Paper _____
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________
`
`STEADYMED LTD.
`Petitioner
`
`v.
`
`UNITED THERAPEUTICS CORPORATION
`Patent Owner
`
`U.S. Patent No. 8,497,393
`Issue Date: Jul. 30, 2013
`Title: PROCESS TO PREPARE TREPROSTINIL, THE ACTIVE
`INGREDIENT IN REMODULIN®
`_______________
`
`Case IPR2016-00006
`_______________
`
`Patent Owner’s Notice of Supplemental Authority
`
`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`4824-5985-1564.1
`
`

`

`IPR2016-00006
`Patent 8,497,393
`
`
`Patent Owner Docket No. 080618-1601
`
`
`
`Pursuant to the Board’s Aug. 5, 2016 email in the above-captioned case, Patent
`
`Owner hereby submits the Federal Circuit’s July 25, 2016 Opinion in notice of
`
`supplemental authority pertaining to the decision in In re Magnum Oil Tools
`
`International, Ltd., No. 2015-1300, 2016 U.S. App. LEXIS 13461 (Fed. Cir. 2016)
`
`as Attachment A to this paper.
`
`
`
`Date: Aug. 5, 2016
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Respectfully submitted,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`/Stephen B. Maebius/
`Stephen B. Maebius
`Registration No. 35,264
`Counsel for Patent Owner
`
`
`
`
`
`
`4824-5985-1564.1
`
`2
`
`

`

`IPR2016-00006
`Patent 8,497,393
`
`
`Attorney Docket No. 080618-1601
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that a copy of the foregoing Patent
`
`Owner’s Notice of Supplemental Authority was served on counsel of record on
`
`Aug. 5, 2016 by filing this document through the PTAB E2E System, as well as by
`
`delivering a copy via email to the counsel of record for the Petitioner at the
`
`following address: Steadymed-IPR@dlapiper.com.
`
`
`
`
`
`
`
`
`
`
`
`Date: Aug. 5, 2016
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` /Stephen B. Maebius/
`
`Stephen B. Maebius
`
`Foley & Lardner LLP
`
`
`
`4824-5985-1564.1
`
`

`

`ATTACHMENT A
`
`
`
`ATTACHMENT AATTACHMENT A
`
`

`

`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
`______________________
`
`NATHANIEL ST. CLAIR, II, Jackson Walker LLP, Dallas,
`TX, argued for appellant. Also represented by JOHN
`MARTIN JACKSON, CHRISTOPHER J. ROURK.
`
`KRISTI L.R. SAWERT, Office of the Solicitor, United
`States Patent and Trademark Office, Alexandria, VA,
`argued for intervenor Michelle K. Lee. Also represented
`by THOMAS W. KRAUSE, SCOTT WEIDENFELLER, MICHAEL
`SUMNER FORMAN.
`______________________
`
`Before NEWMAN, O’MALLEY, and CHEN, Circuit Judges.
`O’MALLEY, Circuit Judge.
`McClinton Energy Group, LLC filed a petition for in-
`ter partes review (“IPR”) of U.S. Patent No. 8,079,413 (the
`
`

