The Patent Trial and Appeal Board (PTAB) recently issued their first post-grant review of a covered business method patent in SAP Am., Inc. v. Versata Dev. Group, Inc. This decision established several important takeaways for patentees and accused infringers. First, during post-grant review of covered business method patents, the PTAB will construe claims using their broadest reasonable interpretation and apply a preponderance of the evidence standard to invalidity challenges. Second, claims previously construed by a district court will have no precedential effect in the PTAB’s decision. Third, when construing patent claims, the PTAB will rely on extrinsic evidence, including district court transcripts and post-grant-review-specific exhibits. Fourth, implementing claims with general-purpose computer hardware performing routine tasks, does not make an abstract claim patentable. Finally, for covered business method patents, petitioners are only estopped from later litigating issues actually raised (as opposed to “could have raised”) before the PTAB that result in a final written decision.1
Section 18 of the America Invents Act created a transitional program for petitioners to challenge the validity of covered business method patents.2 A covered business method patent is a patent that claims a “method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”3 Post-grant review for covered business method patents is available to petitioners who have been sued or charged with infringing a covered business method patent.4
In 2007, Versata asserted U.S. Patent No. 6,553,350 (“the ‘350 Patent”) against SAP. A jury decided that SAP infringed the patent, awarded damages to Versata, and the court issued an injunction.5 This May, the Federal Circuit affirmed the jury’s infringement and damages award, but remanded the court’s injunction.6 A month later, the PTAB issued their final written decision ruling that the asserted claims of the ‘350 Patent were abstract and unpatentable.7 In response, SAP filed a motion with the Federal Circuit to stay the $391 million jury award.8
The PTAB’s decision highlighted that claim interpretation differs between courts and the Patent Office. In general, a patent issued by the Patent Office is presumed valid.9 Accordingly, courts generally construe claims to preserve their validity, and accused infringers must prove patent invalidity by clear and convincing evidence.10 In contrast, the Patent Office gives claims their broadest reasonable interpretation, and applies a preponderance of the evidence standard.11 These disparate approaches can lead to different claim constructions, as seen in the Versata decision.
As the petitioner before the PTAB, SAP had the burden of proving that at least one of the ‘350 Patent’s claims was invalid.12 SAP agreed to drop their invalidity challenge on prior art grounds and solely argued that the ‘350 Patent was drawn to an abstract, unpatentable idea to expedite the trial. The PTAB ruled that the asserted claims were more likely than not (i.e., the preponderance standard) directed to an abstract idea. To reach this conclusion, the PTAB applied the broadest reasonable interpretation standard to construe the claims.
Versata contested the use of the broadest reasonable interpretation standard before the PTAB13 and argued that claim construction is a question of law and, therefore, the PTAB should adopt the district court’s claim construction. The PTAB rejected Versata’s argument and ruled that the broadest reasonable interpretation standard applied because, like reexamination and reissue proceedings, post-grant review offers patentees the opportunity to amend their claims.14
Applying the broadest reasonable interpretation standard, the PTAB reviewed four claim terms.15 To help define the terms, the PTAB considered extrinsic evidence—the parties’ experts.16 Notably, both parties introduced expert declarations specifically tailored for the post-grant review, while also relying on transcripts from expert testimony made during the district court trial.17
After construing the terms, the PTAB conducted its 35 U.S.C. § 101 analysis by considering abstract ideas as applied to routine steps and computer-implemented inventions.18 Specifically, the PTAB held that: (1) the asserted claims could be practiced via pen and paper, which was evidence of an abstract idea; (2) implementing the claims with conventional computer hardware (processor, memory, storage) failed to narrow the claims relative to the abstract idea; and (3) the acts of storing, retrieving, sorting, eliminating, and determining via a computer did not provide meaningful limitations that would make an otherwise abstract idea patentable.19
Post-grant review of covered business method patents gives petitioners, who are also litigating claims in court, an opportunity to strategically determine where to argue invalidity. Petitioners will benefit from the broader claim interpretation standard and the lower burden of proof. Petitioners can also take advantage of the expedited, one-year hearing process. As intended with the passage of the AIA, the Patent Office will take on a larger role in determining the validity of issued business method patents.