August 30, 2016

Compliance with PTAB’s Requirements for Motion to Amend Arbitrary and Capricious?

In Veritax Technologies LLC, v. Veeam Software Corp., [2015-1894] (August 30, 2016), the Federal Circuit vacated the PTAB’s denial of the patent owner’s motion to amend in IPR2014-00090 as arbitrary and capricious.

The Board also denied the motion to amend without making an evidentiary determination of patentability of the proposed new claims.  The Board concluded only that the patent owner failed to address something the Board said must be addressed, namely, whether each newly added feature in each proposed claim, as distinct from the claimed combination of features, was independently known in the prior art.  The Federal Circuit said:

The Board concluded that the motion and the declaration of Veritas’s expert, Dr. Levy, do not discuss the features separately but discuss only “the newly added feature in combination with other known features.” Id. That conclusion, the sole basis for denying the motion to amend, is unreasonable and hence must be set aside as arbitrary and capricious.

The Federal Circuit said that the the patent owner’s submissions contained statements that the newly added features are not described in the prior art.  The Federal Circuit said that there is 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.  The Federal Circuit said that “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.”

Thus, according to the Federal Circuit, a strict adherence to the PTAB’s stated requirement for a statement “whether the feature was previously known anywhere, in whatever setting, and whether or not the feature was known in combination with any of the other elements in the claim” (Toyota Motor Corp. v. American Vehicular Sciences LLC, IPR2013-00419, slip op. at 4–5 (Paper 32) (PTAB March 7, 2014)), can be “arbitrary and capricious.”  One has to wonder what other PTAB requirements are similarly “arbitrary and capricious.”