In a decision bringing four instituted covered business method (CBM) review proceedings to a full stop, the Patent Trial and Appeal board (PTAB or Board) reiterated that a petitioner’s declaratory judgment action filed before a CBM proceeding statutorily dooms the later CBM review.  In doing so, the Board pointed to its precedential decision in SecureBuy, which underscored the controlling language of § 18 of the Leahy-Smith America Invents Act (AIA).  GTNX, Inc. v. INTTRA, Inc., Case Nos. CBM2014-00072;-075 (PTAB, Dec. 10, 2014) (Green, APJ).

The petitioner, GTNX, filed petitions in February 2014 seeking CBM review of four of INTTRA’s patents, a parent and three divisionals, directed to online systems and methods for buyers and sellers of international container transportation services. According to the claimed invention, the system gives a user a single point of access for booking cargo across a plurality of carriers. A shipper wanting to move goods could ostensibly submit a booking request to a plurality of carriers through the communication portal provided by the invention. GTNX challenged the claims of the patents on grounds of ineligible subject matter, lack of written description support and obviousness. After INTTRA filed its preliminary response, the Board instituted CBM review of the four patents.

A month after institution, INTTRA filed  motions to dismiss all four proceedings on the basis that the patents were ineligible for CBM review due to GTNX having previously (in 2011) filed declaratory judgment actions challenging the validity of the four patent. INTTRA cited the Board’s decision in SecureBuy, which was designated by the PTAB as precedential on July 31, 2014.

GTNX opposed terminating the reviews, arguing that INTTRA had waived any argument for termination by failing to raise the issue in its preliminary response or in a request for rehearing of the institution decision. GTNX argued that SecureBuy was not controlling as that case was factually different and because it was based on an incorrect analysis of § 18.

Addressing GTNX’s first argument, the Board looked to its earlier decision in SecureBuy, noting that § 18 “provides that covered business method patent review proceedings shall employ all of the statutory standards and procedures of a post-grant review . . . except for those expressly excluded.” The Board, noting that § 325 (a)(1) was not expressly excluded, explained that the statute barred CBM review when the petitioner has filed an earlier civil action challenging the validity of the patent in question. As the Board explained, the requirements of § 325(a)(1) are a jurisdictional limitation and that, as the Supreme Court explained, “[a]n agency may not confer power upon itself. To permit an agency to expand its power in the face of a congressional limitation on its jurisdiction would be to grant the agency power to override Congress.”  The Board added that a patent owner cannot waive such a statutory requirement.

Regarding GTNX’s second argument against termination, the Board simply stated that SecureBuy did indeed control the outcome of the proceedings as it was a precedential opinion under agency authority.

Practice Note:  Interestingly, GTNX’s earlier civil actions were actually noted in its petitions.  However, neither the patent owner nor the Board noticed this information prior to institution.