September Federal Circuit Review

September 2016

Denial of Motion to Amend Claims in Inter Partes Review was Arbitrary and Capricious

Veritas Technologies LLC v. Veeam Software Corporation, No. 15-1894 (Fed. Cir. Aug. 30, 2016)

In Veritas Technologies, the Federal Circuit vacated the Patent Trial and Appeal Board’s denial of Veritas’s motion to amend the claims in an inter partes review, finding the Board’s decision to be arbitrary and capricious.

Veeam petitioned the PTAB for cancellation of five claims of a Veritas patent covering a data recovery and restoration system and method, contending the claims were obvious over the prior art. A key dispute concerned whether the claims were broad enough to cover “block-level restoration” or if a proper construction restricted the claims to “file-level restoration” only. Veritas argued in favor of the narrower construction, but also filed a conditional motion to amend to add two new claims which attempted to more expressly cover Veritas’ preferred file-level restoration construction.

The Board accepted Veeam’s broader “block-level restoration” construction and found the challenged claims obvious in view of the prior art. The Board also denied Veritas’s motion to amend, holding that the patent owner failed to discuss whether the newly added features were separately known in the prior art. Veritas only discussed whether the newly added features in combination with other claimed features were known in the art.

The Federal Circuit agreed with the PTAB that the broadest reasonable interpretation of the claims covered block-level restoration, and affirmed the PTAB’s finding of obviousness. However, the Federal Circuit set aside the PTAB’s denial of Veritas’s motion to amend the claims because the patent owner was not required to discuss whether each newly added feature was separately known in the prior art. Novel and non-obvious inventions are often a combination of known individual features, and a patent owner need only describe how the combination of features – not each feature individually – is non-obvious over the prior art. The Federal Circuit remanded to the PTAB to determine the patentability of the proposed substitute claims.

Key Takeaway: When filing a motions to amend claims in an inter partes review, the patent owner needs to demonstrate how the newly added features, in combination with the other claimed features, are non-obvious.

Patent Claims were not Invalid for Lacking Limitation Described in Preferred Embodiment

ScriptPro LLC v. Innovative Associates, Inc., No. 15-1565 (Fed. Cir. Aug. 15, 2016)

In ScriptPro, the Federal Circuit held that the district court erred in finding the claims of a challenged patent to be invalid for lack of adequate written description. The district court improperly found a limitation disclosed in a preferred embodiment to be a requirement of the invention even though it had not been claimed.

ScriptPro held a patent directed to a collating unit for automatically storing prescription containers dispensed by a dispensing system. The district court had previously held that the claims of the patent were invalid for failure to satisfy the written description requirement, finding that the specification limited the invention to a collating unit that required use of sensors to determine whether a holding unit was full. In an initial appeal, the Federal Circuit reversed, holding that no clear language in the patent unambiguously limited the invention to that embodiment. On remand, the district court again invalidated the patent on written description grounds, quoting the Federal Circuit’s previous decision and finding that the specification unambiguously limited the invention to a collating unit that sorted and stored based on patient-identifying information.

In this second appeal, the Federal Circuit reversed the finding of invalidity again. It found the district court improperly focused on one of several purposes of the patent. While many of the problems purportedly solved by the patent involved sorting and storing prescription containers by patient-identifying information, not all of them did. The patent disclosed not only storing by patient-identifying information, but also contemplated some “other predetermined storage scheme.” The specification’s focus on one particular embodiment or purpose cannot limit the described invention where the specification expressly contemplates other embodiments or purposes. Not every claim must contain every limitation disclosed in the specification or achieve every disclosed purpose.

Key Takeaway: An unclaimed embodiment in the specification should not invalidate the claims under the written description requirement unless the specification clearly and unambiguously limits the invention to embodiments having the unclaimed feature.

Patent Owner Waived Obligation-to-Assign Defense by Representing that Resolution of Inventorship Would Resolve Case

Vapor Point LLC v. Moorhead, No. 15-1801 (Fed. Cir. Aug. 10, 2016)

In Vapor Point, the Federal Circuit affirmed a district court order granting Vapor Point’s motion to correct inventorship. The court concluded that NanoVapor had waived its right to argue the added inventors had an obligation to assign their patent rights by explicitly representing that resolution of the inventorship issue would resolve the case.

