IPRs: Federal Circuit Vacates “Unreasonable” PTAB Denial of Motion to Amend

While this article from a guest author relates to a software case, the holding of the case is highly relevant to pharmaceutical/biotechnology/biosimilar IPR proceedings since the case deals with the right of a patent holder to amend claims and avoid the prior art in an IPR proceeding.

Frank Bernstein

Partner at Singularity LLP

The Patent Trial and Appeal Board (PTAB) has received a lot of criticism because of how rarely the PTAB has granted patent owner motions to amend in post-grant proceedings, including inter partes reviews (IPRs).  Much of the criticism has focused on PTAB requirements for the patent owner to show that proposed amended claims are patentable over the prior art.

On August 26, 2016, the Court of Appeals for the Federal Circuit vacated a PTAB denial of a motion to amend claims in an IPR proceeding, but affirmed the PTAB’s interpretation of the original patent claims at issue, and the PTAB’s holding that those claims were invalid for obviousness.[1]  The Federal Circuit decision provides some helpful guidance – more to the PTAB than to patent owners, admittedly – as to how to consider patentability in motions to amend in IPRs.

The patent at issue related to data restoration processes, and in particular to the ability to prioritize certain data for restoration when an active application, running on a computer, needs that information.  One of the issues in the IPR was whether the original patent claims were limited to so-called file-level background restoration processes, or whether the claims were broad enough also to cover block-level restoration processes.  The PTAB held that the broader interpretation was correct, and found the claims at issue invalid for obviousness in view of the  prior art.  The Federal Circuit affirmed this portion of the PTAB decision.

In light of the possibility that the PTAB might find the claims invalid under the broader interpretation, the patent owner, Veritas, filed a contingent motion to amend.  Veritas offered substitute claims 26 and 27 in place of original patent claims 1 and 20, using language that expressly followed the narrower interpretation, to file-level restoration processes.  With the motion to amend, Veritas argued, among other things, that the amended claims recited a combination that was patentable over the prior art.  Veritas also provided supporting written testimony from an expert.

In the PTAB’s written decision, among other things, the PTAB denied the patent owner’s motion to amend, stating that the patent owner, Veritas, 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”.[2]  The PTAB criticized Veritas for arguing only “that the prior art does not describe something having many of the claimed features in combination,” and for failing to argue that none of the newly added features was known “in the art or otherwise”.[3]

In vacating the PTAB decision, the Federal Circuit ruled that the PTAB’s denial on that sole basis was “unreasonable” and therefore must be set aside as “arbitrary and capricious”.[4] 

The Federal Circuit noted that the PTAB’s final written decision contained quotes from Veritas that “on their face satisfy the requirement of discussing whether the newly added features are in the prior art”.[5]  The court looked at the same evidence that the PTAB had, and concluded that there was ample discussion of the newly-added claim features relative to the prior art.[6] 

After pointing specifically to arguments from Veritas, supported by declaration evidence from Veritas’s expert, the Federal Circuit stated, “We do not see how the Board could reasonably demand more from Veritas in this case.”[7]  The court went on to say, “[W]e have been shown no reason to doubt that it is only the combination that was the ‘new feature,’ a scenario recognized in a long line of Supreme Court and Federal Circuit cases noting that novel and nonobvious inventions often are only a combination of known individual features.”[8]  Still further, the Court stated, “In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.”[9]

Sometimes, the presence of an newly-recited element in the prior art has no bearing on whether a claimed combination, including that new element, is patentable.  And this makes eminent sense, because in the electrical and computer arts, claims are combinations of known features.  In such cases, the Federal Circuit has removed any confusion and plainly stated that the focus should be on the patentability of the overall combination. 

[1]           Veritas Technologies LLC v. Veeam Software Corp., 2016 U.S. App. LEXIS 15978 (Fed. Cir., August 30, 2016).

[2]           2016 U.S. App. LEXIS 15978 at *3, citing IPR2014-0090, 2015 Pat. App. LEXIS 5355 at *39-40.

[3]           2015 Pat. App. LEXIS 5355 at *40.

[4]           2016 U.S. App. LEXIS 15978 at *18-19.

[5]           Id. at 20.

[6]           Id.

[7]           Id. at *20-21.

[8]           Id. at *21-22.

[9]           Id. at 22.