SAN FRANCISCO — The U.S. government has weighed in on the first two Federal Circuit appeals from decisions of the newly constituted Patent Trial and Appeal Board.
The Justice Department and the Patent and Trademark Office are backing SAP America Inc. in its dispute with Versata Development Group, contending the PTAB has exclusive, unreviewable authority to decide what kinds of patents are subject to covered business method review.
The government further argues the PTAB decision invalidating Versata’s patent is not precluded by an earlier civil court judgment in Versata’s favor. The 2011 America Invents Act “reflects Congress’ understanding and intent that PTO would not be bound by the rulings of district courts in parallel infringement litigation,” the government states in a May 5 brief signed by DOJ appellate attorney Melissa Patterson.
But the government will have to go it alone on the first PTAB decision from new inter partes review procedures. GPS technology developer Garmin Ltd. informed the U.S. Court of Appeals for the Federal Circuit on May 2 that it’s settled its patent dispute with Cuozzo Speed Technologies, leaving only the government to defend the decision on appeal.
The AIA reconstituted the PTAB, formerly known as the Board of Patent Appeals and Interferences, and established several new avenues for third parties to challenge patent validity, including inter partes review and covered business method review.
Garmin persuaded the PTAB in November to invalidate Cuozzo’s patent for a device that automatically alerts drivers when they’re exceeding the speed limit. Cuozzo has appealed to the Federal Circuit, arguing the PTAB’s standard of claim construction is too broad and that the board reached issues outside of Garmin’s petition.
The PTO’s “broadest reasonable interpretation” standard for claim construction is different from the standard used by courts. Three PTAB judges defended it during an outreach session at Santa Clara University last month while acknowledging that Congress is considering tweaking it in the latest round of patent law reform.
The Federal Circuit on Wednesday granted the PTO’s motion to intervene in Cuozzo Speed Technologies v. Garmin. The PTO has until June 5 to file its brief.
Turner Boyd partner Matthew Smith, who has written about the new IPR procedures and helped litigate another early case to final decision, said it’s not unusual for the government to step in for a settling party when PTO procedures are at stake in an appeal. The broadest reasonable interpretation standard, or BRI, is the kind of issue the office would likely want to defend, he said.
BRI is also at issue in the covered business method case, Versata Development Group v. SAP America. BRI “is the approach PTO has followed in all other proceedings before the office, with judicial approval, for nearly a century,” Patterson wrote in a brief filed last week.
Another big issue is whether Versata’s computer program to optimize pricing is the type of “financial product or service” qualifying for covered business method review.
The government argues the PTAB’s decision on that issue is final and unappealable, because it came before the final decision on the merits.
To SAP’s appellate attorney, Weil, Gotshal & Manges partner Edward Reines, the procedural issues are a “distraction” from its simple case on patent eligibility. “The patent describes only standard, prior art computer hardware and software that add nothing innovative to the claimed price-setting scheme,” Reines wrote in a brief filed last week.
The government agrees the Versata patent covers an abstract idea. “It is difficult to see how the board could have reached any other conclusion,” Patterson writes.
If the Federal Circuit ultimately agrees with SAP and the PTAB, it’s unclear whether that will rescue SAP from a $391 million judgment for patent infringment that’s already been affirmed by the Federal Circuit. Magistrate Judge Roy Payne of the Eastern District of Texas refused to vacate the judgment in an April 21 order.
SAP has “taken advantage of a full and fair opportunity to litigate the validity of the patent before this court, before the jury, and before the Federal Circuit, even pursuing a writ to the United States Supreme Court,” Payne wrote. “To hold that later proceedings before the PTAB can render nugatory that entire process … would do a great disservice to the Seventh Amendment and the entire procedure put in place under Article III of the Constitution.”
SAP is appealing that decision to the Federal Circuit.
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