Two of the earliest challenges to patents under the new post grant proceedings established by the America Invents Act (AIA) are now on appeal to the Court of the Appeals for the Federal Circuit and both appeals are taking direct aim at the US Patent and Trademark Office’s decision to adopt a controversial standard for claim construction – the so-called “Broadest Reasonable Interpretation” standard – to govern all of the new AIA proceedings.

Versata v. SAP concerns the very first “covered business method” (CBM) review proceeding (CBM2012-00001) conducted by the USPTO and is on appeal by the Patent Owner, Versata, of the Patent Trial and Appeal Board (PTAB) decision to invalidate certain challenged claims. Cuozzo v. Garmin concerns the first inter partes review (IPR) proceeding and likewise is on appeal from a PTAB decision finding Couzzo’s claims invalid.

Both appellants are challenging the USPTO’s claim construction standard as impermissible substantive rule-making by the agency and arguing that the standard instead should be the same as that applied to issued patents by the federal courts – the so-called Phillips rule that requires judges and juries to give the elements of a claim their “ordinary and customary meaning.” (See, Phillip v AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005))
Continue Reading Does the Broadest Reasonable Interpretation Standard Make Sense?

Patent owners enforcing their rights who seek to exclude testimony about a pending administrative challenge to the patent-in-suit may face a Hobson’s choice – at least in Nevada. Particularly, the price for excluding evidence of pending administrative challenges to a patent may be a loss of the presumption of the patent’s validity in a district court trial.

In federal courts, judges may preclude evidence from being presented to a jury, particularly where the evidence has the potential to cause unfair prejudice. Such an opportunity is provided by Rule 403 of the Federal Rules of Evidence, which states that a court may exclude relevant evidence if its probative value is substantially outweighed by a danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, and/or needlessly presenting cumulative evidence.

Judges may use Rule 403 in patent infringement cases, particularly in cases where the patent in question is part of a concurrent reexamination proceeding in the Patent Office. In a recent ruling on a motion to preclude evidence concerning a concurrent reexamination of a patent, the District Court of Nevada held, consistent with precedent, that the evidence would be prejudicial, and therefore was inadmissible at trial. Server Technology, Inc. vs. American Power Conversion Corporation (3:06-CV-00698-LRH-VPC (D. Nev.)).

Particularly, District Court Judge Larry Hicks stated that the reexamination of the patent in question was not final, and that a final decision would not occur until long after the trial. Judge Hicks reasoned that the prejudicial effect of notifying the jury about the reexamination proceeding would influence the jury’s determination of the issues of infringement and invalidity. In addition, allowing the evidence would only confuse a jury because both the standard of proof and the applied claim construction by the Patent Office would be different from the standards to be applied at trial. Such differences, in addition to causing jury confusion, would also waste time and resources because it would be necessary to explain the differences to the jury.
Continue Reading What Should A Jury Be Told About A Concurent PTO Trial?

The regulations implementing Inter Partes Review (“IPR”), as well as Post-Grant Review (“PGR”), allow the Patent Trial and Appeal Board (“Board”) to join or stay certain proceedings by motion or sua sponte. See 37 C.F.R. § 42.122 (IPR), and 37 C.F.R. § 42.222 (PGR). This provision seems to make a good deal of sense in terms of avoiding duplication of effort and possible inconsistent results.
Continue Reading Too Many Cooks in the Kitchen? – PTAB Puts Parallel Reviews By Central Reexam Unit on Hold

On June 11, 2013, the Patent Trial and Appeal Board (PTAB) rendered its first decision in a case under the new AIA procedures for administratively contesting patents.  In the case of SAP America, Inc. v. Versata Development Group, Inc., CBM2012-00001, Paper 70 (June 11, 2013), the PTAB found Versata’s patent claims ineligible for patent protection because they were drawn to “abstract ideas.”

The petition for review was brought under the Covered Business Method (CBM) post grant review rules, which permit free-wheeling challenges to patents under essentially all grounds that are available (sections 101, 102, 103 and 112 of the US Patent Laws).  (Similar rules for non-business method patent will not kick-in until patents start issuing with effective filing dates on or after March 16, 2013.)

Interestingly, the same parties litigated this same patent (U.S. Patent No. 6,553,350 ) a few years ago in the Eastern District of Texas (Versata Software, Inc. v. SAP America, Inc., 2009 U.S. Dist. LEXIS 45751 at 16-18 (E.D. Tex. 2009)).  In the district court case, the patent was found valid and infringed – and Versata was awarded a $391 million infringement judgment.  Apparently, SAP had not raised the issue of patent ineligibility under 35 U.S.C. 101 during the jury trial.  The district court judgment was affirmed by the Court of Appeals for Federal Circuit (Versata Software, Inc. v. SAP America, Inc., 2013 U.S. App. LEXIS 8838; 106 U.S.P.Q.2d 1649 (Fed. Cir. 2013)).  The Federal Circuit will probably also wind up with an appeal of the PTAB decision since SAP had asked the Federal Circuit to stay the damage award and injunctive relief until the PTAB conducted its review.
Continue Reading PTAB Renders Its First Decision