Opinion ID: 2815829
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: This is a covered business method (“CBM”) patent case, under § 18 of the Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, 125 Stat. 284 (2011). It comes to us as an appeal of a final written decision of the 4 VERSATA DEVELOPMENT GROUP v. SAP AMERICA, INC. Patent Trial and Appeal Board (“PTAB”), 1 the recentlycreated adjudicatory arm of the United States Patent and Trademark Office (“USPTO” or “Government”). 2 The case originated as a petition to the USPTO, submitted by appellees SAP America, Inc. and SAP AG (collectively, “SAP”), pursuant to the provisions of the AIA. SAP requested that the USPTO institute review of the validity of certain claims in U.S. Patent No. 6,553,350 (“’350 patent”). The ’350 patent is owned by the appellant, Versata Development Group, Inc. (“Versata”), who had sued SAP for infringing the patent. In its petition to the USPTO, SAP alleged that the patent was a covered business method patent. Covered business method patents are subject to the special provisions of AIA § 18. See 125 Stat. at 329–31. 3 Section 18 establishes a separately-designated transition- 1 For oral argument purposes, this case, denomi- nated as Versata I, was consolidated with Case No. 20141145, on appeal from the United States District Court for the Eastern District of Virginia, involving the same parties, the same patent, and essentially the same issues. That case will issue as Versata II. 2 The PTAB, established by § 7 of the AIA, is the successor to the Board of Patent Appeals and Interferences (“BPAI”). Compare 35 U.S.C. § 6 (2006) (concerning the BPAI) with 35 U.S.C. § 6 (2012) (concerning the PTAB). 3 In general, the AIA is codified in various parts of 35 U.S. Code. Section 18 of the AIA is not however codified; it is found in 125 Stat. References to § 18 in this opinion are to pages 329–31 of 125 Stat. VERSATA DEVELOPMENT GROUP v. SAP AMERICA, INC. 5 al program 4 under which the USPTO conducts post-grant review proceedings concerning the validity of covered business method patents. As the title suggests, the special program provided by § 18 is available only for “covered business method patents,” as that term is defined by the statute. However, for purposes of conducting proceedings thereunder, § 18 is considered a part of the broader chapter 32 provisions of title 35, U.S. Code, governing post-grant review (“PGR”), 35 U.S.C. §§ 321– 329; § 18 expressly incorporates, with certain exceptions not relevant here, the standards and procedures found in that chapter. 5 § 18(a)(1). In addition to the merits of the decision rendered by the PTAB (which held the claims at issue invalid), the parties to the appeal dispute several predicate issues. These include: 4 The program is called ‘transitional’ because it is scheduled to ‘sunset’ eight years after implementing regulations are issued. § 18(a)(3)(A). 5 A note on terminology: The potential under the AIA for more than the usual confusion that accompanies new congressional mandates stems in part from incidental features of the AIA. In particular, various new procedures intersect with earlier procedures of a similarsounding kind, e.g., inter partes review (“IPR”) has replaced inter partes reexamination, compare 35 U.S.C. §§ 311–318 (2006) (concerning inter partes reexamination), with 35 U.S.C. §§ 311–319 (2012) (concerning IPR). The statute also employs identical terminology to mean different things, e.g., the heading of AIA § 6 is entitled “Post-Grant Review Proceedings,” 125 Stat. at 299, while one of the programs thereunder shares the same name— “Chapter 32—Post-Grant Review.” It is not uncommon for the entirety of AIA proceedings to be referred to informally as ‘post-grant review.’ 6 VERSATA DEVELOPMENT GROUP v. SAP AMERICA, INC. • if the PTAB makes an initial determination under § 18 of the AIA that the patented in- vention qualifies for “covered business method” treatment under § 18, may a court review that issue when reviewing as part of a final written decision the invalidation of claims under the authority of § 18? • if the answer is yes, for purposes of post- grant review by the USPTO how is the term “covered business method patent” to be un- derstood, and does the patent at issue here qualify as a CBM patent? • if the PTAB correctly determines that un- der § 18 of the AIA a patent comes within the definition of a CBM patent, what are the criteria for determining whether the pa- tent is excluded from review under § 18 be- cause the patent falls within the statutorily-excepted category of “technologi- cal invention,” and how do those criteria apply to the ’350 patent? • if, in deciding the merits of the case—the validity of the challenged claims in the pa- tent—the PTAB is called upon to engage in claim construction, does the PTAB apply the USPTO’s general rule of the “broadest reasonable interpretation,” or does it apply the judicial standard of the “one correct construction”? • finally, on appeal at the final written deci- sion stage to this court, during which we must decide whether the PTAB applied the substantive tests for validity correctly, may a court determine whether as an initial matter the PTAB chose the correct substan- VERSATA DEVELOPMENT GROUP v. SAP AMERICA, INC. 7 tive tests to apply, and did the PTAB apply them correctly here? After determining the answers to these queries, contested by the parties, as explained below, we address their application to the ’350 patent at issue.