First Post-AIA PTAB Ruling Opens Doors to More Patent Challenges

SUMMARY

On Tuesday, June 11, 2013, the Patent Trial and Appeal Board (PTAB; or “the Board”) of the United States Patent and Trademark Office (USPTO) issued its first decision in a post-grant review proceeding. The PTAB ruled that a business method patent owned by Versata Software Inc. was invalid in a proceeding brought by SAP, Inc. A post-grant review proceeding provides a forum for challenging a granted patent, in particular on bases not available in pre-AIA re-examination proceedings. Business owners may wish to consider using a post-grant review proceeding to challenge the validity of patents that limit their ability to exploit their technologies.

Versata created and sold pricing software that SAP customers formerly used in conjunction with SAP’s enterprise resource planning systems. Later, SAP created its own pricing software. In 2007, Versata sued SAP, alleging that SAP infringed its patent. In 2011, a jury found for Versata and ordered SAP to pay $391 million in damages. The U.S. Court of Appeals for the Federal Circuit (“the Federal Circuit”) affirmed the lower court’s decision in May 2013, for which SAP has requested an en banc rehearing.

In September 2012, SAP filed a petition with the PTAB, seeking post-grant review of Versata’s patent, alleging invalidity of the patent. In its June 11, 2013 decision, the PTAB agreed with SAP, ruling that Versata’s patent was invalid. Specifically, the Board ruled that Versata’s patent covered an abstract idea that was not eligible for a patent under Section 101 of the Patent Act. It is important to note that challenges to the validity of a patent based on Section 101 of the Patent Act were not available under pre-AIA re-examination proceedings.

During the proceeding, the PTAB construed the claims using the so-called "broadest-reasonable-interpretation" standard, a standard different from the “presumption of validity” standard used in district courts. In other words, in finding Versata’s patent invalid, the board did not give deference to prior decisions by the USPTO’s examiners who issued the patent. Thus, the new post-grant review proceeding is more favorable to patent challengers than proceedings in district courts. The PTAB’s ruling suggests that patent challengers will have an easier time challenging the validity of patent claims before the PTAB than before a district court.

The decision by the PTAB, issued less than nine months after SAP filed its petition, shows that the new post-grant proceedings could be a viable and efficient alternative for patent infringement actions that often take several years. Further, the new proceedings offer an expedited venue for resolving disputes within the patent office, especially compared to pre-AIA re-examination proceedings that often take years.

Published In: Civil Procedure Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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