In Veritas Technologies LLC v. Veeam Software Corp., Appeal No. 2015-1894 (Fed. Cir. Aug. 30, 2016), the Federal Circuit affirmed the PTAB’s conclusion of obviousness but vacated its denial of a conditional motion to amend and remanded for the PTAB to address the patentability of the substitute claims. The patent owner, Veritas, argued for a narrow construction of the unamended claims that it contended distinguished over the prior art, but the board rejected that construction as narrower than the broadest reasonable construction. Veritas had filed a conditional motion to amend to add narrower claims if the board concluded that the existing claims were unpatentable. But the board denied the motion to amend.

Specifically, the claim construction issue depended on whether the claims were restricted to “file-level access” or read also on “block-level access.” Although the intrinsic evidence included suggestions that the invention operates at the file level, the court agreed with the board that “it would not be unreasonable for a relevant skilled artisan to read the claims also to cover block-level restoration,” and the court therefore affirmed the board’s construction and its holding of obviousness under the broadest-reasonable-interpretation standard.

The court then turned to the board’s denial of the contingent motion to amend, which it reviewed under the Administrative Procedure Act to determine whether the board’s action was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Veritas had submitted the substitute claims to restrict them more clearly to the construction that it had urged for the unamended claims. The sole reason the board gave for its denial of the motion to amend was that Veritas had failed to discuss whether the newly added features in the substitute claims were separately known in the art; instead it had asserted only that “the newly added feature[s] in combination with other known features [were] not in the prior art.” The court held the board’s reasoning unreasonable and in violation of the Administrative Procedure Act because Veritas had addressed the correct legal test: whether the claimed combination as a whole was patentable, regardless of whether the separate individual limitations were found in the prior art. The court quoted KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418-19 (2007): “[I]nventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.” In conclusion, the court noted, “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.”

This opinion, along with the court’s recent granting of a petition for rehearing en banc in In re Aqua Products, Inc., No. 2015-1177, 2016 WL 4375651 (Fed. Cir. Aug. 12, 2016) (requesting supplemental briefs addressing which party has the burden of proof regarding patentability of amended claims and whether the board may sua sponte raise patentability challenges to the amended claims), suggests that the court is giving greater scrutiny to the board’s reluctance to grant motions to amend, and attempting to resolve the dilemmas in that regard that the AIA has created.