CBM Claims Not Addressed in the PTAB's Final Decision May Be Challenged in a Follow-On CBM Proceeding

by Knobbe Martens

Last week, the Patent Trial and Appeal Board added a decision declining to apply estoppel under 35 USC 325(e)(1) to dismiss a follow-on CBM proceeding in Westlake Services LLC v. Credit Acceptance Corp., CBM2014-00176 to the list of Representative Orders, Decisions, and Notices on the Board’s Web site.  In this decision, the PTAB held a party challenging a patent in a post-grant proceeding could only face estoppel as to claims for which trial was actually instituted and addressed in a final written decision. Importantly, claims challenged in a petition but dismissed before trial may not be subject to statutory estoppel.

In a prior proceeding, a petitioner requested review of 42 patent claims. The PTAB instituted trial on most of them and dismissed the rest after finding they were patent eligible under Ultramercial, Inc. v. Hulu LLC, 772 F.3d 1335 (Fed. Cir. 2013). The petitioner then filed a request for rehearing. While the rehearing request was pending, the Supreme Court issued Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014) and vacated Ultramercial.  The petitioner requested authorization to file a second request for rehearing in light of Alice.  The PTAB denied the request but noted the petitioner was free to file another petition challenging the claims.  The petitioner accordingly filed a follow-on petition for CBM review of the claims dismissed from the prior proceeding, and the PTAB instituted the follow-on proceeding.  The PTAB subsequently issued a final written decision in the prior proceeding finding the instituted claims unpatentable under 35 U.S.C. § 101.

After the final written decision issued in the prior proceeding, the patent owner moved to terminate the follow-on proceeding.  The patent owner argued the petitioner was estopped from maintaining the follow-on proceeding “on any ground that the petitioner raised or reasonably could have raised” during the first proceeding under 35 U.S.C. § 325(e)(1) and 37 C.F.R. § 42.73(d)(1), even on claims on which the PTAB did not institute trial.

The PTAB declined to dismiss the follow-on proceeding and held that estoppel is applied “on a claim-by-claim basis.” The final written decision in the prior proceeding only ruled on the patentability of some of the claims.  Because the remaining claims were dismissed before trial, the PTAB could not have addressed the patentability of the dismissed claims in its final written decision.  Therefore, the Board held the final written decision in the prior proceeding did not estop the follow-on proceeding on the dismissed claims.

This decision curtails the reach of statutory estoppel in post-grant proceedings.  Nevertheless, it remains to be seen how broadly the PTAB will apply this decision.  For example, it is unclear whether parties challenging some but not all claims of a patent in a post-grant proceeding will face statutory estoppel as to the unchallenged claims.

Westlake Services LLC v. Credit Acceptance Corp., CBM 2014-00176, Paper 28 (P.T.A.B. May 14, 2015)

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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