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10 July 2015Patents

Federal Circuit upholds CBM decision for first time

The US Court of Appeals for the Federal Circuit has affirmed a ruling by the Patent Trial and Appeal Board (PTAB) that a patent owned by software company Versata is invalid, in its first ever ruling on a covered business method (CBM) patent review.

The decision, issued yesterday, July 9, concerned US patent number 6,533,350, called “method and apparatus for pricing products in multi-level product and organisational groups”.

SAP America had challenged the patent in a CBM review filed on September 16, 2012—the day that the America Invents Act came into effect.

CBM patents cover methods or an apparatus used in a financial service but patents protecting a “technological invention” are not considered to be CBM.

A CBM review can only be conducted after a party has been sued.

Versata sued SAP America at the US District Court for the Eastern District of Texas in 2007 for allegedly infringing the ‘350 patent. The court ruled in favour of Versata and awarded it $345 million in damages in 2011, an amount which later increased to $391 million to include interest.

SAP America appealed against the ruling and the federal circuit upheld the court’s decision in May 2013.

But in June 2013 the PTAB concluded its CBM review of the ‘350 patent and cancelled five of its claims. It was the first CBM review to be decided at the PTAB.

Later that year Versata appealed against the decision at the federal circuit.

Versata claimed that the ‘350 patent was not CBM and that the PTAB was incorrect in applying the broadest reasonable interpretation standard in constructing its claims.

Instead Versata argued that the PTAB should apply the “one correct construction”, a legal standard used by district courts when interpreting patent claims.

But Versata’s arguments were rejected by the court and the three-judge panel also determined that the claims in the patent were too abstract and therefore ineligible for protection.

Writing the majority opinion, Judge Sheldon Plager said: “In its decision, the PTAB correctly applied the US Supreme Court’s test in Alice v CLS Bank and Mayo v Prometheus. Versata identifies no persuasive basis for disturbing the PTAB’s determination, which was amply supported by the record before it.”

Although all three judges on the panel agreed that the ‘350 patent was invalid, Judge Todd Hughes dissented in part, arguing that the federal circuit does not have the jurisdiction to “review the PTAB’s determination that Versata’s patent is a CBM”.

Legal representatives for SAP America, law firms Ropes & Gray and Finnegan, Henderson, Farabow, Garrett & Dunner, told WIPR that they will comment but had not at the time of publication.

Versata had not responded to a request for comment at the time of publication but we will update the story should the company get in touch.

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Patents
14 June 2013   The US Patent Trial and Appeal Board has delivered a final ruling in a covered business method review case for the first time, cancelling five claims in a patent owned by software company Versata.