PTAB Clarifies Standards for Instituting CBM Review and Motions to Exclude Evidence | Practical Law

PTAB Clarifies Standards for Instituting CBM Review and Motions to Exclude Evidence | Practical Law

In two covered business method patent reviews, the Patent Trial and Appeal Board (PTAB) issued final decisions cancelling Progressive's patent claims as invalid and clarifying the standards for instituting covered business method (CBM) review and motions to exclude evidence.

PTAB Clarifies Standards for Instituting CBM Review and Motions to Exclude Evidence

Practical Law Legal Update 3-555-6926 (Approx. 5 pages)

PTAB Clarifies Standards for Instituting CBM Review and Motions to Exclude Evidence

by Practical Law Intellectual Property & Technology
Published on 28 Jan 2014 • USA (National/Federal)
In two covered business method patent reviews, the Patent Trial and Appeal Board (PTAB) issued final decisions cancelling Progressive's patent claims as invalid and clarifying the standards for instituting covered business method (CBM) review and motions to exclude evidence.
On January 23, 2014, the US Patent Trial and Appeal Board (PTAB) issued two final decisions in covered business method (CBM) patent reviews, holding Progressive's claims unpatentable as obvious over the prior art. In its decisions, the PTAB clarified that:
  • A patent may be subject to a CBM review if the subject matter of at least one claim is directed to a covered business method.
  • A motion to exclude evidence may not be filed to:
    • challenge the sufficiency of the evidence to prove a particular fact;
    • argue that a reply contains new evidence or arguments; or
    • to serve as a sur-reply.
(Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co., Case CBM2012-00002 (PTAB Jan. 23, 2014) and Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co., Case CBM2012-00004 (PTAB Jan. 23, 2014).)

Background

Progressive Casualty Insurance Co. (Progressive) is the owner of US Patent No. 6,064,970 ('970 patent), which is directed to a method for determining automobile insurance premiums based on data collected from the vehicle related to its operation. On June 18, 2012, Progressive sued Liberty Mutual Insurance Company (Liberty) for infringement of the '970 patent in the US District Court for the Northern District of Ohio. The litigation was stayed during an ex parte reexamination of the '970 patent and the stay was lifted after the USPTO issued a reexamination certificate on January 10, 2012. On September 16, 2012, Liberty filed two petitions for CBM review of claims 1 and 3-18 (all claims) of the '970 patent. On January 25, 2013, the PTAB instituted trials on:
  • Claims 1, 3-6 and 9-18 in CBM2012-00002 based on three different combinations of four prior art references under 35 U.S.C. § 103.
  • Claims 1 and 3-18 (all claims) in CBM2012-00004 based on four different combinations of six prior art references under 35 U.S.C. § 103.
Progressive filed its patent owner response under 37 C.F.R. § 42.220 on May 1, 2013 and argued that the PTAB improperly instituted CBM review of all claims of the '970 patent after concluding that just one of the claims (claim 4) was directed to a covered business method. Progressive argued that the PTAB should have reviewed each claim before instituting a CBM on the entire patent and asked the PTAB to dismiss the proceedings on all claims other than claim 4.
Progressive also filed motions to exclude evidence under 37 C.F.R. § 42.64(c) in both proceedings. Progressive's motions sought to exclude certain evidence submitted in support of Liberty's reply on the alleged grounds that the evidence should have been submitted with Liberty's petition and that it was unreliable.

Outcome

The PTAB issued final decisions in both CBM reviews on January 23, 2014, holding the following claims of unpatentable as obvious under 35 U.S.C. § 103 in light of the prior art:
  • In CBM2012-00002, claims 1, 3-6 and 9-18 of the '970 patent.
  • In CBM2012-00004, claims 1 and 3-18 of the '970 patent.
In reaching its obviousness determinations, the PTAB:
  • Rejected Progressive's request to cancel the proceedings on all claims other than claim 4 and clarified that a patent is eligible for a CBM review if the subject matter of at least one claim is directed to a covered business method.
  • Denied Progressive's motions to exclude evidence and clarified that a motion to exclude evidence may not be filed to:
    • challenge the sufficiency of the evidence to prove a particular fact;
    • argue that a reply contains new evidence or arguments; or
    • serve as a sur-reply.

Institution of CBM Review

The PTAB first rejected Progressive's argument that it was improper for the PTAB to institute CBM review of the '970 patent after concluding that just one of the claims is directed to a covered business method. The PTAB began its analysis of Progressive's arguments by analyzing the language of Section 18(d)(1) of the America Invents Act (AIA). Specifically, the PTAB explained that if Congress had intended to limit the availability of CBM review on a claim-by-claim basis, it could have used the term "claim" rather than "patent" in the statute. The PTAB also explained that the statutory language allows CBM review of an entire patent based on the subject matter of a single claim, and does not require a claim-by-claim analysis. The PTAB also emphasized that Progressive did not identify any statutory provision or legislative history that would support its argument that each patent claim must meet the covered business method patent test before instituting a CBM review.
Based on its review of the statute and Progressive's arguments, the PTAB concluded that an entire patent is eligible for CBM review if the subject matter of at least one claim is directed to a covered business method. The PTAB did not, therefore, exceed its authority by instituting CBM review of the '970 patent based on its analysis of a single claim.

Motions to Exclude Evidence

In its analysis of Progressive's motions to exclude evidence, the PTAB emphasized that a motion to exclude evidence must:
  • Identify where in the record the objection to the evidence was originally made.
  • Identify where in the record the evidence sought to be excluded was relied on by an opponent.
  • Address objections to exhibits in numerical order.
  • Explain each objection.
The PTAB first noted that Progressive failed to comply with these requirements because it did not identify where in the record the objection to the evidence was originally made and it did not address its objections in numerical order.
The PTAB also explained that while a motion to exclude may raise issues relating to admissibility of evidence, it may not be used to:
  • Challenge the sufficiency of the evidence to prove a particular fact.
  • Argue that a reply contains new evidence or arguments.
  • Present a sur-reply.
The PTAB denied Progressive's motions to exclude because they violated each of these points.

Practical Implications

The PTAB's decision provides helpful guidance to both patent owners and patent challengers practicing before the PTAB. Patent owners should keep in mind that they will not be able to shield patents from CBM review so long as one patent claim meets the statutory definition for covered business method patents. Patent challengers may also benefit from this clarification because they will not have to fear that a CBM petition will be denied on the grounds that not all claims meet the statutory requirement. Regarding the motions to exclude, the PTAB's opinions suggest that it may be difficult to succeed in excluding evidence. Any party that wants to exclude evidence should make sure that it has a strong evidentiary basis for doing so and that it complies with all of the stated requirements for a motion to exclude evidence.