`

`
`
` 2
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`“’413 patent”), owned by Magnum Oil Tools International,
`Ltd. (“Magnum”). The Patent Trial and Appeal Board
`(“Board”) instituted review and issued a final written
`decision holding all challenged claims of the ’413 patent
`obvious under 35 U.S.C. § 103. Subsequently, McClinton
`and Magnum settled their dispute over the ’413 patent
`and other patents not at issue here. Magnum now ap-
`peals the Board’s judgment regarding the ’413 patent.
`The Director of the U.S. Patent and Trademark Office
`(“PTO”) intervened in the appeal pursuant to 35 U.S.C.
`§ 143. For the following reasons, we reverse.
`I. FACTUAL BACKGROUND
`A. The ’413 Patent
`The ’413 patent is directed to technology in the field of
`oil drilling through use of hydraulic fracturing, commonly
`known as “fracking.” Fracking is a technique used to
`extract natural gas and oil from natural shale formations.
`During the fracking process, a hole known as a “wellbore”
`is drilled into the earth. Then, a fluid mixture is injected
`down the wellbore into the shale at high pressure to
`release the gas or oil.
`Downhole plugs divide the wellbore into separate sec-
`tions so that different sections of the wellbore may be
`fracked at different times. A setting tool is used to insert
`the downhole plugs into their appropriate positions in the
`wellbore. The body of the plug is then secured in place via
`the radial expansion of “slips” and “malleable elements”
`that contact the sidewalls of the wellbore. The expanded
`plug forms an airtight barrier, blocking movement of
`liquid or gas around the plug. See ’413 patent, at col. 8, l.
`46–col. 9, l. 13.
`The setting tool can connect either to the top of the
`plug facing the opening of the wellbore (“top-set”), or to
`the bottom of the plug (“bottom-set”). The ’413 patent
`teaches a bottom-set plug in which the setting tool fits
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`3
`
`through a hollow passageway in the body of the plug and
`attaches near the bottom of the plug. See id. at col. 9,
`ll. 29-46. The setting tool exerts an axial force upward on
`the body of the plug while a “setting sleeve” exerts an
`axial force downward on the plug. The resulting axial
`compression causes the plug to set in place via radial
`expansion. Id.
`Once the downhole plug is set, the setting tool must
`be disengaged from the plug and extracted from the
`wellbore. The ’413 patent at issue describes a mechanism
`for releasing the setting tool from the downhole plug. Id.
`at col. 3, ll. 47-57.
`The ’413 patent teaches the use of an insert having a
`“lower shear or shearable mechanism” for releasing a
`setting tool. ’413 patent, at col. 2, ll. 54-56. The patent
`teaches that the insert is placed within the plug body and
`contains both shearable and nonshearable threads. The
`inner threads connected to the setting tool shear when
`exposed to sufficient stress, but the outer threads con-
`nected to the plug body do not shear. The stress level
`required to shear the shearable threads is lower than that
`required to dislodge the plug body, so that the setting tool
`may be released without dislodging the plug from its set
`position. Id. at col. 2, ll. 59-63. Figure 1A of the ’413
`patent depicts the claimed insert:
`
`

`

`
`
` 4
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`
`The ’413 patent has twenty claims, three of which are
`independent (claims 1, 7, and 17). All of the claims of the
`’413 patent recite that the “shearable threads” of the
`release mechanism are part of an insert that is placed
`within the central bore of the plug. Claim 1 of the ’413
`patent is representative, and is reproduced below in its
`entirety:
`1. A plug for isolating a wellbore, comprising:
`a body having a first end and a second end;
`at least one malleable element disposed about the
`body;
`at least one slip disposed about the body;
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`5
`
`extending
`
`at least one conical member disposed about the
`body; and
`an insert screwed into an inner surface of the body
`proximate the second end of the body and adapted
`to receive a setting tool that enters the body
`through the first end thereof, wherein:
`the insert comprises one or more shearable threads
`disposed on an inner surface thereof;
`the
`insert has a passageway
`therethrough;
`the one or more shearable threads are adapted to
`engage the setting tool; and
`the one or more shearable threads are adapted to
`deform to release the setting tool when exposed to
`a predetermined axial force, thereby providing a
`flow passage through the insert and the body.
`’413 patent, at col. 13, l. 57-col. 14, l. 7 (emphasis added).
`B. Overview of the Prior Art
`The Board instituted IPR based on the following three
`primary references: U.S. Patent Application Publication
`No. 2007/0151722 to Lehr et al. (“Lehr”); U.S. Patent No.
`4,437,516 to Cockrell (“Cockrell”); and U.S. Patent No.
`4,595,052 to Kristiansen (“Kristiansen”). J.A. 8. In its
`petition for institution, McClinton had also relied on a
`reference known as the Alpha Oil Tools Catalog (1997),
`“Standard Frac Plug” (“Alpha”). J.A. 136-38. Specifically,
`McClinton argued that both Alpha and Lehr disclose
`downhole plugs that include the standard features of a
`typical downhole plug and all the limitations of claim 1
`except for (1) shearable threads on the inside of an insert
`that shear in response to a predetermined axial force; and
`(2) non-shearable threads on the outside of the insert that
`screw into the inner surface of the plug body. Compare
`J.A. 98-100 (Alpha), with J.A. 115-18 (Lehr).
`
`

