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Credit Acceptance Corp. v. Westlake Services

No Estoppel Against Maintaining CBM Attack on Claims Previously Non-Instituted

Credit Acceptance Corp. v. Westlake Services, (Fed. Cir. June 9, 2017) (DYK, Mayer (dissenting-in-part), Reyna) (PTAB) (3 of 5 stars)

Fed Cir affirms CBM patent-ineligibility determination. CAC’s patent related to providing financing to a customer who is purchasing a product from a dealer’s inventory. Two CBM proceedings were at issue, both brought by Westlake. The first resulted in an institution decision that was pre-Alice, 134 S. Ct. 2347 (2014), and in which the Board declined to institute review of certain claims of CAC’s patent. The second CBM petition was post-Alice, but before the first proceeding reached a final written decision, and this time the Board took up the subject-matter patentability of the claims it had previously declined to review. Once the first CBM proceeding reached a final written decision, CAC moved to terminate the second, arguing that § 325(e)(1) barred Westlake from challenging the claims where there had previously been a decision not to institute.

The Fed Cir has jurisdiction to review the PTAB’s decision that Westlake was not estopped. Cuozzo, 136 S. Ct. 2131 (2016), was not contradictory because § 325(e)(1) is not limited to institution decisions; its estoppel governs any stage of subsequent proceedings, and the ability of an estopped petitioner to “maintain” a proceeding. The opinion reasons that that the AIA does not bar review of such decisions, and notes that it would be incongruous for estoppel to be non-reviewable as to subsequent CBM proceedings, but would be appealable as to subsequent district court or ITC proceedings, as per AIA § 18(a)(1)(D).

The PTAB did not err in concluding that Westlake was not estopped. Per Synopsys, 814 F.3d 1309 (Fed. Cir. 2016), there is no estoppel in future PTO proceedings for claims on which CBM was not instituted. The opinion reasons that Shaw, 817 F.3d 1293 (Fed. Cir. 2016), is supportive because in that case, IPR estoppel attached only to those grounds that could have actually been raised during the IPR—which did not include non-instituted grounds.

The PTAB did not err in finding the claims patent-ineligible. At Alice step one, they claim the abstract idea of processing an application for financing a purchase. There was no meaningful distinction against the abstract claims in Alice or Bilski, 561 U.S. 593 (2010). The opinion rejects CAC’s argument that the claims improved the functionality of computers—they did so only by automating previously manual processes, so Enfish, 822 F.3d 1327 (Fed. Cir. 2016), was not applicable. The claims also failed to recite an inventive concept at Alice step two. Nothing in the recitation of components does anything to transform the claim into anything more than an abstract idea.

Dissent-in-part: Judge Mayer would have held that the Fed Cir lacks jurisdiction to review the PTAB’s decision to deny a motion to terminate for § 325(e)(1) estoppel.

KEYWORDS: COVERED BUSINESS METHOD; ESTOPPEL (NO); SUBJECT-MATTER ELIGIBILITY (NO); CREDIT ACCEPTANCE CORP.; WESTLAKE SERVICES