A Quick Look at the First Patent Trial and Appeal Board Decision in a Covered Business Method Patent Proceeding, SAP America, Inc. v. Versata Development Group, Inc.

On June 11, 2013, the USPTO Patent Trial and Appeal Board (PTAB) issued its first final decision in a covered business method patent (CBM) proceeding, in SAP America, Inc. v. Versata Development Group, Inc. (CBM2012-00001). Although this case is not in the field of pharmaceuticals or biotechnology, a few aspects of this decision will be of interest to stakeholders across all industries.

The Patent At Issue

The patent at issue was Versata’s U.S. Patent 6,553,350, directed to methods of pricing products for different purchasers.

Versata sued SAP for patent infringement in 2007. After a jury trial, SAP was found liable for infringement, but the court ordered a second jury trial on damages. Both parties appealed to the Federal Circuit in 2011, and the court affirmed the finding of infringement in a decision issued in 2013, after the PTAB proceeding was commenced. Of note to this review, “SAP did not appeal the district court’s claim construction, and the validity of the ’350 patent was not an issue on appeal.”

The CBM Proceedings

CBM proceedings became available on September 16, 2012, the effective date of Section 18 of the America Invents Act (AIA). A party who has been sued for or charged with infringement of a covered business method patent can petition for Post Grant Review of the patent to challenge the validity of the patent “on any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).”

SAP filed its petition for CBM review of the ’350 patent on September 16, 2012, asserting that certain claims were invalid under 35 USC §§ 101, 102, and 112. The PTAB granted the petition with regard to §§ 101 and 102, and SAP agreed to proceed only with relation to § 101 to obtain expedited review.

Points Of Interest

At least the following aspects of the PTAB decision will be of interest to stakeholders across all industries.

• The CBM proceeding was brought after two jury trials that found SAP liable for infringement, and while an appeal was pending at the Federal Circuit.

Did Congress intend CBM proceedings to permit a collateral attack on a patent already found to be infringed in a district court proceeding?

The estoppel provisions of the statute provide that a petitioner in a CBM proceeding “may not assert, either in a civil action … or in a proceeding before the International Trade Commission … that the claim is invalid on any ground that the petitioner raised during [the CBM] proceeding.” However, estoppel may run only one way, from a CBM proceeding to a district court/ITC proceeding, and not from a pending district court/ITC proceeding to a CBM proceeding. A similar issue just was addressed by the Federal Circuit in Fresenius USA, Inc. v. Baxter International, Inc. (July 2, 2013), where the court found that estoppel did not arise from a district court proceeding that still was pending.

• The PTAB construed the claims according to its “broadest reasonable interpretation” (BRI) paradigm, even though its claim construction was different from that of the district court.

Did Congress intend the PTAB to apply a BRI claim construction? Even when a district court already has construed the claims? Even when the parties did not appeal the district court’s claim construction?

At least Congressman Goodlatte (R-Va.) thinks otherwise.  The “discussion draft“ of patent reform legislation he released in May would amend the Post Grant Review and Inter Partes Review statutes to require the USPTO to construe a claim in such a proceeding as it “has been or would be in a civil action to invalidate a patent under section 282, including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art, the prosecution history pertaining to the patent, and prior judicial determinations and stipulations relating to the patent.”