`

`
`
` 6
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`The Board declined to institute IPR based on Alpha,
`instead instituting IPR based on the primary reference
`Lehr in view of Cockrell and Kristiansen. Alpha is none-
`theless relevant to this appeal because Magnum focuses
`its arguments on differences between Alpha and Lehr.
`We briefly review each of these references in turn.
`1. Alpha
`As shown in the figure below, Alpha teaches a bottom-
`set plug with a shear ring. The Alpha insert contains
`non-shearable threads on the inside of the insert, which
`allow the setting tool to apply a sufficient force to sepa-
`rate the shear ring from the insert and allow the setting
`tool to remove the insert through the bore of the plug. See
`J.A. 138.
`
`Appellant Br. at 7.
`
`
`
`
`
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`7
`
`2. Lehr
`Lehr teaches the use of a “deformable release device”
`to allow release of a setting tool from a downhole plug.
`J.A. 184 (¶ 0003). The deformable release device 30
`shown in Figure 5 of Lehr is a washer-shaped device that
`is held in place by plunger 80, as shown in Figure 3B.
`J.A. 178-79. The washer-shaped device of Lehr does not
`
`have threads.
`Lehr also discloses a setting tool. Figure 1 of Lehr
`provides an overview picture of the deformable release
`device 30 and the plunger 80 in the context of the down-
`hole plug 70 and the setting tool 10.
`
`J.A. 187 (¶¶ 0037-39).
`
`
`
`
`

`

`
`
` 8
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`3. Cockrell
`Cockrell teaches shearable threads on a “frangible re-
`lease member” that is used to release a downhole plug or
`other downhole tool from its working position. Cockrell
`’516 patent, at Abstract (J.A. 139). Figure 1C of Cockrell,
`reproduced below, shows that the release member is
`located near the lower end of the plug and possesses both
`internal shearable threads 140 and external threads 138.
`Id. at col. 5, ll. 40-47 (J.A. 145). Accordingly, one way
`that the downhole plug or tool may be released from its
`working position is through the application of sufficient
`axial force to shear the internal threads of the release
`
`member. Id. at col. 5, l. 52 – col. 6, l. 68 (J.A. 145).
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`9
`
`Unlike Lehr, Cockrell does not teach the use of a set-
`ting tool. Instead, Cockrell is hydraulically set. Cockrell
`’516 patent, at col. 7, ll. 3-8 (J.A. 146).
`4. Kristiansen
`Kristiansen teaches the use of a non-shearable
`threaded insert known as a “converter plug” that is used
`during field reconfiguration of a downhole plug. See
`Kristiansen ‘052 patent, at col. 3, ll. 58-61 (J.A. 227). The
`Kristiansen insert screws into the body of a plug by way
`of threads along its outer surface. Id. at col. 5, ll. 30-35
`(J.A. 228). Figures 13 and 17 of Kristiansen illustrate the
`converter plug 4 and its position within a plug body.
`
`
`Also unlike Lehr, Kristiansen does not teach the use
`of a setting tool. Kristiansen teaches the use of a charge
`to set downhole plugs. Id. at col. 7, ll. 50-58 (J.A. 229).
`
`

