## Facts

- Magnum owned U.S. Patent No. 8,079,413, covering downhole plugs used in hydraulic fracturing to segment a wellbore and form a pressure-tight barrier.
- The patent described a “bottom-set” plug configuration in which a setting tool passes through a hollow passage and attaches near the bottom, applying opposing axial forces that compress the plug and cause radial expansion.
- McClinton filed an inter partes review petition asserting certain claims were unpatentable as obvious under 35 U.S.C. § 103 based on combinations of prior-art references.
- The PTAB instituted review and issued a final written decision holding all challenged claims obvious, reasoning in part that once review was instituted the burden shifted to Magnum to show nonobviousness.
- Magnum and McClinton later settled their broader dispute; McClinton did not participate in the appeal.
- The USPTO Director intervened on appeal to defend the PTAB’s decision.

## Issues

1. In an inter partes review, whether the PTAB may shift the burden of persuasion on unpatentability from the petitioner to the patent owner after institution.
2. Whether the PTAB’s obviousness findings were supported by substantial evidence, including an adequately articulated motivation to combine the asserted references with a reasonable expectation of success.
3. Whether reversal (rather than remand) was appropriate where the record showed the petitioner failed to carry its burden.

## Decision

- The Federal Circuit reversed the PTAB’s final written decision.
- The court held the PTAB erred by shifting the burden of persuasion to the patent owner; the petitioner retains the burden throughout the IPR.
- The court held the PTAB’s obviousness determinations lacked substantial evidence and relied on conclusory assertions rather than a reasoned, evidence-supported rationale for combining prior art.
- The court reversed without remand because, on the existing record, the petitioner had not proven unpatentability by a preponderance of the evidence.

## Legal Principles

- Under 35 U.S.C. § 316(e), the IPR petitioner bears the burden of proving unpatentability by a preponderance of the evidence, and the burden of persuasion does not shift to the patent owner.
- The institution determination (reasonable likelihood the petitioner would prevail) is not a merits decision and does not reduce the petitioner’s ultimate burden at the final written decision stage.
- Although the burden of production may shift in response to a prima facie case, the burden of persuasion remains with the petitioner.
- Attorney argument in an IPR petition is not evidence; unpatentability must be proven with record evidence.
- An obviousness determination must include a reasoned explanation, supported by evidence, of why a skilled artisan would be motivated to combine references with a reasonable expectation of success; “common sense” cannot replace analysis and evidentiary support.

## Conclusion

The Federal Circuit reinstated the challenged claims by holding that the PTAB misallocated the burden of persuasion in IPR and that the petitioner’s obviousness case lacked an evidence-supported, articulated rationale for combining prior art, warranting reversal on the existing record.


In re Magnum Oil Tools Int'l, Ltd., 829 F.3d 1364 (Fed. Cir. 2016)