On September 16, 2014, the Patent Trial and Appeal Board (PTAB) invalidated a patent asserted by VirtualAgility, Inc. against Salesforce.com. The PTAB’s decision applies the U.S. Supreme Court’s framework for determining patent eligibility under 35 U.S.C. § 101 that was set forth recently in Alice Corp. Pty. Ltd v. CLS Bank Int'l, 134 S. Ct. 2347 (June 19, 2014).
VirtualAgility asserted U.S. Patent No. 8,095,413 (“the ’413 patent”) in the Eastern District of Texas in January 2013. In May 2013, Salesforce.com filed a petition at the PTAB under the Transitional Program for Covered Business Method (CBM) Patents, which assesses the validity of patents that the board determines are CBMs. To qualify as a CBM that is reviewable under this program—which was instituted in 2012 and will be available until September 15, 2020—the board must determine that the patent (1) does not claim a “technological invention” and (2) is directed to the practice, administration, or management of a financial product or service. A CBM review can challenge a patent on any grounds for validity, unlike an inter partes review that is limited to anticipation and obviousness challenges via priorart patents and printed publications only. To institute a CBM review, the petitioner must also show that it is "more likely than not" that at least one challenged claim is unpatentable. The PTAB instituted the CBM review in November 2013 after determining that the ’413 patent’s claims met this standard. While the district court denied Salesforce.com’s the request to stay the case during the CBM review, the Federal Circuit reversed upon an interlocutory appeal.
In addition to finding anticipation by a prior art patent, the PTAB found every claim of the ’413 unpatentable under § 101. The PTAB centered its decision on the twostep process for analyzing claims under § 101 set forth by the Supreme Court in Alice. The first step under Alice is to determine whether the claims are directed to a patent ineligible subject matter – a law of nature, natural phenomenon, or abstract idea. The second step is to consider the elements of the claims both “individually and ‘as an ordered combination’” to determine if there are additional elements that “’transform the nature of the claim into a patenteligible application.’” Alice, 134 S. Ct. at 2355 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1291, 1297 (2012)). The ’413 patent is directed to a method and apparatus for managing collaborative activity (e.g., strategic planning and project management) by using a computer database storing data encoding types of collaborative activity (e.g., a list of goals for a project). Applying the Alice framework, the PTAB found: (1) the challenged claims are indeed directed to an abstract idea, the creation and use of models to aid in processing management information; and (2) the claims lack an inventive concept, as the recitation of general purpose computer equipment to execute the abstract idea does not impose a meaningful limit on the claims.
Salesforce.com, Inc. v. VirtualAgility, Inc., PTAB Case No. CBM201300024 (Sept. 16, 2014).