`

`
`
` 10
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`II. PROCEDURAL BACKGROUND
`McClinton filed this IPR challenging all claims of the
`’413 patent. In its Petition, McClinton argued that the
`claims would have been obvious over Alpha as a base
`reference, in combination with Cockrell and Kristiansen.
`While McClinton also noted that the claims would have
`been obvious over the combination of Lehr as a base
`reference (in view of Cockrell and Kristiansen), McClinton
`largely “incorporated by reference” its arguments on Lehr
`from its earlier arguments based on Alpha. See, e.g.,
`J.A. 118 (Petition for IPR) (incorporating by reference
`arguments with respect to Lehr “as discussed above with
`respect to Alpha,” and noting that “[t]he same analysis
`applies to combinations using Lehr as a base reference”).
`In its Preliminary Response, Magnum argued that
`McClinton’s obviousness arguments based on Lehr were
`insufficient for failure to “specify where each element of
`the claim is found in” Lehr, Cockrell, and Kristiansen.
`J.A. 368 (quoting 37 C.F.R. § 42.104(b)(4)). Magnum also
`contended that McClinton’s Petition and expert declara-
`tion focused on explaining how a skilled artisan might
`have modified Alpha in view of Cockrell and Kristiansen,
`but failed to describe how a skilled artisan would modify
`Lehr in view of Cockrell and Kristiansen. J.A. 369-72.
`Finding that McClinton had established a reasonable
`likelihood of success in its Petition, the Board instituted
`IPR of all challenged claims based on Lehr in view of
`Cockrell and Kristiansen, but not on the basis of Alpha.
`J.A. 385-412 (“Institution Decision”). After trial and the
`completion of briefing, the Board issued a final written
`decision holding all challenged claims unpatentable under
`35 U.S.C. § 103. J.A. 1-37. Magnum requested rehearing,
`arguing that the Board had relied on a “new ground of
`unpatentability” regarding a skilled artisan’s motivation
`to combine Lehr with Cockrell and Kristiansen. See J.A.
`34-42. Magnum also argued that there was no evidence
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`11
`
`supporting the Board’s finding that a skilled artisan
`would have had a reasonable expectation of success in
`removing Lehr’s retaining pins and replacing them with
`Cockrell’s shearable threads. J.A. 42. The Board rejected
`Magnum’s arguments, finding that McClinton had ex-
`plained adequately why a skilled artisan would have had
`a reasonable expectation of success and a motivation to
`combine the teachings of Lehr, Cockrell, and Kristiansen.
`Accordingly, in a decision dated October 29, 2014, the
`Board denied Magnum’s request for rehearing. J.A. 38-
`47.
`
`Subsequently, McClinton and Magnum entered into a
`settlement agreement, wherein “McClinton has agreed
`not to participate in any appeal of the final written deci-
`sion in the underlying inter partes review proceeding.” In
`re Magnum Oil Tools Int’l, Ltd., Fed. Cir. No. 15-1300,
`Doc. 3 (filed Feb. 2, 2015). When Magnum filed the
`instant appeal, McClinton filed a request to withdraw
`from the appeal, which we granted. Id., Doc. 4 (filed Feb.
`5, 2015). After McClinton’s withdrawal, the Director of
`the PTO intervened in this appeal pursuant to 35 U.S.C. §
`143.
`We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
`III. STANDARD OF REVIEW
`Obviousness is a question of law based on underlying
`facts. In re Gartside, 203 F.3d 1305, 1316 (Fed. Cir.
`2000). We review the Board’s legal conclusion of obvious-
`ness de novo, and underlying factual findings for substan-
`tial evidence. In re Cuozzo Speed Techs., LLC, 793 F.3d
`1268, 1280 (Fed. Cir. 2015), aff’d, Cuozzo Speed Techs.,
`LLC v. Lee, No. 15-446, 2016 U.S. LEXIS 3927 (June 20,
`2016). Substantial evidence “means such relevant evi-
`dence as a reasonable mind might accept as adequate to
`support a conclusion.” Consol. Edison Co. v. NLRB, 305
`U.S. 197, 229 (1938); see In re Morsa, 713 F.3d 104, 109
`(Fed. Cir. 2013).
`
`

