SAP v Versata decision threatens business method patents

June 13 2013

Business method patent owners were dealt a blow this week after the PTAB confirmed it will assume the “broadest reasonable interpretation” of a patent when considering if its claims are too far-reaching under new post-grant challenge proceedings

In the first-ever covered business method (CBM) review trial, the USPTO’s Patent Trial and Appeal Board (PTAB) found all five challenged claims in SAP v Versata invalid.

The PTAB concluded that Versata’s claims relating to a method and apparatus for pricing products and services are ineligible for patent protection under Section 101. Versata’s system arranges customers and products into a hierarchy and applies pricing adjustments to different groups.

The CBM review trial is a new post-grant patent challenge proceeding created under the AIA. Designed to reduce the number of overly broad business method patents, it allows those accused of infringing a patent covered under Section 18 of the AIA to challenge its validity through the USPTO’s appeals procedure rather than through the court system.

CBM review was introduced in September 2012. The USPTO will not accept any new petitions for CMB review on or after September 16, 2020.

Versata had argued that the terms for judging the validity of the claims should be based on a district court interpretation standard. But Administrative Patent Judges Sally Medley, Michael Tierney and Rama Elluru disagreed.

“The use of the broadest reasonable interpretation encourages patent owners to remove ambiguities and to narrow their claims by amendment, such that the inventor’s contribution to the art is expressed in clear, precise and unambiguous terms,” they said.

The dispute began in 2007, when Versata sued for infringement of US patent 6,553,350. A district court jury found that SAP had infringed the patent and awarded damages.

Both parties appealed to the Federal Circuit in October 2011. The appellate court affirmed the jury’s verdict and damages.

In September 2012, SAP filed a petition with the USPTO challenging claims 17 and 26 to 29 as being ineligible for patent protection. Versata claimed that SAP had failed to meet all three criteria for seeking a CBM review, but in February this year the PTAB disagreed and ordered that the review should go ahead.