Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01145/USCOURTS-ca13-14-01145-0/pdf.json

Nature of Suit Code: 899
Nature of Suit: Other Statutes - Administrative Procedure Act/Review or Appeal of Agency Decision
Cause of Action: 

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United States Court of Appeals 

for the Federal Circuit ______________________ 

VERSATA DEVELOPMENT GROUP, INC.,

Plaintiff-Appellant

v.

MICHELLE K. LEE, DIRECTOR, U.S. PATENT AND 

TRADEMARK OFFICE,

Defendant-Appellee

SAP AMERICA, INC., SAP AG,

Defendants-Appellees

______________________ 

2014-1145

______________________ 

Appeal from the United States District Court for the 

Eastern District of Virginia in No. 1:13-cv-00328-GBLIDD, Judge Gerald Bruce Lee.

______________________ 

Decided: July 13, 2015

______________________ 

 JEFFREY A. LAMKEN, MoloLamken LLP, Washington, 

DC, argued for plaintiff-appellant. Also represented by

ROBERT DANNY HUNTINGTON, NANCY JO LINCK, MARTIN 

MOSS ZOLTICK, Rothwell Figg Ernst & Manbeck PC, 

Washington, DC. 

 MELISSA N. PATTERSON, Appellate Staff, Civil Division, United States Department of Justice, Washington, 

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2 VERSATA DEVELOPMENT GROUP v. LEE

DC, argued for defendant-appellee Michelle K. Lee. Also 

represented by DENNIS C. BARGHAAN, JR., MARK R.

FREEMAN, STUART F. DELERY, DANA J. BOENTE; NATHAN K.

KELLEY, SCOTT C. WEIDENFELLER, Office of the Solicitor, 

United States Patent and Trademark Office, Alexandria, 

VA.

 ERIKA ARNER, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Reston, VA, argued for defendantsappellees SAP America, Inc., SAP AG. Also represented 

by J. MICHAEL JAKES, MICHAEL A. MORIN, JOHN M.

WILLIAMSON, Washington, DC; EDWARD R. REINES, Weil, 

Gotshal & Manges LLP, Redwood Shores, CA. 

______________________ 

Before NEWMAN, PLAGER, and HUGHES, Circuit 

Judges.

Opinion for the court filed by Circuit Judge PLAGER. 

Circuit Judge HUGHES concurs in the result.

PLAGER, Circuit Judge. 

INTRODUCTION

This case, Versata II, is a companion to Versata Development Group, Inc. v. SAP America, Inc., No. 2014-

1194 (“Versata I”). The cases were consolidated for argument purposes, but are decided separately. For the 

detailed background and facts, see the opinion in Versata 

I, No. 14-1194 (Fed. Cir. July 9, 2015). 

Briefly, Versata owns U.S. Patent No. 6,553,350 (“’350 

patent”). Versata in 2007 sued SAP for, inter alia, infringement of the ’350 patent. The result of the trial was 

a judgment in favor of Versata. On appeal to this court, 

in an opinion issued in 2013, we affirmed the damages 

award, but vacated the injunction as overbroad, and 

remanded for further proceedings.

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VERSATA DEVELOPMENT GROUP v. LEE 3

Meanwhile, in 2012, SAP petitioned the U.S. Patent 

and Trademark Office (“USPTO”) to institute a covered 

business method (“CBM”) review of the ’350 patent; CBM 

reviews are one of the new administrative review procedures established in the Leahy-Smith America Invents 

Act (“AIA”), Pub. L. No. 112-29, 125 Stat. 284 (2011). SAP 

asked for CBM review on the grounds that certain key 

claims in the patent were unpatentable and invalid. In 

January 2013, the Patent Trial and Appeal Board 

(“PTAB”) granted SAP’s petition and instituted a covered

business method review of the ’350 patent. 

Then, in March 2013, while the PTAB was conducting 

its CBM review, Versata sued the USPTO in the U.S. 

District Court for the Eastern District of Virginia, seeking 

to set aside the PTAB’s decision to institute CBM review. 

SAP filed a motion to intervene, which the district court 

granted. On August 7, 2013, the district court granted 

the USPTO’s motions to dismiss for lack of subject matter 

jurisdiction and failure to state a claim, and SAP’s motion 

to dismiss for lack of subject matter jurisdiction. 

