Court Opinion

ID: 2816564
Source: CourtListenerOpinion
Date Created: 2015-07-13 15:04:57.819781+00
Date Added: 2024-06-11T12:23:12.748778
License: Public Domain

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-GBL-
IDD, 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 Divi-
sion, United States Department of Justice, Washington,
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, Gar-
rett & Dunner, LLP, Reston, VA, argued for defendants-
appellees 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 De-
velopment Group, Inc. v. SAP America, Inc., No. 2014-
1194 (“Versata I”). The cases were consolidated for argu-
ment 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, in-
fringement 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.
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 proce-
dures 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 reme-
dy through appeal to the Court of Appeals for the Federal
Circuit.” Id.
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 dis-
trict 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, subsec-
tion 324(e). Section 324 is part of chapter 32, Post-Grant
Review. Chapter 32 contains various procedural provi-
sions governing the administration of PTAB reviews
under the chapter. Separately, reviews of covered busi-
ness method patents are governed by the special provi-
sions 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 Fund-
ing 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 constru-
ing the counterpart provision for inter partes review,
§ 314(d): St. Jude Med., Cardiology Div., Inc. v. Volcano
VERSATA DEVELOPMENT GROUP     v. LEE                        5

Corp., 749 F.3d 1373 (Fed. Cir. 2014) (interlocutory re-
view); In re Dominion Dealer Solutions, LLC, 749 F.3d
1379 (Fed. Cir. 2014) (mandamus); In re Proctor & Gam-
ble Co., 749 F.3d 1376 (Fed. Cir. 2014) (same). See Versa-
ta 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 tradi-
tional 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 determi-
nations at the decision to institute stage, the district court
was correct in barring judicial review pursuant to subsec-
tion 324(e).
                       CONCLUSION
    The judgment of the district court in Versata II is af-
firmed.
                        AFFIRMED