`

`
`
` 12
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`IV. DISCUSSION
`As an initial matter, the PTO argues that Magnum
`challenges only the Board’s decision to institute the IPR,
`which is an unreviewable decision. Intervenor Br. at 35;
`Cuozzo Speed Techs., LLC v. Lee, No. 15-446, 2016 U.S.
`LEXIS 3927, at *23 (June 20, 2016) (“[W]here a patent
`holder merely challenges the Patent Office’s
`‘deter-
`min[ation] that the information presented in the peti-
`tion . . . shows that there is a reasonable likelihood’ of
`success ‘with respect to at least 1 of the claims chal-
`lenged,’ §314(a), or where a patent holder grounds its
`claim in a statute closely related to that decision to insti-
`tute inter partes review, § 314(d) bars judicial review.”).
`Magnum responds that it is not challenging the Board’s
`decision to institute the IPR, but rather the Board’s
`statements made regarding obviousness of the claimed
`invention, some of which were made in the Board’s insti-
`tution decision and later relied upon in the Board’s final
`written decision. Appellant Reply Br. at 3.
`Magnum is correct to state that we have jurisdiction
`to review determinations made during institution that are
`subsequently incorporated into the Board’s final written
`decision. See Versata Dev. Grp., Inc. v. SAP Am., Inc., 793
`F.3d 1306, 1315 (Fed. Cir. 2015) (“To be clear, it is the
`merits of the final written decision that are on appeal; we
`are not here called upon to review the determination by
`the [Board] whether to institute a CBM review, and
`indeed the statute expressly instructs that we may
`not . . . .”). In Versata, we held that “[w]e have jurisdic-
`tion to decide the [merits of a final written decision] even
`though it is decided . . . initially by the [Board] at the
`decision to institute stage.” Id. at 1329. Nothing in either
`35 U.S.C. § 314(d) or Cuozzo Speed Techs. shields aspects
`of a Board decision which are critical to its ultimate
`judgment merely because its final analysis relies on
`statements made when it initially considered the petition.
`We have jurisdiction here to review all of Magnum’s
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`13
`
`arguments regarding the basis for the Board’s ultimate
`judgment of unpatentability.
`On the merits, Magnum argues that the Board erred
`in cancelling the claims of the ’413 patent because “nei-
`ther McClinton nor the [Board] ever established a prima
`facie basis for the rejection.” Appellant Br. at 12. Mag-
`num further contends that McClinton failed to specifically
`argue why a skilled artisan would have been motivated to
`combine Lehr with Cockrell and Kristiansen. Instead,
`Magnum contends, McClinton attempted to improperly
`incorporate by reference its separate arguments concern-
`ing its assertion of obviousness based on Alpha in view of
`Cockrell and Kristiansen. Magnum asserts that Lehr
`could not be the basis for a finding of obviousness because
`Lehr fails to disclose key limitations recited in the ’413
`patent, and a skilled artisan would not have sought to
`combine Lehr with the other prior art references.
`The PTO disagrees with Magnum’s proposed burden-
`shifting framework. The PTO takes the view that upon
`institution of an IPR, the Board necessarily finds that the
`Petitioner has demonstrated a “reasonable likelihood of
`success.” The PTO urges that this finding operates to
`shift the burden of producing evidence of nonobviousness
`to the patentee. Intervenor Br. at 32. Here, the PTO
`asserts that the Board necessarily held that McClinton
`met its initial burden of proving obviousness when the
`Board “concluded in the decision to institute that McClin-
`ton ‘ha[d] demonstrated a reasonable likelihood of prevail-
`ing’ on its assertion that claim 1 is unpatentable over
`Lehr, Cockrell, and Kristiansen.” Id. The PTO then
`explains its view that “once the Board found a reasonable
`likelihood that McClinton would ultimately carry its
`burden of persuasion, the burden of production shifted to
`Magnum to argue or produce evidence in its patent-owner
`response that Lehr, Cockrell, and Kristiansen do not
`render claim 1 obvious.” Id. at 33. In making this argu-
`ment, the PTO implies that the Board’s conclusion on
`
`

