SecureBuy LLC v. Cardinal Commerce Corp.

Addressing the circumstances under which a Covered Business Method (CBM) patent review may proceed, the U.S. Patent and Trademark Office’s (USPTO) Patent Trial and Appeal Board (PTAB, the Board) held that a post-grant review may not be instituted if the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent before the CBM petition is filed. SecureBuy LLC v. Cardinal Commerce Corp., Case CBM2014-00035 (PTAB, April 25, 2014) (Hoskins, APJ.).

Cardinal Commerce Corporation owned a patent directed to schemes for credit card payment authentication. SecureBuy filed a petition for CBM review of the patent. Two weeks prior to that filing, SecureBuy had filed two separate civil suits in federal court seeking declaratory judgments that several claims of the patent were invalid.

Under the America Invents Act (AIA), CBM review is barred in cases where a civil suit has already been filed by the petitioner.  According to the Board, AIA is intended to expedite the review of business method patents by involving the USPTO, not to provide a petitioner with multiple different forums in which to challenge an issued patent.

The Board found that the CBM review requested by SecureBuy was foreclosed by § 325 of the AIA because on the filing date of the petition SecureBuy had already filed a civil suit seeking declaratory judgment that several claims of the patent were invalid. Thus, the Board dismissed the CBM petition without reaching the merits of the invalidity allegation.

The Board marked its decision in the instant case as “precedential,” meaning that future Board judges must adhere to the ruling in the instant case as long as this ruling is not “overcome by subsequent binding authority.”