Mike McKool, McKool Smith founder (Mei-Chun Jau)
SAN FRANCISCO — Time is running out on SAP AG’s attempt to use new U.S. Patent and Trademark Office procedures to get out from under a $391 million patent judgment.
The U.S. Court of Appeals for the Federal Circuit on Wednesday upheld the judgment for a second time, summarily affirming the verdict without a hearing.
SAP had argued that the court ought to wait while it considers a groundbreaking decision by the Patent Trial and Appeal Board last year that invalidated the patent.
“SAP’s appeal is powered by the compelling logic that a district court should not enter judgment directing a party to pay $391 million based on a patent that the Patent Office has finally determined invalid,” SAP’s appellate attorney, Edward Reines of Weil, Gotshal & Manges, wrote in a brief last week opposing dismissal of the appeal.
But Versata and its attorneys at McKool Smith said SAP has been trying to keep the case on “never-ending litigation life support” while doing an end around to the PTAB. “If such tactics are tolerated,” partner Mike McKool wrote in his motion to dismiss, “it will incentivize defendants who have lost before an Article III court to proliferate proceedings with collateral administrative attacks, while simultaneously pursuing arguments—any argument, no matter the merit—to prolong the Article III case and give it the appearance of non-finality.”
Versata v. SAP is the 10th-largest patent award of the last 15 years, according to legal analytics firm Lex Machina. SAP was found to have infringed Versata’s patent on a computer program that optimizes pricing based on type of product, customer and customer location. The Federal Circuit affirmed the award last year while asking U.S. Magistrate Judge Roy Payne to reconsider injunctive relief.
A month later, the PTAB ruled in a separate proceeding that Versata’s patent claims recite unpatentable abstract ideas under Section 101 of the Patent Act. SAP v. Versata was the first PTAB ruling under the “covered business method” program established by the 2011 America Invents Act. Big technology companies ranging from Intel Corp., Hewlett-Packard Co., Dell and Facebook Inc. have thrown amicus curiae support behind SAP on appeal, while 3M, Eli Lilly & Co., Amgen Inc. and others say the PTAB overstepped its authority.
The Federal Circuit is not likely to decide the appeal until next year, however.
In the meantime, Versata abandoned its request for an injunction and Payne entered judgment earlier this year. SAP appealed, leading to Wednesday’s order from the Federal Circuit.
Among the three judges signing the summary affirmance was new Chief Judge Sharon Prost. That’s an ominous sign for SAP, as Prost has been more willing to defer to PTO decisions, so long as there has been no “final decree” from the courts.
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