`

`
`
` 14
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`obviousness in an IPR can be based on less than a pre-
`ponderance of the evidence if the patent holder does not
`affirmatively disprove the grounds upon which the IPR
`was initiated. Id. at 31-33.
`Having set forth its position regarding the parties’ re-
`spective burdens, the PTO asserts that the Board proper-
`ly applied its described burden-shifting framework in
`holding the challenged patent claims obvious. Id. at 33.
`In particular, the PTO argues that Lehr discloses all of
`the features of the claimed invention other than the
`recited shearable threads. In place of the shearable
`threads, Lehr discloses a deformable release device. The
`PTO contends that substantial evidence supports the
`Board’s finding that a skilled artisan would have been
`motivated to combine the deformable release device
`taught in Lehr with the shearable threads taught in
`Cockrell and Kristiansen, primarily relying on Magnum’s
`failure to prove the contrary. Id. at 44.
`A. Burden of Proof
`“In an inter partes review . . . , the petitioner shall
`have the burden of proving a proposition of unpatentabil-
`ity by a preponderance of the evidence.” 35 U.S.C.
`§ 316(e). “[T]he burden of proof is on the petitioner to
`prove unpatentable those issued claims that were actually
`challenged in the petition for review and for which the
`Board instituted review.” Nike, Inc. v. Adidas AG, 812
`F.3d 1326, 1334 (Fed. Cir. 2016).
`Because several terms regarding the burden of proof
`are critical to resolving the parties’ dispute, we briefly
`define the terms here. “As an initial matter . . . there are
`two distinct burdens of proof: a burden of persuasion and
`a burden of production. The burden of persuasion ‘is the
`ultimate burden assigned to a party who must prove
`something to a specified degree of certainty,’ such as by a
`preponderance of the evidence or by clear and convincing
`evidence.” Dynamic Drinkware, LLC v. Nat’l Graphics,
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`15
`
`Inc., 800 F.3d 1375, 1378 (Fed. Cir. 2015) (citing Tech.
`Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1326-27
`(Fed. Cir. 2008)). A distinct burden, “[t]he burden of
`production may entail ‘producing additional evidence and
`presenting persuasive argument based on new evidence or
`evidence already of record.’” Id. (citing Tech. Licensing
`Corp., 545 F.3d at 1327).
`“In an inter partes review, the burden of persuasion is
`on the petitioner to prove ‘unpatentability by a prepon-
`derance of the evidence,’ 35 U.S.C. § 316(e), and that
`burden never shifts to the patentee.” Dynamic Drink-
`ware, 800 F.3d at 1378. Indeed, “the Supreme Court has
`never imposed nor even contemplated a formal burden-
`shifting framework in the patent litigation context.” In re
`Cyclobenzaprine Hydrochloride Extended-Release Capsule
`Patent Litig., 676 F.3d 1063, 1075 (Fed. Cir. 2012) (revers-
`ing district court’s determination of obviousness because
`“the court imposed a burden-shifting framework in a
`context in which none exists”). We have noted that “a
`burden-shifting framework makes sense in the prosecu-
`tion context,” where “[t]he prima facie case furnishes a
`‘procedural tool of patent examination, allocating the
`burdens of going forward as between examiner and appli-
`cant.’” Id. at 1080 n. 7 (citing In re Oetiker, 977 F.2d
`1443, 1445 (Fed. Cir. 1992)). As the PTO concedes, how-
`ever, that burden-shifting framework does not apply in
`the adjudicatory context of an IPR. Intervenor Br. at 30
`(citing In re Jung, 637 F.3d 1356, 1362 (Fed. Cir. 2011)
`(holding the prima facie case during patent examination
`“is merely a procedural device that enables an appropri-
`ate shift of the burden of production” from the PTO to the
`patent applicant)).
`Next, we resolve the parties’ arguments about the re-
`lated but distinct burden of production. The PTO incor-
`rectly contends that “the burden of production—or the
`burden of going forward with evidence, shifts between the
`petitioner and the patent owner,” as soon as the Board
`
`

