The Leahy-Smith America Invents Act, commonly called the AIA,
was enacted by Congress in 2011 and ushered in a new regime of
post-grant review of issued U.S. patents. Under that regime, which
includes both inter partes reviews ("IPR") and
covered business method ("CBM") reviews, the Patent Trial
and Appeals Board ("PTAB") conducts reviews in two
stages: First, the PTAB makes a decision to "institute"
an IPR or CBM review; if it institutes a review, the PTAB then
proceeds to a trial and issues a final written decision, which may
be reviewed by the Federal Circuit on appeal. The Federal
Circuit's decisions to date, including its recent revised
decision in In re Cuozzo Speed Technologies, have
uniformly held that the decision to institute an IPR or CBM review
is not reviewable by the Federal Circuit by appeal (but may be by
writ of mandamus).
But, in Versata Development Group, Inc. v. SAP America,
Inc., decided on July 9, 2015, a divided panel of the Federal
Circuit held that the question of whether the PTAB exceeded its
statutory authority to invalidate only patents claiming
"covered business methods" was reviewable on appeal from
a final written decision of the PTAB in a CBM trial. The panel
distinguished Cuozzo and its other prior decisions as
holding only that institution decisions are unreviewable on
substantive matters; Versata, by contrast, holds that
limits on the Board's "ultimate invalidation
authority," such as whether a patent is a "covered
business method" patent as defined by the AIA, are reviewable
on appeal from a final written decision. And this is the case
regardless of whether the PTAB made decisions on those matters at
the institution phase.
The panel's decision was grounded in substantial part on the
long-recognized principle that an agency has a "heavy
burden" to overcome the "strong presumption" that
"Congress intends judicial review of agency action."
Nothing in the statute, the panel majority concluded, sufficed to
carry that "heavy burden," and so it declined to read the
AIA as granting the PTAB complete, and completely unreviewable,
authority to determine whether its actions were within the limits
of the statutory authority granted to it by Congress.
The panel declined to fully enumerate exactly which issues are
questions of the PTAB's ultimate invalidation authority, and
thus available to challenge on appeal to the Federal Circuit,
finding it sufficient to hold that the question of whether a patent
claims a "covered business method," as defined in the
AIA, is one of those issues. The Federal Circuit's opinion was
authored by Senior Judge Plager and joined by Judge Newman; Judge
Hughes dissented on this jurisdictional issue, believing that
"the statute precludes review of the Board's institution
decision that Versata's patent is a 'covered business
method patent.'"
On the merits, the Federal Circuit unanimously held that the PTAB
was correct to find that the Versata patent, with claims directed
to determining prices of products offered to purchasing
organizations, was a covered business method patent and did not
fall into the "technological invention" safe harbor of
the statute. Further, the panel affirmed the PTAB's holding
that Versata's claims were drawn principally to abstract ideas
without an additional inventive concept and thus failed to satisfy
the standards for patent-eligibility in 35 U.S.C.
§ 101.
The most important facet of the Versata decision for
future cases is that it maintains an avenue for judicial review of
PTAB decisions to institute IPRs and CBM reviews that many had
thought closed by Cuozzo and prior Federal Circuit
decisions. Further review of the Versata
decision—whether by the full en banc Federal Circuit
or by the U.S. Supreme Court, remains possible.
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