Versata v. Rea - An APA Challenge to the AIA - Part 1

In this four-part series, we follow Versata’s challenge under the Administrative Procedure Act (APA) to the USPTO’s implementation of the Transitional Program for Covered Business Method Patents, Section 18 of the AIA. Part 1 covers Versata’s complaint filed in the United States District Court for the Eastern District of Virginia; Part 2 reviews the USPTO’s motion to dismiss; Part 3 discusses Versata’s response; and Part 4 summarizes intervenor SAP’s arguments in support of dismissal.

What is a covered business method (CBM) patent under § 18 of the AIA?  Can review of a CBM patent under § 18 be sought on the basis that the patent fails to satisfy the requirements of subject-matter eligibility, 35 U.S.C. § 101? These are the central questions raised by plaintiff Versata in its district court challenge to a recent decision by the USPTO instituting a post-grant review of U.S. Patent 6,553,350  (the ’350 patent). That review, the first such review ever conducted by the agency, was conducted concurrently with the district court briefing and  concluded with a PTAB decision canceling each challenged claim as unpatentable under 35 U.S.C. § 101. Finnegan represented patent challenger SAP as intervener in the district court action and before the USPTO.

Post-grant review (PGR) under the AIA is new mechanism of post-issuance administrative review generally limited to patents issuing from applications filed on or after March 16, 2013. Section 18, however, expands the availability of PGR to cover CBM patents filed before March 16, 2013, so long as the patent in question has been asserted in an infringement suit and the party seeking review was a defendant. Under the statute, CBM patents claim “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”

In its complaint, Versata first argues that the PTAB exceeded its statutory authority by broadly construing § 18 to cover “patents claiming activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.” Asserting that the PTAB’s construction would expand PGR to cover patents “relat[ing] in any way to money,” Versata urges an alternative construction of § 18 that would narrowly limit CBM eligibility to patents “related to financial products or services.”

Versata’s other challenge concerns the grounds upon which a PGR may be sought.  Specifically, Versata argues that the AIA limits the scope of review to “conditions for patentability” under Part II of the Title 35, and that while §§ 102 and 103 are designated as such, § 101 is not.

In Part 2, we examine the USPTO’s motion to dismiss Versata’s challenge.