`

`
`
` 16
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`institutes an IPR. Intervenor Br. at 31 (discussing Dy-
`namic Drinkware, 800 F.3d at 1379). In Dynamic Drink-
`ware, we noted that, in the context of establishing
`conception and reduction to practice for the purposes of
`establishing a priority date, the burden of production can
`shift from the patent challenger to the patentee. 800 F.3d
`at 1379. This is because a patent challenger has the
`burden of producing evidence to support a conclusion of
`unpatentability under § 102 or § 103, but a patentee bears
`the burden of establishing that its claimed invention is
`entitled to an earlier priority date than an asserted prior
`art reference. See id. (discussing Tech. Licensing, 545
`F.3d at 1327). In such a case, the shifting of the burden of
`production is warranted because the patentee affirmative-
`ly seeks to establish a proposition not relied on by the
`patent challenger and not a necessary predicate for the
`unpatentability claim asserted—effectively an affirmative
`defense. In the context of the present case, however, the
`notion of burden-shifting is inapposite because the pa-
`tentee’s position is that the patent challenger failed to
`meet its burden of proving obviousness. Applying a
`burden-shifting framework here would introduce unnec-
`essary confusion because the ultimate burden of persua-
`sion of obviousness must remain on the patent challenger
`and “a fact finder must consider all evidence of obvious-
`ness and nonobviousness before reaching a determina-
`tion.” In re Cyclobenzaprine, 676 F.3d at 1077; see also
`Nike Inc., 812 F.3d 1335 (“Importantly, we have repeated-
`ly emphasized that an obviousness inquiry requires
`examination of all four Graham factors and that an
`obviousness determination can be made only after consid-
`eration of each factor.”) (citing, inter alia, Kinetic Con-
`cepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1360
`(Fed. Cir. 2012))).
`Where, as here, the only question presented is wheth-
`er due consideration of the four Graham factors renders a
`claim or claims obvious, no burden shifts from the patent
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`17
`
`challenger to the patentee. This is especially true where
`the only issues to be considered are what the prior art
`discloses, whether there would have been a motivation to
`combine the prior art, and whether that combination
`would render the patented claims obvious. We thus
`disagree with the PTO’s position that the burden of
`production shifts to the patentee upon the Board’s conclu-
`sion in an institution decision that “there is a reasonable
`likelihood that the petitioner would prevail.” See Interve-
`nor Br. at 32 (citing 35 U.S.C. § 314(a)). The PTO’s
`proposed burden shifting framework is also directly at
`odds with our precedent holding that the decision to
`institute and the final written decision are “two very
`different analyses,” and each applies a “qualitatively
`different standard.” TriVascular, Inc. v. Samuels, 812
`F.3d 1056, 1068 (Fed. Cir. 2016). As we explained in
`TriVascular:
`[T]he Board is not bound by any findings made in
`its Institution Decision. At that point, the Board is
`considering the matter preliminarily without the
`benefit of a full record. The Board is free to
`change its view of the merits after further devel-
`opment of the record, and should do so if con-
`vinced its initial inclinations were wrong.
`Id.; see also Cuozzo Speed Techs., 2016 U.S. LEXIS 3927,
`at *18-19 (“The Patent Office’s decision to initiate inter
`partes review is ‘preliminary,’ not ‘final.’”) (quoting 5
`U.S.C. § 704)). Furthermore, because of the “significant
`difference” between the standards of proof at institution
`and trial during an IPR, see TriVascular, 812 F.3d at
`1068, it is inappropriate to shift the burden to the patent-
`ee after institution to prove that the patent is patentable.1
`
`1 We note, however, that while the institution of an
`IPR does not by itself translate to a conclusion of un-
`patentability and the patent owner is not required to use
`
`

