Netsirv v. Boxbee, Inc.

In a decision to institute post-grant review, the Patent Trial and Appeal Board (PTAB or Board) clarified the importance of corroboration to establish the credibility of testimony relating to prior public use in a post grant review (PGR) proceeding. Netsirv v. Boxbee, Inc., Case PGR2015-00009 (PTAB, Aug. 4, 2015) (Saindon, APJ).

At issue was a patent that related generally to the tracking and delivery of storage containers. Unlike conventional storage systems, the challenged patent allowed users to identify individual items stored in one or more relatively small storage containers, and described a computerized method for coordinating the system.

In rendering its decision to institute, the Board first determined that the challenged patent was eligible for PGR. Under 37 C.F.R. § 42.201, a petitioner seeking PGR must not be the patent owner; have filed, or a real party-in-interest of the petitioner have filed, a civil action challenging the patent’s validity; and be estopped from challenging the claims on the grounds identified by the petition.

After the Board determined that the petitioner was eligible to request PGR of the challenged patent, it turned its attention to the subject-matter eligibility of the patent under 35 USC § 101. The petitioner argued that the patent claims were directed to ineligible subject matter, alleging that the claimed process was directed to an abstract idea and did not add elements that limited the abstract idea or amount to significantly more than the abstract idea itself.

The Board performed an Alice analysis, concluding that the challenged claims were more likely than not unpatentable under § 101. UnderAlice, the court must first “determine whether the claims at issue are directed to [a] patent-ineligible concept.” If so, the second step in the analysis is to “search for an inventive concept—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” (See IP Update, Vol. 17, No. 7.)

Noting that the patent owner had not rebutted the petitioner’s § 101 analysis, the Board first found that the challenged claims were directed to patent-ineligible abstract concepts that claimed subject matter utilizing “a fundamental economic practice long prevalent in our system of commerce” and then proceeded to find that the claims did not recite any meaningful limitation beyond the general abstract idea. Thus, the Board determined that the claims were “directed to routine, conventional, and/or well-known steps.”

The petitioner also argued that the subject matter of several claims was “in public use, offered for sale, or otherwise publicly known since before the effective filing date of the . . . patent.” As evidence, the petitioner submitted witness testimony generally explaining that a tracking system had been in use well before the patent was applied for. However, the Board emphasized that the testimony of a witness alleging prior use “must be corroborated to prove the credibility of the testimony by clear and convincing evidence.” Generally, whether testimony is sufficiently corroborated is analyzed using a “rule of reason” analysis.

The Board found that the petitioner failed to corroborate its witness’s testimony. First, the witness was the president and CEO of one of the petitioner entities, and therefore had an interest in the outcome of the proceeding. Further, the petitioner failed to point to any evidence to corroborate the testimony that the subject matter was in public use, nor did the petitioner offer a reason for its lack of corroborating evidence. As such, the Board found the witness’ testimony to be insufficient to establish prior public use. Thus, the Board limited its institution of post-grant review to the question of whether the subject matter was ineligible under § 101.