NanoVapor was the assignee of two patents directed to the containment of volatile organic vapor for use with fuels such as biodiesel. Both patents named Moorehead as the sole inventor. Two individuals associated with Vapor Point, Nathan and Matheson, believed that they had contributed to the invention of the patents when they were previously employed at NanoVapor.

Vapor Point sued to correct inventorship of the NanoVapor patents under Section 256 of the Patent Act, seeking to add Nathan and Matheson. NanoVapor counterclaimed to add Moorhead to five of Vapor Point’s own patents and also argued that Vapor Point infringed one of its challenged patents. Both parties asserted additional state law claims, which were dismissed with prejudice during the course of litigation. The district court held a four day evidentiary hearing on the parties’ inventorship claims, finding in favor of Vapor Point, and rejecting all of Moorehead’s alleged contributions to Vapor Point’s patents.

NanoVapor next attempted to argue that Nathan and Matheson had an obligation to assign their invention to it. However, NanoVapor alleged an obligation to assign only as an affirmative defense to Vapor Point’s state law claims, which had been dismissed. Thus, the district court declined to consider the issue. Because Nathan and Matheson held an ownership stake in the NanoVapor patents, and because a claim for patent infringement can only be brought by all assignees to a patent, the district court dismissed NanoVapor’s infringement claim. NanoVapor appealed.

The Federal Circuit affirmed the district court’s refusal to consider NanoVapor’s obligation to assign defense. Inventorship and ownership are separate issues, and ownership is a property right rooted in state law. The dismissal with prejudice of the parties’ state law claims mooted NanoVapor’s defense of ownership. Furthermore, NanoVapor’s counsel made affirmative representations that resolution of the inventorship question would resolve the case. NanoVapor’s clear representation amounted to a waiver of any assertion of ownership of Nathan and Matheson’s rights.

In a concurring opinion, Judge O’Malley argued that even absent NanoVapor’s waiver, the Patent Act requires any assignment of patent rights to be in writing. NanoVapor’s argument that Nathan and Matheson had an obligation to assign first required the production of a written instrument reflecting such an assignment, which NanoVapor conceded that it could not produce.

Key Takeaway: Ownership and inventorship are separate issues, and alleged ownership by assignment is not a defense to a claim to correct inventorship of a patent.

Board Erred in Invoking Common Sense to Supply Missing Claim Limitation in Prior Art Reference

Arendi S.A.R.L. v. Apple Inc., No. 15-2073 (Fed. Cir. Aug. 10, 2016)

In Arendi, the Federal Circuit reversed a Patent Trial and Appeal Board’s finding of unpatentability of claims in an inter partes review because the Board’s obviousness analysis improperly invoked common sense to supply a missing limitation in the prior art.

Arendi’s claims were directed to a method for using one computer program to display a document and another computer program to search an external source for related information. On a petition from Apple, Google, and Motorola Mobility, the PTAB instituted review of 17 claims of Arendi’s patent. In a final written decision, the Board found all of the instituted claims obvious in view of one prior art reference. While the reference did not disclose one claim limitation related to performing a search using information from the displayed document, the Board concluded it would have been “common sense” for a person of ordinary skill art to implement such a search.

The Federal Circuit reversed, finding the Board erred in relying so heavily on common sense. Common sense may be used to provide a known motivation to combine, or to supply a missing limitation where the limitation is unusually simple and the technology particularly straightforward. For example, the Federal Circuit favorably cited an earlier case in which common sense was used to supply step D of a claim having steps A through D, where step D was nothing more than an instruction to repeat steps A, B and C. However, common sense cannot be used as a wholesale substitute for reasoned analysis and evidentiary support, especially when dealing with a limitation missing from the prior art.

Key Takeaway: In an obviousness analysis, common sense cannot be used as a substitute for reasoned analysis and evidentiary support, and cannot be used to supply a missing claim limitation that is central to the claim.