`

`
`
` 18
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`Instead, 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). And, the Board has an obligation to assess the
`question anew after trial based on the totality of the
`record.
`
`B. Obviousness
`Magnum argues that the Board improperly shifted
`the burden to Magnum to prove nonobviousness. Mag-
`num contends that the Board never required McClinton to
`explain why a skilled artisan would have sought to com-
`bine the asserted prior art references. Magnum points
`out that McClinton attempted to establish obviousness in
`its petition by arguing from Alpha as the primary base
`reference. The Board did not initiate the IPR based on
`Alpha, however. But, contends Magnum, the Board in its
`final written decision improperly incorporated by refer-
`ence McClinton’s arguments based on Alpha into the
`Board’s conclusion that the claimed invention would have
`been obvious in light of the primary reference Lehr.
`The PTO argues that the differences between Alpha
`and Lehr are irrelevant to this appeal, and that, regard-
`less, “the proper time for Magnum to challenge the
`Board’s actions would have been in a Request for Rehear-
`ing of the Institution Decision under 37 C.F.R. § 42.71(c).”
`Intervenor Br. at 36. The PTO further contends that “it is
`not error for the Board to rely on an unpatentability
`
`
`its opportunity under the regulations to file a patent
`owner response, as in district court validity challenges,
`the patent owner “‘would be well advised to introduce
`evidence” on the asserted challenge. Pfizer, Inc. v. Apotex,
`Inc., 480 F.3d 1348, 1360 (Fed. Cir. 2007) (quoting Ortho-
`kinetics, Inc. v. Safety Travel Chairs, Inc., 806 F.2d 1565,
`1570 (Fed. Cir. 1986)).
`
`

`

`IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`19
`
`theory that could have been included in a properly-drafted
`petition,” but was not. Intervenor Br. at 34.
`We briefly dispose of the PTO’s argument that Mag-
`num was required to raise its concerns with the Board in
`its request for rehearing prior to filing the instant appeal.
`See Intervenor Br. at 36. “A party to an inter partes
`review . . . who is dissatisfied with the final written
`decision of the Patent Trial and Appeal Board under
`section 318(a) . . . may appeal the Board’s decision only to
`the United States Court of Appeals for the Federal Cir-
`cuit.” 35 U.S.C. § 141(c). Nowhere does the statute
`granting parties the right to appeal a final written deci-
`sion in an IPR require that the party first file a request
`for rehearing before the Board, especially a rehearing of
`the initial institution decision. Instead, a party who is
`dissatisfied with the final written decision of the Board
`can elect to directly appeal that decision. Magnum may
`advance on appeal its argument concerning motivation to
`combine, since it raised this argument before the Board in
`the IPR. Thus, we reject the PTO’s contention that Mag-
`num was required to raise the present challenge to the
`Board’s actions in a request for rehearing of the institu-
`tion decision before it could challenge a final Board opin-
`ion relying on the same rationale given in the institution
`decision. As a practical matter, why would Magnum have
`had an incentive to seek reconsideration of an Institution
`Decision relying solely on Lehr when it believed McClin-
`ton ultimately would be unable to sustain its burden of
`proof based on that reference? Fleshing that out is what
`an IPR trial is for.
`We now address Magnum’s argument that the Board’s
`improper shifting of the burden of proof resulted in re-
`versible error. Appellant Br. at 22-24. Magnum cites to
`several examples in the Board’s decision where the Board
`required Magnum to rebut Petitioner McClinton’s asser-
`tions that a skilled artisan would have been motivated to
`combine the prior art references, without first requiring
`
`

`

`
`
` 20
`
` IN RE: MAGNUM OIL TOOLS INTERNATIONAL
`
`McClinton to provide evidence to support its assertions.
`We agree with Magnum that the Board improperly shift-
`ed the burden to it, as the patentee, to prove nonobvious-
`ness. Because McClinton failed to separately meet its
`burden of establishing obviousness in view of Lehr,
`Cockrell, and Kristiansen, we reverse.
`The final written decisio