In Veritas Technologies LLC v. Veeam Software Corporation, the Federal Circuit concluded that the PTAB erred in denying Patent Owner’s motion to amend claims in an IPR proceeding and remanded to the PTAB for further consideration of the substitute claims submitted in the motion. No. 2014-00090 (Fed. Cir. Aug. 30, 2016).

In the IPR, the Board applied the broadest reasonable interpretation standard of claim interpretation and invalidated the challenged claims as obvious over prior art. The Board also denied Patent Owner’s motion to amend, concluding only that Patent Owner and its expert declarant had failed to address whether each newly added feature in each proposed claim, as distinct from the claimed combination of features, was independently known in the prior art. Notably, the Board did not make an evidentiary determination of patentability of the proposed new claims.

The Federal Circuit panel found no error with the Board’s claim construction and affirmed the obviousness determination of the patent claims, but the panel took issue with the Board’s denial of the motion to amend. Applying the Administrative Procedure Act and reviewing the Board’s denial to see if it was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law,” the Federal Circuit noted that Patent Owner did not contest Petitioner’s argument that the substitute claims address the parties’ claim-construction dispute. But rather than determine whether the substitute claims should be construed as Patent Owner argued, the Federal Circuit focused on the inadequacies of the Board’s reasons for denying the motion to amend.

More specifically, the Federal Circuit focused on the fact that the Board denied the motion to amend based on its insistence that the Patent Owner discuss whether each newly added feature was separately known in the prior art. The Board concluded that the motion and accompanying expert declaration were insufficient because they did not discuss the features separately but discussed only “the newly added feature in combination with other known features.” The Federal Circuit held that this analysis and conclusion by the Board, which was the sole basis for denying the motion to amend, was unreasonable and must be set aside as arbitrary and capricious.

According to the Federal Circuit, there was nothing inherently improper in the Patent Owner’s decision to focus only on the combination itself as the “new feature,” given the “long line of Supreme Court and Federal Circuit cases noting that novel and nonobvious inventions often are only a combination of known individual features.”