Judicial Review Available for Decision that a Patent Qualified for CBM Review; § 101 Review Appropriate in CBM Review


Versata Development Grp., Inc. v. SAP Am., Inc., ___F.3d ___ (Fed. Cir. July 9, 2015) (Newman, PLAGER, Hughes (dissenting in part)) (P.T.A.B.) (5 of 5 stars)

Federal Circuit affirms determination, following CBM ("covered business method") review, of invalidity under § 101, and resolves several procedural issues along the way.

Jurisdiction: Judicial review is available for a PTAB decision that a patent qualifies for CBM review. Such review is available only upon the PTAB's entry of a final written decision. Although section 324(e) makes the PTAB's institution decisions non-reviewable, it does not bar review, upon the PTAB issuing a final written decision in a CBM review, of whether the PTAB's determination that the patent qualified for CBM review in the first place. The issue was reviewable because it went to the PTAB's power to invalidate the claims.

"Covered Business Method": The PTAB correctly determined that the patent under review qualified for CBM review. The statutory definition of "covered business method patent" included within that term patents claiming techniques for "performing data processing operations...used in the practice, administration, or management of a financial product or service[.]" 35 U.S.C. § 18(d)(1). Such text was not limited to patents specifically targeting the financial services industry. Thus the '350 patent, which was directed to techniques for determining product pricing, fell within both definitions. The '350 patent also did not fall within the statutory exception provided for patents for "technological inventions." The '350 patent claims techniques of using data hierarchies to organize pricing information. "[T]his is not a technical solution but more akin to creating organizational management charts."  Op. at 39.

Claim Construction: The PTAB's application of the "broadest reasonable interpretation" standard for claim interpretation was correct. The Fed Cir previously confirmed the appropriateness of this standard in the IPR context in Cuozzo, and such reasoning applies equally to the CBM context.

Availability of Section 101: The PTAB's determination that a CBM proceeding could invalidate a patent on § 101 grounds was subject to judicial review, for the reasons discussed above pertaining to judicial review of a PTAB decision that a patent qualified for CBM review.

The PTAB correctly determined that the CBM statute granted authority to apply § 101 review in CBM proceedings.  The statute referred to CBM review (and post-grant review generally) of "patentability"; prior Fed Cir and Supreme Court opinions "established that § 101 challenges constitute validity and patentability challenges."  Slip op. at 45.

Merits:  The PTAB correctly determined that the claims were invalid under § 101. Applying the first step of Alice and Mayo, the claims were directed to the abstract idea of "determining a price, using organizational and product group hierarchies." Op. at 51. Applying the second step, the claims lack additional limitations that might transform the abstract idea into a patentable invention, as they recite using a computer in purely conventional ways to perform the various functions of the claims. None of Versata's counterarguments were persuasive. The record demonstrated that the PTAB properly considered the claims as a whole. Purported benefits of the claims (e.g., efficiency, increased computer performance) were not recited in any claim. There was no inconsistency in construing the claims to require a "computer storage medium," and then finding "that the underlying, patent-ineligible invention could be performed via pen and paper or in a person's mind." Slip Op. at 55. The PTAB properly allocated the burdens of proof.

Dissent-in-part: Judge Hughes agreed with the majority that the PTAB properly held the '350 patent claims invalid under § 101, and that the "broadest reasonable interpretation" standard is appropriate for CBM. In his view, however, the PTAB's initial determination that the patent at issue was a "covered business method patent" was not subject to judicial review.