In Starbucks Corp. v. Ameranth, Inc., CBM2017-00053 (PTAB Dec. 4, 2017) (Paper 7), the PTAB denied institution of a CBM review under (1) its “specific” grant of discretion to deny CBM petitions that are substantially similar to prior petitions and (2) its “general” grant of discretion to decline institution of a proceeding. The Starbucks decision provides an example of when the Board’s denial of institution is based on issues unrelated to substantive patentability.
Ameranth, Inc. asserted U.S. Pat. No. 8,146,077 (the ‘077 Patent) against Starbucks Corp. in the Southern District of California in May 2013. In May 2017, Starbucks filed a petition for CBM review (the Petition at Issue).
Starbucks sought institution of a CBM review of the ’077 Patent, arguing it was unpatentable under (1) 35 U.S.C. § 101 as being directed to non-statutory subject matter; (2) 35 U.S.C. § 112 ¶ 1 as failing to enable the claimed automatic generation of menu configurations and hospitality screens for handheld devices; and (3) 35 U.S.C. § 112 ¶ 2 as indefinite for failing to describe corresponding structure for certain claim terms.
After Ameranth filed its case against Starbucks, but before Starbucks filed the Petition at Issue, the ‘077 Patent had been challenged in three prior CBM petitions. Starbucks and numerous other entities were parties to the first CBM petition, filed in October 2013 (the First Petition). Starbucks was not a party to the subsequent petitions (the Second and Third Petitions). The Board denied institution of each prior petition.
Denial of Institution Under § 325(d) Based on Substantial Similarity
The Board found 35 U.S.C. § 325(d) supported denial of each ground of the Petition at Issue. Under § 325(d), the Board may deny a petition “because, the same or substantially the same prior art or arguments previously were presented to the Office.” To determine whether it should exercise its § 325(d) discretion to deny, the Board “analyze[d] the extent of the overlap between the present Petition and the previous petitions.”
i. Substantial Similarity of Post-Alice § 101 Arguments and Pre-Alice § 101 Arguments
First, the Board found two § 101 arguments substantially similar despite an interim landmark change in the pertinent law. In the First Petition, Starbucks argued the claims were invalid as unpatentable subject matter under 35 U.S.C. § 101. Thereafter the Supreme Court decided Alice Corp. Pty, Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 1358 (2014). In the Petition at Issue, Starbucks argued that because § 101 law had changed since the Supreme Court’s decision in Alice, the Board should revisit its decision with respect to patentable subject matter. The Board looked back to its decision in the First Petition, stating it was at the time “cognizant that limiting the claim to a particular technological environment or field of use, or adding insignificant pre- or post-solution activity, does not constitute a meaningful limitation.” The Board was “not persuaded that [its] analysis in the [First] Proceeding is at odds with Alice, such that [it] should ignore the substantial similarity between Petitioner’s assertions in the [First] Petition and its assertions in the instant Petition.” Accordingly, it determined that the similarity supported the exercise of its discretion to deny institution under § 325 (d).
ii. Substantial Similarity of § 112 Enablement and Written Description Arguments
Next, the Board found two § 112 arguments to be substantially similar, despite their basis in different statutory requirements of § 112. In the Petition at Issue, Starbucks argued that the specification did not enable a person of ordinary skill in the art to generate handheld device menus as recited in the claims. In the First Petition, Starbucks argued that the challenged claims were unpatentable because the specification did not provide a proper description of certain limitations regarding handheld device menus. The Board determined that both petitions raise “arguments as to whether the handheld menus are supported properly by the disclosures of the ‘077 [P]atent.” Since each argument “require[s] an analysis of the description of the handheld device in order to determine the adequacy of the disclosures,” the Board found that argument similarity supported denial of the Petition at Issue under § 325 (d).
iii. Substantial Similarity of § 112 Indefiniteness and § 101 Unpatentable Subject Matter Arguments
Finally, in perhaps its boldest “substantial similarity” determination, the Board concluded that § 101 and § 112 arguments were substantially similar. In the Petition at Issue, Starbucks argued that the claims were indefinite because they recited software-implemented means-plus-function terms without reciting the algorithm for performing the recited function. In the First Petition, Starbucks, as part of its § 101 arguments, more than once asserted that no algorithm was disclosed to perform the claimed limitations. The Board found substantial similarity because “[i]n both proceedings, Petitioner argues that the claims do not meet the requirements of the Patent Act because the Specification does not provide an algorithm to support the recited software.” Acknowledging that §§ 112 and 101 have “important differences,” the Board found that the arguments were nonetheless “grounded in factual issues that have substantial similarity.” Specifically, Starbucks merely modified its approach by changing from § 101 to § 112 to address the same “infirmity in the Specification.” Accordingly the Board concluded that the similar arguments support exercise of discretion under § 325(d).
Denial of Institution Under the Grant of General Discretion of 35 U.S.C. § 324(a)
In addition to finding § 325(d) supported its decision to deny institution of CBM, the Board also found § 324(a) supported that decision. Under § 324(a), the Board “may not” institute CBM unless the petitioner can “demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” According to the Board, while § 325(d) is a specific grant of discretion, § 324(a) is a general grant.
The Board looked to seven non-exhaustive factors established as precedential in the General Plastic decision for determining whether to institute a proceeding. Many of the factors appear straightforward (e.g., whether petitioner had the patent owner’s preliminary response or received the Board’s decision to institute). But notable in the Board’s analysis is that the Board’s finding of similarity under § 325(d), at least in part, drove its § 324(a) conclusion.
For example, the second General Plastic factor requires determining “whether the petitioner knew of the prior art asserted in the second petition when it filed the first petition.” The Board acknowledged that the First Petition and the Petition at Issue challenged the ‘077 Patent under §§ 101 and 112. As such, both were not based on prior art. Nonetheless, the Board concluded the second factor weighed in favor of denying institution. In support of its conclusion, the Board determined that the “purpose of this factor . . . is to examine whether Petitioner possessed or should have been able to obtain the information necessary to assert the ground that is before us in the instant Petition.” Consistent with that purpose, the Board found that the substantial overlap between the petitions (as determined by the § 325(d) analysis) warranted a conclusion that the second factor weighed in favor of denying institution.
The § 325(d) analysis also drove the fifth General Plastic factor for § 324(a). The fifth factor is “whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent.” Starbucks asserted several differences in the Petition at Issue and the prior petition that should, Starbucks argued, weigh against discretionary denial of institution. The Board dismissed Starbucks’ argument, concluding that, in its § 325(d) analysis, it had already discussed the overlap between the previous asserted grounds and those of the instant Petition.
Weighing these and the other five factors, the Board concluded that it should exercise its discretion to deny CBM review under 35 U.S.C. § 324(a).
The Board in Starbucks denied institution of CBM—not because of substantive patentability grounds—but because the Petition at Issue was too similar to prior petitions. The Board did “not take lightly denying a petition on grounds unrelated to its substantive patentability challenges.” It also noted it did not “hold that multiple petitions against the same claims of the same patent are never permitted.” But it did find that seemingly separate arguments, even those based on separate statutory grounds, could be so alike that their similarity precludes substantive patentability analysis.