by Dennis Crouch
Unwired Planet v. Google (Fed. Cir. 2017) (en banc denied)
The Federal Circuit has denied Google’s petition for rehearing en banc. The patent challenger asked the Federal Circuit to overturn Versata in light of the Supreme Court’s decision in Cuozzo. The issue is well known to attorneys involved in the post-grant review of covered-business-method (CBM) patents.
According to the statute, the CBM process begins with a petition and institution decision by the Director. Once instituted, the PTAB holds trial and issues a final decision. The statute indicates that CBM review may be instituted “only for” CBM patents but that the Director’s institution decision “shall be final and nonappealable.”
In Versata, a divided Federal Circuit panel held that the CBM question could be reviewed since – a non-CBM patent is “outside the PTAB’s invalidation authority.” In its briefing, Google argued that Versata was wrong when it was decided, and was extra-wrong following the Supreme Court’s Cuozzo decision that gave substantial force to the non-appealable provision of the statute. Of course, Cuozzo offered a number of ‘outs’ – suggesting generally that there will be times when appeals of initiation decisions may still be allowed.
Versata v. SAP: Federal Circuit Claims Broad Review of CBM Decisions
In what appears to be a unanimous denial, the Federal Circuit has rejected Google’s petition. Judge Hughes wrote a short concurring opinion
in dissent – arguing (as he did in the original Versata case) that the statute no-appeal provision should be given more weight.
I continue to believe that Versata was incorrectly decided. I further believe that Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) confirms that our review of the Patent Trial and Appeal Board’s decision should be limited to the ultimate merits of the patent validity determination and should not, with narrow exception, extend to any decisions related to institution. Those exceptions may include the rare circumstances where the agency acts unconstitutionally or in complete disregard of the limits on its statutory authority.
I expect that the Supreme Court would agree with the Federal Circuit on this particular issue based upon how the court sees eligibility as a threshold and almost jurisdictional issue and the close tie between the CBM definition and patent eligibility. In the eyes of the Supreme Court, these issues are categorically different from the likelihood-of-invalidation question that is the substantive focus of initiation decisions.
Despite my prognostications here, Google is likely to petition for writ of certiorari. Top Supreme Court Litigator Neal Katyal handled the failed petition here that particularly asked two questions: (1) Whether the Federal Circuit has jurisdiction to review a PTAB determination that a patent is a “covered business method” patent. (2) Whether the Federal Circuit should defer to the Patent and Trademark Office’s reasonable interpretation of the definition of a “covered business method” patent.
I have discussed the first question above. The second question is also an interesting issue of administrative law that may be mooted if Congress enacts the Separation of Powers Restoration Act of 2017.