On June 13, 2016, the Patent Trial and Appeal Board (PTAB or Board) issued two post-grant review (PGR) decisions invalidating two livestock valuation patents for being directed to patent ineligible subject matter under 35 U.S.C. § 101, based on the Supreme Court's opinion in Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014). These are the first PGR decisions to come from the Board under the new Leahy-Smith America Invents Act (AIA) procedure. American Simmental Assn v. Leachman Cattle of Colorado LLC, Case Nos. PGR2015-0003 and PGR2015-0005 (PTAB June 13, 2016).
Petitioner American Simmental Association (ASA) filed two petitions challenging U.S. Patent Nos. 8,660,888 and 8,725,557 after they were asserted by patent owner Leachman Cattle of Colorado LLC against ASA. The PTAB instituted PGR review for all claims of both patents under § 101 and some claims under § 103. In determining whether the claims were unpatentable under § 101, the PTAB used the two-step framework established in Alice. Under that framework, a patent claim is ineligible under § 101 if (i) it is directed to an abstract idea and (ii) the elements of the claim do not amount to significantly more than the abstract idea itself.
The PTAB invalidated all claims of the '888 and '557 patents under § 101 because they were directed to the patent-ineligible abstract idea of "determining an animal's relative economic value based on its genetic and physical traits," and all computer recitations in the claims were directed to "to generic computer hardware used in a conventional manner, which are insufficient to impart patentability under Alice." The PTAB also found some claims of the '557 patent obvious in light of prior art disclosing methods implemented on a computer for determining relative economic value of animals. The Board also denied Leachman's motion to amend the claims, indicating that the proposed amendments would not cure the § 101 deficiencies.
Decision Highlights Potential Power of PGR Proceedings:
The Board distinguished the petition from DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), which held that a patent covering a process used in internet commerce was not patent-ineligible. The Board noted that DDR held that the "problem of retaining website visitors" involves a "claimed solution [that] is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks." Id. at 1257. However, in the ASA petition, the Board found the problem was articulated clearly in the patents' specification as "determining an animal's relative economic value based on its genetic and physical traits." The Board held that this problem, or its solution, did not involve or require anything computer related.
This decision shows the potential power of PGR proceedings, since both patents were invalidated under § 101. Post grant review is different from the more common inter partes review because it allows petitioners to challenge claims on more than just anticipation and obviousness. A petition for PGR may attack a patent for a variety of defects, including lack of written description or enablement, double-patenting, and patent ineligibility.
PGR is only available for patents filed on or after March 16, 2013, which represents the day that the AIA changed the U.S. from a first-to-invent system to a first-inventor-to-file system. A petition for PGR may be filed within the first 9 months after patent grant or issuance of a reissue patent. During this 9 month period, a petition for IPR cannot be filed. PGR is no longer available once the 9 month window has closed; therefore, petitioners must be mindful of the statutory time constraints if they intend to rely on invalidity challenges that are available only in PGRs.
Although they are relatively new, interest in PGRs is growing. Approximately 34 PGR petitions have been filed since 2014, with 16 of those filed in the first half of 2016. As more issued patents become eligible for PGR, it is likely we will see an increase in the number of petitions filed.
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