The Software IP Report

PTAB Finding of Invalidity Does Not Trump Federal Court’s Final Judgment

The Covered Business Method Patent review procedure created by the America Invents Act may be a powerful tool for attacking business method patents, but CBM cannot overcome all court proceedings, at least if Versata Software, Inc. v. SAP America, Inc., No. 2:07cv153-RSP (April 21, 2014), is any guide.  In this case, Magistrate Judge Payne held that a non-final ruling of the Patent Trial and Appeal Board (PTAB) that patent claims were invalid was not a basis for disturbing a final judgment awarding damages to Versata, especially where the award had been scrutinized by the Federal Circuit and the district court.  Moreover, Magistrate Judge Payne stated that his ruling would not have been any different event if the PTAB ruling had been final.

Before considering SAP’s motion to vacate the judgment based on the PTAB ruling, the court considered the question of a stay.  SAP had previously sought a stay based on the factors set forth in Section 18 of the America Invents Act, which established the CBM program.  The court had earlier declined to stay the case, and did so again, finding that all factors weighed against a stay. The case had been tried, so there were no efficiencies to be gained, and the non-moving party would have been prejudiced.  Further, the fact that a stay had already been denied weighed heavily against granting one here.

SAP argued that the judgment should be vacated under FRCP 60(b)(5), because the judgment against it was no longer equitable in light of the PTAB’s ruling, and under the catch-all provision of FRCP 60(b)(6).  But FRCP 60(b)(5) was aimed at injunctions, and did not apply to interest accruing on a damages award, as SAP argued.  Further, under Fifth Circuit law, the catch-all provision applied only to “extraordinary cases.”  Here, “the fact that the Defendants have obtained a contrary determination regarding the validity of the asserted patent in another forum does not appear to present such circumstances.”  The patent was fully and fairly litigated in federal court, and SAP had even pursued a writ to the U.S. Supreme Court. The judgment here was final, and there were no other issues to be resolved.  The amount of the judgment did not warrant a stay; that amount had been reviewed by the district court and the appellate court, and moreover SAP’s chief financial officer had provided an affidavit saying SAP could pay it.