While the Federal Circuit has accepted, en banc, the question of what a patent owner must demonstrate to the Board to obtain leave to amend its claims in an IPR as discussed in our earlier blog post (In re Aqua Products, No. 2015-1177 petition for rehearing en banc granted, 2016 WL 4375651 (Fed. Cir. Aug. 12, 2016)), the court provided some guidance this week on what is not a sufficient basis for denying a motion to amend.
In Veritas Technologies LLC v. Veeam Software Corp., No. 2015-1894 (August 30, 2016), the Federal Circuit vacated the Board’s denial of a motion for leave to amend because the court concluded that the Board’s denial was arbitrary and capricious. The primary dispute in the IPR related to whether the original patent claims, directed to systems and methods for restoring computer data, were broad enough to encompass recovery processes that restore data by focusing on the block where the requested data is stored and those that restore data by focusing on the particular file name for the files sought to be restored. The patent owner (Veritas) sought to add new claims more clearly focused on the more narrow file-level restoration contingent on the Board’s conclusion the original claims encompass both restoration processes.
The Board adopted the broader claim construction that the petitioner (Veeam) proposed and found the original claims invalid as obvious over art that disclosed the block-level restoration process. Turning to the motion for leave to amend, the Board denied the motion solely on the basis that the patent owner had not discussed whether each newly added feature was separately known in the prior art. Instead, the patent owner had discussed only “the newly added feature in combination with other known features.”
The Federal Circuit agreed with the Board’s claim construction and its determination that the original claims would have been obvious. It then reviewed the denial of the motion for leave to amend. The Board’s decision on a motion to amend is reviewed under the Administrative Procedures Act and can only be set aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Here, the Federal Circuit found the Board’s decision unreasonable. The court recognized that a combination of known elements can constitute a patentable new feature. The patent owner had argued that the prior art systems did not disclose the combination identified in the proposed new claims and had also discussed the absence of those newly added features in the two key prior art references. Thus, the court did not believe that it would add something meaningfully different if the patent owner were to discuss each new feature separately: “We do not see how the Board could reasonably demand more from Veritas in this case.” Accordingly, the court vacated the Board’s denial of the motion to amend and remanded the case for the Board to address patentability of the proposed new claims.
The court specifically noted that the Board’s rationale here is erroneous regardless of the outcome of the In re Aqua Products pending en banc decision. Now that the Federal Circuit has identified that there is some limit on the Board’s power to address a motion for leave to amend, it will be interesting to see if the Federal Circuit provides any additional guidance about what a patent owner must prove to amend its claims in Aqua Products.