PTAB Issues First Precedential Opinion in an AIA Post-Grant Proceeding
During an AIA Post-Grant Proceeding, the Patent Trial & Appeal Board (“PTAB”) can issue three types of decisions: (1) routine, (2) informative, and (3) precedential. Routine decisions are the most common and have limited persuasive value. Informative decisions generally illustrate procedural and other norms. These types of decisions are highly persuasive, but fall short of being binding. Precedential decisions are binding on all PTAB judges. Thus, they create consistent authority to be followed in future Board decisions. Precedential decisions in AIA post-grant proceedings are quite rare. In fact, it was not until very recently that the PTAB finally issued its first precedential decision under the new post-grant proceedings implemented by the AIA in SecureBuy LLC v. CardinalCommerce Corp., CBM 2014-00035 (Pat. Tr. & App. Bd., Apr. 25, 2014).
The SecureBuy proceeding involved a covered business method (“CBM”) review of U.S. Patent No. 7,051,002 (“the ’002 Patent”). The ’002 Patent was held by CardinalCommerce Corp., and generally claimed a method for credit card authorization. In seeking to defend itself from CardinalCommerce’s infringement claims, SecureBuy first filed two separate civil actions seeking a declaratory judgment that the claims of the ’002 Patent were invalid. Two weeks later, SecureBuy filed a petition requesting CBM review of the ’002 Patent.
The problem with SecureBuy’s strategy with respect to the CBM proceeding was that under 35 U.S.C. § 325(a)(1), a petitioner is barred from seeking post-grant review of a patent where the petitioner has already filed a civil action challenging the validity of a claim of the same patent. Along the same lines, 37 C.F.R. § 42.201(a) allows the filing of “a petition to institute post-grant review of the patent unless: (a) Before the date on which the petition for review is filed, the petitioner or real party-in-interest filed a civil action challenging the validity of a claim of the patent.” However, 37 C.F.R. § 42.300(a) also states that “[a] covered business method patent review is a trial and subject to the rules set forth in subpart A and also subject to the post-grant review procedures set forth in subpart C except for §§ 42.200, 42.401, 42.202, and 42.204.” (emphasis added). Thus, there was some ambiguity as to whether § 325(a)(1) applied to CMB proceedings, at least as argued by SecureBuy.
In its precedential decision, the PTAB resolved the dispute by holding that a CBM proceeding cannot proceed if a petitioner files a civil suit to challenge a patent’s validity prior to filing its review petition. This decision is now binding on all PTAB panels.