The district court held that it lacked subject matter 

jurisdiction “because the AIA’s express language, detailed 

structure and scheme for administrative and judicial 

review, legislative purpose, and nature of administrative 

action evince Congress’s clear intent to preclude subject 

matter jurisdiction over the PTAB’s decision to institute 

patent reexamination [sic] proceedings.” Versata Dev. 

Corp. v. Rea, 959 F. Supp. 2d 912, 915 (E.D. Va. 2013). 

The district court also held that “the decision to institute 

post-grant review is merely an initial step in the PTAB’s 

process to resolve the ultimate question of patent validity, 

not a final agency action as contemplated by 5 U.S.C. 

§ 704. . . . Plaintiff retains an alternative adequate remedy through appeal to the Court of Appeals for the Federal 

Circuit.” Id.

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4 VERSATA DEVELOPMENT GROUP v. LEE

Versata appealed the judgment to this court. That 

appeal is the case now before us, Versata II. We have 

jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

The district court was correct as a matter of law when 

it dismissed Versata’s suit seeking to set aside the PTAB’s 

decision to institute review of the ’350 patent. The district court cited the express language of the AIA and held 

that the statute barred the court’s review of that decision.

As we explain in Versata I, 35 U.S.C. § 324, added as 

part of the AIA, contains the review bar at issue, subsection 324(e). Section 324 is part of chapter 32, Post-Grant 

Review. Chapter 32 contains various procedural provisions governing the administration of PTAB reviews 

under the chapter. Separately, reviews of covered business method patents are governed by the special provisions of AIA § 18. However, § 18(a)(1) specifically 

incorporates, with exceptions not here relevant, the 

standards and procedures found in chapter 32, including 

§ 324.

Subsection 324(e) provides that “[t]he determination 

[by the PTAB] whether to institute a post-grant review 

under this section shall be final and nonappealable.” 

Although at the time the district court ruled it did not 

have the benefit of our views—the decision was made 

before we had addressed the issue—we recently have 

acknowledged the statutory limits of judicial review of 

decisions to institute in CBM cases. See VirtualAgility 

Inc. v. Salesforce.com, Inc., 759 F.3d 1307 (Fed. Cir. 2014)

(stay of previously-commenced litigation); Benefit Funding Sys. LLC v. Advance Am. Cash Advance Ctrs. Inc., 767 

F.3d 1383 (Fed. Cir. 2014) (same); accord GTNX, Inc. v. 

INTTRA, Inc., Nos. 15-1349, -1350, -1352, -1353, 2015 WL 

3692319 (Fed. Cir. June 16, 2015); see also cases construing the counterpart provision for inter partes review, 

§ 314(d): St. Jude Med., Cardiology Div., Inc. v. Volcano 

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VERSATA DEVELOPMENT GROUP v. LEE 5

Corp., 749 F.3d 1373 (Fed. Cir. 2014) (interlocutory review); In re Dominion Dealer Solutions, LLC, 749 F.3d 

1379 (Fed. Cir. 2014) (mandamus); In re Proctor & Gamble Co., 749 F.3d 1376 (Fed. Cir. 2014) (same). See Versata I for discussion of these cases.

At the same time, in Versata I we highlighted the 

fundamental importance of judicial review of agency 

action, both as a matter of historic case law as well as of 

statutory law. The importance of judicial review was 

recognized by the district court when it noted that an 

adequate remedy lay in appeal to the Federal Circuit, an 

appeal expressly provided in the AIA at the final written 

decision stage. We have thus acknowledged the balance 

Congress struck between its desire for a prompt and 

efficient review process at the USPTO, on the one hand, 

and, on the other, the necessary recognition of the traditional role of judicial review of agency action. In Versata I

we found that balance carefully crafted, and consistent 

with the roles the Constitution assigns to the Judicial and 

Executive Branches. 

Accordingly, since the attempt by Versata to obtain 

judicial review of the PTAB’s decision to institute a CBM 

review in this case was addressed to the PTAB’s determinations at the decision to institute stage, the district court 

was correct in barring judicial review pursuant to subsection 324(e).

CONCLUSION

The judgment of the district court in Versata II is affirmed.

AFFIRMED

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