Westlake Services LLC v. Credit Acceptance Corp.

In an order issued on a patent owner’s motion to terminate in connection with a second petition for covered business method (CBM) patent review, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB or Board) declined to terminate review of claims for which review had previously been requested in light of intervening changes in the law. Westlake Services LLC v. Credit Acceptance Corp., Case CBM2014-00176 (PTAB, May 14, 2015) (McKone, APJ.).

In its first CBM review (CBM2014-00008) (IP Update, Vol. 18, No. 4), the petitioner Westlake Services requested review of all claims of the patent at issue. The Board instituted trial on only some of the claims and ultimately found those claims to be directed to non-patent-eligible subject matter under § 101.

During the first CBM review, the Supreme Court issued its decision in Alice and vacated a Federal Circuit decision on which the Board relied in declining to institute on some of the claims. In view of the new case law, the petitioner sought a rehearing in the first CBM review regarding those claims, but the Board declined, indicating that the petitioner was free to file another petition.

The petitioner submitted a new petition requesting review of the claims on which trial was not instituted in the first CBM review. In the second CBM review, the Board instituted trial after considering the impact of serial petitions on the patent owner, the nature of the changes in the law and the impact of the timing of these cases on the petitioner’s ability to present its arguments.

Meanwhile, after issuance of a Final Written Decision in the first CBM review, the patent owner filed a Motion to Terminate in the second CBM review, arguing that the Final Written Decision had an estoppel effect that applies to all claims challenged in the first petition, including those claims on which trial was not instituted. The petitioner responded that § 325(e) should be interpreted to apply on a claim-by-claim basis and, thus, estoppel should not apply to claims on which trial was not instituted in the first CBM review.

The Board agreed with the petitioner and concluded that estoppel is applied on a claim-by-claim basis, stating that estoppel is invoked under § 325(e)(1) as to “a claim in a patent.” The issuance of the Final Written Decision in the first CBM review did not change the Board’s view regarding its decision to institute trial in the second CBM review.

Practice Note: Changes in the law can present opportunities to seek review of claims on which trial has not yet been instituted, even when other claims of the same patent are the subject of a final written decision.