § 42.121(a) to discuss its motion to amend only two business days before the motion was due. The panel suggested that such calls be requested at least ten business days in advance, then reset the schedule. It also excused a one-day-late patent owner response caused by problems with the Board’s electronic filing system, to which the petitioner did not object.

The substantive issue was the statement in Idle Free (Paper 26) that the burden is on the patent owner to show patentable distinction “over the prior art of record and also prior art known to the patent owner.” Read literally, that sentence seemed to demand that a patent owner survey all prior art it knew of.

What the Board decided

The panel said patent owners should still follow Idle Free, read with three clarifications.

1. “Prior art of record” means material art in the patent’s prosecution history, material art of record in the current proceeding (including art in grounds on which review was not instituted), and material art of record in any other Office proceeding involving the patent.
2. “Prior art known to the patent owner” means no more than the material prior art the patent owner makes of record under its duty of candor and good faith in 37 C.F.R. § 42.11. Because a substitute claim is considered only after the original claim falls, the focus is first on the added limitation. Art about that limitation can be material even if it does not disclose the rest of the claim.
3. Burden shifting. Once the patent owner makes a prima facie case of patentability over the prior art of record, the burden of production shifts to the petitioner, who may attack the prima facie case or apply additional prior art in its opposition. The patent owner may respond in its reply. The ultimate burden of persuasion remained with the patent owner as movant, citing the Federal Circuit’s 2015 decision in Microsoft Corp. v. Proxyconn, Inc.

Why it matters

MasterImage replaced an open-ended inquiry with a defined universe of art and tied the patent owner’s disclosure obligation to the existing duty of candor. It also introduced the language of shifting burdens of production, which framed how oppositions to motions to amend were written. The order is a good illustration of how the Board used designated decisions to adjust practice before formal rules caught up. See amending patent claims during inter partes review.

The duty of candor point has lasting relevance. Section 42.11 still applies to every party in a Board proceeding, and a patent owner proposing a narrower claim should consider what it knows about the feature it adds.

Later developments

The burden of persuasion that MasterImage left with the patent owner did not survive. In Aqua Products, Inc. v. Matal (Fed. Cir. 2017) (en banc), the Federal Circuit held that the patent owner does not bear the burden of persuasion on patentability of substitute claims. In 2019 the Board designated Lectrosonics, Inc. v. Zaxcom, Inc., IPR2018-01129, Paper 15, precedential as motion-to-amend guidance, and the earlier Idle Free and MasterImage guidance was de-designated. Decisions such as Western Digital v. SPEX show the transition. The USPTO later adopted motion-to-amend procedures by rule; readers should check current 37 C.F.R. § 42.121 and the USPTO’s list of precedential and informative decisions, since designations can change.

Key takeaways

• An expanded panel clarified Idle Free rather than overruling it.
• “Prior art of record” was limited to material art in the prosecution history and Office proceedings involving the patent.
• “Prior art known to the patent owner” was tied to the duty of candor in § 42.11.
• A prima facie showing shifted the burden of production to the petitioner, but persuasion stayed with the patent owner, a position later rejected in Aqua Products.
• The order was precedential in its time and has since been de-designated.