Fed. Circ. Says PTAB Wrongly Denied Veritas' Amendment Bid
By Suevon Lee
Law360, Los Angeles (August 30, 2016, 5:49 PM EDT) -- The Federal Circuit on Tuesday affirmed the Patent Trial and Appeal Board’s decision that Veritas Technologies Inc.'s data restoration patent was obvious due to prior art, but reversed its decision not to allow amendment of claims, saying the denial was “arbitrary and capricious.”
In a ruling sure to turn heads in the patent law world, a three-judge panel remanded the case to the board to determine the patentability of the two proposed claims, saying the denial of amendment was erroneous despite the outcome of a pending full Federal Circuit ruling on Aqua Product Inc.'s challenge of PTAB procedures for amending patents in America Invents Act reviews.
“We do not see how the board could reasonably demand more from Veritas in this case,” wrote Circuit Judge Richard G. Taranto regarding the PTAB’s grounds for denial based on Veritas’ failure to address whether each newly added feature in the two new proposed claims, when not combined with each other, was separately known in the prior art.
Swiss information technology company Veeam Software Corp. sought inter partes review under the AIA of five claims of Veritas’ U.S. Patent No. 7,024,527, which relates to a mechanism that prioritizes data restoration sought by an active application during the course of computer data restoration so that application does not have to wait for a file to be fully restored before accessing the file.
After the PTAB instituted its review, Veritas, which merged with Symantec Corp. in 2005, filed a conditional motion to amend the patent to add two new claims narrowing the scope of the patent in the event the board eventually found the challenged claims to be invalid.
These new claims would narrow the claim scope from a broader “block-level” data restoration to a more restrictive “file-level” restoration not anticipated by prior art, the company asserted.
In an April 2015 decision, the board rejected the challenged claims for obviousness and also dismissed Veritas’ motion to amend based on the sole ground that the Mountain View, California-based firm didn’t state how the features in the two new claims were independently known in the prior art.
The board’s conclusion that the ‘527 patent was unpatentable was left undisturbed by the Federal Circuit Tuesday, which affirmed its reasoning and found no fault with its broadest-reasonable-interpretation standard.
“Although the ‘527 patent gives indications that the contemplated restore application operates at the file level, the indications here are not enough under the broadest-reasonable-interpretation standard to exclude block-level restoration,” the court said.
However, it reversed the denial of amendment under a review of the Administrative Procedures Act that permits reversal if action is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” according to the opinion.
The Federal Circuit made sure to point out that it wasn’t making any determination on whether the two new proposed claims were “properly construed as limited to a background program operating at the file level or what arguments are open to the parties on that question.”
It stated that the board merely held Veritas to a seemingly unreachable standard by requiring it to first address whether the features of the two claims would be independently known from prior art.
The court noted how “a long line of Supreme Court and Federal Circuit cases” have held that “novel and nonobvious inventions often are only a combination of known individual features.”
“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,” the court said.
It added that the court’s denial was wrong independent of the resolution of In re Aqua Products Inc., the case pending en banc review in the Federal Circuit, oral arguments for which are set for Dec. 9.
The difficulty of amending claims in AIA reviews has been one of the more contentious topics in patent law since the proceedings became available in 2012. Patent owners have complained that the board has made it nearly impossible to secure claim amendments, which are a key tool for saving patents from invalidity challenges.
Byron Pickard, an attorney with Sterne Kessler Goldstein & Fox PLLC who is representing Veeam, told Law360 Tuesday the court's affirmance should block any remaining infringement suit Veritas has against Veeam.
“We are pleased that court affirmed the board’s obviousness rulings," Pickard said. "As a result, Symantec has no remaining patent claims asserted against Veeam, and there is no reason for the litigation to continue.”
A representative for Veritas declined to comment on Tuesday.
In addition to Judge Taranto, Circuit Judges Alan D. Lourie and Kathleen O’Malley sat on the panel.
The patent-in-suit is U.S. Patent No. 7,024,527.
Veritas is represented by K. Lee Marshall, Joseph J. Richetti and Alexander David Walden of Bryan Cave LLP.
Veeam is represented by Byron Leroy Pickard, Mark Fox Evans, Lori A. Gordon, Michael Q. Lee and Daniel S. Block of Sterne Kessler Goldstein & Fox PLLC.
USPTO Director Michelle K. Lee, an intervenor, is represented by Meredith Hope Schoenfeld, Thomas W. Krause, Scott Weidenfeller, Robert McBride and Molly R. Silfen of the USPTO’s Office of the Solicitor.
The case is Veritas Technologies LLC v. Veeam Software Corporation, No. 15-1894 in the U.S. Court of Appeals for the Federal Circuit.
—Additional reporting by Ryan Davis. Editing by Kelly Duncan.
