Digest of Versata Dev. Group, Inc. v. SAP Am., Inc., No 2014-1194 (Fed. Cir. July 9, 2015) (precedential). On appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board. Before Newman, Plager, and Hughes.
Procedural Posture: Appellant and Patent Owner Versata Development Group appeals the Patent Trial and Appeal Board’s (“PTAB’s”) determination that certain claims of U.S. Patent No. 6,553,350, which generally relates to product pricing, are invalid under 35 U.S.C. § 101 at the conclusion of a covered business method (“CBM”) review. According to Versata, the PTAB incorrectly determined that the ’350 patent is a CBM patent, erroneously applied the broadest reasonable interpretation claim construction standard, and erred when it found the ’350 patent unpatentable under § 101. The Federal Circuit affirmed.
- Appellate Jurisdiction: While 35 U.S.C. § 324(e) provides that the “[t]he determination by the Director [of the USPTO] whether to institute a post-grant review … shall be final and nonappealable,” a PTAB’s determination that a patent qualifies as a CBM patent is reviewable on appeal of a final written decision. While first addressed in an institution decision, whether or not a patent qualifies as a CBM patent serves as a limit on the PTAB’s ultimate invalidation authority and thus can be considered by the Federal Circuit.
- CBM Review: The PTAB correctly determined that the ’350 patent is a CBM patent. According to the Federal Circuit, the statutory definition of a CBM patent “covers a wide range of finance-related activities,” including general business patents. It is not limited to just patents related to banks, brokerages, and insurance. Further, the ’350 patent is not a “technological patent” excluded from the scope of CBM review. Congress has provided the USPTO with rule-making authority with respect to CBM review. While the USPTO’s rules are somewhat unclear, they do explain that a patent that simply engages in the “recitation of known technologies,” “reciting the use of known prior art technology,” and “combining prior art structures to achieve the normal, expected, or predictable result of that combination” is not a “technological patent.” In view of this—and the Supreme Court’s holding in Alice Corp. v. CLS Bank Int’l regarding unpatentable abstract ideas and inadequate references to general purpose computers—supported the PTAB’s determination that the ’350 patent is not a technological patent.
- Broadest Reasonable Interpretation Standard: In view of In re Cuozzo, it was proper for the PTAB to apply the “broadest reasonable interpretation” claim construction standard.
- Patent Eligibility (Section 101): Unpatentablity under § 101 can be asserted in a CBM review. And, the PTAB correctly determined that the ’350 patent is directed to a patent-ineligible abstract idea of determining a price using organizational and product group hierarchies. Further, none of the claims at issue include sufficient additional limitations to make them patent eligible. Instead, the claims require only well-understood, routine, and conventional computer functions.
Hughes, concurring in part and dissenting in part:
- Appellate Jurisdiction: The majority interpretation of allowing appellate review of the Patent Trial and Appeal Board’s decisions in CBM patents is in direct conflict of other Federal Circuit decisions, such as In re Cuozzo, which do not allow appeals of the PTAB’s decisions to institute reviews. An appellate review of whether a patent qualifies as a CBM patent is prohibited by the “plain language, structure, and purpose” of the AIA.