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Supreme Court PTAB Ruling Applies to Business Method Review (1)

Nov. 17, 2020, 6:19 PM; Updated: Nov. 17, 2020, 10:40 PM

A recent U.S. Supreme Court decision barring legal challenges to threshold decisions on the institution of Patent Trial and Appeal Board inter partes review also applies to whether a patent is eligible for covered business method review, the Federal Circuit said Tuesday.

Emerson Electric Co. challenged the validity of a SIPCO LLC wireless communication patent—U.S. Patent No. 8,908,842—under the PTAB’s CBM review process. The board found the patent eligible for CBM review because it didn’t contain a “technical solution to a technical problem.” It later invalidated the relevant parts of the patent based on prior art, and SIPCO appealed.

The U.S. Court of Appeals for the Federal Circuit initially reversed the PTAB’s decision, finding the patent did contain a technical solution to a technical problem, and remanded for the PTAB to determine whether it should have received CBM review.

But the U.S. Supreme Court vacated and remanded the Federal Circuit decision in April. Federal patent law bars judicial challenges of PTAB decisions to institute inter partes review. The high court said in Thryv Inc. v. Click-To-Call Technologies LP that the ban extends to the board’s threshold decision on whether an inter partes review petition is time-barred, finding it closely related to the institution decision.

The Supreme Court remanded for the Federal Circuit to decide whetherThryv also bars challenges to the threshold determination that a patent is eligible for CBM review. The Federal Circuit said Tuesday that it does.

In the SIPCO case, “the Federal Circuit ties up a loose end that may have been unaddressed by the Supreme Court in Thryv, in a manner that is entirely consistent with Thryv’s holding,” David Okano, associate at Paul Hastings LLP, said.

Institution Conditions

The appeals court said both reviews are subject to materially identical “no appeal” provisions for institution decisions. And just as the time bar is “integral to, indeed a condition on” instituting inter partes review, patent law also requires that CBM review be granted “only for a patent that is a covered business method patent.”

“The determination that a patent qualifies for CBM review is thus expressly and exclusively tied to the decision to institute the proceeding,” the court said.

The court said it saw “no meritorious distinction” between the time-bar from Thryv and the CBM patent eligibility decision. Therefore, under Thryv, patent law prohibits a judicial challenge to the CBM patent eligibility decision because it’s “nothing more than a contention that the agency should have refused to institute CBM review.”

“Certainly this decision narrows the avenues for appeal going forward by both petitioners and patent owners,” Okano said.

“For petitioners, it forecloses appeals for CBM petitions that have been denied, and for patent owners, it removes one ground for appeal once a decision to institute a CBM has been made,” Okano added.

The Federal Circuit also affirmed the PTAB’s invalidity decision on the merits.

The SIPCO case isn’t the first time the Federal Circuit has grappled with applying Thryv. The appeals court in ESIP Series 2, LLC v. Puzhen Life USA, LLC said Thryv and other Supreme Court precedent precludes review of a patent owner’s real-party-in-interest argument at the PTAB.

Gonsalves Law Firm represented SIPCO. Ropes & Gray LLP represented Emerson.

The case is SIPCO LLC v. Emerson Elec. Co., Fed. Cir., No. 18-1635, 11/17/20.

(Updated with attorney comments and additional reporting.)

To contact the reporter on this story: Blake Brittain in Washington at bbrittain@bloomberglaw.com; Ian Lopez at ilopez@bloomberglaw.com.
To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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